UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|
|
|
þ
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
FOR THE QUARTERLY PERIOD ENDED
DECEMBER 31, 2008
OR
|
|
|
o
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
FOR THE TRANSITION PERIOD FROM
TO
Commission
file number
1-16671
AMERISOURCEBERGEN CORPORATION
(Exact name of registrant as specified in its charter)
|
|
|
Delaware
|
|
23-3079390
|
|
|
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
1300 Morris Drive, Chesterbrook, PA
|
|
19087-5594
|
|
|
|
(Address of principal executive offices)
|
|
(Zip Code)
|
(610) 727-7000
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
þ
No
o
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in
Rule 12b-2 of the Exchange Act).
|
|
|
|
|
|
|
Large accelerated filer
þ
|
|
Accelerated filer
o
|
|
Non-accelerated filer
o
|
|
Smaller reporting company
o
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes
o
No
þ
The number of shares of common stock of AmerisourceBergen Corporation outstanding as of
January 31, 2009 was 152,277,593.
AMERISOURCEBERGEN CORPORATION
INDEX
2
PART I. FINANCIAL INFORMATION
ITEM I. Financial Statements (Unaudited)
AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
September 30,
|
|
(
in thousands, except share and per share data
)
|
|
2008
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
470,917
|
|
|
$
|
878,114
|
|
Accounts receivable, less allowances for returns and doubtful
accounts: $369,631 at December 31, 2008 and $393,714 at
September 30, 2008
|
|
|
3,537,704
|
|
|
|
3,480,267
|
|
Merchandise inventories
|
|
|
4,963,704
|
|
|
|
4,211,775
|
|
Prepaid expenses and other
|
|
|
34,744
|
|
|
|
55,914
|
|
Assets held for sale
|
|
|
|
|
|
|
43,691
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
9,007,069
|
|
|
|
8,669,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, at cost:
|
|
|
|
|
|
|
|
|
Land
|
|
|
35,537
|
|
|
|
35,258
|
|
Buildings and improvements
|
|
|
285,946
|
|
|
|
281,001
|
|
Machinery, equipment and other
|
|
|
640,342
|
|
|
|
616,942
|
|
|
|
|
|
|
|
|
Total property and equipment
|
|
|
961,825
|
|
|
|
933,201
|
|
Less accumulated depreciation
|
|
|
(389,381
|
)
|
|
|
(381,042
|
)
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
572,444
|
|
|
|
552,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets:
|
|
|
|
|
|
|
|
|
Goodwill and other intangible assets
|
|
|
2,852,618
|
|
|
|
2,875,366
|
|
Other assets
|
|
|
129,015
|
|
|
|
120,500
|
|
|
|
|
|
|
|
|
Total other assets
|
|
|
2,981,633
|
|
|
|
2,995,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
12,561,146
|
|
|
$
|
12,217,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
7,655,869
|
|
|
$
|
7,326,580
|
|
Accrued expenses and other
|
|
|
255,695
|
|
|
|
270,823
|
|
Current portion of long-term debt
|
|
|
1,310
|
|
|
|
1,719
|
|
Accrued income taxes
|
|
|
35,488
|
|
|
|
|
|
Deferred income taxes
|
|
|
558,435
|
|
|
|
550,708
|
|
Liabilities held for sale
|
|
|
|
|
|
|
17,759
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
8,506,797
|
|
|
|
8,167,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt, net of current portion
|
|
|
1,185,339
|
|
|
|
1,187,412
|
|
Other liabilities
|
|
|
153,193
|
|
|
|
152,740
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
Common stock, $0.01 par value authorized: 600,000,000 shares; issued and
outstanding: 240,621,654 shares and 153,303,856 shares at Decemeber 31, 2008,
respectively,
and 240,577,082 and 156,215,460 shares at September 30, 2008, respectively
|
|
|
2,406
|
|
|
|
2,406
|
|
Additional paid-in capital
|
|
|
3,700,728
|
|
|
|
3,692,023
|
|
Retained earnings
|
|
|
2,574,563
|
|
|
|
2,479,078
|
|
Accumulated other comprehensive loss
|
|
|
(26,556
|
)
|
|
|
(16,490
|
)
|
Treasury stock, at cost: 87,317,798 shares at December 31, 2008 and 84,361,622 shares at
September 30, 2008
|
|
|
(3,535,324
|
)
|
|
|
(3,446,972
|
)
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
2,715,817
|
|
|
|
2,710,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
|
|
$
|
12,561,146
|
|
|
$
|
12,217,786
|
|
|
|
|
|
|
|
|
See
notes to consolidated financial statements.
3
AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31,
|
|
(in thousands, except per share data)
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
Operating revenue
|
|
$
|
16,881,078
|
|
|
$
|
16,145,895
|
|
Bulk deliveries to customer warehouses
|
|
|
457,299
|
|
|
|
1,133,488
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
17,338,377
|
|
|
|
17,279,383
|
|
Cost of goods sold
|
|
|
16,848,529
|
|
|
|
16,795,167
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
489,848
|
|
|
|
484,216
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Distribution, selling, and administrative
|
|
|
272,026
|
|
|
|
270,770
|
|
Depreciation
|
|
|
15,053
|
|
|
|
16,069
|
|
Amortization
|
|
|
3,856
|
|
|
|
4,557
|
|
Facility consolidations, employee severance and other
|
|
|
1,029
|
|
|
|
177
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
197,884
|
|
|
|
192,643
|
|
Other loss
|
|
|
429
|
|
|
|
737
|
|
Interest expense, net
|
|
|
14,183
|
|
|
|
16,414
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
183,272
|
|
|
|
175,492
|
|
Income taxes
|
|
|
70,743
|
|
|
|
67,083
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
112,529
|
|
|
|
108,409
|
|
(Loss) income from discontinued operations, net of income taxes
|
|
|
(1,473
|
)
|
|
|
1,411
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
111,056
|
|
|
$
|
109,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
Basic earnings per share:
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.73
|
|
|
$
|
0.66
|
|
Discontinued operations
|
|
|
(0.01
|
)
|
|
|
0.01
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
0.72
|
|
|
$
|
0.67
|
|
|
|
|
|
|
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.73
|
|
|
$
|
0.65
|
|
Discontinued operations
|
|
|
(0.01
|
)
|
|
|
0.01
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
0.72
|
|
|
$
|
0.66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
154,297
|
|
|
|
164,905
|
|
Diluted
|
|
|
155,089
|
|
|
|
167,062
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share of common stock
|
|
$
|
0.10
|
|
|
$
|
0.075
|
|
See notes to consolidated financial statements.
4
AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31,
|
|
(in thousands)
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
111,056
|
|
|
$
|
109,820
|
|
Loss (income) from discontinued operations
|
|
|
1,473
|
|
|
|
(1,411
|
)
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
112,529
|
|
|
|
108,409
|
|
Adjustments to reconcile income from continuing operations to net cash used in
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation, including amounts charged to cost of goods sold
|
|
|
17,813
|
|
|
|
18,440
|
|
Amortization, including amounts charged to interest expense
|
|
|
4,843
|
|
|
|
5,390
|
|
Provision for doubtful accounts
|
|
|
8,175
|
|
|
|
3,300
|
|
Provision for (benefit from) deferred income taxes
|
|
|
9,681
|
|
|
|
(13,625
|
)
|
Share-based compensation
|
|
|
7,374
|
|
|
|
7,417
|
|
Other
|
|
|
37
|
|
|
|
743
|
|
Changes in operating assets and liabilities, excluding the
effects of acquisitions and dispositions:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(80,090
|
)
|
|
|
108,492
|
|
Merchandise inventories
|
|
|
(768,924
|
)
|
|
|
(610,257
|
)
|
Prepaid expenses and other assets
|
|
|
22,611
|
|
|
|
3,854
|
|
Accounts payable, accrued expenses and income taxes
|
|
|
366,625
|
|
|
|
260,131
|
|
Other
|
|
|
(4,789
|
)
|
|
|
2,213
|
|
|
|
|
|
|
|
|
Net cash used in operating activities continuing operations
|
|
|
(304,115
|
)
|
|
|
(105,493
|
)
|
Net cash (used in) provided by operating activities discontinued operations
|
|
|
(251
|
)
|
|
|
4,463
|
|
|
|
|
|
|
|
|
NET CASH USED IN OPERATING ACTIVITIES
|
|
|
(304,366
|
)
|
|
|
(101,030
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(42,344
|
)
|
|
|
(26,195
|
)
|
Cost of acquired companies, net of cash acquired
|
|
|
|
|
|
|
(162,506
|
)
|
Proceeds from sales of property and equipment
|
|
|
|
|
|
|
20
|
|
Proceeds from the sale of PMSI
|
|
|
14,936
|
|
|
|
|
|
Purchases of investment securities available-for-sale
|
|
|
|
|
|
|
(909,105
|
)
|
Proceeds from sale of investment securities available-for-sale
|
|
|
|
|
|
|
1,376,524
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by investing activities continuing operations
|
|
|
(27,408
|
)
|
|
|
278,738
|
|
Net cash used in investing activities discontinued operations
|
|
|
(1,138
|
)
|
|
|
(736
|
)
|
|
|
|
|
|
|
|
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES
|
|
|
(28,546
|
)
|
|
|
278,002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Borrowings under revolving and securitization credit facilities
|
|
|
339,208
|
|
|
|
1,437,954
|
|
Repayments under revolving and securitization credit facilities
|
|
|
(311,689
|
)
|
|
|
(1,411,148
|
)
|
Purchases of common stock
|
|
|
(88,352
|
)
|
|
|
(311,442
|
)
|
Exercise of
stock options, including excess tax benefits of $55 and $600 in fiscal 2009 and 2008, respectively
|
|
|
1,331
|
|
|
|
4,249
|
|
Cash dividends on common stock
|
|
|
(15,571
|
)
|
|
|
(12,498
|
)
|
Other
|
|
|
788
|
|
|
|
(131
|
)
|
|
|
|
|
|
|
|
Net cash used in financing activities continuing operations
|
|
|
(74,285
|
)
|
|
|
(293,016
|
)
|
Net cash used in financing activities discontinued operations
|
|
|
|
|
|
|
(21
|
)
|
|
|
|
|
|
|
|
NET CASH USED IN FINANCING ACTIVITIES
|
|
|
(74,285
|
)
|
|
|
(293,037
|
)
|
|
|
|
|
|
|
|
|
DECREASE IN CASH AND CASH EQUIVALENTS
|
|
|
(407,197
|
)
|
|
|
(116,065
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
878,114
|
|
|
|
640,204
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
470,917
|
|
|
$
|
524,139
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements.
5
AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements present the consolidated financial position, results of
operations and cash flows of AmerisourceBergen Corporation and its wholly owned subsidiaries (the
Company) as of the dates and for the periods indicated. All intercompany accounts and
transactions have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements have been prepared in conformity
with U.S. generally accepted accounting principles (GAAP) for interim financial information, with
the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, all
adjustments (consisting only of normal recurring accruals, except as otherwise disclosed herein)
considered necessary to present fairly the financial position as of December 31, 2008 and the
results of operations and cash flows for the interim periods ended December 31, 2008 and 2007 have
been included. Certain information and footnote disclosures normally included in financial
statements presented in accordance with U.S. GAAP, but which are not required for interim reporting
purposes, have been omitted. The accompanying unaudited consolidated financial statements should
be read in conjunction with the financial statements and notes thereto included in the Companys
Annual Report on Form 10-K for the fiscal year ended September 30, 2008.
The preparation of financial statements in conformity with U.S. GAAP requires management to
make estimates and assumptions that affect amounts reported in the financial statements and
accompanying notes. Actual amounts could differ from these estimated amounts.
Recently Issued Financial Accounting Standards
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements, which defines fair
value, establishes a framework for measuring fair value, and expands disclosures about fair value
measurements. FASB Staff Position 157-2 delayed the effective date of the application of SFAS 157
to fiscal years beginning after November 15, 2008 for all nonfinancial assets and liabilities that
are recognized or disclosed at fair value in the financial statements on a nonrecurring basis.
SFAS 157 defines fair value as the price that would be received from selling an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement
date (exit price). SFAS 157 establishes a fair value hierarchy, which prioritizes the inputs to
valuation techniques used to measure fair value into three levels. Level 1 inputs are quoted
prices in active markets for identical assets or liabilities. Level 2 inputs are observable other
than quoted prices in active markets for identical assets and liabilities, quoted prices for
identical or similar assets or liabilities in inactive markets, or other inputs that are observable
or can be corroborated by observable market data for substantially the full term of the assets or
liabilities. Level 3 inputs are generally unobservable and typically reflect managements
estimates of assumptions that market participants would use in pricing the asset or liability.
In the first quarter of fiscal 2009, the Company adopted SFAS 157 for all financial assets and
liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value
in the financial statements on a recurring basis. The adoption of SFAS 157 did not have any impact
on the Companys financial position, results of operations or liquidity. At December 31, 2008, the
Company had $324.0 million of investments in money market accounts, which were valued as level 1
investments. The adoption of this standard in fiscal 2010 as it relates to the Companys
nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial
statements on a nonrecurring basis is not expected to have a material impact on the Companys
financial position, results of operations or liquidity.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets
and Financial Liabilities, including an amendment of FASB Statement No. 115. SFAS No. 159 permits
the Company to elect fair value as the initial and subsequent measurement attribute for certain
financial assets and liabilities that are not otherwise required to be measured at fair value, on
an instrument-by-instrument basis. In the first quarter of fiscal 2009, the Company chose not to
elect the fair value option for any items not already required to be measured at fair value in
accordance with U.S. GAAP. As a result, the adoption of SFAS No. 159 did not have an impact on the
Companys financial position, results of operations or liquidity.
6
AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
In December 2007, the FASB issued SFAS No. 141R, Business Combinations, which replaces SFAS
No. 141. SFAS No. 141R establishes principles and requirements for how an acquirer recognizes and
measures in its financial statements the identifiable assets acquired, the goodwill acquired, the
liabilities assumed, and any non-controlling interest in the acquired business. SFAS No. 141R also
establishes disclosure requirements, which will enable users to evaluate the nature and financial
effects of the business combination. SFAS No. 141R is effective as of the beginning of an entitys
fiscal year that begins after December 15, 2008, which will be the Companys fiscal year beginning
October 1, 2009. The Company is currently evaluating the impact of adopting this standard.
Note 2. Discontinued Operations
In October 2008, the Company completed the divestiture of its former workers compensation
business, PMSI. In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, the Company classified PMSIs assets and liabilities as held for sale in the
consolidated balance sheet as of September 30, 2008 and classified PMSIs operating results and
cash flows as discontinued in the consolidated financial statements for all periods presented.
The following table summarizes the assets and liabilities of PMSI as of September 30, 2008 (in
thousands):
|
|
|
|
|
Assets:
|
|
|
|
|
Accounts receivable
|
|
$
|
44,033
|
|
Other assets
|
|
|
(342
|
)
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
Accounts payable
|
|
|
14,959
|
|
Other liabilities
|
|
|
2,800
|
|
|
|
|
|
Net assets
|
|
$
|
25,932
|
|
|
|
|
|
PMSIs revenue and (loss) income before income taxes were as follows:
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
Revenue
|
|
$
|
28,993
|
|
|
$
|
108,641
|
|
(Loss) income before income taxes
|
|
|
(1,075
|
)
|
|
|
2,337
|
|
The Company sold PMSI for approximately $34 million, which is subject to a final working
capital adjustment, and which includes a $19 million subordinated note payable due from PMSI on the
fifth anniversary of the closing date (the maturity date), of which $4 million may be payable in
October 2010, if PMSI achieves certain revenue targets with respect to its largest customer.
Interest, which accrues at an annual rate of 7%, will be payable in cash on a quarterly basis, if
PMSI achieves a defined minimum fixed charge coverage ratio, or will be compounded semi-annually
and paid at maturity. Additionally, if PMSIs annual net revenue exceeds certain thresholds through
December 2011, the Company may be entitled to additional payments of up to $10 million under the
subordinated note payable due from PMSI on the maturity date of the note.
7
AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Note 3. Income Taxes
The Company files income tax returns in U.S. federal and state jurisdictions as well as
various foreign jurisdictions. The Companys U.S. federal income tax returns for fiscal 2005 and
subsequent years remain subject to examination by the U.S. Internal Revenue Service (IRS). The
IRS is currently examining the Companys tax return for fiscal 2006. In Canada, the Company is
currently under examination for fiscal years 2005 and 2006.
The Company has unrecognized tax benefits, defined as the aggregate tax effect of differences
between tax return positions and the benefits recognized in the Companys financial statements.
During the three months ended December 31, 2008, unrecognized tax benefits increased by $3.3
million, primarily due to an increase in state tax positions. As of December 31, 2008, the Company
had unrecognized tax benefits of $52.6 million ($37.2 million, net of federal benefit). Included
in this amount is $16.3 million of interest and penalties, which the Company continues to record in
income tax expense.
If recognized, net of federal benefit, $35.3 million of the Companys unrecognized tax benefit
would reduce income tax expense and the effective tax rate. Also, if recognized, net of federal
benefit, $1.9 million of the Companys unrecognized tax benefit would result in a decrease to
goodwill. During the next 12 months, it is reasonably possible that state tax audit resolutions
and the expiration of statutes of limitations could result in a reduction of unrecognized tax
benefits by approximately $8.6 million.
Note 4. Goodwill and Other Intangible Assets
Following is a summary of the changes in the carrying value of goodwill for the three months
ended December 31, 2008 (in thousands):
|
|
|
|
|
Goodwill at September 30, 2008
|
|
$
|
2,536,945
|
|
|
|
|
|
|
Foreign currency translation
|
|
|
(16,597
|
)
|
|
|
|
|
|
|
|
|
|
Goodwill at December 31, 2008
|
|
$
|
2,520,348
|
|
|
|
|
|
Following is a summary of other intangible assets (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
September 30, 2008
|
|
|
|
Gross
|
|
|
|
|
|
|
Net
|
|
|
Gross
|
|
|
|
|
|
|
Net
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Carrying
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Carrying
|
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indefinite-lived intangibles
trade names
|
|
$
|
251,044
|
|
|
$
|
|
|
|
$
|
251,044
|
|
|
$
|
252,138
|
|
|
$
|
|
|
|
$
|
252,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finite-lived intangibles:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
|
116,693
|
|
|
|
(46,518
|
)
|
|
|
70,175
|
|
|
|
119,521
|
|
|
|
(44,664
|
)
|
|
|
74,857
|
|
Other
|
|
|
31,721
|
|
|
|
(20,670
|
)
|
|
|
11,051
|
|
|
|
31,306
|
|
|
|
(19,880
|
)
|
|
|
11,426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other intangible assets
|
|
$
|
399,458
|
|
|
$
|
(67,188
|
)
|
|
$
|
332,270
|
|
|
$
|
402,965
|
|
|
$
|
(64,544
|
)
|
|
$
|
338,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense for other intangible assets was $3.9 million and $4.6 million in the
three months ended December 31, 2008 and 2007, respectively. Amortization expense for other
intangible assets is estimated to be $15.6 million in fiscal 2009, $15.0 million in fiscal 2010,
$14.0 million in fiscal 2011, $11.9 million in fiscal 2012, $10.2 million in fiscal 2013, and $18.4
million thereafter.
8
AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Note 5. Debt
Debt consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
September 30,
|
|
|
|
2008
|
|
|
2008
|
|
|
Blanco revolving credit facility at 1.20% and 3.04%,
respectively, due 2009
|
|
$
|
55,000
|
|
|
$
|
55,000
|
|
Receivables securitization facility due 2009
|
|
|
|
|
|
|
|
|
Multi-currency revolving credit facility at 3.76%, due 2011
|
|
|
232,385
|
|
|
|
235,130
|
|
$400,000, 5 5/8% senior notes due 2012
|
|
|
398,841
|
|
|
|
398,773
|
|
$500,000, 5 7/8% senior notes due 2015
|
|
|
498,166
|
|
|
|
498,112
|
|
Other
|
|
|
2,257
|
|
|
|
2,116
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
1,186,649
|
|
|
|
1,189,131
|
|
Less current portion
|
|
|
1,310
|
|
|
|
1,719
|
|
|
|
|
|
|
|
|
|
Total, net of current portion
|
|
$
|
1,185,339
|
|
|
$
|
1,187,412
|
|
|
|
|
|
|
|
|
The Company has a $695 million five-year multi-currency senior unsecured revolving credit
facility (the Multi-Currency Revolving Credit Facility) with a syndicate of lenders. (This amount
reflects the reduction of $55 million in availability under the facility as a result of the
bankruptcy of Lehman Commercial Paper, Inc. in September 2008.) Interest on borrowings under the
Multi-Currency Revolving Credit Facility accrues at specified rates based on the Companys debt
rating and ranges from 19 basis points to 60 basis points over LIBOR/EURIBOR/Bankers Acceptance
Stamping Fee, as applicable (40 basis points over LIBOR/EURIBOR/Bankers Acceptance Stamping Fee at
December 31, 2008.) Additionally, interest on borrowings denominated in Canadian dollars may
accrue at the greater of the Canadian prime rate or the CDOR rate. The Company pays quarterly
facility fees to maintain the availability under the Multi-Currency Revolving Credit Facility at
specified rates based on the Companys debt rating, ranging from 6 basis points to 15 basis points
of the total commitment (10 basis points at December 31, 2008). The Company may choose to repay or
reduce its commitments under the Multi-Currency Revolving Credit Facility at any time. The
Multi-Currency Revolving Credit Facility contains covenants, including compliance with a financial
leverage ratio test, as well as others that impose limitations on, among other things, indebtedness
of excluded subsidiaries and asset sales.
The Company has a $975 million receivables securitization facility (Receivables
Securitization Facility), of which $181.2 million expires in June 2009 and $793.8 million expires
in November 2009. The Company has available to it an accordion feature whereby the commitment may
be increased, subject to lender approval, for seasonal needs during the December and March
quarters. Effective January 2, 2009, the Company increased its availability by $152 million under
the accordion feature. Interest rates are based on prevailing market rates for short-term
commercial paper plus a program fee, and vary based on the Companys debt ratings. The program fee
and the commitment fee, on average, were 53 basis points and 20 basis points, respectively, at
December 31, 2008. At December 31, 2008, there were no
borrowings outstanding under the Receivables
Securitization Facility.
The Blanco revolving credit facility (the Blanco Credit Facility) is not classified in the
current portion of long-term debt on the accompanying consolidated balance sheet at December 31,
2008 because the Company has the ability and intent to refinance it on a long-term basis.
Borrowings under the Blanco Credit Facility are guaranteed by the Company. Interest on borrowings
under the Blanco Credit Facility accrues at specific rates based on the Companys debt rating (55
basis points over LIBOR at December 31, 2008). Additionally, the Company pays quarterly facility
fees on the full amount of the facility to maintain the availability under the Blanco Credit
Facility at specific rates based on the Companys debt rating (10 basis points at December 31,
2008).
9
AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Note 6. Stockholders Equity and Earnings Per Share
The following table illustrates comprehensive income for the three months ended December 31,
2008 and 2007 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Net income
|
|
$
|
111,056
|
|
|
$
|
109,820
|
|
Foreign currency translation adjustments and other
|
|
|
(10,066
|
)
|
|
|
(2,788
|
)
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
$
|
100,990
|
|
|
$
|
107,032
|
|
|
|
|
|
|
|
|
In November 2008, the Companys board of directors increased the quarterly dividend by 33% to
$0.10 per share.
In May 2007, the Companys board of directors authorized a program allowing the Company to
purchase up to $850 million of its outstanding shares of common stock, subject to market
conditions. Subsequently, in November 2007, the Companys board of directors authorized an
increase to the $850 million repurchase program by $500 million. During the three months ended
December 31, 2008, the Company purchased 0.6 million shares for $18.1 million to complete this
program.
In November 2008, the Companys board of directors authorized a new program allowing the
Company to purchase up to $500 million of its outstanding shares of common stock, subject to market
conditions. During the three months ended December 31, 2008, the Company purchased 2.3 million
shares under this program for $70.3 million.
Basic earnings per share is computed on the basis of the weighted average number of shares of
common stock outstanding during the periods presented. Diluted earnings per share is computed on
the basis of the weighted average number of shares of common stock outstanding during the periods
presented plus the dilutive effect of stock options and restricted stock.
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31,
|
|
(in thousands)
|
|
2008
|
|
|
2007
|
|
|
Weighted average common shares outstanding basic
|
|
|
154,297
|
|
|
|
164,905
|
|
Effect of dilutive securities stock options and restricted stock
|
|
|
792
|
|
|
|
2,157
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding diluted
|
|
|
155,089
|
|
|
|
167,062
|
|
|
|
|
|
|
|
|
Note 7. Facility Consolidations, Employee Severance and Other
The following table illustrates the charges incurred by the Company relating to facility
consolidations, employee severance and other for the three months ended December 31, 2008 and 2007
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Facility consolidations and employee severance
|
|
$
|
1,029
|
|
|
$
|
(758
|
)
|
Costs related to business divestitures
|
|
|
|
|
|
|
935
|
|
|
|
|
|
|
|
|
|
Total facility
consolidations, employee
severance and other
|
|
$
|
1,029
|
|
|
$
|
177
|
|
|
|
|
|
|
|
|
During fiscal 2008, the Company announced a more streamlined organizational structure and
introduced an initiative (cE2) designed to drive increased customer efficiency and cost
effectiveness. In connection with these efforts, the Company reduced various operating costs and
terminated certain positions. The Company incurred the majority of its employee severance costs
related to the above efforts through December 31, 2008. During the three months ended December 31,
2008, the Company terminated 122 employees and incurred $1.0 million of employee severance costs.
Most employees receive their severance benefits over a period of time, generally not in excess of
12 months, while others may receive a lump-sum payment.
10
AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
During the three months ended December 31, 2007, the Company reversed $0.9 million of employee
severance charges previously estimated and recorded relating to its prior integration plan.
The following table displays the activity in accrued expenses and other from September 30,
2008 to December 31, 2008 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
|
|
|
Lease Cancellation
|
|
|
|
|
|
|
Severance
|
|
|
Costs and Other
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2008
|
|
$
|
17,081
|
|
|
$
|
4,356
|
|
|
$
|
21,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expense recorded during the period
|
|
|
878
|
|
|
|
151
|
|
|
|
1,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments made during the period
|
|
|
(3,169
|
)
|
|
|
(429
|
)
|
|
|
(3,598
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2008
|
|
$
|
14,790
|
|
|
$
|
4,078
|
|
|
$
|
18,868
|
|
|
|
|
|
|
|
|
|
|
|
The employee severance balance set forth in the above table as of December 31, 2008 includes
an accrual for the Bergen Brunswig Matter as described in Note 8. The lease cancellation costs and
other balance set forth in the above table as of December 31, 2008 primarily consists of an accrual
for information technology transition costs payable to IBM Global Services.
Note 8. Legal Matters and Contingencies
In the ordinary course of its business, the Company becomes involved in lawsuits,
administrative proceedings, government subpoenas, and government investigations, including
antitrust, commercial, environmental, product liability, intellectual property, regulatory,
employment discrimination, and other matters. Significant damages or penalties may be sought from
the Company in some matters, and some matters may require years for the Company to resolve. The
Company establishes reserves based on its periodic assessment of estimates of probable losses.
There can be no assurance that an adverse resolution of one or more matters during any subsequent
reporting period will not have a material adverse effect on the Companys results of operations for
that period. However, on the basis of information furnished by counsel and others and taking into
consideration the reserves established for pending matters, the Company does not believe that the
resolution of currently pending matters (including the matters specifically described below),
individually or in the aggregate, will have a material adverse effect on the Companys financial
condition.
RxUSA Matter
In 2001, the Company sued one of its former customers, Rx USA International, Inc. and certain
related companies (RxUSA), seeking over $300,000 for unpaid invoices. The matter is pending in
the United States District Court for the Eastern District of New York (the Federal District
Court). Thereafter, RxUSA filed counterclaims alleging breach of contract claiming that it was
overbilled for products by over $400,000. RxUSA also alleged violations of the federal and New
York antitrust laws, tortious interference with business relations and defamation. The Federal
District Court has granted summary judgment for the Company on the antitrust and defamation
counterclaims, but denied the motion on the breach of contract and tortious interference
counterclaims. In connection with its tortious interference counterclaim, RxUSA asserts
compensatory damages of $61 million plus punitive damages. The trial of the Companys claims and
RxUSAs remaining counterclaims commenced in the Federal District Court on January 26, 2009. The
Company is vigorously prosecuting its claim for unpaid invoices and does not believe that the
counterclaims asserted by RxUSA have merit, but cannot predict the outcome of the trial or the
ultimate outcome of this matter.
11
AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
New York Attorney General Subpoena
In April 2005, the Company received a subpoena from the Office of the Attorney General of the
State of New York (the NYAG) requesting documents and responses to interrogatories concerning the
manner and degree to which the Company purchased pharmaceuticals from other wholesalers, often
referred to as the alternate source market, rather than directly from manufacturers. Similar
subpoenas have been issued by the NYAG to other pharmaceutical distributors. After receiving the
subpoena, the Company engaged in discussions with the NYAG, initially to clarify the scope of the
subpoena and subsequently to provide background information requested by the NYAG. The Company has
produced responsive information and documents and will continue to cooperate with the NYAG. Late in
fiscal year 2007, the Company received a communication from the NYAG detailing potential theories
of liability. Subsequently, the Company met with the NYAG to discuss this matter and has
communicated the Companys position on this matter to the NYAG. The Company believes that it has
not engaged in any wrongdoing, but cannot predict the outcome of this matter.
Bergen Brunswig Matter
A former Bergen Brunswig chief executive officer who was terminated in 1999 filed an action
that year in the Superior Court of the State of California, County of Orange (the Superior Court)
claiming that Bergen Brunswig (predecessor in interest to AmerisourceBergen Corporation) had
breached its obligations to him under his employment agreement. Shortly after the filing of the
lawsuit, Bergen Brunswig made a California Civil Procedure Code § 998 Offer of Judgment to the
executive, which the executive accepted. The resulting judgment awarded the executive damages and
the continuation of certain employment benefits. Since then, the Company and the executive have
engaged in litigation as to what specific benefits were included in the scope of the Offer of
Judgment and the value of those benefits. The Superior Court entered an Order in Implementation of
Judgment on June 7, 2001, which identified the specific benefits encompassed by the Offer of
Judgment. Following submission by the executive of a claim for benefits pursuant to the Bergen
Brunswig Supplemental Executive Retirement Plan (the Plan), the Company followed the
administrative procedure set forth in the Plan. This procedure involved separate reviews by two
independent parties, the first by the Review Official appointed by the Plan Administrator and
second by the Plan Trustee, and resulted in a determination that the executive was entitled to a
$1.9 million supplemental retirement benefit and such amount was paid. The executive challenged
this award and on July 7, 2006, the Superior Court entered a Second Order in Implementation of
Judgment determining that the executive was entitled to a supplemental retirement benefit, net of
the $1.9 million previously paid to him, in the amount of $19.4 million, which included interest at
the rate of ten percent per annum from August 29, 2001. The Company recorded a charge of $13.9
million in June 2006 to establish the total liability of $19.4 million on its balance sheet. The
Superior Court refused to award the executive other benefits claimed, including an award of stock
options, a severance payment and forgiveness of a loan. Both the executive and the Company appealed
the ruling of the Superior Court. On October 12, 2007, the Court of Appeal for the State of
California, Fourth Appellate District (the Court of Appeal) made certain rulings, and reversed
certain portions of the July 2006 decision of the Superior Court in a manner that was favorable to
the Company. As a result, in fiscal 2007, the Company reduced its total liability to the executive
by $10.4 million. The Company continues to accrue interest on the remaining liability to the
executive, pending the final resolution of this matter. The former executive filed a petition with
the Supreme Court of California for review of the October 12, 2007 appellate decision. The Supreme
Court of California denied the petition on January 23, 2008. The parties then entered into a
stipulation to remand the calculation of the executives supplemental retirement benefit to the
Plan Administrator in accordance with the Court of Appeals decision of October 12, 2007. On
June 10, 2008, the Plan Administrator issued a decision that the executive is entitled to receive
approximately $6.9 million in supplemental retirement benefits plus interest, less the $1.9 million
already paid to the executive under the Plan. The executive appealed this determination and a
hearing on his appeal was held in August 2008 before a Review Official appointed by the Plan
Administrator. On October 31, 2008, the Review Official issued an interim decision affirming in
most respects the Plan Administrators determination of the executives supplemental retirement
benefit. On November 17, 2008, the executive filed a motion for a Third Order in Implementation of
Judgment with the Superior Court asking the court to overturn the decision of the Review official.
A hearing on the executives motion for a Third Order in Implementation of Judgment is scheduled
for February 23, 2009.
Note 9. Litigation Settlements
Antitrust Settlements
During the last several years, numerous class action lawsuits have been filed against certain
brand pharmaceutical manufacturers alleging that the manufacturer, by itself or in concert with
others, took improper actions to delay or prevent generic drugs from entering the market. The
Company has not been a named plaintiff in any of these class actions, but has been a member of the
direct purchasers class (i.e., those purchasers who purchase directly from these pharmaceutical
manufacturers). None of the class actions has gone to trial, but some have settled in the past
with the Company receiving proceeds from the settlement funds. Currently, there are several such
class actions pending in which the Company is a class member. During the three months ended
December 31, 2007, the Company recognized a gain of $1.6 million relating to the above-mentioned
class action lawsuits. The gain, which was net of attorney fees and estimated payments due to
other parties, was recorded as a reduction to cost of goods sold in the Companys consolidated
statements of operations.
12
AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Other Settlements
During the three months ended December 31, 2007, the Company recognized a $10.0 million gain
as a reduction to cost of goods sold in the Companys consolidated statement of operations
resulting from a favorable litigation settlement with a major competitor related to sales
activities involving an independent retail group purchasing organization.
Note 10. Business Segment Information
The Company has three operating segments, which include the operations of AmerisourceBergen
Drug Corporation (ABDC), the AmerisourceBergen Specialty Group (ABSG), and the
AmerisourceBergen Packaging Group (ABPG). The Company has aggregated the operating results of
ABDC, ABSG, and ABPG into one reportable segment, Pharmaceutical Distribution. The businesses of
the Pharmaceutical Distribution operating segments are similar in that they service both healthcare
providers and pharmaceutical manufacturers in the pharmaceutical supply chain.
Management evaluates segment performance based on total revenue including bulk deliveries to
customer warehouses. Total revenue was $17.3 billion in both the three months ended December 31,
2008 and 2007. Pharmaceutical Distribution operating income is evaluated before facility
consolidations, employee severance and other; and gain on antitrust litigation settlements. All
corporate office expenses were allocated to the Pharmaceutical Distribution segment.
The following table reconciles Pharmaceutical Distribution operating income to income from
continuing operations before income taxes for the three months ended December 31, 2008 and 2007 (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
Pharmaceutical Distribution operating income
|
|
$
|
198,913
|
|
|
$
|
191,235
|
|
Facility consolidations, employee severance and other
|
|
|
(1,029
|
)
|
|
|
(177
|
)
|
Gain on antitrust litigation settlements
|
|
|
|
|
|
|
1,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating income
|
|
|
197,884
|
|
|
|
192,643
|
|
Other loss
|
|
|
429
|
|
|
|
737
|
|
Interest expense, net
|
|
|
14,183
|
|
|
|
16,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
$
|
183,272
|
|
|
$
|
175,492
|
|
|
|
|
|
|
|
|
Note 11. Selected Consolidating Financial Statements of Parent, Guarantors and Non-Guarantors
The Companys 5 5/8% senior notes due September 15, 2012 (the 2012 Notes) and the 5 7/8%
senior notes due September 15, 2015 (the 2015 Notes and, together with the 2012 Notes, the
Notes) each are fully and unconditionally guaranteed on a joint and several basis by certain of
the Companys subsidiaries (the subsidiaries of the Company that are guarantors of the Notes being
referred to collectively as the Guarantor Subsidiaries). The total assets, stockholders equity,
revenue, earnings, and cash flows from operating activities of the Guarantor Subsidiaries exceeded
a majority of the consolidated total of such items as of or for the periods reported. The only
consolidated subsidiaries of the Company that are not guarantors of the Notes (the Non-Guarantor
Subsidiaries) are: (a) the receivables securitization special purpose entity, (b) the foreign
operating subsidiaries, and (c) certain smaller operating subsidiaries. The following tables
present condensed consolidating financial statements including AmerisourceBergen Corporation (the
Parent), the Guarantor Subsidiaries, and the Non-Guarantor Subsidiaries. Such financial
statements include balance sheets as of December 31, 2008 and September 30, 2008, statements of
operations for the three months ended December 31, 2008 and 2007, and statements of cash flows for
the three months ended December 31, 2008 and 2007.
13
AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
SUMMARY CONSOLIDATING BALANCE SHEETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
|
|
|
|
Consolidated
|
|
(in thousands)
|
|
Parent
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Total
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
332,730
|
|
|
$
|
86,890
|
|
|
$
|
51,297
|
|
|
$
|
|
|
|
$
|
470,917
|
|
Accounts receivable, net
|
|
|
672
|
|
|
|
1,190,009
|
|
|
|
2,347,023
|
|
|
|
|
|
|
|
3,537,704
|
|
Merchandise inventories
|
|
|
|
|
|
|
4,821,654
|
|
|
|
142,050
|
|
|
|
|
|
|
|
4,963,704
|
|
Prepaid expenses and other
|
|
|
175
|
|
|
|
32,871
|
|
|
|
1,698
|
|
|
|
|
|
|
|
34,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
333,577
|
|
|
|
6,131,424
|
|
|
|
2,542,068
|
|
|
|
|
|
|
|
9,007,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
|
|
|
547,382
|
|
|
|
25,062
|
|
|
|
|
|
|
|
572,444
|
|
Goodwill and other intangible assets
|
|
|
|
|
|
|
2,736,421
|
|
|
|
116,197
|
|
|
|
|
|
|
|
2,852,618
|
|
Other assets
|
|
|
11,638
|
|
|
|
116,654
|
|
|
|
723
|
|
|
|
|
|
|
|
129,015
|
|
Intercompany investments and advances
|
|
|
2,933,162
|
|
|
|
2,582,199
|
|
|
|
(1,986,429
|
)
|
|
|
(3,528,932
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
3,278,377
|
|
|
$
|
12,114,080
|
|
|
$
|
697,621
|
|
|
$
|
(3,528,932
|
)
|
|
$
|
12,561,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
|
|
|
$
|
7,519,605
|
|
|
$
|
136,264
|
|
|
$
|
|
|
|
$
|
7,655,869
|
|
Accrued expenses and other
|
|
|
(334,447
|
)
|
|
|
615,274
|
|
|
|
10,356
|
|
|
|
|
|
|
|
291,183
|
|
Current portion of long-term debt
|
|
|
|
|
|
|
358
|
|
|
|
952
|
|
|
|
|
|
|
|
1,310
|
|
Deferred income taxes
|
|
|
|
|
|
|
559,711
|
|
|
|
(1,276
|
)
|
|
|
|
|
|
|
558,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
(334,447
|
)
|
|
|
8,694,948
|
|
|
|
146,296
|
|
|
|
|
|
|
|
8,506,797
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net of current portion
|
|
|
897,007
|
|
|
|
716
|
|
|
|
287,616
|
|
|
|
|
|
|
|
1,185,339
|
|
Other liabilities
|
|
|
|
|
|
|
148,597
|
|
|
|
4,596
|
|
|
|
|
|
|
|
153,193
|
|
|
Total stockholders equity
|
|
|
2,715,817
|
|
|
|
3,269,819
|
|
|
|
259,113
|
|
|
|
(3,528,932
|
)
|
|
|
2,715,817
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders equity
|
|
$
|
3,278,377
|
|
|
$
|
12,114,080
|
|
|
$
|
697,621
|
|
|
$
|
(3,528,932
|
)
|
|
$
|
12,561,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMARY CONSOLIDATING BALANCE SHEETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2008
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
|
|
|
|
Consolidated
|
|
(in thousands)
|
|
Parent
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Total
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
719,570
|
|
|
$
|
100,623
|
|
|
$
|
57,921
|
|
|
$
|
|
|
|
$
|
878,114
|
|
Accounts receivable, net
|
|
|
1,276
|
|
|
|
1,280,346
|
|
|
|
2,198,645
|
|
|
|
|
|
|
|
3,480,267
|
|
Merchandise inventories
|
|
|
|
|
|
|
4,076,697
|
|
|
|
135,078
|
|
|
|
|
|
|
|
4,211,775
|
|
Prepaid expenses and other
|
|
|
47
|
|
|
|
53,418
|
|
|
|
2,449
|
|
|
|
|
|
|
|
55,914
|
|
Assets held for sale
|
|
|
|
|
|
|
43,691
|
|
|
|
|
|
|
|
|
|
|
|
43,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
720,893
|
|
|
|
5,554,775
|
|
|
|
2,394,093
|
|
|
|
|
|
|
|
8,669,761
|
|
|
Property and equipment, net
|
|
|
|
|
|
|
525,444
|
|
|
|
26,715
|
|
|
|
|
|
|
|
552,159
|
|
Goodwill and other intangible assets
|
|
|
|
|
|
|
2,738,998
|
|
|
|
136,368
|
|
|
|
|
|
|
|
2,875,366
|
|
Other assets
|
|
|
12,302
|
|
|
|
106,627
|
|
|
|
1,571
|
|
|
|
|
|
|
|
120,500
|
|
Intercompany investments and advances
|
|
|
2,540,391
|
|
|
|
3,433,945
|
|
|
|
(1,828,831
|
)
|
|
|
(4,145,505
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
3,273,586
|
|
|
$
|
12,359,789
|
|
|
$
|
729,916
|
|
|
$
|
(4,145,505
|
)
|
|
$
|
12,217,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
|
|
|
$
|
7,164,839
|
|
|
$
|
161,741
|
|
|
$
|
|
|
|
$
|
7,326,580
|
|
Accrued expenses and other
|
|
|
(333,344
|
)
|
|
|
593,403
|
|
|
|
10,764
|
|
|
|
|
|
|
|
270,823
|
|
Current portion of long-term debt
|
|
|
|
|
|
|
|
|
|
|
1,719
|
|
|
|
|
|
|
|
1,719
|
|
Deferred income taxes
|
|
|
|
|
|
|
551,984
|
|
|
|
(1,276
|
)
|
|
|
|
|
|
|
550,708
|
|
Liabilities held for sale
|
|
|
|
|
|
|
17,759
|
|
|
|
|
|
|
|
|
|
|
|
17,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
(333,344
|
)
|
|
|
8,327,985
|
|
|
|
172,948
|
|
|
|
|
|
|
|
8,167,589
|
|
|
Long-term debt, net of current portion
|
|
|
896,885
|
|
|
|
|
|
|
|
290,527
|
|
|
|
|
|
|
|
1,187,412
|
|
Other liabilities
|
|
|
|
|
|
|
147,052
|
|
|
|
5,688
|
|
|
|
|
|
|
|
152,740
|
|
|
Total stockholders equity
|
|
|
2,710,045
|
|
|
|
3,884,752
|
|
|
|
260,753
|
|
|
|
(4,145,505
|
)
|
|
|
2,710,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders equity
|
|
$
|
3,273,586
|
|
|
$
|
12,359,789
|
|
|
$
|
729,916
|
|
|
$
|
(4,145,505
|
)
|
|
$
|
12,217,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, 2008
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
|
|
|
|
Consolidated
|
|
(in thousands)
|
|
Parent
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Total
|
|
|
Operating revenue
|
|
$
|
|
|
|
$
|
16,517,298
|
|
|
$
|
363,780
|
|
|
$
|
|
|
|
$
|
16,881,078
|
|
Bulk deliveries to customer warehouses
|
|
|
|
|
|
|
457,299
|
|
|
|
|
|
|
|
|
|
|
|
457,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
|
|
|
|
16,974,597
|
|
|
|
363,780
|
|
|
|
|
|
|
|
17,338,377
|
|
Cost of goods sold
|
|
|
|
|
|
|
16,503,219
|
|
|
|
345,310
|
|
|
|
|
|
|
|
16,848,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
471,378
|
|
|
|
18,470
|
|
|
|
|
|
|
|
489,848
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution, selling and administrative
|
|
|
|
|
|
|
284,846
|
|
|
|
(12,820
|
)
|
|
|
|
|
|
|
272,026
|
|
Depreciation
|
|
|
|
|
|
|
14,349
|
|
|
|
704
|
|
|
|
|
|
|
|
15,053
|
|
Amortization
|
|
|
|
|
|
|
3,146
|
|
|
|
710
|
|
|
|
|
|
|
|
3,856
|
|
Facility consolidations, employee
severance
and other
|
|
|
|
|
|
|
1,029
|
|
|
|
|
|
|
|
|
|
|
|
1,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
|
|
|
168,008
|
|
|
|
29,876
|
|
|
|
|
|
|
|
197,884
|
|
Other loss
|
|
|
|
|
|
|
429
|
|
|
|
|
|
|
|
|
|
|
|
429
|
|
Interest expense (income), net
|
|
|
39,987
|
|
|
|
(42,829
|
)
|
|
|
17,025
|
|
|
|
|
|
|
|
14,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations before
income taxes and equity in earnings of
subsidiaries
|
|
|
(39,987
|
)
|
|
|
210,408
|
|
|
|
12,851
|
|
|
|
|
|
|
|
183,272
|
|
Income taxes
|
|
|
(13,995
|
)
|
|
|
80,049
|
|
|
|
4,689
|
|
|
|
|
|
|
|
70,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations
|
|
|
(25,992
|
)
|
|
|
130,359
|
|
|
|
8,162
|
|
|
|
|
|
|
|
112,529
|
|
Loss from discontinued operations
|
|
|
|
|
|
|
(1,473
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,473
|
)
|
Equity in earnings of subsidiaries
|
|
|
137,048
|
|
|
|
|
|
|
|
|
|
|
|
(137,048
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
111,056
|
|
|
$
|
128,886
|
|
|
$
|
8,162
|
|
|
$
|
(137,048
|
)
|
|
$
|
111,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, 2007
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
|
|
|
|
Consolidated
|
|
(in thousands)
|
|
Parent
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Total
|
|
|
Operating revenue
|
|
$
|
|
|
|
$
|
15,670,110
|
|
|
$
|
475,785
|
|
|
$
|
|
|
|
$
|
16,145,895
|
|
Bulk deliveries to customer warehouses
|
|
|
|
|
|
|
1,133,485
|
|
|
|
3
|
|
|
|
|
|
|
|
1,133,488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
|
|
|
|
16,803,595
|
|
|
|
475,788
|
|
|
|
|
|
|
|
17,279,383
|
|
Cost of goods sold
|
|
|
|
|
|
|
16,341,558
|
|
|
|
453,609
|
|
|
|
|
|
|
|
16,795,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
462,037
|
|
|
|
22,179
|
|
|
|
|
|
|
|
484,216
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution, selling and administrative
|
|
|
|
|
|
|
281,281
|
|
|
|
(10,511
|
)
|
|
|
|
|
|
|
270,770
|
|
Depreciation
|
|
|
|
|
|
|
15,346
|
|
|
|
723
|
|
|
|
|
|
|
|
16,069
|
|
Amortization
|
|
|
|
|
|
|
3,661
|
|
|
|
896
|
|
|
|
|
|
|
|
4,557
|
|
Facility consolidations, employee severance
and other
|
|
|
|
|
|
|
177
|
|
|
|
|
|
|
|
|
|
|
|
177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
|
|
|
161,572
|
|
|
|
31,071
|
|
|
|
|
|
|
|
192,643
|
|
Other loss (income)
|
|
|
|
|
|
|
744
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
737
|
|
Interest expense (income), net
|
|
|
34,789
|
|
|
|
(51,496
|
)
|
|
|
33,121
|
|
|
|
|
|
|
|
16,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations before
income taxes and equity in earnings of
subsidiaries
|
|
|
(34,789
|
)
|
|
|
212,324
|
|
|
|
(2,043
|
)
|
|
|
|
|
|
|
175,492
|
|
Income taxes
|
|
|
(12,176
|
)
|
|
|
79,892
|
|
|
|
(633
|
)
|
|
|
|
|
|
|
67,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing
operations
|
|
|
(22,613
|
)
|
|
|
132,432
|
|
|
|
(1,410
|
)
|
|
|
|
|
|
|
108,409
|
|
Income from discontinued operations
|
|
|
|
|
|
|
1,411
|
|
|
|
|
|
|
|
|
|
|
|
1,411
|
|
Equity in earnings of subsidiaries
|
|
|
132,433
|
|
|
|
|
|
|
|
|
|
|
|
(132,433
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
109,820
|
|
|
$
|
133,843
|
|
|
$
|
(1,410
|
)
|
|
$
|
(132,433
|
)
|
|
$
|
109,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, 2008
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
|
|
|
|
Consolidated
|
|
(in thousands)
|
|
Parent
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Total
|
|
|
Net income
|
|
$
|
111,056
|
|
|
$
|
128,886
|
|
|
$
|
8,162
|
|
|
$
|
(137,048
|
)
|
|
$
|
111,056
|
|
Loss from discontinued operations
|
|
|
|
|
|
|
1,473
|
|
|
|
|
|
|
|
|
|
|
|
1,473
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
111,056
|
|
|
|
130,359
|
|
|
|
8,162
|
|
|
|
(137,048
|
)
|
|
|
112,529
|
|
Adjustments to reconcile income from continuing operations to net cash used in
operating activities
|
|
|
(137,011
|
)
|
|
|
(236,694
|
)
|
|
|
(179,987
|
)
|
|
|
137,048
|
|
|
|
(416,644
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities continuing operations
|
|
|
(25,955
|
)
|
|
|
(106,335
|
)
|
|
|
(171,825
|
)
|
|
|
|
|
|
|
(304,115
|
)
|
Net cash used in operating activities discontinued operations
|
|
|
|
|
|
|
(251
|
)
|
|
|
|
|
|
|
|
|
|
|
(251
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(25,955
|
)
|
|
|
(106,586
|
)
|
|
|
(171,825
|
)
|
|
|
|
|
|
|
(304,366
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
|
|
(38,325
|
)
|
|
|
(4,019
|
)
|
|
|
|
|
|
|
(42,344
|
)
|
Proceeds from the sale of PMSI
|
|
|
|
|
|
|
14,936
|
|
|
|
|
|
|
|
|
|
|
|
14,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities continuing operations
|
|
|
|
|
|
|
(23,389
|
)
|
|
|
(4,019
|
)
|
|
|
|
|
|
|
(27,408
|
)
|
Net cash used in investing activities discontinued operations
|
|
|
|
|
|
|
(1,138
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,138
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
|
|
|
|
(24,527
|
)
|
|
|
(4,019
|
)
|
|
|
|
|
|
|
(28,546
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net borrowings under revolving and securitization credit facilities
|
|
|
|
|
|
|
|
|
|
|
27,519
|
|
|
|
|
|
|
|
27,519
|
|
Deferred financing costs and other
|
|
|
|
|
|
|
835
|
|
|
|
(47
|
)
|
|
|
|
|
|
|
788
|
|
Purchases of common stock
|
|
|
(88,352
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(88,352
|
)
|
Exercise of stock options, including excess tax benefit
|
|
|
1,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,331
|
|
Cash dividends on common stock
|
|
|
(15,571
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,571
|
)
|
Intercompany financing and advances
|
|
|
(258,293
|
)
|
|
|
116,545
|
|
|
|
141,748
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities continuing operations
|
|
|
(360,885
|
)
|
|
|
117,380
|
|
|
|
169,220
|
|
|
|
|
|
|
|
(74,285
|
)
|
Net cash used in financing activities discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(360,885
|
)
|
|
|
117,380
|
|
|
|
169,220
|
|
|
|
|
|
|
|
(74,285
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in cash and cash equivalents
|
|
|
(386,840
|
)
|
|
|
(13,733
|
)
|
|
|
(6,624
|
)
|
|
|
|
|
|
|
(407,197
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
719,570
|
|
|
|
100,623
|
|
|
|
57,921
|
|
|
|
|
|
|
|
878,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
332,730
|
|
|
$
|
86,890
|
|
|
$
|
51,297
|
|
|
$
|
|
|
|
$
|
470,917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
AMERISOURCEBERGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, 2007
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
|
|
|
|
Consolidated
|
|
(in thousands)
|
|
Parent
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
109,820
|
|
|
$
|
133,843
|
|
|
$
|
(1,410
|
)
|
|
$
|
(132,433
|
)
|
|
$
|
109,820
|
|
Income from discontinued operations
|
|
|
|
|
|
|
(1,411
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,411
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations
|
|
|
109,820
|
|
|
|
132,432
|
|
|
|
(1,410
|
)
|
|
|
(132,433
|
)
|
|
|
108,409
|
|
Adjustments to reconcile income (loss) from
continuing operations
to net cash (used in)
provided by operating
activities
|
|
|
(130,750
|
)
|
|
|
(132,422
|
)
|
|
|
(83,163
|
)
|
|
|
132,433
|
|
|
|
(213,902
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
(used in) provided by operating activities
continuing operations
|
|
|
(20,930
|
)
|
|
|
10
|
|
|
|
(84,573
|
)
|
|
|
|
|
|
|
(105,493
|
)
|
Net cash provided by operating activities
discontinued operations
|
|
|
|
|
|
|
4,463
|
|
|
|
|
|
|
|
|
|
|
|
4,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities
|
|
|
(20,930
|
)
|
|
|
4,473
|
|
|
|
(84,573
|
)
|
|
|
|
|
|
|
(101,030
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
|
|
(24,750
|
)
|
|
|
(1,445
|
)
|
|
|
|
|
|
|
(26,195
|
)
|
Cost of acquired companies, net of cash acquired
|
|
|
|
|
|
|
(162,506
|
)
|
|
|
|
|
|
|
|
|
|
|
(162,506
|
)
|
Proceeds from sales of property and equipment
|
|
|
|
|
|
|
10
|
|
|
|
10
|
|
|
|
|
|
|
|
20
|
|
Net sales of investment securities available-for-sale
|
|
|
467,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
467,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
provided by (used in) investing activities
continuing operations
|
|
|
467,419
|
|
|
|
(187,246
|
)
|
|
|
(1,435
|
)
|
|
|
|
|
|
|
278,738
|
|
Net cash used in investing activities discontinued
operations
|
|
|
|
|
|
|
(736
|
)
|
|
|
|
|
|
|
|
|
|
|
(736
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
467,419
|
|
|
|
(187,982
|
)
|
|
|
(1,435
|
)
|
|
|
|
|
|
|
278,002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net borrowings under revolving and securitization
credit facilities
|
|
|
|
|
|
|
|
|
|
|
26,806
|
|
|
|
|
|
|
|
26,806
|
|
Deferred financing costs and other
|
|
|
|
|
|
|
(131
|
)
|
|
|
|
|
|
|
|
|
|
|
(131
|
)
|
Purchases of common stock
|
|
|
(311,442
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(311,442
|
)
|
Exercise of stock options, including excess tax
benefit
|
|
|
4,249
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,249
|
|
Cash dividends on common stock
|
|
|
(12,498
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,498
|
)
|
Intercompany financing and advances
|
|
|
(294,727
|
)
|
|
|
225,237
|
|
|
|
69,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
(used in) provided by financing activities
continuing operations
|
|
|
(614,418
|
)
|
|
|
225,106
|
|
|
|
96,296
|
|
|
|
|
|
|
|
(293,016
|
)
|
Net cash used in financing activities discontinued
operations
|
|
|
|
|
|
|
(21
|
)
|
|
|
|
|
|
|
|
|
|
|
(21
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(614,418
|
)
|
|
|
225,085
|
|
|
|
96,296
|
|
|
|
|
|
|
|
(293,037
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in cash and cash equivalents
|
|
|
(167,929
|
)
|
|
|
41,576
|
|
|
|
10,288
|
|
|
|
|
|
|
|
(116,065
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
500,246
|
|
|
|
58,259
|
|
|
|
81,699
|
|
|
|
|
|
|
|
640,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
332,317
|
|
|
$
|
99,835
|
|
|
$
|
91,987
|
|
|
$
|
|
|
|
$
|
524,139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
Overview
The following discussion should be read in conjunction with the Consolidated Financial
Statements and notes thereto contained herein and in conjunction with the financial statements and
notes thereto included in AmerisourceBergen Corporations (the Companys) Annual Report on Form
10-K for the fiscal year ended September 30, 2008.
The Company is a pharmaceutical services company providing drug distribution and related
healthcare services and solutions to its pharmacy, physician, and manufacturer customers, which are
based primarily in the United States and Canada. Substantially all of the Companys operations are
located in the United States and Canada. The Company also has a pharmaceutical packaging operation
in the United Kingdom.
The Company has three operating segments, which include the operations of AmerisourceBergen
Drug Corporation (ABDC), the AmerisourceBergen Specialty Group (ABSG), and the
AmerisourceBergen Packaging Group (ABPG). The Company has aggregated the operating results of
ABDC, ABSG, and ABPG into one reportable segment, Pharmaceutical Distribution.
Servicing both healthcare providers and pharmaceutical manufacturers in the pharmaceutical
supply channel, the Pharmaceutical Distribution segments operations provide drug distribution and
related services designed to reduce healthcare costs and improve patient outcomes.
ABDC distributes a comprehensive offering of brand-name and generic pharmaceuticals,
over-the-counter healthcare products, home healthcare supplies and equipment, and related services
to a wide variety of healthcare providers, including acute care hospitals and health systems,
independent and chain retail pharmacies, mail order pharmacies, medical clinics, long-term care and
other alternate site pharmacies, and other customers. ABDC also provides pharmacy management,
staffing and other consulting services; scalable automated pharmacy dispensing equipment,
medication and supply dispensing cabinets; and supply management software to a variety of retail
and institutional healthcare providers.
ABSG, through a number of individual operating businesses, provides pharmaceutical
distribution and other services primarily to physicians who specialize in a variety of disease
states, including principally oncology, and to other healthcare providers, including dialysis
clinics. ABSG also distributes vaccines, other injectables, plasma, and other blood products. In
addition, through its specialty services businesses, ABSG provides drug commercialization services,
third party logistics, group purchasing, and other services for biotech and other pharmaceutical
manufacturers, as well as reimbursement consulting, data analytics, practice management, and
physician education.
ABPG consists of American Health Packaging, Anderson Packaging (Anderson), and Brecon
Pharmaceuticals Limited (Brecon). American Health Packaging delivers unit dose, punch card,
unit-of-use, and other packaging solutions to institutional and retail healthcare providers.
American Health Packagings largest customer is ABDC, and as a result, its operations are closely
aligned with the operations of ABDC. Anderson is a leading provider of contract packaging services
for pharmaceutical manufacturers. Brecon is a United Kingdom-based provider of contract packaging
and clinical trials materials services for pharmaceutical manufacturers.
Divestiture
In October 2008, the Company completed the divestiture of its former workers compensation
business, PMSI. In accordance with the Financial Accounting Standards Boards (FASBs) Statement
of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, the Company classified PMSIs assets and liabilities as held for sale in the
consolidated balance sheet as of September 30, 2008 and classified PMSIs operating results and
cash flows as discontinued in the consolidated financial statements for all periods presented.
The Company sold PMSI for approximately $34 million, which is subject to a final working
capital adjustment, and which includes a $19 million subordinated note payable due from PMSI on the
fifth anniversary of the closing date (the maturity date), of which $4 million may be payable in
October 2010, if PMSI achieves certain revenue targets with respect to its largest customer.
Interest, which accrues at an annual rate of 7%, will be payable in cash on a quarterly basis, if
PMSI achieves a defined minimum fixed charge coverage ratio, or will be compounded semi-annually
and paid at maturity. Additionally, if PMSIs annual net revenue exceeds certain thresholds through
December 2011, the Company may be entitled to additional payments of up to $10 million under the
subordinated note payable due from PMSI on the maturity date of the note.
19
ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
(Continued)
Results of Operations
AmerisourceBergen Corporation
Summary Financial Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
|
|
(dollars in thousands)
|
|
2008
|
|
|
2007
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
17,338,377
|
|
|
$
|
17,279,383
|
|
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceutical Distribution gross profit
|
|
$
|
489,848
|
|
|
$
|
482,631
|
|
|
|
1
|
%
|
Gain on antitrust litigation settlements
|
|
|
|
|
|
|
1,585
|
|
|
|
N/M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross profit
|
|
$
|
489,848
|
|
|
$
|
484,216
|
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceutical Distribution operating income
|
|
$
|
198,913
|
|
|
$
|
191,235
|
|
|
|
4
|
%
|
Facility consolidations, employee severance and other
|
|
|
(1,029
|
)
|
|
|
(177
|
)
|
|
|
N/M
|
|
Gain on antitrust litigation settlements
|
|
|
|
|
|
|
1,585
|
|
|
|
N/M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating income
|
|
$
|
197,884
|
|
|
$
|
192,643
|
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentages of total revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceutical Distribution
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
2.83
|
%
|
|
|
2.79
|
%
|
|
|
|
|
Operating expenses
|
|
|
1.68
|
%
|
|
|
1.69
|
%
|
|
|
|
|
Operating income
|
|
|
1.15
|
%
|
|
|
1.11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AmerisourceBergen Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
2.83
|
%
|
|
|
2.80
|
%
|
|
|
|
|
Operating expenses
|
|
|
1.68
|
%
|
|
|
1.69
|
%
|
|
|
|
|
Operating income
|
|
|
1.14
|
%
|
|
|
1.11
|
%
|
|
|
|
|
20
ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
(Continued)
Operating Results
Total revenue, including bulk deliveries, was $17.3 billion in the quarters ended December 31,
2008 and 2007. Total revenue growth was 0.3% from the prior year quarter as ABSGs total revenue
growth of 5% was substantially offset by a 0.5% decline in ABDCs total revenue. During the
quarter ended December 31, 2008, 69% of total revenue was from sales to institutional customers and
31% was from sales to retail customers; this compared to a customer mix in the prior year quarter
of 64% institutional and 36% retail. In comparison with the prior year quarter results, sales to
institutional customers increased 8% primarily due to the strong growth of our largest customer.
Sales to retail customers decreased 13% primarily due to the July 1, 2008 loss of certain business
(approximately $3.0 billion on an annualized basis) with a national retail drug chain customer.
Excluding the loss of this business, total revenue in the quarter ended December 31, 2008 would
have increased by 4.8% from the prior year quarter.
Bulk deliveries of $457.3 million in the quarter ended December 31, 2008 decreased from $1.1
billion in the prior year quarter primarily due to the prior fiscal year transition of a
significant amount of business previously conducted on a bulk delivery basis with our largest
customer to an operating revenue basis. Due to the insignificant service fees generated from bulk
deliveries, fluctuations in volume have no significant impact on operating margins. However,
revenue from bulk deliveries has a positive impact on our cash flows due to favorable timing
between the customer payments to us and payments by us to our suppliers.
ABDCs total revenue decreased by 0.5% from the prior year quarter primarily due to the loss
of certain business with a large retail drug chain customer, as mentioned above, offset, in part,
by an increase in sales to certain of its large institutional customers.
ABSGs total revenue of $3.8 billion in the quarter ended December 31, 2008 increased 5% from
the prior year quarter primarily due to the good growth broadly across its distribution and
services businesses, offset, in part, by declining anemia drug sales (see paragraph below).
Additionally, the prior year quarter benefited from one month of sales to a large oncology drug
customer, which was acquired by a competitor in October 2007. The majority of ABSGs revenue is
generated from the distribution of pharmaceuticals to physicians who specialize in a variety of
disease states, especially oncology. ABSG also distributes vaccines, plasma, and other blood
products. ABSGs business may be adversely impacted in the future by changes in medical guidelines
and the Medicare reimbursement rates for certain pharmaceuticals, including oncology drugs
administered by physicians and anemia drugs. Since ABSG provides a number of services to or
through physicians, any changes to this service channel could result in slower or reduced growth in
revenues.
Revenue related to the distribution of anemia-related products, which represented
approximately 5.5% of total revenue in the quarter ended December 31, 2008, decreased approximately
11% from the prior year quarter. The decline in sales of anemia-related products has been most
pronounced in the use of these products for cancer treatment. Sales of oncology anemia-related
products represented approximately 2% of total revenue in the quarter ended December 31, 2008 and
decreased approximately 27% from the prior year quarter. Several developments have contributed to
the decline in sales of anemia drugs, including expanded warning and other product safety labeling
requirements, more restrictive federal policies governing Medicare reimbursement for the use of
these drugs to treat oncology patients with kidney failure and dialysis, and changes in regulatory
and clinical medical guidelines for recommended dosage and use. As a result, we expect
oncology-related anemia drug sales to continue to decline further in fiscal 2009 from our fiscal
2008 total. In addition, the U.S. Food and Drug Administration (FDA) is continuing to review
clinical study data concerning the possible risks associated with erythropoiesis stimulating
agents. Also, on July 30, 2008, the Centers for Medicare & Medicaid Services (CMS) announced it
is considering a review of national Medicare coverage policy for these drugs for patients who have
cancer or pre-dialysis chronic kidney disease. The FDA or CMS may take additional action regarding
the use, safety labeling and/or Medicare coverage of these drugs in the future. Further changes in
medical guidelines for anemia drugs may impact the availability and extent of reimbursement for
these drugs from third party payors, including federal and state governments and private insurance
plans. Our future revenue growth rate and/or profitability may continue to be impacted by any
future reductions in reimbursement for anemia drugs or changes that limit the dosage and or use of
anemia drugs.
21
ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
(Continued)
We continue to expect that our total revenue growth in fiscal 2009 will be between 1% and 3%.
This expected range reflects market growth between 1% and 2% as estimated by industry data firm IMS
Healthcare, Inc. (IMS), the expected strong growth of certain of our large institutional
customers, primarily within ABDC, offset in part by the loss of certain business with a national
retail chain customer to a competitor, effective July 1, 2008. Sales to this chain customer
approximated $3.0 billion on an annualized basis. Our expected growth largely reflects U.S.
pharmaceutical industry conditions, including increases in prescription drug utilization, the
introduction of new products, and higher pharmaceutical prices, offset, in part, by the increased
use of lower-priced generics. Our growth has also been impacted by industry competition and
changes in customer mix. Industry sales in the United States, as estimated by IMS, are expected to
grow between 1% and 2% in 2009 and between 3% and 6% per year during the five-year period ending
2012. IMS also indicated that certain sectors of the market, such as biotechnology and other
specialty and generic pharmaceuticals would grow faster than the overall market. Our future
revenue growth will continue to be affected by various factors such as: competition within the
industry, customer consolidation, changes in pharmaceutical manufacturer pricing and distribution
policies and practices, increased downward pressure on reimbursement rates, changes in Federal
government rules and regulations, industry growth trends, such as the likely increase in the number
of generic drugs that will be available over the next few years as a result of the expiration of
certain drug patents held by brand manufacturers, and general economic conditions.
Gross profit of $489.8 million in the quarter ended December 31, 2008 increased 1% from the
prior year quarter. As a percentage of total revenue, gross profit in the quarter ended December
31, 2008 was 2.83%, an increase of 3 basis points from the prior year quarter. These increases
were primarily due the strong growth and increased profitability of our generic programs; increased
contributions from our fee-for-service agreements, including $10.2 million of fees relating to
prior period sales due to the execution of new agreements in the current quarter; strong
manufacturer price increases; and good growth from certain of ABSGs service businesses; all of
which were partially offset by ABSGs $12.7 million loss on its influenza vaccine program, which
included a $15.5 million write-down of excess influenza vaccine inventory. Prior years gross
profit also benefited from a gain of $10.0 million relating to a favorable litigation settlement
with a major competitor. Additionally, in the prior year quarter, we recognized a gain of $1.6
million from antitrust litigation settlements with pharmaceutical manufacturers. This gain, which
was excluded from the determination of Pharmaceutical Distribution segments gross profit, was
recorded as reduction to cost of goods sold.
Our cost of goods sold for interim periods includes a last-in, first-out (LIFO) provision
that is based on our estimated annual LIFO provision. We recorded a LIFO charge of $5.0 million
and $3.1 million in the quarters ended December 31, 2008 and 2007, respectively. The annual LIFO
provision is affected by changes in inventory quantities, product mix, and manufacturer pricing
practices, which may be impacted by market and other external influences.
Operating expenses of $292.0 million, which include the below facility consolidations,
employee severance and other charges of $1.0 million, in the quarter ended December 31, 2008
increased $0.4 million from the prior year quarter. As a percentage of total revenue, operating
expenses declined to 1.68% from 1.69% in the prior year quarter, which was primarily due to reduced
ABDC warehouse operating costs from continuing productivity improvements and due to our streamlined
organizational structure within ABDC and ABSG, as a result of our cE2 initiative described below.
The following table illustrates the charges incurred relating to facility consolidations,
employee severance and other,
(which are excluded from operating expenses of the Pharmaceutical Distribution
segment),
for the quarters ended December 31, 2008 and 2007 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2007
|
|
Facility consolidations and employee severance
|
|
$
|
1,029
|
|
|
$
|
(758
|
)
|
Costs related to business divestitures
|
|
|
|
|
|
|
935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total facility consolidations, employee severance and other
|
|
$
|
1,029
|
|
|
$
|
177
|
|
|
|
|
|
|
|
|
22
ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
(Continued)
In fiscal 2008, we announced a more streamlined organizational structure and introduced an
initiative (cE2) designed to drive increased customer efficiency and cost effectiveness. In
connection with these efforts, we have reduced various operating costs and terminated certain
positions. We have incurred the majority of our employee severance costs related to cE2 through
December 31, 2008. During the quarter ended December 31, 2008, we terminated 122 employees and
incurred $1.0 million of employee severance costs. During the prior year quarter, we reversed $0.9
million of employee severance charges previously estimated and recorded. Costs related to business
divestitures in the prior year quarter related to the sale of PMSI.
We paid a total of $3.6 million and $0.4 million for employee severance, lease cancellation
and other costs during the quarters ended December 31, 2008 and 2007, respectively. Most employees
receive their severance benefits over a period, generally not in excess of 12 months, while others
may receive a lump-sum payment.
Operating income of $197.9 million in the quarter ended December 31, 2008 increased 3% from
the prior year quarter. As a percentage of total revenue, operating income in the quarter ended
December 31, 2008 increased 3 basis points from the prior year quarter. These increases were due
to the improvement in our gross profit as operating expenses were relatively flat in comparison to
the prior year quarter. The costs of facility consolidations, employee severance and other
decreased operating income by $1.0 million in the quarter ended December 31, 2008 and lowered
operating income as a percentage of total revenue by 1 basis point. The gain on antitrust
litigation settlements, less the costs of facility consolidations, employee severance and other,
contributed $1.4 million to operating income in the prior year quarter and contributed 1 basis
point to operating income as a percentage of total revenue.
Interest expense, interest income, and their respective weighted-average interest rates in the
quarters ended December 31, 2008 and 2007 were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
Weighted-Average
|
|
|
|
|
|
|
Weighted-Average
|
|
|
|
Amount
|
|
|
Interest Rate
|
|
|
Amount
|
|
|
Interest Rate
|
|
Interest expense
|
|
$
|
16,363
|
|
|
|
5.30
|
%
|
|
$
|
20,235
|
|
|
|
5.73
|
%
|
Interest income
|
|
|
(2,180
|
)
|
|
|
2.27
|
%
|
|
|
(3,821
|
)
|
|
|
4.45
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
$
|
14,183
|
|
|
|
|
|
|
$
|
16,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense decreased from the prior year quarter due to a decrease of $82.8 million in
average borrowings and a decrease in the weighted-average variable interest rate to 3.73% from
5.63% in the prior year quarter. Interest income decreased from the prior year quarter primarily
due to a decline in the weighted-average interest rate. Our net interest expense in future periods
may vary significantly depending upon changes in net borrowings, interest rates and strategic
decisions made by us to deploy our invested cash and short-term investments.
Income tax expense reflects an effective income tax rate of 38.6%, versus 38.2% in the prior
year quarter. We expect that our effective tax rate in fiscal 2009 will approximate our prior
fiscal year tax rate of 38.4%.
Income from continuing operations of $112.5 million in the quarter ended December 31, 2008
increased 4% from the prior year quarter due to the increase in operating income and the decrease
in interest expense. Diluted earnings per share from continuing operations of $0.73 in the quarter
ended December 31, 2008 increased 12% from $0.65 per share in the prior year quarter. The
difference between diluted earnings per share growth and the increase in income from continuing
operations was primarily due to the 7% reduction in weighted average common shares outstanding
resulting from purchases of our common stock in connection with our stock repurchase program (see
Liquidity and Capital Resources), net of the impact of stock option exercises.
(Loss) income from discontinued operations, net of income taxes, for the quarters ended
December 31, 2008 and 2007 related to the PMSI business, which was sold in October 2008.
Accordingly, PMSIs results of operations have been classified as discontinued for the current and
prior periods presented.
23
ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
(Continued)
Liquidity and Capital Resources
The following table illustrates the Companys debt structure at December 31, 2008, including
availability under revolving credit facilities and the receivables securitization facility (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
|
Additional
|
|
|
|
Balance
|
|
|
Availability
|
|
|
|
|
|
|
|
|
|
|
Fixed-Rate Debt:
|
|
|
|
|
|
|
|
|
$400,000, 5 5/8% senior notes due 2012
|
|
$
|
398,841
|
|
|
$
|
|
|
$500,000, 5 7/8% senior notes due 2015
|
|
|
498,166
|
|
|
|
|
|
Other
|
|
|
1,677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fixed-rate debt
|
|
|
898,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable-Rate Debt:
|
|
|
|
|
|
|
|
|
Blanco revolving credit facility due 2009
|
|
|
55,000
|
|
|
|
|
|
Multi-currency revolving credit facility due 2011
|
|
|
232,385
|
|
|
|
450,505
|
|
Receivables securitization facility due 2009
|
|
|
|
|
|
|
975,000
|
|
Other
|
|
|
580
|
|
|
|
920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total variable-rate debt
|
|
|
287,965
|
|
|
|
1,426,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt, including current portion
|
|
$
|
1,186,649
|
|
|
$
|
1,426,425
|
|
|
|
|
|
|
|
|
The Companys aggregate availability under its revolving credit facilities and its receivables
securitization facility provides sufficient sources of capital to fund the Companys working
capital requirements.
The Company has a $695 million five-year multi-currency senior unsecured revolving credit
facility (the Multi-Currency Revolving Credit Facility) with a syndicate of lenders. (This
amount reflects the reduction of $55 million in availability under the facility as a result of the
bankruptcy of Lehman Commercial Paper, Inc. in September 2008.) Interest on borrowings under the
Multi-Currency Revolving Credit Facility accrues at specified rates based on the Companys debt
rating and ranges from 19 basis points to 60 basis points over LIBOR/EURIBOR/Bankers Acceptance
Stamping Fee, as applicable (40 basis points over LIBOR/EURIBOR/Bankers Acceptance Stamping Fee at
December 31, 2008). Additionally, interest on borrowings denominated in Canadian dollars may
accrue at the greater of the Canadian prime rate or the CDOR rate. The Company pays quarterly
facility fees to maintain the availability under the Multi-Currency Revolving Credit Facility at
specified rates based on the Companys debt rating, ranging from 6 basis points to 15 basis points
of the total commitment (10 basis points at December 31, 2008). The Company may choose to repay or
reduce its commitments under the Multi-Currency Revolving Credit Facility at any time. The
Multi-Currency Revolving Credit Facility contains covenants, including compliance with a financial
leverage ratio test, as well as others that impose limitations on, among other things, indebtedness
of excluded subsidiaries and asset sales.
The Company has a $975 million receivables securitization facility (Receivables
Securitization Facility), of which $181.2 million expires in June 2009 and $793.8 million expires
in November 2009. The Company has available to it an accordion feature whereby the commitment may
be increased, subject to lender approval, for seasonal needs during the December and March
quarters. Effective January 2, 2009, the Company increased its availability by $152 million under
the accordion feature. Interest rates are based on prevailing market rates for short-term
commercial paper plus a program fee, and vary based on the Companys debt ratings. The program fee
and the commitment fee, on average, were 53 basis points and 20 basis points, respectively, at
December 31, 2008. At December 31, 2008, there were no
borrowings outstanding under the Receivables
Securitization Facility.
The Blanco revolving credit facility (the Blanco Credit Facility) is not classified in the
current portion of long-term debt on the accompanying consolidated balance sheet at December 31,
2008 because the Company has the ability and intent to refinance it on a long-term basis.
Borrowings under the Blanco Credit Facility are guaranteed by the Company. Interest on borrowings
under the Blanco Credit Facility accrues at specific rates based on the Companys debt rating (55
basis points over LIBOR at December 31, 2008). Additionally, the Company pays quarterly facility
fees on the full amount of the facility to maintain the availability under the Blanco Credit
Facility at specific rates based on the Companys debt rating (10 basis points at December 31,
2008).
24
ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
(Continued)
The Companys operating results have generated cash flow, which, together with availability
under its debt agreements and credit terms from suppliers, has provided sufficient capital
resources to finance working capital and cash operating requirements, and to fund capital
expenditures, acquisitions, repayment of debt, the payment of interest on outstanding debt,
dividends, and repurchases of shares of the Companys common stock.
Recent deterioration in general economic conditions could adversely affect the amount of
prescriptions that are filled and the amount of pharmaceutical products purchased by consumers and,
therefore, reduce purchases by our customers. In addition, volatility in financial markets may also negatively impact our customers ability to obtain credit
to finance their businesses on acceptable terms. Reduced purchases by our customers or changes in
the ability of our customers to remit payments to us as required
could adversely affect our revenue growth, our profitablity, and our
cash flow from operations.
Recently, the credit markets have been experiencing volatility and disruption. In September
2008, one of our lenders under the Multi-Currency Revolving Credit Facility filed for bankruptcy,
and as a result, our availability under this facility was reduced by $55 million to $695 million.
We continue to monitor the creditworthiness of our lenders and while we do not currently anticipate
the failure of any additional lenders under our revolving credit facilities and/or under the
liquidity facilities of our receivables securitization facility, the failure of any further lenders
could have an adverse effect on our ability to finance our business operations.
Additionally, our receivables securitization facility expires in calendar 2009. While we did
not have any borrowings outstanding under this facility as of December 31, 2008, we have
historically utilized amounts available to us under this facility throughout the year to meet our
business needs. In fiscal 2009, we will seek to renew this facility at available market rates,
which we believe will be higher than the interest rates currently available to us. While we
believe we will be able to renew this facility, there can be no assurance that we will be able to
do so.
The Companys primary ongoing cash requirements will be to finance working capital, fund the
payment of interest on debt, fund repurchases of its common stock, finance acquisitions, and fund
capital expenditures and routine growth and expansion through new business opportunities. In
November 2008, the Companys board of directors approved a new program allowing the Company to
purchase up to $500 million of its outstanding shares of common stock, subject to market
conditions. The Company expects to purchase approximately $350 million of its common stock in
fiscal 2009. During the quarter ended December 31, 2008, the Company purchased $88.4 million of
its common stock, of which $70.2 million was purchased under the above-mentioned $500 million share
repurchase program and $18.1 million was purchased to close out the May 2007 share repurchase
program. As of December 31, 2008, the Company had approximately $429.8 million of availability
remaining on its $500 million share repurchase program. Future cash flows from operations and
borrowings are expected to be sufficient to fund the Companys ongoing cash requirements.
The Companys most significant market risk is the effect of fluctuations in interest rates.
The Company manages interest rate risk by using a combination of fixed-rate and variable-rate debt.
The Company also has market risk exposure relating to its cash and cash equivalents and its
short-term investment securities available-for-sale. At December 31, 2008, the Company had $288.0
million of variable-rate debt. The amount of variable-rate debt fluctuates during the year based
on the Companys working capital requirements. The Company periodically evaluates various
financial instruments that could mitigate a portion of its exposure to variable interest rates.
However, there are no assurances that such instruments will be available on terms acceptable to the
Company. There were no such financial instruments in effect at December 31, 2008.
The Company had $470.9 million in cash and cash equivalents at December 31, 2008. The
unfavorable impact of a hypothetical decrease in interest rates on cash and cash equivalents would
be partially offset by the favorable impact of such a decrease on variable-rate debt. For every
$100 million of cash invested that is in excess of variable-rate debt, a 50 basis point decrease in
interest rates would increase the Companys annual net interest expense by $0.5 million.
The
Company is exposed to foreign currency and exchange rate risk from
its non-U.S. operations.
The Companys largest exposure to foreign exchange rates exists primarily with the Canadian
Dollar. The Company may utilize foreign currency denominated forward contracts to hedge against
changes in foreign exchange rates. Such contracts generally have durations of less than one year.
The Company had no foreign currency denominated forward contracts at December 31, 2008. The
Company may use derivative instruments to hedge its foreign currency exposure and not for
speculative or trading purposes.
25
ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
(Continued)
Following is a summary of the Companys contractual obligations for future principal and
interest payments on its debt, minimum rental payments on its noncancelable operating leases and
minimum payments on its other commitments at December 31, 2008 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
|
|
|
|
|
|
Within 1
|
|
|
1-3
|
|
|
4-5
|
|
|
After 5
|
|
|
|
Total
|
|
|
year
|
|
|
years
|
|
|
years
|
|
|
years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt, including interest payments
|
|
$
|
1,490,062
|
|
|
$
|
109,994
|
|
|
$
|
340,068
|
|
|
$
|
481,250
|
|
|
$
|
558,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
258,258
|
|
|
|
59,601
|
|
|
|
87,870
|
|
|
|
40,138
|
|
|
|
70,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other commitments
|
|
|
464,782
|
|
|
|
46,788
|
|
|
|
125,789
|
|
|
|
161,867
|
|
|
|
130,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,213,102
|
|
|
$
|
216,383
|
|
|
$
|
553,727
|
|
|
$
|
683,255
|
|
|
$
|
759,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The $55 million Blanco Credit Facility, which expires in April 2009, is included in the
Within 1 year column in the above repayment table. However, this borrowing is not classified in
the current portion of long-term debt on the consolidated balance sheet at December 31, 2008
because the Company has the ability and intent to refinance it on a long-term basis.
The Company has commitments to purchase product from influenza vaccine manufacturers through
June 30, 2015. The Company is required to purchase annual doses at prices that the Company
believes will represent market prices. The Company currently estimates its remaining purchase
commitment under these agreements, as amended, will be approximately $327.0 million as of December
31, 2008. These influenza vaccine commitments are included in Other commitments in the above
table.
The Company outsources a significant portion of its corporate and ABDC information technology
activities to IBM Global Services. The remaining commitment under its ten-year outsourcing
arrangement, which expires in June 2015, is approximately $110.7 million and is included in Other
commitments in the above table.
During the quarter ended December 31, 2008, the Companys operating activities used $304.4
million of cash in comparison to cash used of $101.0 million in the prior year quarter. Cash used
in operations during the quarter ended December 31, 2008 was principally the result of an increase
in merchandise inventories of $768.9 million and an increase in accounts receivable of $80.1
million, offset, in part, by an increase in accounts payable, accrued expenses and income taxes of
$366.6 million, income from continuing operations of $112.5 million and non-cash items of $47.9
million. Consistent with prior years, we have increased our average number of inventory days on
hand by two to three days in our December quarter in anticipation of manufacturer plant closings
during the holiday season and due to increased sales expectations. The average number of inventory
days on hand decreased by one-half day in comparison to the prior year quarter. Although accounts
receivable increased slightly from September 30, 2008 due to a significant increase in December
monthly sales compared to September monthly sales, the average number of days sales outstanding
during the quarter ended December 31, 2008 decreased by more than one-half day to 18.3 days from
18.9 days in the prior year quarter. The decline in ABDCs days sales outstanding was greater than
the decline noted above primarily due to changes in customer mix. We continue to monitor the
financial health of our customers very closely due to the current economic conditions. The
increase in accounts payable, accrued expenses and income taxes was primarily driven by the
increase in merchandise inventories and was offset, in part, by the reversal of favorable timing of
payments due to our suppliers at September 30, 2008. Operating cash uses during the quarter ended
December 31, 2008 included $1.0 million in interest payments and $1.6 million of income tax
payments, net of refunds.
During the quarter ended December 31, 2007, the Companys operating activities used $101.0
million of cash as compared to cash provided of $287.9 million in the prior-year quarter. Cash
used by operations during the quarter ended December 31, 2007 was principally the result of an
increase in merchandise inventories of $610.3 million, primarily offset by income from continuing
operations of $108.4 million, a decrease in accounts receivable of $108.5 million, an increase in
accounts payable, accrued expenses and income taxes of $260.1 million, and non-cash items of $21.7
million. The average number of inventory days on hand decreased by one day in comparison to the
prior year quarter despite the large increase in merchandise inventories, which occurred during the
month of December. The increase in merchandise inventories was driven by seasonal demand,
increasing sales expectations, and requirements under our fee-for-service agreements. Days sales
outstanding were reduced by one-half day to 18.9 days in the quarter ended December 31, 2007. The
decrease was largely driven by the decline in growth of ABSG, which generally has a higher
receivable investment than the ABDC distribution business. The
increase in accounts payable, accrued expenses and income taxes was driven by the increase in merchandise
inventories, net of a decline in days payable outstanding by one-half day to 37.1 days. The days
payable outstanding reduction was driven by the reversal of favorable timing of payments to our
suppliers as of September 30, 2007. Operating cash uses during the quarter ended December 31, 2007
included $5.2 million in interest payments and $10.5 million of income tax payments, net of
refunds.
26
ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
(Continued)
Capital expenditures for the quarter ended December 31, 2008 were $42.3 million and related
principally to our Business Transformation project, which includes a new enterprise resource
planning (ERP) platform that will be implemented throughout ABDC and our corporate functions. The
Company estimates that it will spend approximately $140 million for capital expenditures during
fiscal 2009.
Capital expenditures for the quarter ended December 31, 2007 were $26.2 million and related
principally to the expansion of our ABPG production facility in Rockford, Illinois, investments in
warehouse expansions and improvements, information technology, and warehouse automation.
In October 2008, the Company sold PMSI for approximately $34 million, which is subject to a
final working capital adjustment. The Company received cash totaling $14.9 million and a $19
million subordinated note payable due from PMSI on the fifth anniversary of the closing date.
In October 2007, the Company acquired Bellco, a privately held New York distributor of branded
and generic pharmaceuticals, for a purchase price of $162.2 million, net of $20.7 million of cash
acquired.
Net cash provided by investing activities in the quarter ended December 31, 2007 included
purchases and sales of short-term investment securities. Net proceeds relating to these investment
activities in the quarter ended December 31, 2007 were $467.4 million. These short-term investment
securities primarily consisted of tax-exempt variable rate demand notes used to maximize the
Companys after tax interest income.
During the quarter ended December 31, 2008, the Company purchased 3.0 million shares of its
common stock for a total of $88.4 million. The Company currently expects that it will purchase
approximately $350 million of its common stock during fiscal 2009. The Company has $429.8 million
of availability remaining under its share repurchase program as of December 31, 2008. During the
quarter ended December 31, 2007, the Company purchased 7.1 million shares of its common stock for a
total of $311.4 million.
On November 13, 2008, the Companys board of directors increased the quarterly dividend by 33%
and declared a cash dividend of $0.10 per share, which was paid on December 8, 2008 to stockholders
of record as of the close of business on November 24, 2008. The Company anticipates that it will
continue to pay quarterly cash dividends in the future. However, the payment and amount of future
dividends remains within the discretion of the Companys board of directors and will depend upon
the Companys future earnings, financial condition, capital requirements, and other factors.
Recently Issued Financial Accounting Standards
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements, which defines fair
value, establishes a framework for measuring fair value, and expands disclosures about fair value
measurements. FASB Staff Position 157-2 delayed the effective date of the application of SFAS 157
to fiscal years beginning after November 15, 2008 for all nonfinancial assets and liabilities that
are recognized or disclosed at fair value in the financial statements on a nonrecurring basis.
SFAS 157 defines fair value as the price that would be received from selling an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement
date (exit price). SFAS 157 establishes a fair value hierarchy, which prioritizes the inputs to
valuation techniques used to measure fair value into three levels. Level 1 inputs are quoted
prices in active markets for identical assets or liabilities. Level 2 inputs are observable other
than quoted prices in active markets for identical assets and liabilities, quoted prices for
identical or similar assets or liabilities in inactive markets, or other inputs that are observable
or can be corroborated by observable market data for substantially the full term of the assets or
liabilities. Level 3 inputs are generally unobservable and typically reflect managements
estimates of assumptions that market participants would use in pricing the asset or liability.
27
ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
(Continued)
In the first quarter of fiscal 2009, the Company adopted SFAS 157 for all financial assets and
liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value
in the financial statements on a recurring basis. The adoption of SFAS 157 did not have any impact
on the Companys financial position, results of operations or liquidity. At December 31, 2008, the
Company had $324.0 million of investments in money market accounts, which were valued as level 1
investments. The adoption of this standard in fiscal 2010 as it relates to the Companys
nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial
statements on a nonrecurring basis is not expected to have a material impact on the Companys
financial position, results of operations or liquidity.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets
and Financial Liabilities, including an amendment of FASB Statement No. 115. SFAS No. 159 permits
the Company to elect fair value as the initial and subsequent measurement attribute for certain
financial assets and liabilities that are not otherwise required to be measured at fair value, on
an instrument-by-instrument basis. In the first quarter of fiscal 2009, the Company chose not to
elect the fair value option for any items not already required to be measured at fair value in
accordance with U.S. generally accepted accounting principles. As a result, the adoption of SFAS
No. 159 did not have an impact on the Companys financial position, results of operations or
liquidity.
In December 2007, the FASB issued SFAS No. 141R, Business Combinations, which replaces SFAS
No. 141. SFAS No. 141R establishes principles and requirements for how an acquirer recognizes and
measures in its financial statements the identifiable assets acquired, the goodwill acquired, the
liabilities assumed, and any non-controlling interest in the acquired business. SFAS No. 141R also
establishes disclosure requirements, which will enable users to evaluate the nature and financial
effects of the business combination. SFAS No. 141R is effective as of the beginning of an entitys
fiscal year that begins after December 15, 2008, which will be the Companys fiscal year beginning
October 1, 2009. The Company is currently evaluating the impact of adopting this standard.
Forward-Looking Statements
Certain of the statements contained in this Managements Discussion and Analysis of Financial
Condition and Results of Operations and elsewhere in this report are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, as amended (the Exchange Act). These statements are based on managements
current expectations and are subject to uncertainty and changes in circumstances. Actual results
may vary materially from the expectations contained in the forward-looking statements. The
following factors, among others, could cause actual results to differ materially from those
described in any forward-looking statements: changes in pharmaceutical market growth rates; the
loss of one or more key customer or supplier relationships; changes in customer mix; customer
delinquencies, defaults or insolvencies; supplier defaults or insolvencies; changes in
pharmaceutical manufacturers pricing and distribution policies or practices; adverse resolution of
any contract or other dispute with customers or suppliers; federal and state government enforcement
initiatives to detect and prevent suspicious orders of controlled substances and the diversion of
controlled substances; changes in U.S. legislation or regulatory action affecting pharmaceutical
product pricing or reimbursement policies, including under Medicaid and Medicare; changes in
regulatory or clinical medical guidelines and/or labeling for the pharmaceuticals we distribute,
including erythropoiesis-stimulating agents (ESAs) used to treat anemia patients; price inflation
in branded pharmaceuticals and price deflation in generics; significant breakdown or interruption
of our information technology systems; success of integration, restructuring or systems
initiatives; interest rate and foreign currency exchange rate fluctuations; economic, business,
competitive and/or regulatory developments in Canada, the United Kingdom and elsewhere outside of
the United States; the impact of divestitures or the acquisition of businesses that do not perform
as we expect or that are difficult for us to integrate or control; our inability to successfully
complete any other transaction that we may wish to pursue from time to time; changes in tax
legislation or adverse resolution of challenges to our tax positions; increased costs of
maintaining, or reductions in our ability to maintain, adequate liquidity and financing sources;
continued volatility and further deterioration of the capital and credit markets; and other
economic, business, competitive, legal, tax, regulatory and/or operational factors affecting our
business generally. Certain additional factors that management believes could cause actual outcomes
and results to differ materially from those described in forward-looking statements are set forth
(i) elsewhere in this report, (ii) in Item 1A (Risk Factors) in the Companys Annual Report on Form
10-K for the fiscal year ended September 30, 2008 and elsewhere in that report and (iii) in other
reports filed by the Company pursuant to the Exchange Act.
28
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
The Companys most significant market risk is the effect of fluctuations in interest rates.
See discussion under Liquidity and Capital Resources in Item 2 on page 25.
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are intended to ensure that
information required to be disclosed in the Companys reports submitted under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the rules and
forms of the SEC. These controls and procedures also are intended to ensure that information
required to be disclosed in such reports is accumulated and communicated to management to allow
timely decisions regarding required disclosures.
The Companys Chief Executive Officer and Chief Financial Officer, with the participation of
other members of the Companys management, have evaluated the effectiveness of the Companys
disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e)
under the Exchange Act) and have concluded that the Companys disclosure controls and procedures
were effective for their intended purposes as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting
There were no changes during the fiscal quarter ended December 31, 2008 in the Companys
internal control over financial reporting that materially affected, or are reasonably likely to
materially affect, those controls.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
See Note 8 (Legal Matters and Contingencies) of the Notes to the Consolidated Financial
Statements set forth under Item 1 of Part I of this report for the Companys current description of
legal proceedings.
29
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
(c) Issuer Purchases of Equity Securities
The following table sets forth the number of shares purchased, the average price paid per
share, the total number of shares purchased as part of publicly announced programs, and the
approximate dollar value of shares that may yet be purchased under the programs during each month
in the quarter ended December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of
|
|
|
Approximate Dollar
|
|
|
|
|
|
|
|
|
|
|
|
Shares Purchased as
|
|
|
Value of Shares that
|
|
|
|
Total
|
|
|
Average Price
|
|
|
Part of the Publicly
|
|
|
May Yet Be
|
|
|
|
Number of Shares
|
|
|
Paid per
|
|
|
Announced
|
|
|
Purchased Under the
|
|
Period
|
|
Purchased
|
|
|
Share
|
|
|
Programs
|
|
|
Programs
|
|
October 1 to October 31
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
18,079,594
|
|
November 1 to November 30
|
|
|
1,727,476
|
|
|
$
|
29.13
|
|
|
|
1,727,476
|
|
|
$
|
467,760,715
|
|
December 1 to December 31
|
|
|
1,228,700
|
|
|
$
|
30.89
|
|
|
|
1,228,700
|
|
|
$
|
429,807,858
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,956,176
|
|
|
$
|
29.86
|
|
|
|
2,956,176
|
|
|
$
|
429,807,858
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a)
|
|
In May 2007, the Company announced a program to purchase up to $850 million of
its outstanding shares of common stock, subject to market conditions. In November 2007,
the Companys board of directors authorized an increase to the $850 million repurchase
program by $500 million, subject to market conditions. During the quarter ended
December 31, 2008, the Company purchased 0.6 million shares under this program. This
program expired in November 2008, when the Company exhausted its availability.
|
|
b)
|
|
In November 2008, the Company announced a new program to purchase up to $500
million of its outstanding shares of common stock, subject to market conditions. During
the quarter ended December 31, 2008, the Company purchased 2.3 million shares under this
program for $70.2 million. There is no expiration date related to this new program.
|
30
ITEM 6. Exhibits
(a) Exhibits:
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
|
AmerisourceBergen Drug Corporation Supplement Retirement Plan, as amended and restated
as of November 24, 2008 (incorporated by reference to Exhibit 10.2 to the Registrants
Annual Report on Form 10-K for the fiscal year ended September 30, 2008).
|
|
|
|
|
|
|
10.2
|
|
|
Bergen Brunswig Corporation Fifth Amended and Restated Supplemental Executive Retirement
Plan, amended and restated as of November 24, 2008 (incorporated by reference to Exhibit
10.9 to the Registrants Annual Report on Form 10-K for the fiscal year ended September
30, 2008).
|
|
|
|
|
|
|
10.3
|
|
|
AmerisourceBergen Corporation 2001 Restricted Stock Plan, as amended and restated as of
November 12, 2008 (incorporated by reference to Exhibit 10.18 to the Registrants Annual
Report on Form 10-K for the fiscal year ended September 30, 2008).
|
|
|
|
|
|
|
10.4
|
|
|
AmerisourceBergen Corporation 2001 Deferred Compensation Plan, as amended and restated
as of November 24, 2008 (incorporated by reference to Exhibit 10.19 to the Registrants
Annual Report on Form 10-K for the fiscal year ended September 30, 2008).
|
|
|
|
|
|
|
10.5
|
|
|
AmerisourceBergen Corporation Supplemental 401(k) Plan, as amended and restated as of
November 24, 2008 (incorporated by reference to Exhibit 10.20 to the Registrants Annual
Report on Form 10-K for the fiscal year ended September 30, 2008).
|
|
|
|
|
|
|
10.6
|
|
|
Amended and Restated Employment Agreement, dated as of November 24, 2008, between the
Registrant and R. David Yost.
|
|
|
|
|
|
|
10.7
|
|
|
Letter Agreement, dated January 7, 2009, between the Registrant and R. David Yost.
|
|
|
|
|
|
|
10.8
|
|
|
AmerisourceBergen Corporation Amended and Restated Long Term Incentive Award Agreement,
dated December 22, 2008, for R. David Yost.
|
|
|
|
|
|
|
10.9
|
|
|
Amended and Restated Employment Agreement, dated as of November 24, 2008, between the
Registrant and Michael D. DiCandilo.
|
|
|
|
|
|
|
10.10
|
|
|
Letter Agreement, dated January 7, 2009, between the Registrant and Michael D. DiCandilo.
|
|
|
|
|
|
|
10.11
|
|
|
Amended and Restated Employment Agreement, dated as of December 15, 2008, between the
Registrant and Steven H. Collis.
|
|
|
|
|
|
|
10.12
|
|
|
Letter Agreement, dated January 7, 2009, between the Registrant and Steven H. Collis.
|
|
|
|
|
|
|
10.13
|
|
|
Amended and Restated Employment Agreement, dated as of November 24, 2008, between the
Registrant and Jeanne B. Fisher.
|
|
|
|
|
|
|
10.14
|
|
|
Letter Agreement, dated January 7, 2009, between the Registrant and Jeanne B. Fisher.
|
|
|
|
|
|
|
10.15
|
|
|
Amended and Restated Employment Agreement, dated as of November 24, 2008, between the
Registrant and John G. Chou.
|
|
|
|
|
|
|
10.16
|
|
|
Letter Agreement, dated January 7, 2009, between the Registrant and John G. Chou.
|
|
|
|
|
|
|
10.17
|
|
|
Eighth Amendment, dated as of December 18, 2008, to the Receivables Purchase Agreement
among Amerisource Receivables Financial Corporation, as Seller, AmerisourceBergen Drug
Corporation, as Initial Servicer, Bank of America, National Association, as
Administrator, and various purchase groups.
|
|
|
|
|
|
|
31.1
|
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
|
|
|
|
|
|
31
|
|
|
|
|
|
31.2
|
|
|
Rule 13a-14(a)/15d-14(a)
Certification of Chief Financial Officer.
|
|
|
|
|
|
|
32.1
|
|
|
Section 1350 Certification of Chief Executive Officer.
|
|
|
|
|
|
|
32.2
|
|
|
Section 1350 Certification of Chief Financial Officer.
|
|
|
|
*
|
|
Copies of the exhibits will be furnished to any security holder of the Registrant upon
payment of the reasonable cost of reproduction.
|
|
|
|
Each marked exhibit is a management contract or a compensatory plan, contract or
arrangement in which a director or executive officer of the Registrant participates or
has participated.
|
32
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
|
|
|
|
|
|
AMERISOURCEBERGEN CORPORATION
|
|
February 5, 2009
|
/s/ R. David Yost
|
|
|
R. David Yost
|
|
|
President and Chief Executive Officer
|
|
|
|
|
February 5, 2009
|
/s/ Michael D. DiCandilo
|
|
|
Michael D. DiCandilo
|
|
|
Executive Vice President and
Chief Financial Officer
|
|
33
EXHIBIT INDEX
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
|
AmerisourceBergen Drug Corporation Supplement Retirement Plan, as amended and restated
as of November 24, 2008 (incorporated by reference to Exhibit 10.2 to the Registrants
Annual Report on Form 10-K for the fiscal year ended September 30, 2008).
|
|
|
|
|
|
|
10.2
|
|
|
Bergen Brunswig Corporation Fifth Amended and Restated Supplemental Executive Retirement
Plan, amended and restated as of November 24, 2008 (incorporated by reference to Exhibit
10.9 to the Registrants Annual Report on Form 10-K for the fiscal year ended September
30, 2008).
|
|
|
|
|
|
|
10.3
|
|
|
AmerisourceBergen Corporation 2001 Restricted Stock Plan, as amended and restated as of
November 12, 2008 (incorporated by reference to Exhibit 10.18 to the Registrants Annual
Report on Form 10-K for the fiscal year ended September 30, 2008).
|
|
|
|
|
|
|
10.4
|
|
|
AmerisourceBergen Corporation 2001 Deferred Compensation Plan, as amended and restated
as of November 24, 2008 (incorporated by reference to Exhibit 10.19 to the Registrants
Annual Report on Form 10-K for the fiscal year ended September 30, 2008).
|
|
|
|
|
|
|
10.5
|
|
|
AmerisourceBergen Corporation Supplemental 401(k) Plan, as amended and restated as of
November 24, 2008 (incorporated by reference to Exhibit 10.20 to the Registrants Annual
Report on Form 10-K for the fiscal year ended September 30, 2008).
|
|
|
|
|
|
|
10.6
|
|
|
Amended and Restated Employment Agreement, dated as of November 24, 2008, between the
Registrant and R. David Yost.
|
|
|
|
|
|
|
10.7
|
|
|
Letter Agreement, dated January 7, 2009, between the Registrant and R. David Yost.
|
|
|
|
|
|
|
10.8
|
|
|
AmerisourceBergen Corporation Amended and Restated Long Term Incentive Award Agreement,
dated December 22, 2008, for R. David Yost.
|
|
|
|
|
|
|
10.9
|
|
|
Amended and Restated Employment Agreement, dated as of November 24, 2008, between the
Registrant and Michael D. DiCandilo.
|
|
|
|
|
|
|
10.10
|
|
|
Letter Agreement, dated January 7, 2009, between the Registrant and Michael D. DiCandilo.
|
|
|
|
|
|
|
10.11
|
|
|
Amended and Restated Employment Agreement, dated as of December 15, 2008, between the
Registrant and Steven H. Collis.
|
|
|
|
|
|
|
10.12
|
|
|
Letter Agreement, dated January 7, 2009, between the Registrant and Steven H. Collis.
|
|
|
|
|
|
|
10.13
|
|
|
Amended and Restated Employment Agreement, dated as of November 24, 2008, between the
Registrant and Jeanne B. Fisher.
|
|
|
|
|
|
|
10.14
|
|
|
Letter Agreement, dated January 7, 2009, between the Registrant and Jeanne B. Fisher.
|
|
|
|
|
|
|
10.15
|
|
|
Amended and Restated Employment Agreement, dated as of November 24, 2008, between the
Registrant and John G. Chou.
|
|
|
|
|
|
|
10.16
|
|
|
Letter Agreement, dated January 7, 2009, between the Registrant and John G. Chou.
|
|
|
|
|
|
|
10.17
|
|
|
Eighth Amendment, dated as of December 18, 2008, to the Receivables Purchase Agreement
among Amerisource Receivables Financial Corporation, as Seller, AmerisourceBergen Drug
Corporation, as Initial Servicer, Bank of America, National Association, as
Administrator, and various purchase groups.
|
|
|
|
|
|
|
31.1
|
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
|
|
|
|
|
|
34
|
|
|
|
|
|
31.2
|
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
|
|
|
|
|
|
|
32.1
|
|
|
Section 1350 Certification of Chief Executive Officer.
|
|
|
|
|
|
|
32.2
|
|
|
Section 1350 Certification of Chief Financial Officer.
|
|
|
|
*
|
|
Copies of the exhibits will be furnished to any security holder of the Registrant upon
payment of the reasonable cost of reproduction.
|
|
|
|
Each marked exhibit is a management contract or a compensatory plan, contract or
arrangement in which a director or executive officer of the Registrant participates or
has participated.
|
35
Exhibit 10.6
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the Agreement) by and between AmerisourceBergen
Corporation, a Delaware corporation (hereinafter the Company), and R. David Yost (the
Executive), dated and effective as of November 24, 2008.
WHEREAS, the Company and the Executive entered into an employment agreement (the Original
Agreement) effective October 1, 2003, reflecting the determination of the Board of Directors of
the Company (the Board), upon the recommendation of the Compensation and Succession Planning
Committee of the Board (the Committee), that it would be in the best interests of the Company and
its shareholders to employ the Executive as the Chief Executive Officer of the Company, and the
Executives desire to serve in that capacity; and
WHEREAS, the parties wish to amend the Original Agreement to comport with Section 409A of the
Internal Revenue Code, as amended, and the regulations promulgated thereunder and to make certain
other changes intended to clarify certain provisions of the Original Agreement;
NOW, THEREFORE, intending to be legally bound, the parties hereto agree to amend and restate
the Original Agreement in its entirety as follows:
1.
Employment Period
. The Company shall continue to employ the Executive, either
directly or through a Subsidiary (as defined below), and the Executive shall continue to serve the
Company or any such Subsidiary, on the terms and conditions set forth in this Agreement, beginning
November 24, 2008 (the Employment Date) and until that employment ceases as provided below in
Section 4 (the Employment Period). Subsidiary means any entity that is controlled, directly or
indirectly, by the Company.
2.
Position and Duties
.
(a) During the Employment Period, the Executive shall be employed as the Chief Executive
Officer of the Company, subject to such changes in title as may be proposed by the Board and
consented to by the Executive. The Executive shall report to the Board and shall perform such
duties for the Company as are related typically to the office of Chief Executive Officer, in the
manner reasonably directed by the Board, in its sole discretion. For so long as and during the
period in which the Executive is serving as the Chief Executive Officer, the Board shall use its
best efforts to cause the Executive to be nominated and elected as a director of the Company and,
if elected by the Companys stockholders, the Executive shall serve as a director of the Company.
(b) During the Employment Period, but excluding any periods of vacation and absence due to
intermittent illness to which the Executive is entitled, and any services on corporate, civic or
charitable boards or committees, lectures, speaking engagements or teaching engagements that are
approved by the Board and that do not significantly interfere with the performance of his
responsibilities to the Company or violating the provisions of Section 9, the Executive shall
devote his full time and attention during normal business hours to the business and affairs of the
Company and the Executive shall use reasonable efforts to carry out all duties and responsibilities
assigned to him faithfully and efficiently.
3.
Compensation
.
(a)
Base Salary
. During the Employment Period, the Executive shall continue to
receive annual base salary at the rate in effect as of the date of this Agreement, payable in
accordance with the regular payroll practices of the Company. The Executives base salary shall be
reviewed annually by the Committee, in accordance with the Companys standard practices for
executives generally, and may be increased as determined by the Committee, in its sole discretion.
(b)
Annual Bonus and Incentive Plans; Other Benefits
. During the Employment Period:
(i) the Executive shall be entitled to participate in any short-term and long-term incentive
programs established and/or maintained by the Company for its senior level executives generally;
(ii) the Executive shall be entitled to participate in all incentive, savings and retirement plans,
practices, policies and programs of the Company to at least the same extent as other senior
executives of the Company; (iii) the Executive and/or the Executives family, as the case may be,
shall be eligible for participation in, and shall receive all benefits under, all welfare benefit
plans, practices, policies and programs provided by the Company to at least the same extent as
other senior executives of the Company; and (iv) the Executive shall be entitled to, and the
Company shall provide the Executive with, not less than the number of weeks of vacation during each
calendar year to which the Executive is entitled as of the date of this Agreement. In addition to
the foregoing, the Executive shall be entitled to annual reimbursement of up to $5,000 per year for
tax and financial planning and tax preparation, or such greater amount as may be authorized by the
Committee, in its sole discretion.
(c)
Expenses
. During the Employment Period, the Executive shall be entitled to
receive advancement or prompt reimbursement for all reasonable expenses incurred or anticipated to
be incurred by the Executive in carrying out the Executives duties under this Agreement, provided
that the Executive complies with the generally applicable policies, practices and procedures of the
Company for submission of expense reports, receipts, or similar documentation of such expenses.
(d) Notwithstanding anything herein to the contrary or otherwise, except to the extent any
expense, reimbursement or in-kind benefit provided pursuant to Sections 3(b), 3(c) and 5(a) does
not constitute a deferral of compensation within the meaning of Section 409A of the Internal
Revenue Code of 1986, as amended from time to time (Code), and its implementing regulations and
guidance (Section 409A) (i) the amount of expenses eligible for reimbursement or in-kind benefits
provided to the Executive during any calendar year will not affect the amount of expenses eligible
for reimbursement or in-kind benefits provided to the Executive in any other calendar year, (ii)
the reimbursements for expenses for which the Executive is entitled to be reimbursed shall be made
on or before the last day of the calendar year following the calendar year in which the applicable
expense is incurred and (iii) the right to payment or reimbursement or in-kind benefits hereunder
may not be liquidated or exchanged for any other benefit.
4.
Termination of Employment
.
(a)
Death or Disability
. The Executives employment and the Employment Period shall
terminate automatically upon the Executives death or long term Disability during the Employment
Period. Disability means a condition entitling the Executive to benefits under the Companys
Long Term Disability Plan, policy or arrangement.
2
(b)
By the Company
. The Company may terminate the Executives employment under this
Agreement during the Employment Period for Cause or without Cause. Cause means:
(i) the continued failure by the Executive to substantially perform his duties as contemplated
by this Agreement (other than any such failure resulting from his incapacity due to physical or
mental illness or injury or any such actual or anticipated failure after the issuance by the
Executive of a Notice of Termination for Good Reason) over a period of not less than thirty days
after a demand for substantial performance is delivered to the Executive by the Board or by the
Chief Executive Officer of the Company, which demand identifies the manner in which it is believed
that the Executive has not substantially performed his duties;
(ii) the willful misconduct of the Executive materially and demonstrably injurious to the
Company (including, without limitation, any breach by the Executive of Section 9 of this
Agreement); provided that no act or failure to act on the Executives part will be considered
willful if done, or omitted to be done, by him in good faith and with reasonable belief that his
action or omission was in the best interest of the Company;
(iii) the Executives conviction of a misdemeanor, which, as determined in good faith by the
Board, constitutes a crime of moral turpitude and gives rise to material harm to the Company or to
any subsidiary or affiliate of the Company; or
(iv) the Executives conviction of a felony (including, without limitation, any felony
constituting a crime of moral turpitude).
(c)
By the Executive
. The Executive may terminate employment under this Agreement for
Good Reason or without Good Reason. Good Reason means:
(i) any reduction in the Executives base salary; or
(ii) material failure by the Company to comply with any provision of Sections 2 and 3 of this
Agreement (including, but not limited to, a diminution in the Executives authority, duties, or
responsibilities) other than an isolated, insubstantial or inadvertent failure that is not taken in
bad faith and is remedied by the Company within 30 days after receipt of written notice thereof
from the Executive.
Notwithstanding the foregoing, Good Reason for purposes of Section 4(c)(i) shall not include
a reduction in base salary if such reduction is coincident with a reduction applicable to all
members of the senior management team. 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 that
constitutes Good Reason and the specific provision(s) of this Agreement on which the Executive
relies. Such Notice of Termination for Good Reason must be received by the Company no later than
the 60
th
day after the event, or last in a series of events, that gives rise to Good
Reason. The Company shall have 30 days to remedy the conduct set forth in the Notice of
Termination for Good Reason. A termination of employment by the Executive for Good Reason shall be
effective on the 60
th
business day following the date when the Notice of Termination for
Good Reason is given, unless the conduct set forth in the notice is remedied by the Company within
the 30-day period. A termination of the Executives employment by the Executive without Good
Reason shall be effected by giving the Company at least 30 days advance written notice of the
termination.
(d)
Date of Termination
. The Date of Termination means the date of the Executives
death, the date of the Executives Disability, or the date the termination of the Executives
employment under this Agreement by the Company for Cause or without Cause or by the Executive for
Good Reason or without Good Reason, as the case may be, is effective. The Employment Period
shall end on the Date of Termination.
3
(e)
Separation from Service
. For purposes of determining under Section 409A whether
there has been a separation from service with the meaning of Treasury Regulation Section
1.409A-1(h) (or any successor regulation), the Executive shall be deemed to have incurred a
separation from service if his employment has been terminated in accordance with this Section 4 and
he is performing less than 50% of the average level of bona fide services he was performing for the
Company in the immediately preceding 36-month period (Separation From Service). In addition,
notwithstanding any other provision of this Agreement to the contrary, any payment or benefit
described in Section 5 that represents a deferral of compensation within the meaning of Section
409A shall only be paid or provided to Executive upon a Separation From Service as defined herein.
5.
Obligations of the Company upon Termination
.
(a)
By the Company Other Than for Cause; or By the Executive for Good Reason
. If,
during the Employment Period, the Company terminates the Executives employment under this
Agreement (other than for Cause) or the Executive terminates employment under this Agreement for
Good Reason:
(1) the Executive shall be entitled to continued payment for two years after the
Separation From Service of the Executives current base salary (as in effect on the Date of
Termination), which amounts shall be paid in installments over such two-year period pursuant
to the Companys normal payroll policy,
(2) the Executive shall be entitled to receive the following bonus payments: (i)
either (A) if the Separation from Service occurs following the end of a fiscal year but
prior to the date that an annual bonus for such previously completed fiscal year, if any, is
approved by the Companys Board of Directors, a bonus payment equal to the bonus payment
that the Executive would have received for such prior fiscal year without regard to the
Executive not having remained employed by the Company on the date that such bonus payment
would otherwise have been paid to the Executive, with any such bonus amount to be paid at
the same time as annual bonuses for such prior fiscal year are paid by the Company under the
applicable bonus program generally but in no event later than March 15
th
of the
calendar year following the calendar year that includes the last day of the applicable
fiscal year or (B) if Separation from Service occurs following the end of a fiscal year but
after the date that an annual bonus for such previously completed fiscal year is approved
(or determined not to be payable by the Companys Board or Directors), a bonus payment equal
to an amount representing 100% of the Executives target bonus for the Executives salary
grade for the fiscal year of the Company in which such Separation from Service occurs,
multiplied by a fraction, the numerator of which is the number of days in such current
fiscal year through the Separation from Service, and the denominator of which is 365, with
any such amount to be paid at the same time as annual bonuses for the fiscal year in which
such Separation from Service occurs are paid by the Company under the applicable bonus
program generally but in no event later than December 31st of the calendar year following
the calendar year that includes the last day of the applicable fiscal year and (ii)
continued payment for the two fiscal years ending immediately after the Separation from
Service of a bonus equal to the average of the annual bonuses earned by the Executive over
the three complete years (or if less than three complete years, the average bonus earned
during such lesser number of complete years) preceding the Date of Termination (that is, not
including the bonus year that
includes the Date of Termination) with each such bonus payment being paid at the same
time as annual bonuses are paid by the Company under the applicable bonus program; and
4
(3) for the eighteen month period following the Separation From Service (subject to
earlier termination as described below), if the Executive elects to receive continuation
coverage under the Companys group health plans pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA), the Executive shall be entitled to: (i) waiver by the
Company of the COBRA premium costs of medical, prescription, dental and vision coverage, if
any, under the Companys group health plans (as in effect from time to time) for the
Executive and, to the extent permitted under COBRA, the Executives spouse and eligible
dependents, if any, for the first two calendar months of the eighteen month continuation
period; and (ii) following the initial two-month period, the Executive shall be entitled to
reimbursement from the Company for the COBRA premium costs of medical, prescription, dental
and vision coverage, if any, under the Companys group health plans for the Executive and,
to the extent permitted under COBRA, the Executives spouse and eligible dependents, if any,
with such reimbursement not to exceed the COBRA rates for such coverage; provided, however,
that the Executive shall be required to submit to the Company reasonable evidence of payment
by the Executive of any such COBRA premiums in order to obtain reimbursement from the
Company and that the Executive may not submit any requests for reimbursement of such
payments more than once per calendar month. Notwithstanding anything to the contrary set
forth above, the Company, in its sole discretion, may discontinue any coverage contemplated
hereunder in the event that such continuation is not permitted under or would adversely
affect the tax status of the plan or plans of the Company pursuant to which the coverage is
provided, in which case the Company shall make supplemental severance payments to the
Executive in monthly amounts equal to the amounts to which the Executive otherwise would
have been entitled to reimbursement hereunder in respect of such coverage for the remainder
of the period that the Company otherwise would have been obligated to make reimbursements
hereunder to the Executive. Any amounts that are reimbursed to the Executive by the Company
or paid directly to the Executive as supplemental severance payments will be considered
taxable income to the Executive and any taxes on such amounts will be the Executives
responsibility and subject to applicable tax withholding.
In addition, the Executive shall be entitled to receive executive level outplacement assistance
under any outplacement assistance program then being maintained by the Company in accordance with
the terms of any such program, or if no such program then exists, in an amount not to exceed
$10,000; provided that any reimbursable expense must be incurred by the Executive no later than the
end of the second calendar year following the year of the Separation From Service. The Executive
shall also become vested in any outstanding options, restricted stock or other equity incentive
awards only to the extent provided for under the terms governing such equity incentive award. The
Company shall also pay, or cause to be paid, to the Executive, in a lump sum in cash within 30 days
after the Separation From Service (or, in the case of the pro-rated Annual Bonus Amount, at the
time such bonus would otherwise be paid), the following accrued but unpaid cash compensation of the
Executive (the Accrued Obligations): (X) the Executives base salary through the Date of
Termination that has not yet been paid, (Y) any accrued but unpaid vacation pay, and (Z) any
unreimbursed employee business expenses; provided, however, that the Companys obligation to make
any payments, or cause any payments to be made, under this paragraph (a) to the extent any such
payment shall not have accrued as of the day before the Date of Termination shall also be
conditioned upon the Executives execution, and non-revocation, of a written release, substantially
in the form attached hereto as
Annex 1
, of any and all claims against the Company and all
related parties with respect to all matters arising out of the Executives employment under this
Agreement or the termination thereof (other than any entitlements under the terms of this Agreement
to indemnification or under any other plans or programs of the Company in which the Executive
participated and under which the Executive has accrued and is due a benefit). The payments and
benefits described in this paragraph (a) (other than those payments and benefits accrued as of the
day before the Date of Termination) will be paid, or will begin to be paid or provided, as
applicable, after the applicable release review period and revocation period have expired, and as
if the Executive signed the release on the last day of the release review period.
5
To the extent compliance with the requirements of Treas. Reg. § 1.409A-3(i)(2) (or any successor
provision) is necessary to avoid the application of an additional tax under Section 409A to
payments due to the Executive upon or following his Separation From Service, then notwithstanding
any other provision of this Agreement (or any otherwise applicable plan, policy, agreement or
arrangement), any such payments that are otherwise due within six months following the Executives
Separation From Service will be deferred (without interest) and paid to the Executive in a lump sum
immediately following that six month period. This provision shall not be construed as preventing
payments pursuant to Section 5 equal to an amount up to 2 times the lesser of (a) the Executives
annualized compensation for the year prior to the Separation From Service, and (b) the maximum
amount that may be taken into account under a qualified plan pursuant to section 401(a)(17) of the
Code, being paid to the Executive in the first six months following the Separation From Service.
(b)
Death or Disability
. If the Executives employment is terminated by reason of the
Executives death or Disability during the Employment Period, the Company shall pay the Accrued
Obligations to the Executive or the Executives estate or legal representative, as applicable, in a
lump sum in cash within 30 days after the Date of Termination. In such event, the Company shall
have no further obligations under this Agreement or otherwise to or with respect to the Executive;
and for any entitlements under the terms of any other plans or programs of the Company in which the
Executive participated and under which the Executive has become entitled to a benefit.
(c)
By the Company for Cause; By the Executive Other than for Good Reason
. If the
Executives employment is terminated by the Company for Cause during the Employment Period, or the
Executive voluntarily terminates employment during the Employment Period, other than for Good
Reason, the Company shall pay the Executive, or shall cause the Executive to be paid, the
Executives base salary through the Date of Termination that has not been paid and the amount of
any declared but unpaid bonuses, accrued but unpaid vacation pay, and unreimbursed employee
business expenses, and the Company shall have no further obligations under this Agreement or
otherwise to or with respect to the Executive other than for any entitlements under the terms of
any other plans or programs of the Company in which the Executive participated and under which the
Executive has become entitled to a benefit.
6.
Change in Control
. It is the intention of the parties that payments to be made to
the Executive whether under the terms of this Agreement or otherwise shall not constitute excess
parachute payments within the meaning of Section 280G of the Code and any regulations thereunder.
If the independent accountants serving as auditors for the Company on the date of this Agreement
(or any other independent certified public accounting firm designated by the Company) determine
that any payment or distribution by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise) would be nondeductible by the Company pursuant to Section 280G of the Code (or any
successor provision), then the amounts payable or distributable under this Agreement will be
reduced to the maximum amount which may be paid or distributed without causing such payments or
distributions to be nondeductible. The determination shall take into account (a) whether the
payments or distributions are parachute payments under Section 280G, (b) the amount of payments
and distributions under this Agreement that constitute reasonable compensation, and (c) the present
value of such payments and distributions determined in accordance
with Treasury Regulations in effect from time to time. If a reduction is required in
accordance with this Section 6, cash payments will be reduced before any acceleration of vesting or
forfeiture conditions are eliminated and future payments will be reduced before amounts that are
immediately payable.
7.
Non-exclusivity of Rights
. Nothing in this Agreement shall prevent or limit the
Executives continuing or future participation in any plan, program, policy or practice provided by
the Company for which the Executive may qualify. Vested benefits and other amounts that the
Executive is otherwise entitled to receive on or after the Date of Termination under any plan,
policy, practice or program of, or any contract or agreement with, the Company shall 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.
6
8.
No Mitigation
. 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.
9.
Confidential Information; Non-solicitation; Non-competition
.
(a) The Executive agrees and acknowledges that by reason of his employment by and service to
the Company, he will have access to, become exposed to and/or become knowledgeable about
confidential information of the Company (the Confidential Information) from time to time during
the Employment Period, including, without limitation, proposals, plans, inventions, practices,
systems, programs, processes, methods, techniques, research, records, supplier sources, customer
lists and other forms of business information that are not known to the Companys competitors, are
not recognized as being encompassed within standard business or management practices and/or are
kept secret and confidential by the Company. Executive agrees that at no time during or after the
Employment Period will he disclose or use the Confidential Information except as may be required in
the prudent course of business for the benefit of the Company. The Executive also agrees to be
subject to the Companys Code of Ethics and Business Conduct as in effect from time to time during
the Employment Period.
(b) The Executive acknowledges that the Company is generally engaged in business throughout
the United States. During the Executives employment by the Company and for two years after the
Date of Termination or the expiration of the Employment Period, the Executive agrees that he will
not, unless acting with the prior written consent of the Company, directly or indirectly, own,
manage, control, or participate in the ownership, management or control of, or be employed or
engaged by, or otherwise affiliated or associated with, as an officer, director, employee,
consultant, independent contractor or otherwise, any other corporation, partnership,
proprietorship, firm, association or other business entity, which is engaged in any business,
including the wholesale distribution of pharmaceutical products, that, or otherwise engage in any
business that, as of the Date of Termination or expiration of the Employment Period, as applicable,
is engaged in by the Company, has been reviewed with the Board for development to be owned or
managed by the Company, and/or has been divested by the Company but as to which the Company has an
obligation to refrain from involvement, but only for so long as such restriction applies to the
Company; provided, however, that the ownership of not more than 5% of the equity of a publicly
traded entity shall not be deemed to be a violation of this paragraph. During such two-year
period, Executive also agrees to make himself reasonably available to the Company for consulting at
a per diem rate that reflects his annual salary as in an effect prior to his termination of
employment (plus reimbursement of Executives reasonable expenses). Notwithstanding the foregoing,
the Executive shall be relieved of the covenants provided for in this subsection in the event that
the Company fails to make payments to Executive as provided for in Section 5(a) of this Agreement.
(c) The Executive also agrees that he will not, directly or indirectly, during the period
described in paragraph (b) of this Section 9 induce any person who is an employee, officer,
director, or agent of the Company, to terminate such relationship, or employ, assist in employing
or otherwise be associated in business with any present or former employee or officer of the
Company, including without limitation those who commence such positions with the Company after the
Date of Termination.
7
(d) The Executive acknowledges and agrees that the restrictions contained in this Section 9
are reasonable and necessary to protect and preserve the legitimate interests, properties, goodwill
and business of the Company, that the Company would not have entered into this Agreement in the
absence of such restrictions and that irreparable injury will be suffered by the Company should the
Executive breach the provisions of this Section. The Executive represents and acknowledges that
(i) the Executive has been advised by the Company to consult the Executives own legal counsel in
respect of this Agreement, (ii) the Executive has consulted with and been advised by his own
counsel in respect of this Agreement, and (iii) the Executive has had full opportunity, prior to
execution of this Agreement, to review thoroughly this Agreement with the Executives counsel.
(e) The Executive further acknowledges and agrees that a breach of the restrictions in this
Section 9 will not be adequately compensated by monetary damages. The Executive agrees that actual
damage may be difficult to ascertain and that, in the event of any such breach, the Company shall
be entitled to injunctive relief in addition to such other legal or equitable remedies as may be
available to the Company. In the event that the provisions of this Section 9 should ever be
adjudicated to exceed the limitations permitted by applicable law in any jurisdiction, it is the
intention of the parties that the provision shall be amended such that those provisions are made
consistent with the maximum limitations permitted by applicable law, that such amendment shall
apply only within the jurisdiction of the court that made such adjudication and that those
provisions otherwise be enforced to the maximum extent permitted by law.
(f) If the Executive breaches his obligations under this Section 9, he agrees that suit may be
brought, and that he consents to personal jurisdiction, in the United States District Court for the
Eastern District of Pennsylvania, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in Chester County, Pennsylvania; consents to the
non-exclusive jurisdiction of any such court in any such suit, action or proceeding; and waives any
objection which he may have to the laying of venue of any such suit, action or proceeding in any
such court. The Executive also irrevocably and unconditionally consents to the service of any
process, pleadings, notices or other papers.
(g) For purposes of this Section 9, the term Company shall be deemed to include each
Subsidiary of the Company.
10.
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 otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by the Executives
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.
(c) The Company shall 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 expressly to assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such succession had taken
place. As used in this Agreement, Company shall mean both the Company as defined above and any
such successor that assumes and agrees to perform this Agreement, by operation of law or otherwise.
8
11.
Miscellaneous
.
(a) This Agreement shall be governed by, and construed in accordance with, the laws of the
Commonwealth of Pennsylvania, without reference to principles of conflict of laws. The captions of
this Agreement are not 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. This Agreement supersedes the
provisions of, and the Executive shall not be entitled to any rights or benefits, including but not
limited to termination rights or severance benefits, under any other agreement with or commitment
of the Company or any of its subsidiaries or affiliates, including but not limited to the
Employment Agreement dated September 4, 1997 between AmerisourceBergen Services Corporation
(formerly known as AmeriSource Health Corporation) and the Executive.
(b) All notices and other communications under this Agreement shall be in writing and shall be
given by hand to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive
, to the address on file with the Company.
If to the Company
:
AmerisourceBergen Corporation
1300 Morris Drive
Chesterbrook, PA 19087
Attention: General Counsel
or to such other address as either party furnishes to the other in writing in accordance with
this paragraph (b) of Section 11. 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. If any provision of this
Agreement shall be held invalid or unenforceable in part, the remaining portion of such provision,
together with all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.
(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 Executives or the Companys 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
5 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.
(f) Anything to the contrary herein notwithstanding, all benefits or payments provided by the
Company to the Executive that would be deemed to constitute nonqualified deferred compensation
within the meaning of Section 409A are intended to comply with Section 409A of the Code. If,
however, any such benefit or payment is deemed to not comply with Section 409A of the Code, the
Company and the Executive agree to renegotiate in good faith any such benefit or payment
(including, without limitation, as to the timing of any severance payments payable hereof) so that
either (i) Section 409A of the Code will not apply or (ii) compliance with Section 409A will be
achieved.
9
(g) This Agreement may be executed in several counterparts, each of which shall be deemed an
original, and said counterparts shall constitute but one and the same instrument.
12. The respective rights and obligations of the parties hereunder shall survive any
termination of the Executives employment to the extent necessary to the intended preservation of
such rights and obligations, including, but not by way of limitation, those rights and obligations
set forth in Sections 3, 5, 6, 9 and 11.
IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the
authorization of the Committee, the Company has caused this Agreement to be executed in its name on
its behalf, in each case on the date(s) set forth below.
|
|
|
|
|
|
|
AMERISOURCEBERGEN CORPORATION
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ John G. Chou
|
|
|
|
|
|
|
|
|
|
Name:
Title:
|
|
John G. Chou
Senior Vice President, General Counsel & Secretary
|
|
|
|
|
|
|
|
|
|
Date: 11/24/08
|
|
|
|
|
|
EXECUTIVE
|
|
|
|
|
|
/s/ R. David Yost
|
|
|
|
|
|
R. David Yost
|
|
|
|
|
|
Date: 11/24/08
|
|
|
10
ANNEX 1
SEPARATION OF EMPLOYMENT AGREEMENT
AND GENERAL RELEASE
THIS SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE (the Agreement) is made as of
this
_____
day of _____, _____, by and between AmerisourceBergen Corporation (the Company) and
_____
(the Executive).
WHEREAS, Executive formerly was employed as _____;
WHEREAS, Executive and Company entered into an Employment Agreement, dated
_____,
_____, (the Employment Agreement) which provides for certain severance benefits in the event that
Executives employment is terminated on account of a reason set forth in the Employment Agreement;
WHEREAS, Executive and the Company mutually desire to terminate Executives employment on an
amicable basis, such termination to be effective _____ _____,
_____ (the Date of Resignation);
and
WHEREAS, in connection with the termination of Executives employment, the parties have agreed
to a separation package and the resolution of any and all disputes between them.
NOW, THEREFORE, IT IS HEREBY AGREED by and between Executive and the Company as follows:
1. (a) Executive, for and in consideration of the commitments of the Company as set forth in
Paragraph 5 of this Agreement, and intending to be legally bound, does hereby REMISE, RELEASE AND
FOREVER DISCHARGE the Company, its affiliates, subsidiaries and parents, and its officers,
directors, employees, and agents, and its and their respective successors and assigns, heirs,
executors, and administrators (each, a Releasee and collectively, Releasees) from all causes of
action, suits, debts, claims and demands whatsoever in law or in equity, which Executive ever had,
now has, or hereafter may have, whether known or unknown, or which Executives heirs, executors, or
administrators may have, by reason of any matter, cause or thing whatsoever, from the beginning of
Executives employment to the date of this Agreement, and particularly, but without limitation of
the foregoing general terms, any claims arising from or relating in any way to Executives
employment relationship with the Company and/or its predecessors, subsidiaries or affiliates, the
terms and conditions of that employment relationship, and the termination of that employment
relationship, including, but not limited to, any claims arising under the Age Discrimination in
Employment Act, the Older Workers Benefit Protection Act (OWBPA), Title VII of The Civil Rights
Act of 1964, the Americans with Disabilities Act, the Family and Medical Leave Act of 1993, the
Employee Retirement Income Security Act of 1974, the Pennsylvania Human Relations Act, and any
other claims under any federal, state or local common law, statutory, or regulatory provision, now
or hereafter recognized, and any claims for attorneys fees and costs. This Agreement is effective
without regard to the legal nature of the claims raised and without regard to whether any such
claims are based upon tort, equity, implied or express contract or discrimination of any sort.
11
(b) To the fullest extent permitted by law, and subject to the provisions of Paragraph 10
below, Executive represents and affirms that (i) Executive has not filed or caused to be filed on
Executives behalf any claim for relief against the Company or any Releasee and, to the best of
Executives knowledge and belief, no outstanding claims for relief have been filed or asserted
against the Company or any Releasee on Executives behalf; (ii) Executive has not reported any
improper, unethical or illegal conduct or activities to any supervisor, manager, department head,
human resources representative, agent or other representative of the Company, to any member of the
Companys legal or compliance departments, or to the ethics hotline, and has no knowledge of any
such improper, unethical or illegal conduct or activities; and (iii) Executive will not file,
commence, prosecute or participate in any judicial or arbitral action or proceeding against the
Company or any Releasee based upon or arising out of any act, omission, transaction, occurrence,
contract, claim or event existing or occurring on or before the date of this Agreement.
(c) Nothing in the Agreement will be deemed to release the Company from (i) claims solely to
enforce this Agreement, (ii) claims for indemnification under the Companys By-Laws, or (iii)
claims for payment or reimbursement pursuant to any employee benefit plan, policy or arrangement of
the Company.
2. In consideration of the Companys agreements as set forth in Paragraph 5 herein, Executive
agrees to be bound by the terms of Section 9 of the Employment Agreement.
3. Executive agrees and recognizes that Executive has permanently and irrevocably severed
Executives employment relationship with the Company, that Executive shall not seek employment with
the Company or any affiliated entity at any time in the future, and that the Company has no
obligation to employ Executive in the future.
4. Executive further agrees that Executive will not disparage or subvert the Company, or make
any statement reflecting negatively on the Company, its affiliated corporations or entities, or any
of their officers, directors, employees, agents or representatives, including, but not limited to,
any matters relating to the operation or management of the Company, Executives employment and the
termination of Executives employment, irrespective of the truthfulness or falsity of such
statement. The Company agrees that none of its officers, directors, employees, agents or
representatives will disparage or subvert the Executive, or make any statement reflecting
negatively on the Executive, including, but not limited to, any matters relating to the Executives
performance or the termination of Executives employment, irrespective of the truthfulness or
falsity of such statement.
5. In consideration for Executives agreement as set forth herein, the Company agrees that the
Company shall provide the following:
[
insert description of severance benefits to which Executive is entitled under the
Employment Agreement
]; and
[(b)] To the extent covered by directors and officers liability insurance on the Date
of Resignation, the Company will maintain, for no less than 6 years following the Date of
Resignation, directors and officers liability insurance covering the Executives potential
liability in connection with his employment by the Company in amounts and on terms that are
commensurate with the coverage provided to its active officers and directors of the Company.
6. Executive understands and agrees that the payments, benefits and agreements provided in
this Agreement are being provided to Executive in consideration for Executives acceptance and
execution of, and in reliance upon Executives representations in, this Agreement. Executive
acknowledges that if Executive had not executed this Agreement containing a release of all claims
against the Company, Executive would only have been entitled to the payments provided in the
Companys standard severance pay plan for employees.
12
7. Executive acknowledges and agrees that the Company previously has satisfied any and all
obligations owed to Executive under any employment agreement or offer letter Executive has with the
Company and, further, that this Agreement supersedes any employment agreement or offer letter
Executive has with the Company, and any and all prior agreements or understandings, whether written
or oral, between the parties shall remain in full force and effect to the extent not inconsistent
with this Agreement, and further, that, except as set forth expressly herein, no promises or
representations have been made to Executive in connection with the termination of Executives
employment agreement or offer letter with the Company, or the terms of this Agreement.
8. Executive agrees not to disclose the terms of this Agreement to anyone, except Executives
spouse, attorney and, as necessary, tax/financial advisor. Likewise, the Company agrees that the
terms of this Agreement will not be disclosed except as may be necessary to obtain approval or
authorization to fulfill its obligations hereunder or as required by law. It is expressly
understood that any violation of the confidentiality obligation imposed hereunder constitutes a
material breach of this Agreement.
9. Executive represents that Executive does not presently have in Executives possession any
records and business documents, whether on computer or hard copy, and other materials (including
but not limited to computer disks and tapes, computer programs and software, office keys,
correspondence, files, customer lists, technical information, customer information, pricing
information, business strategies and plans, sales records and all copies thereof) (collectively,
the Corporate Records) provided by the Company and/or its predecessors, subsidiaries or
affiliates or obtained as a result of Executives prior employment with the Company and/or its
predecessors, subsidiaries or affiliates, or created by Executive while employed by or rendering
services to the Company and/or its predecessors, subsidiaries or affiliates. Executive
acknowledges that all such Corporate Records are the property of the Company. In addition,
Executive shall promptly return in good condition any and all beepers, credit cards, cellular
telephone equipment, business cards and computers. As of the Date of Resignation, the Company will
make arrangements to remove, terminate or transfer any and all business communication lines
including network access, cellular phone, fax line and other business numbers.
10. Nothing in this Agreement shall prohibit or restrict Executive from: (i) making any
disclosure of information required by law; (ii) providing information to, or testifying or
otherwise assisting in any investigation or proceeding brought by, any federal regulatory or law
enforcement agency or legislative body, any self-regulatory organization, or the Companys
[
designated legal, compliance or human resources officer
]; or (iii) filing, testifying,
participating in or otherwise assisting in a proceeding relating to an alleged violation of any
federal, state or municipal law relating to fraud, or any rule or regulation of the Securities and
Exchange Commission or any self-regulatory organization.
11. The parties agree and acknowledge that the agreement by the Company described herein, and
the settlement and termination of any asserted or unasserted claims against the Releasees, are not
and shall not be construed to be an admission of any violation of any federal, state or local
statute or regulation, or of any duty owed by any of the Releasees to Executive.
12. Executive agrees and recognizes that should Executive breach any of the obligations or
covenants set forth in this Agreement, the Company will have no further obligation to provide
Executive
with the consideration set forth herein, and will have the right to seek repayment of all
consideration paid up to the time of any such breach. Further, Executive acknowledges in the event
of a breach of this Agreement, Releasees may seek any and all appropriate relief for any such
breach, including equitable relief and/or money damages, attorneys fees and costs.
13
13. Executive further agrees that the Company shall be entitled to preliminary and permanent
injunctive relief, without the necessity of proving actual damages, as well as to an equitable
accounting of all earnings, profits and other benefits arising from any violations of this
Agreement, which rights shall be cumulative and in addition to any other rights or remedies to
which the Company may be entitled.
14. This Agreement and the obligations of the parties hereunder shall be construed,
interpreted and enforced in accordance with the laws of the Commonwealth of Pennsylvania.
15. Executive certifies and acknowledges as follows:
(a) That Executive has read the terms of this Agreement, and that Executive understands its
terms and effects, including the fact that Executive has agreed to RELEASE AND FOREVER DISCHARGE
the Company and each and every one of its affiliated entities from any legal action arising out of
Executives employment relationship with the Company and the termination of that employment
relationship;
(b) That Executive has signed this Agreement voluntarily and knowingly in exchange for the
consideration described herein, which Executive acknowledges is adequate and satisfactory to
Executive and which Executive acknowledges is in addition to any other benefits to which Executive
is otherwise entitled;
(c) That Executive has been and is hereby advised in writing to consult with an attorney prior
to signing this Agreement;
(d) That Executive does not waive rights or claims that may arise after the date this
Agreement is executed;
(e) That the Company has provided Executive with a period of twenty-one (21) days within which
to consider this Agreement, and that Executive has signed on the date indicated below after
concluding that this Agreement is satisfactory to Executive; and
(f) Executive acknowledges that this Agreement may be revoked by Executive within seven (7)
days after execution, and it shall not become effective until the expiration of such seven day
revocation period. In the event of a timely revocation by Executive, this Agreement will be deemed
null and void and the Company will have no obligations hereunder.
[
SIGNATURE PAGE FOLLOWS
]
14
Intending to be legally bound hereby, Executive and the Company executed the foregoing
Separation of Employment Agreement and General Release this
_____ day of
_____,
_____.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Witness:
|
|
|
|
|
|
|
|
|
|
[
Executive
]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMERISOURCEBERGEN CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
Witness:
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
Exhibit 10.9
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the Agreement) by and between AmerisourceBergen
Corporation, a Delaware corporation (hereinafter the Company), and Michael D. DiCandilo (the
Executive), dated and effective as of November 24, 2008.
WHEREAS, the Company and the Executive entered into an employment agreement (the Original
Agreement) effective October 1, 2003, reflecting the determination of the Board of Directors of
the Company (the Board), upon the recommendation of the Compensation and Succession Planning
Committee of the Board (the Committee), that it would be in the best interests of the Company and
its shareholders to employ the Executive as the Chief Financial Officer of the Company, and the
Executives desire to serve in that capacity; and
WHEREAS, the parties wish to amend the Original Agreement to comport with Section 409A of the
Internal Revenue Code, as amended, and the regulations promulgated thereunder and to make certain
other changes intended to clarify certain provisions of the Original Agreement;
NOW, THEREFORE, intending to be legally bound, the parties hereto agree to amend and restate
the Original Agreement in its entirety as follows:
1.
Employment Period
. The Company shall continue to employ the Executive, either
directly or through a Subsidiary (as defined below), and the Executive shall continue to serve the
Company or any such Subsidiary, on the terms and conditions set forth in this Agreement, beginning
November 24, 2008 (the Employment Date) and until that employment ceases as provided below in
Section 4 (the Employment Period). Subsidiary means any entity that is controlled, directly or
indirectly, by the Company.
2.
Position and Duties
.
(a) During the Employment Period, the Executive shall be employed as the Executive Vice
President and Chief Financial Officer of the Company and Chief Operating Officer of
AmerisourceBergen Drug Corporation, subject to such changes in title as may be proposed by the
Board or the Chief Executive Officer and consented to by the Executive. The Executive shall report
to the Chief Executive Officer of the Company and shall perform such duties for the Company as are
related typically to the office of a chief financial officer and such other duties as may be
reasonably assigned by the Board, in its discretion, or the Chief Executive Officer, in his
discretion, including, as of the date hereof, the duties of Chief Operating Officer of
AmerisourceBergen Drug Corporation, all such duties to be performed in the manner reasonably
directed by the Board, in its discretion, or the Chief Executive Officer of the Company, in his
discretion.
(b) During the Employment Period, but excluding any periods of vacation and absence due to
intermittent illness to which the Executive is entitled, and any services on corporate, civic or
charitable boards or committees, lectures, speaking engagements or teaching engagements that are
approved by the Executives direct supervisor and that do not significantly interfere with the
performance of his responsibilities to the Company or violating the provisions of Section 9, the
Executive shall devote his full time and attention during normal business hours to the business and
affairs of the Company and the Executive shall use reasonable efforts to carry out all duties and
responsibilities assigned to him faithfully and efficiently.
3.
Compensation
.
(a)
Base Salary
. During the Employment Period, the Executive shall continue to
receive annual base salary at the rate in effect as of the date of this Agreement, payable in
accordance with the regular payroll practices of the Company. The Executives base salary shall be
reviewed annually by the Committee and/or the Chief Executive Officer of the Company, in accordance
with the Companys standard practices for executives generally, and may be increased as determined
by the Committee, in its sole discretion, or by any person or persons to whom the Committee has
delegated such authority.
(b)
Annual Bonus and Incentive Plans; Other Benefits
. During the Employment Period:
(i) the Executive shall be entitled to participate in any short-term and long-term incentive
programs established and/or maintained by the Company for its senior level executives generally;
(ii) the Executive shall be entitled to participate in all incentive, savings and retirement plans,
practices, policies and programs of the Company to at least the same extent as other senior
executives of the Company; (iii) the Executive and/or the Executives family, as the case may be,
shall be eligible for participation in, and shall receive all benefits under, all welfare benefit
plans, practices, policies and programs provided by the Company to at least the same extent as
other senior executives of the Company; and (iv) the Executive shall be entitled to, and the
Company shall provide the Executive with, not less than the number of weeks of vacation during each
calendar year to which the Executive is entitled as of the date of this Agreement. In addition to
the foregoing, the Executive shall be entitled to annual reimbursement of up to $5,000 per year for
tax and financial planning and tax preparation, or such greater amount as may be authorized by the
Committee, in its sole discretion, or by any person or persons to whom the Committee has delegated
such authority.
(c)
Expenses
. During the Employment Period, the Executive shall be entitled to
receive advancement or prompt reimbursement for all reasonable expenses incurred or anticipated to
be incurred by the Executive in carrying out the Executives duties under this Agreement, provided
that the Executive complies with the generally applicable policies, practices and procedures of the
Company for submission of expense reports, receipts, or similar documentation of such expenses.
(d) Notwithstanding anything herein to the contrary or otherwise, except to the extent any
expense, reimbursement or in-kind benefit provided pursuant to Sections 3(b), 3(c) and 5(a) does
not constitute a deferral of compensation within the meaning of Section 409A of the Internal
Revenue Code of 1986, as amended from time to time (Code), and its implementing regulations and
guidance (Section 409A) (i) the amount of expenses eligible for reimbursement or in-kind benefits
provided to the Executive during any calendar year will not affect the amount of expenses eligible
for reimbursement or in-kind benefits provided to the Executive in any other calendar year, (ii)
the reimbursements for expenses for which the Executive is entitled to be reimbursed shall be made
on or before the last day of the calendar year following the calendar year in which the applicable
expense is incurred and (iii) the right to payment or reimbursement or in-kind benefits hereunder
may not be liquidated or exchanged for any other benefit.
4.
Termination of Employment
.
(a)
Death or Disability
. The Executives employment and the Employment Period shall
terminate automatically upon the Executives death or long term Disability during the Employment
Period. Disability means a condition entitling the Executive to benefits under the
Companys Long Term Disability Plan, policy or arrangement.
2
(b)
By the Company
. The Company may terminate the Executives employment under this
Agreement during the Employment Period for Cause or without Cause. Cause means:
(i) the continued failure by the Executive to substantially perform his duties as contemplated
by this Agreement (other than any such failure resulting from his incapacity due to physical or
mental illness or injury or any such actual or anticipated failure after the issuance by the
Executive of a Notice of Termination for Good Reason) over a period of not less than thirty days
after a demand for substantial performance is delivered to the Executive by the Board or by the
Chief Executive Officer of the Company, which demand identifies the manner in which it is believed
that the Executive has not substantially performed his duties;
(ii) the willful misconduct of the Executive materially and demonstrably injurious to the
Company (including, without limitation, any breach by the Executive of Section 9 of this
Agreement); provided that no act or failure to act on the Executives part will be considered
willful if done, or omitted to be done, by him in good faith and with reasonable belief that his
action or omission was in the best interest of the Company;
(iii) the Executives conviction of a misdemeanor, which, as determined in good faith by the
Board, constitutes a crime of moral turpitude and gives rise to material harm to the Company or to
any subsidiary or affiliate of the Company; or
(iv) the Executives conviction of a felony (including, without limitation, any felony
constituting a crime of moral turpitude).
(c)
By the Executive
. The Executive may terminate employment under this Agreement for
Good Reason or without Good Reason. Good Reason means:
(i) any reduction in the Executives base salary; or
(ii) material failure by the Company to comply with any provision of Sections 2 and 3 of this
Agreement (including, but not limited to, a diminution in the Executives authority, duties, or
responsibilities) other than an isolated, insubstantial or inadvertent failure that is not taken in
bad faith and is remedied by the Company within 30 days after receipt of written notice thereof
from the Executive.
Notwithstanding the foregoing, Good Reason for purposes of Section 4(c)(i) shall not include
a reduction in base salary if such reduction is coincident with a reduction applicable to all
members of the senior management team. 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 that
constitutes Good Reason and the specific provision(s) of this Agreement on which the Executive
relies. Such Notice of Termination for Good Reason must be received by the Company no later than
the 60
th
day after the event, or last in a series of events, that gives rise to Good
Reason. The Company shall have 30 days to remedy the conduct set forth in the Notice of
Termination for Good Reason. A termination of employment by the Executive for Good Reason shall be
effective on the 60
th
business day following the date when the Notice of Termination for
Good Reason is given, unless the conduct set forth in the notice is remedied by the Company within
the 30-day period. A termination of the Executives employment by the Executive
without Good Reason shall be effected by giving the Company at least 30 days advance written
notice of the termination.
3
(d)
Date of Termination
. The Date of Termination means the date of the Executives
death, the date of the Executives Disability, or the date the termination of the Executives
employment under this Agreement by the Company for Cause or without Cause or by the Executive for
Good Reason or without Good Reason, as the case may be, is effective. The Employment Period shall
end on the Date of Termination.
(e)
Separation from Service
. For purposes of determining under Section 409A whether
there has been a separation from service with the meaning of Treasury Regulation Section
1.409A-1(h) (or any successor regulation), the Executive shall be deemed to have incurred a
separation from service if his employment has been terminated in accordance with this Section 4 and
he is performing less than 50% of the average level of bona fide services he was performing for the
Company in the immediately preceding 36-month period (Separation From Service). In addition,
notwithstanding any other provision of this Agreement to the contrary, any payment or benefit
described in Section 5 that represents a deferral of compensation within the meaning of Section
409A shall only be paid or provided to Executive upon a Separation From Service as defined herein.
5.
Obligations of the Company upon Termination
.
(a)
By the Company Other Than for Cause; or By the Executive for Good Reason
. If,
during the Employment Period, the Company terminates the Executives employment under this
Agreement (other than for Cause) or the Executive terminates employment under this Agreement for
Good Reason:
(1) the Executive shall be entitled to continued payment for two years after the
Separation From Service of the Executives current base salary (as in effect on the Date of
Termination), which amounts shall be paid in installments over such two-year period pursuant
to the Companys normal payroll policy,
(2) the Executive shall be entitled to receive the following bonus payments: (i)
either (A) if the Separation from Service occurs following the end of a fiscal year but
prior to the date that an annual bonus for such previously completed fiscal year, if any, is
approved by the Companys Board of Directors, a bonus payment equal to the bonus payment
that the Executive would have received for such prior fiscal year without regard to the
Executive not having remained employed by the Company on the date that such bonus payment
would otherwise have been paid to the Executive, with any such bonus amount to be paid at
the same time as annual bonuses for such prior fiscal year are paid by the Company under the
applicable bonus program generally but in no event later than March 15
th
of the
calendar year following the calendar year that includes the last day of the applicable
fiscal year or (B) if Separation from Service occurs following the end of a fiscal year but
after the date that an annual bonus for such previously completed fiscal year is approved
(or determined not to be payable by the Companys Board or Directors), a bonus payment equal
to an amount representing 100% of the Executives target bonus for the Executives salary
grade for the fiscal year of the Company in which such Separation from Service occurs,
multiplied by a fraction, the numerator of which is the number of days in such current
fiscal year through the Separation from Service, and the denominator of which is 365, with
any such amount to be paid at the same time as annual bonuses for the fiscal year in which
such Separation from Service occurs are paid by the Company under the applicable bonus
program generally but in no event later than December 31st of the calendar year following
the calendar year that includes the last day of the applicable fiscal year and (ii)
continued payment for the two fiscal years ending immediately after the Separation from
Service of a bonus equal to the average of the annual bonuses earned by the Executive over
the three complete years (or if less than three complete years, the average bonus earned
during such lesser number of complete years) preceding the Date of Termination (that is, not
including the bonus year that includes the Date of Termination) with each such bonus payment
being paid at the same time as annual bonuses are paid by the Company under the applicable
bonus program; and
4
(3) for the eighteen month period following the Separation From Service (subject to
earlier termination as described below), if the Executive elects to receive continuation
coverage under the Companys group health plans pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA), the Executive shall be entitled to: (i) waiver by the
Company of the COBRA premium costs of medical, prescription, dental and vision coverage, if
any, under the Companys group health plans (as in effect from time to time) for the
Executive and, to the extent permitted under COBRA, the Executives spouse and eligible
dependents, if any, for the first two calendar months of the eighteen month continuation
period; and (ii) following the initial two-month period, the Executive shall be entitled to
reimbursement from the Company for the COBRA premium costs of medical, prescription, dental
and vision coverage, if any, under the Companys group health plans for the Executive and,
to the extent permitted under COBRA, the Executives spouse and eligible dependents, if any,
with such reimbursement not to exceed the COBRA rates for such coverage; provided, however,
that the Executive shall be required to submit to the Company reasonable evidence of payment
by the Executive of any such COBRA premiums in order to obtain reimbursement from the
Company and that the Executive may not submit any requests for reimbursement of such
payments more than once per calendar month. Notwithstanding anything to the contrary set
forth above, the Company, in its sole discretion, may discontinue any coverage contemplated
hereunder in the event that such continuation is not permitted under or would adversely
affect the tax status of the plan or plans of the Company pursuant to which the coverage is
provided, in which case the Company shall make supplemental severance payments to the
Executive in monthly amounts equal to the amounts to which the Executive otherwise would
have been entitled to reimbursement hereunder in respect of such coverage for the remainder
of the period that the Company otherwise would have been obligated to make reimbursements
hereunder to the Executive. Any amounts that are reimbursed to the Executive by the Company
or paid directly to the Executive as supplemental severance payments will be considered
taxable income to the Executive and any taxes on such amounts will be the Executives
responsibility and subject to applicable tax withholding.
In addition, the Executive shall be entitled to receive executive level outplacement assistance
under any outplacement assistance program then being maintained by the Company in accordance with
the terms of any such program, or if no such program then exists, in an amount not to exceed
$10,000; provided that any reimbursable expense must be incurred by the Executive no later than the
end of the second calendar year following the year of the Separation From Service. The Executive
shall also become vested in any outstanding options, restricted stock or other equity incentive
awards only to the extent provided for under the terms governing such equity incentive award. The
Company shall also pay, or cause to be paid, to the Executive, in a lump sum in cash within 30 days
after the Separation From Service (or, in the case of the pro-rated Annual Bonus Amount, at the
time such bonus would otherwise be paid), the following accrued but unpaid cash compensation of the
Executive (the Accrued Obligations): (X) the Executives base salary through the Date of
Termination that has not yet been paid, (Y) any accrued but unpaid vacation pay, and (Z) any
unreimbursed employee business expenses; provided, however, that the Companys obligation to make
any payments, or cause any payments to be made, under this paragraph (a) to the extent any such
payment shall not have accrued as of the day before the Date of Termination shall
also be conditioned upon the Executives execution, and non-revocation, of a written release,
substantially in the form attached hereto as
Annex 1
, of any and all claims against the
Company and all related parties with respect to all matters arising out of the Executives
employment under this Agreement or the termination thereof (other than any entitlements under the
terms of this Agreement to indemnification or under any other plans or programs of the Company in
which the Executive participated and under which the Executive has accrued and is due a benefit).
The payments and benefits described in this paragraph (a) (other than those payments and benefits
accrued as of the day before the Date of Termination) will be paid, or will begin to be paid or
provided, as applicable, after the applicable release review period and revocation period have
expired, and as if the Executive signed the release on the last day of the release review period.
5
To the extent compliance with the requirements of Treas. Reg. § 1.409A-3(i)(2) (or any successor
provision) is necessary to avoid the application of an additional tax under Section 409A to
payments due to the Executive upon or following his Separation From Service, then notwithstanding
any other provision of this Agreement (or any otherwise applicable plan, policy, agreement or
arrangement), any such payments that are otherwise due within six months following the Executives
Separation From Service will be deferred (without interest) and paid to the Executive in a lump sum
immediately following that six month period. This provision shall not be construed as preventing
payments pursuant to Section 5 equal to an amount up to 2 times the lesser of (a) the Executives
annualized compensation for the year prior to the Separation From Service, and (b) the maximum
amount that may be taken into account under a qualified plan pursuant to section 401(a)(17) of the
Code, being paid to the Executive in the first six months following the Separation From Service.
(b)
Death or Disability
. If the Executives employment is terminated by reason of the
Executives death or Disability during the Employment Period, the Company shall pay the Accrued
Obligations to the Executive or the Executives estate or legal representative, as applicable, in a
lump sum in cash within 30 days after the Date of Termination. In such event, the Company shall
have no further obligations under this Agreement or otherwise to or with respect to the Executive;
and for any entitlements under the terms of any other plans or programs of the Company in which the
Executive participated and under which the Executive has become entitled to a benefit.
(c)
By the Company for Cause; By the Executive Other than for Good Reason
. If the
Executives employment is terminated by the Company for Cause during the Employment Period, or the
Executive voluntarily terminates employment during the Employment Period, other than for Good
Reason, the Company shall pay the Executive, or shall cause the Executive to be paid, the
Executives base salary through the Date of Termination that has not been paid and the amount of
any declared but unpaid bonuses, accrued but unpaid vacation pay, and unreimbursed employee
business expenses, and the Company shall have no further obligations under this Agreement or
otherwise to or with respect to the Executive other than for any entitlements under the terms of
any other plans or programs of the Company in which the Executive participated and under which the
Executive has become entitled to a benefit.
6.
Change in Control
. It is the intention of the parties that payments to be made to
the Executive whether under the terms of this Agreement or otherwise shall not constitute excess
parachute payments within the meaning of Section 280G of the Code and any regulations thereunder.
If the independent accountants serving as auditors for the Company on the date of this Agreement
(or any other independent certified public accounting firm designated by the Company) determine
that any payment or distribution by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise) would be nondeductible by the Company pursuant to Section 280G of the Code (or any
successor provision), then the amounts payable
or distributable under this Agreement will be reduced to the maximum amount which may be paid
or distributed without causing such payments or distributions to be nondeductible. The
determination shall take into account (a) whether the payments or distributions are parachute
payments under Section 280G, (b) the amount of payments and distributions under this Agreement
that constitute reasonable compensation, and (c) the present value of such payments and
distributions determined in accordance with Treasury Regulations in effect from time to time. If a
reduction is required in accordance with this Section 6, cash payments will be reduced before any
acceleration of vesting or forfeiture conditions are eliminated and future payments will be reduced
before amounts that are immediately payable.
6
7.
Non-exclusivity of Rights
. Nothing in this Agreement shall prevent or limit the
Executives continuing or future participation in any plan, program, policy or practice provided by
the Company for which the Executive may qualify. Vested benefits and other amounts that the
Executive is otherwise entitled to receive on or after the Date of Termination under any plan,
policy, practice or program of, or any contract or agreement with, the Company shall 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.
8.
No Mitigation
. 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.
9.
Confidential Information; Non-solicitation; Non-competition
.
(a) The Executive agrees and acknowledges that by reason of his employment by and service to
the Company, he will have access to, become exposed to and/or become knowledgeable about
confidential information of the Company (the Confidential Information) from time to time during
the Employment Period, including, without limitation, proposals, plans, inventions, practices,
systems, programs, processes, methods, techniques, research, records, supplier sources, customer
lists and other forms of business information that are not known to the Companys competitors, are
not recognized as being encompassed within standard business or management practices and/or are
kept secret and confidential by the Company. Executive agrees that at no time during or after the
Employment Period will he disclose or use the Confidential Information except as may be required in
the prudent course of business for the benefit of the Company. The Executive also agrees to be
subject to the Companys Code of Ethics and Business Conduct as in effect from time to time during
the Employment Period.
(b) The Executive acknowledges that the Company is generally engaged in business throughout
the United States. During the Executives employment by the Company and for two years after the
Date of Termination or the expiration of the Employment Period, the Executive agrees that he will
not, unless acting with the prior written consent of the Company, directly or indirectly, own,
manage, control, or participate in the ownership, management or control of, or be employed or
engaged by, or otherwise affiliated or associated with, as an officer, director, employee,
consultant, independent contractor or otherwise, any other corporation, partnership,
proprietorship, firm, association or other business entity, which is engaged in any business,
including the wholesale distribution of pharmaceutical products, that, or otherwise engage in any
business that, as of the Date of Termination or expiration of the Employment Period, as applicable,
is engaged in by the Company, has been reviewed with the Board for development to be owned or
managed by the Company, and/or has been divested by the Company but as to which the Company has an
obligation to refrain from involvement, but only for so long as such restriction applies to the
Company; provided, however, that the ownership of not more than 5% of the equity of a publicly
traded entity shall not be deemed to be a violation of this paragraph. During such
two-year period, Executive also agrees to make himself reasonably available to the Company for
consulting at a per diem rate that reflects his annual salary as in an effect prior to his
termination of employment (plus reimbursement of Executives reasonable expenses). Notwithstanding
the foregoing, the Executive shall be relieved of the covenants provided for in this subsection in
the event that the Company fails to make payments to Executive as provided for in Section 5(a) of
this Agreement.
7
(c) The Executive also agrees that he will not, directly or indirectly, during the period
described in paragraph (b) of this Section 9 induce any person who is an employee, officer,
director, or agent of the Company, to terminate such relationship, or employ, assist in employing
or otherwise be associated in business with any present or former employee or officer of the
Company, including without limitation those who commence such positions with the Company after the
Date of Termination.
(d) The Executive acknowledges and agrees that the restrictions contained in this Section 9
are reasonable and necessary to protect and preserve the legitimate interests, properties, goodwill
and business of the Company, that the Company would not have entered into this Agreement in the
absence of such restrictions and that irreparable injury will be suffered by the Company should the
Executive breach the provisions of this Section. The Executive represents and acknowledges that
(i) the Executive has been advised by the Company to consult the Executives own legal counsel in
respect of this Agreement, (ii) the Executive has consulted with and been advised by his own
counsel in respect of this Agreement, and (iii) the Executive has had full opportunity, prior to
execution of this Agreement, to review thoroughly this Agreement with the Executives counsel.
(e) The Executive further acknowledges and agrees that a breach of the restrictions in this
Section 9 will not be adequately compensated by monetary damages. The Executive agrees that actual
damage may be difficult to ascertain and that, in the event of any such breach, the Company shall
be entitled to injunctive relief in addition to such other legal or equitable remedies as may be
available to the Company. In the event that the provisions of this Section 9 should ever be
adjudicated to exceed the limitations permitted by applicable law in any jurisdiction, it is the
intention of the parties that the provision shall be amended such that those provisions are made
consistent with the maximum limitations permitted by applicable law, that such amendment shall
apply only within the jurisdiction of the court that made such adjudication and that those
provisions otherwise be enforced to the maximum extent permitted by law.
(f) If the Executive breaches his obligations under this Section 9, he agrees that suit may be
brought, and that he consents to personal jurisdiction, in the United States District Court for the
Eastern District of Pennsylvania, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in Chester County, Pennsylvania; consents to the
non-exclusive jurisdiction of any such court in any such suit, action or proceeding; and waives any
objection which he may have to the laying of venue of any such suit, action or proceeding in any
such court. The Executive also irrevocably and unconditionally consents to the service of any
process, pleadings, notices or other papers.
(g) For purposes of this Section 9, the term Company shall be deemed to include each
Subsidiary of the Company.
10.
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 otherwise than by will or the laws of
descent and distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executives legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.
8
(c) The Company shall 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 expressly to assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such succession had taken
place. As used in this Agreement, Company shall mean both the Company as defined above and any
such successor that assumes and agrees to perform this Agreement, by operation of law or otherwise.
11.
Miscellaneous
.
(a) This Agreement shall be governed by, and construed in accordance with, the laws of the
Commonwealth of Pennsylvania, without reference to principles of conflict of laws. The captions of
this Agreement are not 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 to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive
, to the address on file with the Company.
If to the Company
:
AmerisourceBergen Corporation
1300 Morris Drive
Chesterbrook, PA 19087
Attention: Chief Executive Officer
or to such other address as either party furnishes to the other in writing in accordance with
this paragraph (b) of Section 11. 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. If any provision of this
Agreement shall be held invalid or unenforceable in part, the remaining portion of such provision,
together with all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.
(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 Executives or the Companys 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 5
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.
9
(f) Anything to the contrary herein notwithstanding, all benefits or payments provided by the
Company to the Executive that would be deemed to constitute nonqualified deferred compensation
within the meaning of Section 409A are intended to comply with Section 409A of the Code. If,
however, any such benefit or payment is deemed to not comply with Section 409A of the Code, the
Company and the Executive agree to renegotiate in good faith any such benefit or payment
(including, without limitation, as to the timing of any severance payments payable hereof) so that
either (i) Section 409A of the Code will not apply or (ii) compliance with Section 409A will be
achieved.
(g) This Agreement may be executed in several counterparts, each of which shall be deemed an
original, and said counterparts shall constitute but one and the same instrument.
12. The respective rights and obligations of the parties hereunder shall survive any
termination of the Executives employment to the extent necessary to the intended preservation of
such rights and obligations, including, but not by way of limitation, those rights and obligations
set forth in Sections 3, 5, 6, 9 and 11.
IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the
authorization of the Committee, the Company has caused this Agreement to be executed in its name on
its behalf, in each case on the date(s) set forth below.
|
|
|
|
|
|
|
|
|
AMERISOURCEBERGEN CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ R. David Yost
|
|
|
|
|
|
|
Name:
|
|
R. David Yost
|
|
|
|
|
|
|
Title:
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date: 11/24/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXECUTIVE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Michael D. DiCandilo
|
|
|
|
|
|
|
|
|
|
Michael D. DiCandilo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date: 11/24/08
|
|
|
|
|
10
ANNEX 1
SEPARATION OF EMPLOYMENT AGREEMENT
AND GENERAL RELEASE
THIS SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE (the Agreement) is made as of
this
_____
day of
,
_____, by and between AmerisourceBergen Corporation (the Company) and
(the Executive).
WHEREAS, Executive formerly was employed as
;
WHEREAS, Executive and Company entered into an Employment Agreement, dated
_____,
______, (the Employment Agreement) which provides for certain severance benefits in the event that
Executives employment is terminated on account of a reason set forth in the Employment Agreement;
WHEREAS, Executive and the Company mutually desire to terminate Executives employment on an
amicable basis, such termination to be effective
_____ ___,
_____
(the Date of Resignation);
and
WHEREAS, in connection with the termination of Executives employment, the parties have agreed
to a separation package and the resolution of any and all disputes between them.
NOW, THEREFORE, IT IS HEREBY AGREED by and between Executive and the Company as follows:
1. (a) Executive, for and in consideration of the commitments of the Company as set forth in
Paragraph 5 of this Agreement, and intending to be legally bound, does hereby REMISE, RELEASE AND
FOREVER DISCHARGE the Company, its affiliates, subsidiaries and parents, and its officers,
directors, employees, and agents, and its and their respective successors and assigns, heirs,
executors, and administrators (each, a Releasee and collectively, Releasees) from all causes of
action, suits, debts, claims and demands whatsoever in law or in equity, which Executive ever had,
now has, or hereafter may have, whether known or unknown, or which Executives heirs, executors, or
administrators may have, by reason of any matter, cause or thing whatsoever, from the beginning of
Executives employment to the date of this Agreement, and particularly, but without limitation of
the foregoing general terms, any claims arising from or relating in any way to Executives
employment relationship with the Company and/or its predecessors, subsidiaries or affiliates, the
terms and conditions of that employment relationship, and the termination of that employment
relationship, including, but not limited to, any claims arising under the Age Discrimination in
Employment Act, the Older Workers Benefit Protection Act (OWBPA), Title VII of The Civil Rights
Act of 1964, the Americans with Disabilities Act, the Family and Medical Leave Act of 1993, the
Employee Retirement Income Security Act of 1974, the Pennsylvania Human Relations Act, and any
other claims under any federal, state or local common law, statutory, or regulatory provision, now
or hereafter recognized, and any claims for attorneys fees and costs. This Agreement is effective
without regard to the legal nature of the claims raised and without regard to whether any such
claims are based upon tort, equity, implied or express contract or discrimination of any sort.
11
(b) To the fullest extent permitted by law, and subject to the provisions of Paragraph 10
below, Executive represents and affirms that (i) Executive has not filed or caused to be filed on
Executives behalf any claim for relief against the Company or any Releasee and, to the best of
Executives knowledge and belief, no outstanding claims for relief have been filed or asserted
against the Company or any Releasee on Executives behalf; (ii) Executive has not reported any
improper, unethical or illegal conduct or activities to any supervisor, manager, department head,
human resources representative, agent or other representative of the Company, to any member of the
Companys legal or compliance departments, or to the ethics hotline, and has no knowledge of any
such improper, unethical or illegal conduct or activities; and (iii) Executive will not file,
commence, prosecute or participate in any judicial or arbitral action or proceeding against the
Company or any Releasee based upon or arising out of any act, omission, transaction, occurrence,
contract, claim or event existing or occurring on or before the date of this Agreement.
(c) Nothing in the Agreement will be deemed to release the Company from (i) claims solely to
enforce this Agreement, (ii) claims for indemnification under the Companys By-Laws, or (iii)
claims for payment or reimbursement pursuant to any employee benefit plan, policy or arrangement of
the Company.
2. In consideration of the Companys agreements as set forth in Paragraph 5 herein, Executive
agrees to be bound by the terms of Section 9 of the Employment Agreement.
3. Executive agrees and recognizes that Executive has permanently and irrevocably severed
Executives employment relationship with the Company, that Executive shall not seek employment with
the Company or any affiliated entity at any time in the future, and that the Company has no
obligation to employ Executive in the future.
4. Executive further agrees that Executive will not disparage or subvert the Company, or make
any statement reflecting negatively on the Company, its affiliated corporations or entities, or any
of their officers, directors, employees, agents or representatives, including, but not limited to,
any matters relating to the operation or management of the Company, Executives employment and the
termination of Executives employment, irrespective of the truthfulness or falsity of such
statement. The Company agrees that none of its officers, directors, employees, agents or
representatives will disparage or subvert the Executive, or make any statement reflecting
negatively on the Executive, including, but not limited to, any matters relating to the Executives
performance or the termination of Executives employment, irrespective of the truthfulness or
falsity of such statement.
5. In consideration for Executives agreement as set forth herein, the Company agrees that the
Company shall provide the following:
[
insert description of severance benefits to which Executive is entitled under the
Employment Agreement
]; and
[(b)] To the extent covered by directors and officers liability insurance on the Date
of Resignation, the Company will maintain, for no less than 6 years following the Date of
Resignation, directors and officers liability insurance covering the Executives potential
liability in connection with his employment by the Company in amounts and on terms that are
commensurate with the coverage provided to its active officers and directors of the Company.
6. Executive understands and agrees that the payments, benefits and agreements provided in
this Agreement are being provided to Executive in consideration for Executives acceptance and
execution of, and in reliance upon Executives representations in, this Agreement. Executive
acknowledges that if Executive had not executed this Agreement containing a release of all claims
against the Company, Executive would only have been entitled to the payments provided in the
Companys standard severance pay plan for employees.
12
7. Executive acknowledges and agrees that the Company previously has satisfied any and all
obligations owed to Executive under any employment agreement or offer letter Executive has with the
Company and, further, that this Agreement supersedes any employment agreement or offer letter
Executive has with the Company, and any and all prior agreements or understandings, whether written
or oral, between the parties shall remain in full force and effect to the extent not inconsistent
with this Agreement, and further, that, except as set forth expressly herein, no promises or
representations have been made to Executive in connection with the termination of Executives
employment agreement or offer letter with the Company, or the terms of this Agreement.
8. Executive agrees not to disclose the terms of this Agreement to anyone, except Executives
spouse, attorney and, as necessary, tax/financial advisor. Likewise, the Company agrees that the
terms of this Agreement will not be disclosed except as may be necessary to obtain approval or
authorization to fulfill its obligations hereunder or as required by law. It is expressly
understood that any violation of the confidentiality obligation imposed hereunder constitutes a
material breach of this Agreement.
9. Executive represents that Executive does not presently have in Executives possession any
records and business documents, whether on computer or hard copy, and other materials (including
but not limited to computer disks and tapes, computer programs and software, office keys,
correspondence, files, customer lists, technical information, customer information, pricing
information, business strategies and plans, sales records and all copies thereof) (collectively,
the Corporate Records) provided by the Company and/or its predecessors, subsidiaries or
affiliates or obtained as a result of Executives prior employment with the Company and/or its
predecessors, subsidiaries or affiliates, or created by Executive while employed by or rendering
services to the Company and/or its predecessors, subsidiaries or affiliates. Executive
acknowledges that all such Corporate Records are the property of the Company. In addition,
Executive shall promptly return in good condition any and all beepers, credit cards, cellular
telephone equipment, business cards and computers. As of the Date of Resignation, the Company will
make arrangements to remove, terminate or transfer any and all business communication lines
including network access, cellular phone, fax line and other business numbers.
10. Nothing in this Agreement shall prohibit or restrict Executive from: (i) making any
disclosure of information required by law; (ii) providing information to, or testifying or
otherwise assisting in any investigation or proceeding brought by, any federal regulatory or law
enforcement agency or legislative body, any self-regulatory organization, or the Companys
[
designated legal, compliance or human resources officer
]; or (iii) filing, testifying,
participating in or otherwise assisting in a proceeding relating to an alleged violation of any
federal, state or municipal law relating to fraud, or any rule or regulation of the Securities and
Exchange Commission or any self-regulatory organization.
11. The parties agree and acknowledge that the agreement by the Company described herein, and
the settlement and termination of any asserted or unasserted claims against the Releasees, are not
and shall not be construed to be an admission of any violation of any federal, state or local
statute or regulation, or of any duty owed by any of the Releasees to Executive.
12. Executive agrees and recognizes that should Executive breach any of the obligations or
covenants set forth in this Agreement, the Company will have no further obligation to provide
Executive with the consideration set forth herein, and will have the right to seek repayment of all
consideration paid up to the time of any such breach. Further, Executive acknowledges in the event
of a breach of this Agreement, Releasees may seek any and all appropriate relief for any such
breach, including equitable relief and/or money damages, attorneys fees and costs.
13
13. Executive further agrees that the Company shall be entitled to preliminary and permanent
injunctive relief, without the necessity of proving actual damages, as well as to an equitable
accounting of all earnings, profits and other benefits arising from any violations of this
Agreement, which rights shall be cumulative and in addition to any other rights or remedies to
which the Company may be entitled.
14. This Agreement and the obligations of the parties hereunder shall be construed,
interpreted and enforced in accordance with the laws of the Commonwealth of Pennsylvania.
15. Executive certifies and acknowledges as follows:
(a) That Executive has read the terms of this Agreement, and that Executive understands its
terms and effects, including the fact that Executive has agreed to RELEASE AND FOREVER DISCHARGE
the Company and each and every one of its affiliated entities from any legal action arising out of
Executives employment relationship with the Company and the termination of that employment
relationship;
(b) That Executive has signed this Agreement voluntarily and knowingly in exchange for the
consideration described herein, which Executive acknowledges is adequate and satisfactory to
Executive and which Executive acknowledges is in addition to any other benefits to which Executive
is otherwise entitled;
(c) That Executive has been and is hereby advised in writing to consult with an attorney prior
to signing this Agreement;
(d) That Executive does not waive rights or claims that may arise after the date this
Agreement is executed;
(e) That the Company has provided Executive with a period of twenty-one (21) days within which
to consider this Agreement, and that Executive has signed on the date indicated below after
concluding that this Agreement is satisfactory to Executive; and
(f) Executive acknowledges that this Agreement may be revoked by Executive within seven (7)
days after execution, and it shall not become effective until the expiration of such seven day
revocation period. In the event of a timely revocation by Executive, this Agreement will be deemed
null and void and the Company will have no obligations hereunder.
[
SIGNATURE PAGE FOLLOWS
]
14
Intending to be legally bound hereby, Executive and the Company executed the foregoing
Separation of Employment Agreement and General Release this
_____
day of
_____,
_____.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Witness:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[
Executive
]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMERISOURCEBERGEN CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
Witness:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
Exhibit 10.11
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the Agreement) by and between AmerisourceBergen
Corporation, a Delaware corporation (hereinafter the Company), and
Steven H. Collis (the
Executive), dated and effective as of December 15, 2008.
WHEREAS, the Company and the Executive entered into an employment agreement dated February 19,
2004 (the Original Agreement); and
WHEREAS, the parties wish to amend the Original Agreement to comport with Section 409A of the
Internal Revenue Code, as amended, and the regulations promulgated thereunder and to make certain
other changes intended to clarify certain provisions of the Original Agreement;
NOW, THEREFORE, intending to be legally bound, the parties hereto agree to amend and restate
the Original Agreement in its entirety as follows:
1.
All Prior Agreements Superseded; Repayment of Loan
.
(a) This Agreement supersedes, and the Executive shall not be entitled to any employment,
termination or severance rights or benefits under, any other agreements between the Executive and
the Company, any Subsidiary or any predecessor of any Subsidiary, including but not limited to the
Employment Agreement dated September 1, 2000 between the Executive and Bergen Brunswig Corporation
(now AmerisourceBergen Services Corporation), which agreement was (i) amended by the Settlement
Agreement dated July 27, 2001 (the Settlement Agreement) between the Executive and Bergen
Brunswig Corporation (now AmerisourceBergen Services Corporation) and (ii) assumed by the Company
and supplemented and clarified by a letter agreement dated July 27, 2001 (the Indemnity
Letter)(such agreement, as amended, assumed and supplemented, being referred to as the Bergen
Employment Agreement). Any such other agreements, including but not limited to the Bergen
Employment Agreement, will be null and void upon the execution and effectiveness of this Agreement.
Notwithstanding the foregoing, nothing herein is intended to affect or modify (i) the Executives
rights or obligations arising from the Settlement Agreement and the waiver and release executed by
the Executive in connection therewith; (ii) any rights of the Executive to a Gross-Up Bonus as
provided in the last sentence of the third paragraph of the Indemnity Letter; or (iii) any rights
of the Executive to indemnity and reimbursement as provided in the fourth paragraph of the
Indemnity Letter and in the penultimate paragraph (i.e., the numbered paragraph 3) of the Indemnity
Letter.
(b) Within 10 business days after the execution of the Original Agreement, the Company will
pay $1,500,000.00 to the Executive (subject to Section 12(d) of this Agreement). Within 20
business days after such execution, the Executive will pay $170,000.00 to the Company to discharge
his obligations under a loan made to him in August 2001. Following receipt of such $170,000.00
payment, the Company will release and discharge all security (whether in the form of a pledge of
stock or otherwise) held by the Company with respect to such loan.
2.
Employment Period
. The Company shall continue to employ the Executive, either
directly or through a Subsidiary (as defined below), and the Executive shall continue to serve the
Company or any such Subsidiary, on the terms and conditions set forth in this Agreement, beginning
on the date hereof (the Effective Date) and until that employment ceases as provided below in
Section 4 (the Employment Period). Subsidiary means any entity that is controlled, directly or
indirectly, by the Company.
3.
Position and Duties
.
(a) As of the date of this Agreement, the Executive is employed as an Executive Vice President
of the Company and the President of the Companys Specialty Group. During the Employment Period,
the Executive shall continue to be employed in such capacity or in such other capacity with the
Company or any Subsidiary as may be determined from time to time by the Company, provided that any
such other capacity shall be at a salary grade level that is substantially equivalent to or greater
than the Executives salary grade level as of the date of this Agreement. As of the date of this
Agreement, the Executive is a member of the Companys Executive Management Committee. During the
Employment Period, the Executive will continue to be a member of the Companys Executive Management
Committee, if any, or any successor management committee to the Executive Management Committee, if
any.
(b) During the Employment Period, but excluding any periods of vacation and absence due to
intermittent illness to which the Executive is entitled, and any services on corporate, civic or
charitable boards or committees, lectures, speaking engagements or teaching engagements that are
approved by the Executives direct supervisor and that do not significantly interfere with the
performance of his responsibilities to the Employer (as defined below) or violating the provisions
of Section 10, the Executive shall devote his full time and attention during normal business hours
to the business and affairs of the Employer and the Executive shall use reasonable efforts to carry
out all duties and responsibilities assigned to him faithfully and efficiently. The Employer
means the ABC Entity (as defined below) by which the Executive is then employed. ABC Entity
means the Company or any Subsidiary, as the case may be. For purposes of this Agreement, should
Executive be employed (or have been employed at any time during the Employment Period) by an
Employer or Employers other than the Company, the term Company shall be deemed to include or
refer to such Employer or Employers, to the extent required by the context.
4.
Compensation
.
(a)
Base Salary
. During the Employment Period, the Executive shall continue to
receive annual base salary at the rate in effect as of the date of this Agreement, payable in
accordance with the regular payroll practices of the Company. The Executives base salary shall be
reviewed annually by (i) the Compensation and Succession Planning Committee of the Board of
Directors of the Company (the Committee) and/or (ii) the Chief Executive Officer or the President
of the Company and/or the Chief Executive Officer or the President of the Employer, in accordance
with the Companys standard practices for executives generally, and may be increased as determined
by the Committee, in its sole discretion, or by any person or persons to whom such authority has
been delegated.
(b)
Annual Bonus and Incentive Plans; Other Benefits
. During the Employment Period:
(i) the Executive shall be entitled to participate in any short-term and long-term incentive
programs established and/or maintained by the Company for its senior level executives generally;
(ii) the Executive shall be entitled to participate in all incentive, savings and retirement plans,
practices, policies and programs of the Company to at least the same extent as other senior
executives of the Company; (iii) the Executive and/or the Executives family, as the case may be,
shall be eligible for participation in, and shall receive all benefits under, all welfare benefit
plans, practices, policies and programs provided by the Company to at least the same extent as
other senior executives of the Company; and (iv) the Executive shall be entitled to, and the
Company shall provide the Executive with, not less than the number of weeks of vacation during each
calendar year to which the Executive is entitled as of the date of this Agreement. In addition to
the foregoing, the Executive shall be entitled to annual reimbursement of up to $5,000 per year for
tax and financial planning and tax preparation, or such greater amount as may be authorized by
the Committee, in its sole discretion, or by any person or persons to whom such authority has
been delegated.
2
(c)
Restricted Stock Award
. Within
10 business days following execution of
the Original Agreement, the Company will grant to Executive, pursuant to a stock award under the
AmerisourceBergen Corporation 2002 Management Stock Incentive Plan (the Plan), 5,000 shares of
common stock of the Company. These shares will be subject to the terms and conditions of the
Companys standard award agreement for stock awards granted under the Plan and shall become fully
(100%) vested on the third anniversary of the date of grant, provided the Executive is employed by
the Company on such vesting date. Notwithstanding the preceding sentence, the shares subject to
the stock award shall become fully (100%) vested if the Executives employment terminates due to
his death or Disability.
(d)
Expenses
. During the Employment Period, the Executive shall be entitled to
receive advancement or prompt reimbursement for all reasonable expenses incurred or anticipated to
be incurred by the Executive in carrying out the Executives duties under this Agreement, provided
that the Executive complies with the generally applicable policies, practices and procedures of the
Company for submission of expense reports, receipts, or similar documentation of such expenses.
(e) Notwithstanding anything herein to the contrary or otherwise, except to the extent any
expense, reimbursement or in-kind benefit provided pursuant to Sections 4(b), 4(d) and 6(a) does
not constitute a deferral of compensation within the meaning of Section 409A of the Internal
Revenue Code of 1986, as amended from time to time (Code), and its implementing regulations and
guidance (Section 409A) (i) the amount of expenses eligible for reimbursement or in-kind benefits
provided to the Executive during any calendar year will not affect the amount of expenses eligible
for reimbursement or in-kind benefits provided to the Executive in any other calendar year, (ii)
the reimbursements for expenses for which the Executive is entitled to be reimbursed shall be made
on or before the last day of the calendar year following the calendar year in which the applicable
expense is incurred and (iii) the right to payment or reimbursement or in-kind benefits hereunder
may not be liquidated or exchanged for any other benefit.
5.
Termination of Employment
.
(a)
Death or Disability
. The Executives employment and the Employment Period shall
terminate automatically upon the Executives death or long term Disability during the Employment
Period. Disability means a condition entitling the Executive to benefits under the Companys
Long Term Disability Plan, policy or arrangement.
(b)
By the Company
. The Company may terminate the Executives employment under this
Agreement during the Employment Period for Cause or without Cause. Cause means:
(i) the continued failure by the Executive to substantially perform his duties as contemplated
by this Agreement (other than any such failure resulting from his incapacity due to physical or
mental illness or injury or any such actual or anticipated failure after the issuance by the
Executive of a Notice of Termination for Good Reason) over a period of not less than thirty days
after a demand for substantial performance is delivered to the Executive by the Board , by the
Chief Executive Officer or the President of the Company, by the Chief Executive Officer or the
President of the Employer and/or by such other employee of the Company or the Employer to whom
Executive then may report (if other than the foregoing officers of the Company or the Employer),
which demand identifies the manner in which it is believed that the Executive has not substantially
performed his duties;
(ii) the willful misconduct of the Executive materially and demonstrably injurious to the
Company (including, without limitation, any breach by the Executive of Section 10 of this
Agreement); provided that no act or failure to act on the Executives part will be considered
willful if done, or omitted to be done, by him in good faith and with reasonable belief that his
action or omission was in the best interest of the Company;
3
(iii) the Executives conviction of a misdemeanor, which, as determined in good faith by the
Board, constitutes a crime of moral turpitude and gives rise to material harm to the Company or to
any subsidiary or affiliate of the Company; or
(iv) the Executives conviction of a felony (including, without limitation, any felony
constituting a crime of moral turpitude).
(c)
By the Executive
. The Executive may terminate employment under this Agreement for
Good Reason or without Good Reason. Good Reason means:
(i) any reduction in the Executives base salary; or
(ii) material failure by the Company to comply with any provision of Sections 3 and 4 of this
Agreement (including, but not limited to, a diminution in the Executives authority, duties, or
responsibilities) other than an isolated, insubstantial or inadvertent failure that is not taken in
bad faith and is remedied by the Company within 30 days after receipt of written notice thereof
from the Executive.
Notwithstanding the foregoing, Good Reason for purposes of Section 5(c)(i) shall not include
a reduction in base salary if such reduction is coincident with a reduction applicable to all
members of the senior management team. 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 that
constitutes Good Reason and the specific provision(s) of this Agreement on which the Executive
relies. Such Notice of Termination for Good Reason must be received by the Company no later than
the 60
th
day after the event, or last in a series of events, that gives rise to Good
Reason. The Company shall have 30 days to remedy the conduct set forth in the Notice of
Termination for Good Reason. A termination of employment by the Executive for Good Reason shall be
effective on the 60
th
business day following the date when the Notice of Termination for
Good Reason is given, unless the conduct set forth in the notice is remedied by the Company within
the 30-day period. A termination of the Executives employment by the Executive without Good
Reason shall be effected by giving the Company at least 30 days advance written notice of the
termination.
(d)
Date of Termination
. The Date of Termination means the date of the Executives
death, the date of the Executives Disability, or the date the termination of the Executives
employment under this Agreement by the Company for Cause or without Cause or by the Executive for
Good Reason or without Good Reason, as the case may be, is effective. The Employment Period shall
end on the Date of Termination.
(e)
Separation from Service
. For purposes of determining under Section 409A whether
there has been a separation from service with the meaning of Treasury Regulation Section
1.409A-1(h) (or any successor regulation), the Executive shall be deemed to have incurred a
separation from service if his employment has been terminated in accordance with this Section 4 and
he is performing less than 50% of the average level of bona fide services he was performing for the
Company in the immediately preceding 36-month period (Separation From Service). In addition,
notwithstanding any other provision of this Agreement to the contrary, any payment or benefit
described in Section 5 that represents a deferral of compensation within the meaning of Section
409A shall only be paid or provided to Executive upon a Separation From Service as defined herein.
4
6.
Obligations of the Company upon Termination
.
(a)
By the Company Other Than for Cause; or By the Executive for Good Reason
. If,
during the Employment Period, the Company terminates the Executives employment under this
Agreement (other than for Cause) or the Executive terminates employment under this Agreement for
Good Reason:
(1) the Executive shall be entitled to continued payment for two years after the
Separation From Service of the Executives current base salary (as in effect on the Date of
Termination), which amounts shall be paid in installments over such two-year period pursuant
to the Companys normal payroll policy,
(2) the Executive shall be entitled to receive the following bonus payments: (i)
either (A) if the Separation from Service occurs following the end of a fiscal year but
prior to the date that an annual bonus for such previously completed fiscal year, if any, is
approved by the Companys Board of Directors, a bonus payment equal to the bonus payment
that the Executive would have received for such prior fiscal year without regard to the
Executive not having remained employed by the Company on the date that such bonus payment
would otherwise have been paid to the Executive, with any such bonus amount to be paid at
the same time as annual bonuses for such prior fiscal year are paid by the Company under the
applicable bonus program generally but in no event later than March 15
th
of the
calendar year following the calendar year that includes the last day of the applicable
fiscal year or (B) if Separation from Service occurs following the end of a fiscal year but
after the date that an annual bonus for such previously completed fiscal year is approved
(or determined not to be payable by the Companys Board or Directors), a bonus payment equal
to an amount representing 100% of the Executives target bonus for the Executives salary
grade for the fiscal year of the Company in which such Separation from Service occurs,
multiplied by a fraction, the numerator of which is the number of days in such current
fiscal year through the Separation from Service, and the denominator of which is 365, with
any such amount to be paid at the same time as annual bonuses for the fiscal year in which
such Separation from Service occurs are paid by the Company under the applicable bonus
program generally but in no event later than December 31st of the calendar year following
the calendar year that includes the last day of the applicable fiscal year and (ii)
continued payment for the two fiscal years ending immediately after the Separation from
Service of a bonus equal to the average of the annual bonuses earned by the Executive over
the three complete years (or if less than three complete years, the average bonus earned
during such lesser number of complete years) preceding the Date of Termination (that is, not
including the bonus year that includes the Date of Termination) with each such bonus payment
being paid at the same time as annual bonuses are paid by the Company under the applicable
bonus program; and
(3) for the eighteen month period following the Separation From Service (subject to
earlier termination as described below), if the Executive elects to receive continuation
coverage under the Companys group health plans pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA), the Executive shall be entitled to: (i) waiver by the
Company of the COBRA premium costs of medical, prescription, dental and vision coverage, if
any, under the Companys group health plans (as in effect from time to time) for the
Executive and, to the extent permitted under COBRA, the Executives spouse and eligible
dependents, if any, for the first two calendar months of the eighteen month continuation
period; and (ii) following the initial two-month period, the Executive shall be entitled to
reimbursement from the Company for the COBRA premium costs of medical, prescription, dental
and vision coverage, if any, under the Companys group health plans for the Executive and,
to the extent permitted under COBRA, the Executives spouse and eligible dependents,
5
if any,
with such reimbursement not to exceed the COBRA rates for such coverage; provided, however,
that the Executive shall be required to submit to the Company reasonable evidence of payment
by the Executive of any such COBRA premiums in order to obtain reimbursement from the
Company and that the Executive may not submit any requests for reimbursement of such
payments more than once per calendar month. Notwithstanding anything to the contrary set
forth above, the Company, in its sole discretion, may discontinue any coverage contemplated
hereunder in the event that such continuation is not permitted under or would adversely
affect the tax status of the plan or plans of the Company pursuant to which the coverage is
provided, in which case the Company shall make supplemental severance payments to the
Executive in monthly amounts equal to the amounts to which the Executive otherwise would
have been entitled to reimbursement hereunder in respect of such coverage for the remainder
of the period that the Company otherwise would have been obligated to make reimbursements
hereunder to the Executive. Any amounts that are reimbursed to the Executive by the Company
or paid directly to the Executive as supplemental severance payments will be considered
taxable income to the Executive and any taxes on such amounts will be the Executives
responsibility and subject to applicable tax withholding.
In addition, the Executive shall be entitled to receive executive level outplacement assistance
under any outplacement assistance program then being maintained by the Company in accordance with
the terms of any such program, or if no such program then exists, in an amount not to exceed
$10,000; provided that any reimbursable expense must be incurred by the Executive no later than the
end of the second calendar year following the year of the Separation From Service. The Executive
shall also become vested in any outstanding options, restricted stock or other equity incentive
awards only to the extent provided for under the terms governing such equity incentive award. The
Company shall also pay, or cause to be paid, to the Executive, in a lump sum in cash within 30 days
after the Separation From Service (or, in the case of the pro-rated Annual Bonus Amount, at the
time such bonus would otherwise be paid), the following accrued but unpaid cash compensation of the
Executive (the Accrued Obligations): (X) the Executives base salary through the Date of
Termination that has not yet been paid, (Y) any accrued but unpaid vacation pay, and (Z) any
unreimbursed employee business expenses; provided, however, that the Companys obligation to make
any payments, or cause any payments to be made, under this paragraph (a) to the extent any such
payment shall not have accrued as of the day before the Date of Termination shall also be
conditioned upon the Executives execution, and non-revocation, of a written release, substantially
in the form attached hereto as
Annex 1
, of any and all claims against the Company and all
related parties with respect to all matters arising out of the Executives employment under this
Agreement or the termination thereof (other than any entitlements under the terms of this Agreement
to indemnification or under any other plans or programs of the Company in which the Executive
participated and under which the Executive has accrued and is due a benefit). The payments and
benefits described in this paragraph (a) (other than those payments and benefits accrued as of the
day before the Date of Termination) will be paid, or will begin to be paid or provided, as
applicable, after the applicable release review period and revocation period have expired, and as
if the Executive signed the release on the last day of the release review period.
To the extent compliance with the requirements of Treas. Reg. § 1.409A-3(i)(2) (or any successor
provision) is necessary to avoid the application of an additional tax under Section 409A to
payments due to the Executive upon or following his Separation From Service, then notwithstanding
any other provision of this Agreement (or any otherwise applicable plan, policy, agreement or arrangement),
any such payments that are otherwise due within six months following the Executives Separation
From Service will be deferred (without interest) and paid to the Executive in a lump sum
immediately following that six month period. This provision shall not be construed as preventing
payments pursuant to Section 6 equal to an amount up to 2 times the lesser of (a) the Executives
annualized compensation for the year prior to the Separation From Service, and (b) the maximum
amount that may be taken into account under a qualified plan pursuant to section 401(a)(17) of the
Code, being paid to the Executive in the first six months following the Separation From Service.
6
(b)
Death or Disability
. If the Executives employment is terminated by reason of the
Executives death or Disability during the Employment Period, the Company shall pay the Accrued
Obligations to the Executive or the Executives estate or legal representative, as applicable, in a
lump sum in cash within 30 days after the Date of Termination. In such event, the Company shall
have no further obligations under this Agreement or otherwise to or with respect to the Executive;
and for any entitlements under the terms of any other plans or programs of the Company in which the
Executive participated and under which the Executive has become entitled to a benefit.
(c)
By the Company for Cause; By the Executive Other than for Good Reason
. If the
Executives employment is terminated by the Company for Cause during the Employment Period, or the
Executive voluntarily terminates employment during the Employment Period, other than for Good
Reason, the Company shall pay the Executive, or shall cause the Executive to be paid, the
Executives base salary through the Date of Termination that has not been paid and the amount of
any declared but unpaid bonuses, accrued but unpaid vacation pay, and unreimbursed employee
business expenses, and the Company shall have no further obligations under this Agreement or
otherwise to or with respect to the Executive other than for any entitlements under the terms of
any other plans or programs of the Company in which the Executive participated and under which the
Executive has become entitled to a benefit.
7.
Change in Control
. It is the intention of the parties that payments to be made to
the Executive whether under the terms of this Agreement or otherwise shall not constitute excess
parachute payments within the meaning of Section 280G of the Code and any regulations thereunder.
If the independent accountants serving as auditors for the Company on the date of this Agreement
(or any other independent certified public accounting firm designated by the Company) determine
that any payment or distribution by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise) would be nondeductible by the Company pursuant to Section 280G of the Code (or any
successor provision), then the amounts payable or distributable under this Agreement will be
reduced to the maximum amount which may be paid or distributed without causing such payments or
distributions to be nondeductible. The determination shall take into account (a) whether the
payments or distributions are parachute payments under Section 280G, (b) the amount of payments
and distributions under this Agreement that constitute reasonable compensation, and (c) the present
value of such payments and distributions determined in accordance with Treasury Regulations in
effect from time to time. If a reduction is required in accordance with this Section 7, cash
payments will be reduced before any acceleration of vesting or forfeiture conditions are eliminated
and future payments will be reduced before amounts that are immediately payable.
8.
Non-exclusivity of Rights
. Nothing in this Agreement shall prevent or limit the
Executives continuing or future participation in any plan, program, policy or practice provided by
the Company for which the Executive may qualify. Vested benefits and other amounts that the
Executive is otherwise entitled to receive on or after the Date of Termination under any plan,
policy, practice or program of, or any contract or agreement with, the Company shall 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.
9.
No Mitigation
. 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.
7
10.
Confidential Information; Non-solicitation; Non-competition
.
(a) The Executive agrees and acknowledges that by reason of his employment by and service to
the Company, he will have access to, become exposed to and/or become knowledgeable about
confidential information of the Company (the Confidential Information) from time to time during
the Employment Period, including, without limitation, proposals, plans, inventions, practices,
systems, programs, processes, methods, techniques, research, records, supplier sources, customer
lists and other forms of business information that are not known to the Companys competitors, are
not recognized as being encompassed within standard business or management practices and/or are
kept secret and confidential by the Company. Executive agrees that at no time during or after the
Employment Period will he disclose or use the Confidential Information except as may be required in
the prudent course of business for the benefit of the Company. The Executive also agrees to be
subject to the Companys Code of Ethics and Business Conduct as in effect from time to time during
the Employment Period.
(b) The Executive acknowledges that the Company is generally engaged in business throughout
the United States. During the Executives employment by the Company and for two years after the
Date of Termination or the expiration of the Employment Period, the Executive agrees that he will
not, unless acting with the prior written consent of the Company, directly or indirectly, own,
manage, control, or participate in the ownership, management or control of, or be employed or
engaged by, or otherwise affiliated or associated with, as an officer, director, employee,
consultant, independent contractor or otherwise, any of the following corporations, partnerships,
proprietorships, firms, associations or other business entities, or any of their successors:
Cardinal Health, Inc., McKesson Corporation, Medco Health, Inc., Priority Healthcare Corporation
(or its successors, Curascript Specialty Distribution and Curascript Specialty Pharmacy) and US
Oncology; provided, however, that the ownership of not more than 5% of the equity of a publicly
traded entity shall not be deemed to be a violation of this paragraph. During such two-year
period, Executive also agrees to make himself reasonably available to the Company for consulting at
a per diem rate that reflects his annual salary as in an effect prior to his termination of
employment (plus reimbursement of Executives reasonable expenses). Notwithstanding the foregoing,
the Executive shall be relieved of the covenants provided for in this subsection in the event that
the Company fails to make payments to Executive as provided for in Section 6(a) of this Agreement.
(c) The Executive also agrees that he will not, directly or indirectly, during the period
described in paragraph (b) of this Section 10 induce any person who is an employee, officer,
director, or agent of the Company, to terminate such relationship, or employ, assist in employing
or otherwise be associated in business with any present or former employee or officer of the
Company, including without limitation those who commence such positions with the Company after the
Date of Termination.
(d) The Executive acknowledges and agrees that the restrictions contained in this Section 10
are reasonable and necessary to protect and preserve the legitimate interests, properties, goodwill
and business of the Company, that the Company would not have entered into this Agreement in
the absence of such restrictions and that irreparable injury will be suffered by the Company
should the Executive breach the provisions of this Section. The Executive represents and
acknowledges that (i) the Executive has been advised by the Company to consult the Executives own
legal counsel in respect of this Agreement, (ii) the Executive has consulted with and been advised
by his own counsel in respect of this Agreement, and (iii) the Executive has had full opportunity,
prior to execution of this Agreement, to review thoroughly this Agreement with the Executives
counsel.
8
(e) The Executive further acknowledges and agrees that a breach of the restrictions in this
Section 10 will not be adequately compensated by monetary damages. The Executive agrees that
actual damage may be difficult to ascertain and that, in the event of any such breach, the Company
shall be entitled to injunctive relief in addition to such other legal or equitable remedies as may
be available to the Company. In the event that the provisions of this Section 10 should ever be
adjudicated to exceed the limitations permitted by applicable law in any jurisdiction, it is the
intention of the parties that the provision shall be amended such that those provisions are made
consistent with the maximum limitations permitted by applicable law, that such amendment shall
apply only within the jurisdiction of the court that made such adjudication and that those
provisions otherwise be enforced to the maximum extent permitted by law.
(f) If the Executive breaches his obligations under this Section 10, he agrees that suit may
be brought, and that he consents to personal jurisdiction, in the United States District Court for
the Eastern District of Pennsylvania, or if such court does not have jurisdiction or will not
accept jurisdiction, in any court of general jurisdiction in Chester County, Pennsylvania; consents
to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding; and
waives any objection which he may have to the laying of venue of any such suit, action or
proceeding in any such court. The Executive also irrevocably and unconditionally consents to the
service of any process, pleadings, notices or other papers.
(g) For purposes of this Section 9, the term Company shall be deemed to include each and
every Subsidiary.
11.
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 otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by the Executives
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.
(c) The Company shall 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 expressly to assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such succession had taken
place. As used in this Agreement, Company shall mean both the Company as defined above and any
such successor that assumes and agrees to perform this Agreement, by operation of law or otherwise.
12.
Miscellaneous
.
(a) This Agreement shall be governed by, and construed in accordance with, the laws of the
Commonwealth of Pennsylvania, without reference to principles of conflict of laws. The captions of
this Agreement are not 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.
9
(b) All notices and other communications under this Agreement shall be in writing and shall be
given by hand to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive
, to the address on file with the Company.
If to the Company
:
AmerisourceBergen Corporation
1300 Morris Drive
Chesterbrook, PA 19087
Attention: Chief Executive Officer
or to such other address as either party furnishes to the other in writing in accordance with
this paragraph (b) of Section 12. 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. If any provision of this
Agreement shall be held invalid or unenforceable in part, the remaining portion of such provision,
together with all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.
(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 Executives or the Companys 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
6 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.
(f) Anything to the contrary herein notwithstanding, all benefits or payments provided by the
Company to the Executive that would be deemed to constitute nonqualified deferred compensation
within the meaning of Section 409A are intended to comply with Section 409A of the Code. If,
however, any such benefit or payment is deemed to not comply with Section 409A of the Code, the
Company and the Executive agree to renegotiate in good faith any such benefit or payment
(including, without limitation, as to the timing of any severance payments payable hereof) so that
either (i) Section 409A of the Code will not apply or (ii) compliance with Section 409A will be
achieved.
(g) This Agreement may be executed in several counterparts, each of which shall be deemed an
original, and said counterparts shall constitute but one and the same instrument.
13. The respective rights and obligations of the parties hereunder shall survive any
termination of the Executives employment to the extent necessary to the intended preservation of
such rights and obligations, including, but not by way of limitation, those rights and obligations
set forth in Sections 4, 6, 7, 10 and 12.
10
IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the
authorization of the Committee, the Company has caused this Agreement to be executed in its name on
its behalf, in each case on the date(s) set forth below.
|
|
|
|
|
AMERISOURCEBERGEN CORPORATION
|
|
|
|
|
|
|
|
By:
|
/s/ R. David Yost
|
|
|
|
Name:
|
R. David Yost
|
|
|
|
Title:
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
Date: 12/15/08
|
|
|
|
|
|
|
|
EXECUTIVE
|
|
|
|
|
|
|
|
/s/ Steven H. Collis
|
|
|
|
|
|
Steven H. Collis
|
|
|
|
|
|
|
|
Date: 12/23/08
|
|
|
11
ANNEX 1
SEPARATION OF EMPLOYMENT AGREEMENT
AND GENERAL RELEASE
THIS SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE (the Agreement) is made as of
this
_____
day of
,
_____ , by and between AmerisourceBergen Corporation (the Company) and
(the Executive).
WHEREAS, Executive formerly was employed as
;
WHEREAS, Executive and Company entered into an Employment Agreement, dated
_____,
_____, (the Employment Agreement) which provides for certain severance benefits in the event that
Executives employment is terminated on account of a reason set forth in the Employment Agreement;
WHEREAS, Executive and the Company mutually desire to terminate Executives employment on an
amicable basis, such termination to be effective
_____,
_____
(the Date of Resignation);
and
WHEREAS, in connection with the termination of Executives employment, the parties have agreed
to a separation package and the resolution of any and all disputes between them.
NOW, THEREFORE, IT IS HEREBY AGREED by and between Executive and the Company as follows:
1. (a) Executive, for and in consideration of the commitments of the Company as set forth in
Paragraph 5 of this Agreement, and intending to be legally bound, does hereby REMISE, RELEASE AND
FOREVER DISCHARGE the Company, its affiliates, subsidiaries and parents, and its officers,
directors, employees, and agents, and its and their respective successors and assigns, heirs,
executors, and administrators (each, a Releasee and collectively, Releasees) from all causes of
action, suits, debts, claims and demands whatsoever in law or in equity, which Executive ever had,
now has, or hereafter may have, whether known or unknown, or which Executives heirs, executors, or
administrators may have, by reason of any matter, cause or thing whatsoever, from the beginning of
Executives employment to the date of this Agreement, and particularly, but without limitation of
the foregoing general terms, any claims arising from or relating in any way to Executives
employment relationship with the Company and/or its predecessors, subsidiaries or affiliates, the
terms and conditions of that employment relationship, and the termination of that employment
relationship, including, but not limited to, any claims arising under the Age Discrimination in
Employment Act, the Older Workers Benefit Protection Act (OWBPA), Title VII of The Civil Rights
Act of 1964, the Americans with Disabilities Act, the Family and Medical Leave Act of 1993, the
Employee Retirement Income Security Act of 1974, the Pennsylvania Human Relations Act, and any
other claims under any federal, state or local common law, statutory, or regulatory provision, now
or hereafter recognized, and any claims for attorneys fees and costs. This Agreement is effective
without regard to the legal nature of the claims raised and without regard to whether any such
claims are based upon tort, equity, implied or express contract or discrimination of any sort.
12
(b) To the fullest extent permitted by law, and subject to the provisions of Paragraph 10
below, Executive represents and affirms that (i) Executive has not filed or caused to be filed on
Executives behalf any claim for relief against the Company or any Releasee and, to the best of
Executives knowledge and belief, no outstanding claims for relief have been filed or asserted
against the Company or any Releasee on Executives behalf; (ii) Executive has not reported any
improper, unethical or illegal conduct or activities to any supervisor, manager, department head,
human resources representative, agent or other representative of the Company, to any member of the
Companys legal or compliance departments, or to the ethics hotline, and has no knowledge of any
such improper, unethical or illegal conduct or activities; and (iii) Executive will not file,
commence, prosecute or participate in any judicial or arbitral action or proceeding against the
Company or any Releasee based upon or arising out of any act, omission, transaction, occurrence,
contract, claim or event existing or occurring on or before the date of this Agreement.
(c) Nothing in the Agreement will be deemed to release the Company from (i) claims solely to
enforce this Agreement, (ii) claims for indemnification under the Companys By-Laws, or (iii)
claims for payment or reimbursement pursuant to any employee benefit plan, policy or arrangement of
the Company.
2. In consideration of the Companys agreements as set forth in Paragraph 5 herein, Executive
agrees to be bound by the terms of Section 10 of the Employment Agreement.
3. Executive agrees and recognizes that Executive has permanently and irrevocably severed
Executives employment relationship with the Company, that Executive shall not seek employment with
the Company or any affiliated entity at any time in the future, and that the Company has no
obligation to employ Executive in the future.
4. Executive further agrees that Executive will not disparage or subvert the Company, or make
any statement reflecting negatively on the Company, its affiliated corporations or entities, or any
of their officers, directors, employees, agents or representatives, including, but not limited to,
any matters relating to the operation or management of the Company, Executives employment and the
termination of Executives employment, irrespective of the truthfulness or falsity of such
statement. The Company agrees that none of its officers, directors, employees, agents or
representatives will disparage or subvert the Executive, or make any statement reflecting
negatively on the Executive, including, but not limited to, any matters relating to the Executives
performance or the termination of Executives employment, irrespective of the truthfulness or
falsity of such statement.
5. In consideration for Executives agreement as set forth herein, the Company agrees that the
Company shall provide the following:
[
insert description of severance benefits to which Executive is entitled under the
Employment Agreement
]; and
[(b)] To the extent covered by directors and officers liability insurance on the Date
of Resignation, the Company will maintain, for no less than 6 years following the Date of
Resignation, directors and officers liability insurance covering the Executives potential
liability in connection with his employment by the Company in amounts and on terms that are
commensurate with the coverage provided to its active officers and directors of the Company.
6. Executive understands and agrees that the payments, benefits and agreements provided in
this Agreement are being provided to Executive in consideration for Executives acceptance and
execution of, and in reliance upon Executives representations in, this Agreement. Executive
acknowledges that if Executive had not executed this Agreement containing a release of all claims
against the Company, Executive would only have been entitled to the payments provided in the
Companys standard severance pay plan for employees.
13
7. Executive acknowledges and agrees that the Company previously has satisfied any and all
obligations owed to Executive under any employment agreement or offer letter Executive has with the
Company and, further, that this Agreement supersedes any employment agreement or offer letter
Executive has with the Company, and any and all prior agreements or understandings, whether written
or oral, between the parties shall remain in full force and effect to the extent not inconsistent
with this Agreement, and further, that, except as set forth expressly herein, no promises or
representations have been made to Executive in connection with the termination of Executives
employment agreement or offer letter with the Company, or the terms of this Agreement.
8. Executive agrees not to disclose the terms of this Agreement to anyone, except Executives
spouse, attorney and, as necessary, tax/financial advisor. Likewise, the Company agrees that the
terms of this Agreement will not be disclosed except as may be necessary to obtain approval or
authorization to fulfill its obligations hereunder or as required by law. It is expressly
understood that any violation of the confidentiality obligation imposed hereunder constitutes a
material breach of this Agreement.
9. Executive represents that Executive does not presently have in Executives possession any
records and business documents, whether on computer or hard copy, and other materials (including
but not limited to computer disks and tapes, computer programs and software, office keys,
correspondence, files, customer lists, technical information, customer information, pricing
information, business strategies and plans, sales records and all copies thereof) (collectively,
the Corporate Records) provided by the Company and/or its predecessors, subsidiaries or
affiliates or obtained as a result of Executives prior employment with the Company and/or its
predecessors, subsidiaries or affiliates, or created by Executive while employed by or rendering
services to the Company and/or its predecessors, subsidiaries or affiliates. Executive
acknowledges that all such Corporate Records are the property of the Company. In addition,
Executive shall promptly return in good condition any and all beepers, credit cards, cellular
telephone equipment, business cards and computers. As of the Date of Resignation, the Company will
make arrangements to remove, terminate or transfer any and all business communication lines
including network access, cellular phone, fax line and other business numbers.
10. Nothing in this Agreement shall prohibit or restrict Executive from: (i) making any
disclosure of information required by law; (ii) providing information to, or testifying or
otherwise assisting in any investigation or proceeding brought by, any federal regulatory or law
enforcement agency or legislative body, any self-regulatory organization, or the Companys
[
designated legal, compliance or human resources officer
]; or (iii) filing, testifying,
participating in or otherwise assisting in a proceeding relating to an alleged violation of any
federal, state or municipal law relating to fraud, or any rule or regulation of the Securities and
Exchange Commission or any self-regulatory organization.
11. The parties agree and acknowledge that the agreement by the Company described herein, and
the settlement and termination of any asserted or unasserted claims against the Releasees, are not
and shall not be construed to be an admission of any violation of any federal, state or local
statute or regulation, or of any duty owed by any of the Releasees to Executive.
12. Executive agrees and recognizes that should Executive breach any of the obligations or
covenants set forth in this Agreement, the Company will have no further obligation to provide
Executive
with the consideration set forth herein, and will have the right to seek repayment of all
consideration paid up to the time of any such breach. Further, Executive acknowledges in the event
of a breach of this Agreement, Releasees may seek any and all appropriate relief for any such
breach, including equitable relief and/or money damages, attorneys fees and costs.
14
13. Executive further agrees that the Company shall be entitled to preliminary and permanent
injunctive relief, without the necessity of proving actual damages, as well as to an equitable
accounting of all earnings, profits and other benefits arising from any violations of this
Agreement, which rights shall be cumulative and in addition to any other rights or remedies to
which the Company may be entitled.
14. This Agreement and the obligations of the parties hereunder shall be construed,
interpreted and enforced in accordance with the laws of the Commonwealth of Pennsylvania.
15. Executive certifies and acknowledges as follows:
(a) That Executive has read the terms of this Agreement, and that Executive understands its
terms and effects, including the fact that Executive has agreed to RELEASE AND FOREVER DISCHARGE
the Company and each and every one of its affiliated entities from any legal action arising out of
Executives employment relationship with the Company and the termination of that employment
relationship;
(b) That Executive has signed this Agreement voluntarily and knowingly in exchange for the
consideration described herein, which Executive acknowledges is adequate and satisfactory to
Executive and which Executive acknowledges is in addition to any other benefits to which Executive
is otherwise entitled;
(c) That Executive has been and is hereby advised in writing to consult with an attorney prior
to signing this Agreement;
(d) That Executive does not waive rights or claims that may arise after the date this
Agreement is executed;
(e) That the Company has provided Executive with a period of twenty-one (21) days within which
to consider this Agreement, and that Executive has signed on the date indicated below after
concluding that this Agreement is satisfactory to Executive; and
(f) Executive acknowledges that this Agreement may be revoked by Executive within seven (7)
days after execution, and it shall not become effective until the expiration of such seven day
revocation period. In the event of a timely revocation by Executive, this Agreement will be deemed
null and void and the Company will have no obligations hereunder.
[
SIGNATURE PAGE FOLLOWS
]
15
Intending to be legally bound hereby, Executive and the Company executed the foregoing
Separation of Employment Agreement and General Release this
_____
day of
,
_____.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Witness:
|
|
|
|
|
|
|
|
|
|
[
Executive
]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMERISOURCEBERGEN CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
Witness:
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
Exhibit 10.13
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the Agreement) by and between AmerisourceBergen
Corporation, a Delaware corporation (hereinafter the Company), and Jeanne B. Fisher (the
Executive), dated and effective as of November 24, 2008.
WHEREAS, the Company and the Executive entered into an employment agreement (the Original
Agreement) effective October 1, 2003, reflecting the determination of the Board of Directors of
the Company (the Board), upon the recommendation of the Compensation and Succession Planning
Committee of the Board (the Committee), that it would be in the best interests of the Company and
its shareholders to extend an employment agreement to the Executive, and the Executives desire to
accept such an employment agreement; and
WHEREAS, the parties wish to amend the Original Agreement to comport with Section 409A of the
Internal Revenue Code, as amended, and the regulations promulgated thereunder and to make certain
other changes intended to clarify certain provisions of the Original Agreement;
NOW, THEREFORE, intending to be legally bound, the parties hereto agree to amend and restate
the Original Agreement in its entirety as follows:
1.
Employment Period
. The Company shall continue to employ the Executive, either
directly or through a Subsidiary (as defined below), and the Executive shall continue to serve the
Company or any such Subsidiary, on the terms and conditions set forth in this Agreement, beginning
November 24, 2008 (the Employment Date) and until that employment ceases as provided below in
Section 4 (the Employment Period). Subsidiary means any entity that is controlled, directly or
indirectly, by the Company.
2.
Position and Duties
.
(a) During the Employment Period, the Executive shall be employed as the Senior Vice President
Human Resources of the Company, subject to such changes in title as may be proposed by the Company
and consented to by the Executive. The Executive shall perform such duties for the Company as are
related typically to the office a chief human resources officer and such other duties as may be
assigned by the Company.
(b) During the Employment Period, but excluding any periods of vacation and absence due to
intermittent illness to which the Executive is entitled, and any services on corporate, civic or
charitable boards or committees, lectures, speaking engagements or teaching engagements that are
approved by the Executives direct supervisor and that do not significantly interfere with the
performance of her responsibilities to the Company or violating the provisions of Section 9, the
Executive shall devote her full time and attention during normal business hours to the business and
affairs of the Company and the Executive shall use reasonable efforts to carry out all duties and
responsibilities assigned to her faithfully and efficiently.
3.
Compensation
.
(a)
Base Salary
. During the Employment Period, the Executive shall continue to
receive annual base salary at the rate in effect as of the date of this Agreement, payable in
accordance with the regular payroll practices of the Company. The Executives base salary shall be
reviewed annually by the Committee and/or the Chief Executive Officer of the Company, in accordance
with the Companys standard practices for executives generally, and may be increased as determined by
the Committee, in its sole discretion, or by any person or persons to whom the Committee has
delegated such authority.
(b)
Annual Bonus and Incentive Plans; Other Benefits
. During the Employment Period:
(i) the Executive shall be entitled to participate in any short-term and long-term incentive
programs established and/or maintained by the Company for its senior level executives generally;
(ii) the Executive shall be entitled to participate in all incentive, savings and retirement plans,
practices, policies and programs of the Company to at least the same extent as other senior
executives of the Company; (iii) the Executive and/or the Executives family, as the case may be,
shall be eligible for participation in, and shall receive all benefits under, all welfare benefit
plans, practices, policies and programs provided by the Company to at least the same extent as
other senior executives of the Company; and (iv) the Executive shall be entitled to, and the
Company shall provide the Executive with, not less than the number of weeks of vacation during each
calendar year to which the Executive is entitled as of the date of this Agreement. In addition to
the foregoing, the Executive shall be entitled to annual reimbursement of up to $5,000 per year for
tax and financial planning and tax preparation, or such greater amount as may be authorized by the
Committee, in its sole discretion, or by any person or persons to whom the Committee has delegated
such authority.
(c)
Expenses
. During the Employment Period, the Executive shall be entitled to
receive advancement or prompt reimbursement for all reasonable expenses incurred or anticipated to
be incurred by the Executive in carrying out the Executives duties under this Agreement, provided
that the Executive complies with the generally applicable policies, practices and procedures of the
Company for submission of expense reports, receipts, or similar documentation of such expenses.
(d) Notwithstanding anything herein to the contrary or otherwise, except to the extent any
expense, reimbursement or in-kind benefit provided pursuant to Sections 3(b), 3(c) and 5(a) does
not constitute a deferral of compensation within the meaning of Section 409A of the Internal
Revenue Code of 1986, as amended from time to time (Code), and its implementing regulations and
guidance (Section 409A) (i) the amount of expenses eligible for reimbursement or in-kind benefits
provided to the Executive during any calendar year will not affect the amount of expenses eligible
for reimbursement or in-kind benefits provided to the Executive in any other calendar year, (ii)
the reimbursements for expenses for which the Executive is entitled to be reimbursed shall be made
on or before the last day of the calendar year following the calendar year in which the applicable
expense is incurred and (iii) the right to payment or reimbursement or in-kind benefits hereunder
may not be liquidated or exchanged for any other benefit.
4.
Termination of Employment
.
(a)
Death or Disability
. The Executives employment and the Employment Period shall
terminate automatically upon the Executives death or long term Disability during the Employment
Period. Disability means a condition entitling the Executive to benefits under the Companys
Long Term Disability Plan, policy or arrangement.
(b)
By the Company
. The Company may terminate the Executives employment under this
Agreement during the Employment Period for Cause or without Cause. Cause means:
(i) the continued failure by the Executive to substantially perform her duties as contemplated
by this Agreement (other than any such failure resulting from her incapacity due to physical or
mental illness or injury or any such actual or anticipated failure after the issuance by the
Executive of a Notice of Termination for Good Reason) over a period of not less than thirty
days after a demand for substantial performance is delivered to the Executive by the Board or by
the Chief Executive Officer of the Company, which demand identifies the manner in which it is
believed that the Executive has not substantially performed her duties;
2
(ii) the willful misconduct of the Executive materially and demonstrably injurious to the
Company (including, without limitation, any breach by the Executive of Section 9 of this
Agreement); provided that no act or failure to act on the Executives part will be considered
willful if done, or omitted to be done, by her in good faith and with reasonable belief that her
action or omission was in the best interest of the Company;
(iii) the Executives conviction of a misdemeanor, which, as determined in good faith by the
Board, constitutes a crime of moral turpitude and gives rise to material harm to the Company or to
any subsidiary or affiliate of the Company; or
(iv) the Executives conviction of a felony (including, without limitation, any felony
constituting a crime of moral turpitude).
(c)
By the Executive
. The Executive may terminate employment under this Agreement for
Good Reason or without Good Reason. Good Reason means:
(i) any reduction in the Executives base salary; or
(ii) material failure by the Company to comply with any provision of Sections 2 and 3 of this
Agreement (including, but not limited to, a diminution in the Executives authority, duties, or
responsibilities) other than an isolated, insubstantial or inadvertent failure that is not taken in
bad faith and is remedied by the Company within 30 days after receipt of written notice thereof
from the Executive.
Notwithstanding the foregoing, Good Reason for purposes of Section 4(c)(i) shall not include
a reduction in base salary if such reduction is coincident with a reduction applicable to all
members of the senior management team. 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 that
constitutes Good Reason and the specific provision(s) of this Agreement on which the Executive
relies. Such Notice of Termination for Good Reason must be received by the Company no later than
the 60
th
day after the event, or last in a series of events, that gives rise to Good
Reason. The Company shall have 30 days to remedy the conduct set forth in the Notice of
Termination for Good Reason. A termination of employment by the Executive for Good Reason shall be
effective on the 60
th
business day following the date when the Notice of Termination for
Good Reason is given, unless the conduct set forth in the notice is remedied by the Company within
the 30-day period. A termination of the Executives employment by the Executive without Good
Reason shall be effected by giving the Company at least 30 days advance written notice of the
termination.
(d)
Date of Termination
. The Date of Termination means the date of the Executives
death, the date of the Executives Disability, or the date the termination of the Executives
employment under this Agreement by the Company for Cause or without Cause or by the Executive for
Good Reason or without Good Reason, as the case may be, is effective. The Employment Period shall
end on the Date of Termination.
3
(e)
Separation from Service
. For purposes of determining under Section 409A whether
there has been a separation from service with the meaning of Treasury Regulation Section
1.409A-1(h) (or any successor regulation), the Executive shall be deemed to have incurred a
separation from service if her employment has been terminated in accordance with this Section 4 and
she is performing less than 50% of the average level of bona fide services she was performing for
the Company in the immediately preceding 36-month period (Separation From Service). In addition,
notwithstanding any other provision of this Agreement to the contrary, any payment or benefit
described in Section 5 that represents a deferral of compensation within the meaning of Section
409A shall only be paid or provided to Executive upon a Separation From Service as defined herein.
5.
Obligations of the Company upon Termination
.
(a)
By the Company Other Than for Cause; or By the Executive for Good Reason
. If,
during the Employment Period, the Company terminates the Executives employment under this
Agreement (other than for Cause) or the Executive terminates employment under this Agreement for
Good Reason:
(1) the Executive shall be entitled to continued payment for two years after the
Separation From Service of the Executives current base salary (as in effect on the Date of
Termination), which amounts shall be paid in installments over such two-year period pursuant
to the Companys normal payroll policy,
(2) the Executive shall be entitled to receive the following bonus payments: (i)
either (A) if the Separation from Service occurs following the end of a fiscal year but
prior to the date that an annual bonus for such previously completed fiscal year, if any, is
approved by the Companys Board of Directors, a bonus payment equal to the bonus payment
that the Executive would have received for such prior fiscal year without regard to the
Executive not having remained employed by the Company on the date that such bonus payment
would otherwise have been paid to the Executive, with any such bonus amount to be paid at
the same time as annual bonuses for such prior fiscal year are paid by the Company under the
applicable bonus program generally but in no event later than March 15
th
of the
calendar year following the calendar year that includes the last day of the applicable
fiscal year or (B) if Separation from Service occurs following the end of a fiscal year but
after the date that an annual bonus for such previously completed fiscal year is approved
(or determined not to be payable by the Companys Board or Directors), a bonus payment equal
to an amount representing 100% of the Executives target bonus for the Executives salary
grade for the fiscal year of the Company in which such Separation from Service occurs,
multiplied by a fraction, the numerator of which is the number of days in such current
fiscal year through the Separation from Service, and the denominator of which is 365, with
any such amount to be paid at the same time as annual bonuses for the fiscal year in which
such Separation from Service occurs are paid by the Company under the applicable bonus
program generally but in no event later than December 31st of the calendar year following
the calendar year that includes the last day of the applicable fiscal year and (ii)
continued payment for the two fiscal years ending immediately after the Separation from
Service of a bonus equal to the average of the annual bonuses earned by the Executive over
the three complete years (or if less than three complete years, the average bonus earned
during such lesser number of complete years) preceding the Date of Termination (that is, not
including the bonus year that includes the Date of Termination) with each such bonus payment
being paid at the same time as annual bonuses are paid by the Company under the applicable
bonus program; and
4
(3) for the eighteen month period following the Separation From Service (subject to
earlier termination as described below), if the Executive elects to receive continuation
coverage under the Companys group health plans pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA), the Executive shall be entitled to: (i) waiver by the
Company of the COBRA premium costs of medical, prescription, dental and vision coverage, if
any, under the Companys group health plans (as in effect from time to time) for the
Executive and, to the extent permitted under COBRA, the Executives spouse and eligible
dependents, if any, for the first two calendar months of the eighteen month continuation
period; and (ii) following the initial two-month period, the Executive shall be entitled to
reimbursement from the Company for the COBRA premium costs of medical, prescription, dental
and vision coverage, if any, under the Companys group health plans for the Executive and,
to the extent permitted under COBRA, the Executives spouse and eligible dependents, if any,
with such reimbursement not to exceed the COBRA rates for such coverage; provided, however,
that the Executive shall be required to submit to the Company reasonable evidence of payment
by the Executive of any such COBRA premiums in order to obtain reimbursement from the
Company and that the Executive may not submit any requests for reimbursement of such
payments more than once per calendar month. Notwithstanding anything to the contrary set
forth above, the Company, in its sole discretion, may discontinue any coverage contemplated
hereunder in the event that such continuation is not permitted under or would adversely
affect the tax status of the plan or plans of the Company pursuant to which the coverage is
provided, in which case the Company shall make supplemental severance payments to the
Executive in monthly amounts equal to the amounts to which the Executive otherwise would
have been entitled to reimbursement hereunder in respect of such coverage for the remainder
of the period that the Company otherwise would have been obligated to make reimbursements
hereunder to the Executive. Any amounts that are reimbursed to the Executive by the Company
or paid directly to the Executive as supplemental severance payments will be considered
taxable income to the Executive and any taxes on such amounts will be the Executives
responsibility and subject to applicable tax withholding.
In addition, the Executive shall be entitled to receive executive level outplacement assistance
under any outplacement assistance program then being maintained by the Company in accordance with
the terms of any such program, or if no such program then exists, in an amount not to exceed
$10,000; provided that any reimbursable expense must be incurred by the Executive no later than the
end of the second calendar year following the year of the Separation From Service. The Executive
shall also become vested in any outstanding options, restricted stock or other equity incentive
awards only to the extent provided for under the terms governing such equity incentive award. The
Company shall also pay, or cause to be paid, to the Executive, in a lump sum in cash within 30 days
after the Separation From Service (or, in the case of the pro-rated Annual Bonus Amount, at the
time such bonus would otherwise be paid), the following accrued but unpaid cash compensation of the
Executive (the Accrued Obligations): (X) the Executives base salary through the Date of
Termination that has not yet been paid, (Y) any accrued but unpaid vacation pay, and (Z) any
unreimbursed employee business expenses; provided, however, that the Companys obligation to make
any payments, or cause any payments to be made, under this paragraph (a) to the extent any such
payment shall not have accrued as of the day before the Date of Termination shall also be
conditioned upon the Executives execution, and non-revocation, of a written release, substantially
in the form attached hereto as
Annex 1
, of any and all claims against the Company and all
related parties with respect to all matters arising out of the Executives employment under this
Agreement or the termination thereof (other than any entitlements under the terms of this Agreement
to indemnification or under any other plans or programs of the Company in which the Executive
participated and under which the Executive has accrued and is due a benefit). The payments and
benefits described in this paragraph (a) (other than those payments and benefits accrued as of the
day before the Date of Termination) will be paid, or will begin to be paid or provided, as
applicable, after the applicable
release review period and revocation period have expired, and as if the Executive signed the
release on the last day of the release review period.
5
To the extent compliance with the requirements of Treas. Reg. § 1.409A-3(i)(2) (or any successor
provision) is necessary to avoid the application of an additional tax under Section 409A to
payments due to the Executive upon or following her Separation From Service, then notwithstanding
any other provision of this Agreement (or any otherwise applicable plan, policy, agreement or
arrangement), any such payments that are otherwise due within six months following the Executives
Separation From Service will be deferred (without interest) and paid to the Executive in a lump sum
immediately following that six month period. This provision shall not be construed as preventing
payments pursuant to Section 5 equal to an amount up to 2 times the lesser of (a) the Executives
annualized compensation for the year prior to the Separation From Service, and (b) the maximum
amount that may be taken into account under a qualified plan pursuant to section 401(a)(17) of the
Code, being paid to the Executive in the first six months following the Separation From Service.
(b)
Death or Disability
. If the Executives employment is terminated by reason of the
Executives death or Disability during the Employment Period, the Company shall pay the Accrued
Obligations to the Executive or the Executives estate or legal representative, as applicable, in a
lump sum in cash within 30 days after the Date of Termination. In such event, the Company shall
have no further obligations under this Agreement or otherwise to or with respect to the Executive;
and for any entitlements under the terms of any other plans or programs of the Company in which the
Executive participated and under which the Executive has become entitled to a benefit.
(c)
By the Company for Cause; By the Executive Other than for Good Reason
. If the
Executives employment is terminated by the Company for Cause during the Employment Period, or the
Executive voluntarily terminates employment during the Employment Period, other than for Good
Reason, the Company shall pay the Executive, or shall cause the Executive to be paid, the
Executives base salary through the Date of Termination that has not been paid and the amount of
any declared but unpaid bonuses, accrued but unpaid vacation pay, and unreimbursed employee
business expenses, and the Company shall have no further obligations under this Agreement or
otherwise to or with respect to the Executive other than for any entitlements under the terms of
any other plans or programs of the Company in which the Executive participated and under which the
Executive has become entitled to a benefit.
6.
Change in Control
. It is the intention of the parties that payments to be made to
the Executive whether under the terms of this Agreement or otherwise shall not constitute excess
parachute payments within the meaning of Section 280G of the Code and any regulations thereunder.
If the independent accountants serving as auditors for the Company on the date of this Agreement
(or any other independent certified public accounting firm designated by the Company) determine
that any payment or distribution by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise) would be nondeductible by the Company pursuant to Section 280G of the Code (or any
successor provision), then the amounts payable or distributable under this Agreement will be
reduced to the maximum amount which may be paid or distributed without causing such payments or
distributions to be nondeductible. The determination shall take into account (a) whether the
payments or distributions are parachute payments under Section 280G, (b) the amount of payments
and distributions under this Agreement that constitute reasonable compensation, and (c) the present
value of such payments and distributions determined in accordance with Treasury Regulations in
effect from time to time. If a reduction is required in accordance with this Section 6, cash
payments will be reduced before any acceleration of vesting or forfeiture conditions are eliminated
and future payments will be reduced before amounts that are immediately payable.
7.
Non-exclusivity of Rights
. Nothing in this Agreement shall prevent or limit the
Executives continuing or future participation in any plan, program, policy or practice provided by
the Company for which the Executive may qualify. Vested benefits and other amounts that the
Executive is otherwise entitled to receive on or after the Date of Termination under any plan,
policy, practice or program of, or any contract or agreement with, the Company shall 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.
6
8.
No Mitigation
. 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.
9.
Confidential Information; Non-solicitation; Non-competition
.
(a) The Executive agrees and acknowledges that by reason of her employment by and service to
the Company, she will have access to, become exposed to and/or become knowledgeable about
confidential information of the Company (the Confidential Information) from time to time during
the Employment Period, including, without limitation, proposals, plans, inventions, practices,
systems, programs, processes, methods, techniques, research, records, supplier sources, customer
lists and other forms of business information that are not known to the Companys competitors, are
not recognized as being encompassed within standard business or management practices and/or are
kept secret and confidential by the Company. Executive agrees that at no time during or after the
Employment Period will she disclose or use the Confidential Information except as may be required
in the prudent course of business for the benefit of the Company. The Executive also agrees to be
subject to the Companys Code of Ethics and Business Conduct as in effect from time to time during
the Employment Period.
(b) The Executive acknowledges that the Company is generally engaged in business throughout
the United States. During the Executives employment by the Company and for two years after the
Date of Termination or the expiration of the Employment Period, the Executive agrees that she will
not, unless acting with the prior written consent of the Company, directly or indirectly, own,
manage, control, or participate in the ownership, management or control of, or be employed or
engaged by, or otherwise affiliated or associated with, as an officer, director, employee,
consultant, independent contractor or otherwise, any other corporation, partnership,
proprietorship, firm, association or other business entity, which is engaged in any business,
including the wholesale distribution of pharmaceutical products, that, or otherwise engage in any
business that, as of the Date of Termination or expiration of the Employment Period, as applicable,
is engaged in by the Company, has been reviewed with the Board for development to be owned or
managed by the Company, and/or has been divested by the Company but as to which the Company has an
obligation to refrain from involvement, but only for so long as such restriction applies to the
Company; provided, however, that the ownership of not more than 5% of the equity of a publicly
traded entity shall not be deemed to be a violation of this paragraph. During such two-year
period, Executive also agrees to make herself reasonably available to the Company for consulting at
a per diem rate that reflects her annual salary as in an effect prior to her termination of
employment (plus reimbursement of Executives reasonable expenses). Notwithstanding the foregoing,
the Executive shall be relieved of the covenants provided for in this subsection in the event that
the Company fails to make payments to Executive as provided for in Section 5(a) of this Agreement.
(c) The Executive also agrees that she will not, directly or indirectly, during the period
described in paragraph (b) of this Section 9 induce any person who is an employee, officer,
director, or agent of the Company, to terminate such relationship, or employ, assist in employing
or otherwise be associated in business with any present or former employee or officer of the
Company, including without limitation those who commence such positions with the Company after the
Date of Termination.
(d) The Executive acknowledges and agrees that the restrictions contained in this Section 9
are reasonable and necessary to protect and preserve the legitimate interests, properties, goodwill
and business of the Company, that the Company would not have entered into this Agreement in the
absence of such restrictions and that irreparable injury will be suffered by the Company should the
Executive breach the provisions of this Section. The Executive represents and acknowledges that
(i) the Executive has been advised by the Company to consult the Executives own legal counsel in
respect of this Agreement, (ii) the Executive has consulted with and been advised by her own
counsel in respect of this Agreement, and (iii) the Executive has had full opportunity, prior to
execution of this Agreement, to review thoroughly this Agreement with the Executives counsel.
7
(e) The Executive further acknowledges and agrees that a breach of the restrictions in this
Section 9 will not be adequately compensated by monetary damages. The Executive agrees that actual
damage may be difficult to ascertain and that, in the event of any such breach, the Company shall
be entitled to injunctive relief in addition to such other legal or equitable remedies as may be
available to the Company. In the event that the provisions of this Section 9 should ever be
adjudicated to exceed the limitations permitted by applicable law in any jurisdiction, it is the
intention of the parties that the provision shall be amended such that those provisions are made
consistent with the maximum limitations permitted by applicable law, that such amendment shall
apply only within the jurisdiction of the court that made such adjudication and that those
provisions otherwise be enforced to the maximum extent permitted by law.
(f) If the Executive breaches her obligations under this Section 9, she agrees that suit may
be brought, and that she consents to personal jurisdiction, in the United States District Court for
the Eastern District of Pennsylvania, or if such court does not have jurisdiction or will not
accept jurisdiction, in any court of general jurisdiction in Chester County, Pennsylvania; consents
to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding; and
waives any objection which she may have to the laying of venue of any such suit, action or
proceeding in any such court. The Executive also irrevocably and unconditionally consents to the
service of any process, pleadings, notices or other papers.
(g) For purposes of this Section 9, the term Company shall be deemed to include each
Subsidiary of the Company.
10.
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 otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by the Executives
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.
(c) The Company shall 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 expressly to assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would have been required to perform it if no such succession had
taken place. As used in this Agreement, Company shall mean both the Company as defined above and
any such successor that assumes and agrees to perform this Agreement, by operation of law or
otherwise.
8
11.
Miscellaneous
.
(a) This Agreement shall be governed by, and construed in accordance with, the laws of the
Commonwealth of Pennsylvania, without reference to principles of conflict of laws. The captions of
this Agreement are not 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 to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive
, to the address on file with the Company.
If to the Company
:
AmerisourceBergen Corporation
1300 Morris Drive
Chesterbrook, PA 19087
Attention: Chief Executive Officer
or to such other address as either party furnishes to the other in writing in accordance with
this paragraph (b) of Section 11. 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. If any provision of this
Agreement shall be held invalid or unenforceable in part, the remaining portion of such provision,
together with all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.
(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 Executives or the Companys 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
5 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.
(f) Anything to the contrary herein notwithstanding, all benefits or payments provided by the
Company to the Executive that would be deemed to constitute nonqualified deferred compensation
within the meaning of Section 409A are intended to comply with Section 409A of the Code. If,
however, any such benefit or payment is deemed to not comply with Section 409A of the Code, the
Company and the Executive agree to renegotiate in good faith any such benefit or payment
(including, without limitation, as to the timing of any severance payments payable hereof) so
that either (i) Section 409A of the Code will not apply or (ii) compliance with Section 409A will
be achieved.
(g) This Agreement may be executed in several counterparts, each of which shall be deemed an
original, and said counterparts shall constitute but one and the same instrument.
12. The respective rights and obligations of the parties hereunder shall survive any
termination of the Executives employment to the extent necessary to the intended preservation of
such rights and obligations, including, but not by way of limitation, those rights and obligations
set forth in Sections 3, 5, 6, 9 and 11.
9
IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the
authorization of the Committee, the Company has caused this Agreement to be executed in its name on
its behalf, in each case on the date(s) set forth below.
|
|
|
|
|
AMERISOURCEBERGEN CORPORATION
|
|
|
|
|
|
|
|
By:
|
|
/s/ R. David Yost
|
|
|
|
|
Name: R. David Yost
|
|
|
|
|
Title: President and Chief Executive Officer
|
|
|
|
|
|
|
|
Date: 11/24/08
|
|
|
|
|
|
|
|
EXECUTIVE
|
|
|
|
|
|
|
|
/s/ Jeanne B. Fisher
|
|
|
|
|
|
Jeanne B. Fisher
|
|
|
|
|
|
|
|
Date: 12/19/08
|
|
|
10
ANNEX 1
SEPARATION OF EMPLOYMENT AGREEMENT
AND GENERAL RELEASE
THIS SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE (the Agreement) is made as of
this _____ day of
,
_____, by and between AmerisourceBergen Corporation (the Company) and
(the Executive).
WHEREAS, Executive formerly was employed as
;
WHEREAS, Executive and Company entered into an Employment Agreement, dated
_____, _____, (the Employment Agreement) which provides for certain severance benefits in the event that
Executives employment is terminated on account of a reason set forth in the Employment Agreement;
WHEREAS, Executive and the Company mutually desire to terminate Executives employment on an
amicable basis, such termination to be effective
_____, _____ (the Date of Resignation);
and
WHEREAS, in connection with the termination of Executives employment, the parties have agreed
to a separation package and the resolution of any and all disputes between them.
NOW, THEREFORE, IT IS HEREBY AGREED by and between Executive and the Company as follows:
1. (a) Executive, for and in consideration of the commitments of the Company as set forth in
Paragraph 5 of this Agreement, and intending to be legally bound, does hereby REMISE, RELEASE AND
FOREVER DISCHARGE the Company, its affiliates, subsidiaries and parents, and its officers,
directors, employees, and agents, and its and their respective successors and assigns, heirs,
executors, and administrators (each, a Releasee and collectively, Releasees) from all causes of
action, suits, debts, claims and demands whatsoever in law or in equity, which Executive ever had,
now has, or hereafter may have, whether known or unknown, or which Executives heirs, executors, or
administrators may have, by reason of any matter, cause or thing whatsoever, from the beginning of
Executives employment to the date of this Agreement, and particularly, but without limitation of
the foregoing general terms, any claims arising from or relating in any way to Executives
employment relationship with the Company and/or its predecessors, subsidiaries or affiliates, the
terms and conditions of that employment relationship, and the termination of that employment
relationship, including, but not limited to, any claims arising under the Age Discrimination in
Employment Act, the Older Workers Benefit Protection Act (OWBPA), Title VII of The Civil Rights
Act of 1964, the Americans with Disabilities Act, the Family and Medical Leave Act of 1993, the
Employee Retirement Income Security Act of 1974, the Pennsylvania Human Relations Act, and any
other claims under any federal, state or local common law, statutory, or regulatory provision, now
or hereafter recognized, and any claims for attorneys fees and costs. This Agreement is effective
without regard to the legal nature of the claims raised and without regard to whether any such
claims are based upon tort, equity, implied or express contract or discrimination of any sort.
11
(b) To the fullest extent permitted by law, and subject to the provisions of Paragraph 10
below, Executive represents and affirms that (i) Executive has not filed or caused to be filed on
Executives behalf any claim for relief against the Company or any Releasee and, to the best of
Executives knowledge and belief, no outstanding claims for relief have been filed or asserted
against the Company or any Releasee on Executives behalf; (ii) Executive has not reported any
improper, unethical or illegal conduct or activities to any supervisor, manager, department head,
human resources representative, agent or other representative of the Company, to any member of the
Companys legal or compliance departments, or to the ethics hotline, and has no knowledge of any
such improper, unethical or illegal conduct or activities; and (iii) Executive will not file,
commence, prosecute or participate in any judicial or arbitral action or proceeding against the
Company or any Releasee based upon or arising out of any act, omission, transaction, occurrence,
contract, claim or event existing or occurring on or before the date of this Agreement.
(c) Nothing in the Agreement will be deemed to release the Company from (i) claims solely to
enforce this Agreement, (ii) claims for indemnification under the Companys By-Laws, or (iii)
claims for payment or reimbursement pursuant to any employee benefit plan, policy or arrangement of
the Company.
2. In consideration of the Companys agreements as set forth in Paragraph 5 herein, Executive
agrees to be bound by the terms of Section 9 of the Employment Agreement.
3. Executive agrees and recognizes that Executive has permanently and irrevocably severed
Executives employment relationship with the Company, that Executive shall not seek employment with
the Company or any affiliated entity at any time in the future, and that the Company has no
obligation to employ Executive in the future.
4. Executive further agrees that Executive will not disparage or subvert the Company, or make
any statement reflecting negatively on the Company, its affiliated corporations or entities, or any
of their officers, directors, employees, agents or representatives, including, but not limited to,
any matters relating to the operation or management of the Company, Executives employment and the
termination of Executives employment, irrespective of the truthfulness or falsity of such
statement. The Company agrees that none of its officers, directors, employees, agents or
representatives will disparage or subvert the Executive, or make any statement reflecting
negatively on the Executive, including, but not limited to, any matters relating to the Executives
performance or the termination of Executives employment, irrespective of the truthfulness or
falsity of such statement.
5. In consideration for Executives agreement as set forth herein, the Company agrees that the
Company shall provide the following:
[
insert description of severance benefits to which Executive is entitled under the
Employment Agreement
]; and
[(b)] To the extent covered by directors and officers liability insurance on the Date
of Resignation, the Company will maintain, for no less than 6 years following the Date of
Resignation, directors and officers liability insurance covering the Executives potential
liability in connection with her employment by the Company in amounts and on terms that are
commensurate with the coverage provided to its active officers and directors of the Company.
6. Executive understands and agrees that the payments, benefits and agreements provided in
this Agreement are being provided to Executive in consideration for Executives acceptance and
execution of, and in reliance upon Executives representations in, this Agreement. Executive
acknowledges that if Executive had not executed this Agreement containing a release of all claims
against the Company, Executive would only have been entitled to the payments provided in the
Companys standard severance pay plan for employees.
12
7. Executive acknowledges and agrees that the Company previously has satisfied any and all
obligations owed to Executive under any employment agreement or offer letter Executive has with the
Company and, further, that this Agreement supersedes any employment agreement or offer letter
Executive has with the Company, and any and all prior agreements or understandings, whether written
or oral, between the parties shall remain in full force and effect to the extent not inconsistent
with this Agreement, and further, that, except as set forth expressly herein, no promises or
representations have been made to Executive in connection with the termination of Executives
employment agreement or offer letter with the Company, or the terms of this Agreement.
8. Executive agrees not to disclose the terms of this Agreement to anyone, except Executives
spouse, attorney and, as necessary, tax/financial advisor. Likewise, the Company agrees that the
terms of this Agreement will not be disclosed except as may be necessary to obtain approval or
authorization to fulfill its obligations hereunder or as required by law. It is expressly
understood that any violation of the confidentiality obligation imposed hereunder constitutes a
material breach of this Agreement.
9. Executive represents that Executive does not presently have in Executives possession any
records and business documents, whether on computer or hard copy, and other materials (including
but not limited to computer disks and tapes, computer programs and software, office keys,
correspondence, files, customer lists, technical information, customer information, pricing
information, business strategies and plans, sales records and all copies thereof) (collectively,
the Corporate Records) provided by the Company and/or its predecessors, subsidiaries or
affiliates or obtained as a result of Executives prior employment with the Company and/or its
predecessors, subsidiaries or affiliates, or created by Executive while employed by or rendering
services to the Company and/or its predecessors, subsidiaries or affiliates. Executive
acknowledges that all such Corporate Records are the property of the Company. In addition,
Executive shall promptly return in good condition any and all beepers, credit cards, cellular
telephone equipment, business cards and computers. As of the Date of Resignation, the Company will
make arrangements to remove, terminate or transfer any and all business communication lines
including network access, cellular phone, fax line and other business numbers.
10. Nothing in this Agreement shall prohibit or restrict Executive from: (i) making any
disclosure of information required by law; (ii) providing information to, or testifying or
otherwise assisting in any investigation or proceeding brought by, any federal regulatory or law
enforcement agency or legislative body, any self-regulatory organization, or the Companys
[
designated legal, compliance or human resources officer
]; or (iii) filing, testifying,
participating in or otherwise assisting in a proceeding relating to an alleged violation of any
federal, state or municipal law relating to fraud, or any rule or regulation of the Securities and
Exchange Commission or any self-regulatory organization.
11. The parties agree and acknowledge that the agreement by the Company described herein, and
the settlement and termination of any asserted or unasserted claims against the Releasees, are not
and shall not be construed to be an admission of any violation of any federal, state or local
statute or regulation, or of any duty owed by any of the Releasees to Executive.
12. Executive agrees and recognizes that should Executive breach any of the obligations or
covenants set forth in this Agreement, the Company will have no further obligation to provide
Executive with the consideration set forth herein, and will have the right to seek repayment of all
consideration paid up to the time of any such breach. Further, Executive acknowledges in the event
of a breach of this Agreement, Releasees may seek any and all appropriate relief for any such
breach, including equitable relief and/or money damages, attorneys fees and costs.
13
13. Executive further agrees that the Company shall be entitled to preliminary and permanent
injunctive relief, without the necessity of proving actual damages, as well as to an equitable
accounting of all earnings, profits and other benefits arising from any violations of this
Agreement, which rights shall be cumulative and in addition to any other rights or remedies to
which the Company may be entitled.
14. This Agreement and the obligations of the parties hereunder shall be construed,
interpreted and enforced in accordance with the laws of the Commonwealth of Pennsylvania.
15. Executive certifies and acknowledges as follows:
(a) That Executive has read the terms of this Agreement, and that Executive understands its
terms and effects, including the fact that Executive has agreed to RELEASE AND FOREVER DISCHARGE
the Company and each and every one of its affiliated entities from any legal action arising out of
Executives employment relationship with the Company and the termination of that employment
relationship;
(b) That Executive has signed this Agreement voluntarily and knowingly in exchange for the
consideration described herein, which Executive acknowledges is adequate and satisfactory to
Executive and which Executive acknowledges is in addition to any other benefits to which Executive
is otherwise entitled;
(c) That Executive has been and is hereby advised in writing to consult with an attorney prior
to signing this Agreement;
(d) That Executive does not waive rights or claims that may arise after the date this
Agreement is executed;
(e) That the Company has provided Executive with a period of twenty-one (21) days within which
to consider this Agreement, and that Executive has signed on the date indicated below after
concluding that this Agreement is satisfactory to Executive; and
(f) Executive acknowledges that this Agreement may be revoked by Executive within seven (7)
days after execution, and it shall not become effective until the expiration of such seven day
revocation period. In the event of a timely revocation by Executive, this Agreement will be deemed
null and void and the Company will have no obligations hereunder.
[
SIGNATURE PAGE FOLLOWS
]
14
Intending to be legally bound hereby, Executive and the Company executed the foregoing
Separation of Employment Agreement and General Release this
_____ day of
,
_____.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Witness:
|
|
|
|
|
|
|
|
|
|
[
Executive
]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMERISOURCEBERGEN CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
Witness:
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
Exhibit 10.15
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the Agreement) by and between AmerisourceBergen
Corporation, a Delaware corporation (hereinafter the Company), and John G. Chou (the
Executive), dated and effective as of November 24, 2008.
WHEREAS, the Company and the Executive entered into an employment agreement (the Original
Agreement) effective January 1, 2007, reflecting the determination of the Board of Directors of
the Company (the Board), upon the recommendation of the Compensation and Succession Planning
Committee of the Board (the Committee), that it would be in the best interests of the Company and
its shareholders to extend an employment agreement to the Executive , and the Executives desire to
accept such an employment agreement; and
WHEREAS, the parties wish to amend the Original Agreement to comport with Section 409A of the
Internal Revenue Code, as amended, and the regulations promulgated thereunder and to make certain
other changes intended to clarify certain provisions of the Original Agreement;
NOW, THEREFORE, intending to be legally bound, the parties hereto agree to amend and restate
the Original Agreement in its entirety as follows:
1.
Employment Period
. The Company shall continue to employ the Executive, either
directly or through a Subsidiary (as defined below), and the Executive shall continue to serve the
Company or any such Subsidiary, on the terms and conditions set forth in this Agreement, beginning
November 24, 2008 (the Employment Date) and until that employment ceases as provided below in
Section 4 (the Employment Period). Subsidiary means any entity that is controlled, directly or
indirectly, by the Company.
2.
Position and Duties
.
(a) During the Employment Period, the Executive shall be employed as the Senior Vice
President, General Counsel and Secretary of the Company, subject to such changes in title as may be
proposed by the Company and consented to by the Executive. The Executive shall perform such duties
for the Company as are related typically to the office of a chief legal officer and secretary and
such other duties as may be assigned by the Company. The Executive shall report to the Board, or a
committee of the Board, as appropriate, to the extent required pursuant to applicable law,
including, but not limited to, the reporting up provisions of the Sarbanes-Oxley Act of 2002.
(b) During the Employment Period, but excluding any periods of vacation and absence due to
intermittent illness to which the Executive is entitled, and any services on corporate, civic or
charitable boards or committees, lectures, speaking engagements or teaching engagements that are
approved by the Executives direct supervisor and that do not significantly interfere with the
performance of his responsibilities to the Company or violating the provisions of Section 9, the
Executive shall devote his full time and attention during normal business hours to the business and
affairs of the Company and the Executive shall use reasonable efforts to carry out all duties and
responsibilities assigned to him faithfully and efficiently.
3.
Compensation
.
(a)
Base Salary
. During the Employment Period, the Executive shall continue to
receive annual base salary at the rate in effect as of the date of this Agreement, payable in
accordance
with the regular payroll practices of the Company. The Executives base salary shall be
reviewed annually by the Committee and/or the Chief Executive Officer of the Company, in accordance
with the Companys standard practices for executives generally, and may be increased as determined
by the Committee, in its sole discretion, or by any person or persons to whom the Committee has
delegated such authority.
(b)
Annual Bonus and Incentive Plans; Other Benefits
. During the Employment Period:
(i) the Executive shall be entitled to participate in any short-term and long-term incentive
programs established and/or maintained by the Company for its senior level executives generally;
(ii) the Executive shall be entitled to participate in all incentive, savings and retirement plans,
practices, policies and programs of the Company to at least the same extent as other senior
executives of the Company; (iii) the Executive and/or the Executives family, as the case may be,
shall be eligible for participation in, and shall receive all benefits under, all welfare benefit
plans, practices, policies and programs provided by the Company to at least the same extent as
other senior executives of the Company; and (iv) the Executive shall be entitled to, and the
Company shall provide the Executive with, not less than the number of weeks of vacation during each
calendar year to which the Executive is entitled as of the date of this Agreement. In addition to
the foregoing, the Executive shall be entitled to annual reimbursement of up to $5,000 per year for
tax and financial planning and tax preparation, or such greater amount as may be authorized by the
Committee, in its sole discretion, or by any person or persons to whom the Committee has delegated
such authority.
(c)
Expenses
. During the Employment Period, the Executive shall be entitled to
receive advancement or prompt reimbursement for all reasonable expenses incurred or anticipated to
be incurred by the Executive in carrying out the Executives duties under this Agreement, provided
that the Executive complies with the generally applicable policies, practices and procedures of the
Company for submission of expense reports, receipts, or similar documentation of such expenses.
(d) Notwithstanding anything herein to the contrary or otherwise, except to the extent any
expense, reimbursement or in-kind benefit provided pursuant to Sections 3(b), 3(c) and 5(a) does
not constitute a deferral of compensation within the meaning of Section 409A of the Internal
Revenue Code of 1986, as amended from time to time (Code), and its implementing regulations and
guidance (Section 409A) (i) the amount of expenses eligible for reimbursement or in-kind benefits
provided to the Executive during any calendar year will not affect the amount of expenses eligible
for reimbursement or in-kind benefits provided to the Executive in any other calendar year, (ii)
the reimbursements for expenses for which the Executive is entitled to be reimbursed shall be made
on or before the last day of the calendar year following the calendar year in which the applicable
expense is incurred and (iii) the right to payment or reimbursement or in-kind benefits hereunder
may not be liquidated or exchanged for any other benefit.
4.
Termination of Employment
.
(a)
Death or Disability
. The Executives employment and the Employment Period shall
terminate automatically upon the Executives death or long term Disability during the Employment
Period. Disability means a condition entitling the Executive to benefits under the Companys
Long Term Disability Plan, policy or arrangement.
2
(b)
By the Company
. The Company may terminate the Executives employment under this
Agreement during the Employment Period for Cause or without Cause. Cause means:
(i) the continued failure by the Executive to substantially perform his duties as contemplated
by this Agreement (other than any such failure resulting from his incapacity due to physical or
mental illness or injury or any such actual or anticipated failure after the issuance by the
Executive of a Notice of Termination for Good Reason) over a period of not less than thirty days
after a demand for substantial performance is delivered to the Executive by the Board or by the
Chief Executive Officer of the Company, which demand identifies the manner in which it is believed
that the Executive has not substantially performed his duties;
(ii) the willful misconduct of the Executive materially and demonstrably injurious to the
Company (including, without limitation, any breach by the Executive of Section 9 of this
Agreement); provided that no act or failure to act on the Executives part will be considered
willful if done, or omitted to be done, by him in good faith and with reasonable belief that his
action or omission was in the best interest of the Company;
(iii) the Executives conviction of a misdemeanor, which, as determined in good faith by the
Board, constitutes a crime of moral turpitude and gives rise to material harm to the Company or to
any subsidiary or affiliate of the Company; or
(iv) the Executives conviction of a felony (including, without limitation, any felony
constituting a crime of moral turpitude).
(c)
By the Executive
. The Executive may terminate employment under this Agreement for
Good Reason or without Good Reason. Good Reason means:
(i) any reduction in the Executives base salary; or
(ii) material failure by the Company to comply with any provision of Sections 2 and 3 of this
Agreement (including, but not limited to, a diminution in the Executives authority, duties, or
responsibilities) other than an isolated, insubstantial or inadvertent failure that is not taken in
bad faith and is remedied by the Company within 30 days after receipt of written notice thereof
from the Executive.
Notwithstanding the foregoing, Good Reason for purposes of Section 4(c)(i) shall not include
a reduction in base salary if such reduction is coincident with a reduction applicable to all
members of the senior management team. 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 that
constitutes Good Reason and the specific provision(s) of this Agreement on which the Executive
relies. Such Notice of Termination for Good Reason must be received by the Company no later than
the 60
th
day after the event, or last in a series of events, that gives rise to Good
Reason. The Company shall have 30 days to remedy the conduct set forth in the Notice of
Termination for Good Reason. A termination of employment by the Executive for Good Reason shall be
effective on the 60
th
business day following the date when the Notice of Termination for
Good Reason is given, unless the conduct set forth in the notice is remedied by the Company within
the 30-day period. A termination of the Executives employment by the Executive without Good
Reason shall be effected by giving the Company at least 30 days advance written notice of the
termination.
(d)
Date of Termination
. The Date of Termination means the date of the Executives
death, the date of the Executives Disability, or the date the termination of the Executives
employment under this Agreement by the Company for Cause or without Cause or by the Executive for
Good Reason or without Good Reason, as the case may be, is effective. The Employment Period
shall end on the Date of Termination.
3
(e)
Separation from Service
. For purposes of determining under Section 409A whether
there has been a separation from service with the meaning of Treasury Regulation Section
1.409A-1(h) (or any successor regulation), the Executive shall be deemed to have incurred a
separation from service if his employment has been terminated in accordance with this Section 4 and
he is performing less than 50% of the average level of bona fide services he was performing for the
Company in the immediately preceding 36-month period (Separation From Service). In addition,
notwithstanding any other provision of this Agreement to the contrary, any payment or benefit
described in Section 5 that represents a deferral of compensation within the meaning of Section
409A shall only be paid or provided to Executive upon a Separation From Service as defined herein.
5.
Obligations of the Company upon Termination
.
(a)
By the Company Other Than for Cause; or By the Executive for Good Reason
. If,
during the Employment Period, the Company terminates the Executives employment under this
Agreement (other than for Cause) or the Executive terminates employment under this Agreement for
Good Reason:
(1) the Executive shall be entitled to continued payment for two years after the
Separation From Service of the Executives current base salary (as in effect on the Date of
Termination), which amounts shall be paid in installments over such two-year period pursuant
to the Companys normal payroll policy,
(2) the Executive shall be entitled to receive the following bonus payments: (i)
either (A) if the Separation from Service occurs following the end of a fiscal year but
prior to the date that an annual bonus for such previously completed fiscal year, if any, is
approved by the Companys Board of Directors, a bonus payment equal to the bonus payment
that the Executive would have received for such prior fiscal year without regard to the
Executive not having remained employed by the Company on the date that such bonus payment
would otherwise have been paid to the Executive, with any such bonus amount to be paid at
the same time as annual bonuses for such prior fiscal year are paid by the Company under the
applicable bonus program generally but in no event later than March 15
th
of the
calendar year following the calendar year that includes the last day of the applicable
fiscal year or (B) if Separation from Service occurs following the end of a fiscal year but
after the date that an annual bonus for such previously completed fiscal year is approved
(or determined not to be payable by the Companys Board or Directors), a bonus payment equal
to an amount representing 100% of the Executives target bonus for the Executives salary
grade for the fiscal year of the Company in which such Separation from Service occurs,
multiplied by a fraction, the numerator of which is the number of days in such current
fiscal year through the Separation from Service, and the denominator of which is 365, with
any such amount to be paid at the same time as annual bonuses for the fiscal year in which
such Separation from Service occurs are paid by the Company under the applicable bonus
program generally but in no event later than December 31st of the calendar year following
the calendar year that includes the last day of the applicable fiscal year and (ii)
continued payment for the two fiscal years ending immediately after the Separation from
Service of a bonus equal to the average of the annual bonuses earned by the Executive over
the three complete years (or if less than three complete years, the average bonus earned
during such lesser number of complete years) preceding the Date of Termination (that is, not
including the bonus year that
includes the Date of Termination) with each such bonus payment being paid at the same
time as annual bonuses are paid by the Company under the applicable bonus program; and
4
(3) for the eighteen month period following the Separation From Service (subject to
earlier termination as described below), if the Executive elects to receive continuation
coverage under the Companys group health plans pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA), the Executive shall be entitled to: (i) waiver by the
Company of the COBRA premium costs of medical, prescription, dental and vision coverage, if
any, under the Companys group health plans (as in effect from time to time) for the
Executive and, to the extent permitted under COBRA, the Executives spouse and eligible
dependents, if any, for the first two calendar months of the eighteen month continuation
period; and (ii) following the initial two-month period, the Executive shall be entitled to
reimbursement from the Company for the COBRA premium costs of medical, prescription, dental
and vision coverage, if any, under the Companys group health plans for the Executive and,
to the extent permitted under COBRA, the Executives spouse and eligible dependents, if any,
with such reimbursement not to exceed the COBRA rates for such coverage; provided, however,
that the Executive shall be required to submit to the Company reasonable evidence of payment
by the Executive of any such COBRA premiums in order to obtain reimbursement from the
Company and that the Executive may not submit any requests for reimbursement of such
payments more than once per calendar month. Notwithstanding anything to the contrary set
forth above, the Company, in its sole discretion, may discontinue any coverage contemplated
hereunder in the event that such continuation is not permitted under or would adversely
affect the tax status of the plan or plans of the Company pursuant to which the coverage is
provided, in which case the Company shall make supplemental severance payments to the
Executive in monthly amounts equal to the amounts to which the Executive otherwise would
have been entitled to reimbursement hereunder in respect of such coverage for the remainder
of the period that the Company otherwise would have been obligated to make reimbursements
hereunder to the Executive. Any amounts that are reimbursed to the Executive by the Company
or paid directly to the Executive as supplemental severance payments will be considered
taxable income to the Executive and any taxes on such amounts will be the Executives
responsibility and subject to applicable tax withholding.
In addition, the Executive shall be entitled to receive executive level outplacement assistance
under any outplacement assistance program then being maintained by the Company in accordance with
the terms of any such program, or if no such program then exists, in an amount not to exceed
$10,000; provided that any reimbursable expense must be incurred by the Executive no later than the
end of the second calendar year following the year of the Separation From Service. The Executive
shall also become vested in any outstanding options, restricted stock or other equity incentive
awards only to the extent provided for under the terms governing such equity incentive award. The
Company shall also pay, or cause to be paid, to the Executive, in a lump sum in cash within 30 days
after the Separation From Service (or, in the case of the pro-rated Annual Bonus Amount, at the
time such bonus would otherwise be paid), the following accrued but unpaid cash compensation of the
Executive (the Accrued Obligations): (X) the Executives base salary through the Date of
Termination that has not yet been paid, (Y) any accrued but unpaid vacation pay, and (Z) any
unreimbursed employee business expenses; provided, however, that the Companys obligation to make
any payments, or cause any payments to be made, under this paragraph (a) to the extent any such
payment shall not have accrued as of the day before the Date of Termination shall also be
conditioned upon the Executives execution, and non-revocation, of a written release, substantially
in the form attached hereto as
Annex 1
, of any and all claims against the Company and all
related parties with respect to all matters arising out of the Executives employment under this
Agreement or the termination thereof (other than any entitlements under the terms of this Agreement
to indemnification or under any other plans or programs of the Company in which the Executive
participated and under which the Executive has accrued and is due a benefit). The payments and
benefits described in this paragraph (a) (other than those payments and benefits accrued as of the
day before the Date of Termination) will be paid, or will begin to be paid or provided, as
applicable, after the applicable release review period and revocation period have expired, and as
if the Executive signed the release on the last day of the release review period.
5
To the extent compliance with the requirements of Treas. Reg. § 1.409A-3(i)(2) (or any successor
provision) is necessary to avoid the application of an additional tax under Section 409A to
payments due to the Executive upon or following his Separation From Service, then notwithstanding
any other provision of this Agreement (or any otherwise applicable plan, policy, agreement or
arrangement), any such payments that are otherwise due within six months following the Executives
Separation From Service will be deferred (without interest) and paid to the Executive in a lump sum
immediately following that six month period. This provision shall not be construed as preventing
payments pursuant to Section 5 equal to an amount up to 2 times the lesser of (a) the Executives
annualized compensation for the year prior to the Separation From Service, and (b) the maximum
amount that may be taken into account under a qualified plan pursuant to section 401(a)(17) of the
Code, being paid to the Executive in the first six months following the Separation From Service.
(b)
Death or Disability
. If the Executives employment is terminated by reason of the
Executives death or Disability during the Employment Period, the Company shall pay the Accrued
Obligations to the Executive or the Executives estate or legal representative, as applicable, in a
lump sum in cash within 30 days after the Date of Termination. In such event, the Company shall
have no further obligations under this Agreement or otherwise to or with respect to the Executive;
and for any entitlements under the terms of any other plans or programs of the Company in which the
Executive participated and under which the Executive has become entitled to a benefit.
(c)
By the Company for Cause; By the Executive Other than for Good Reason
. If the
Executives employment is terminated by the Company for Cause during the Employment Period, or the
Executive voluntarily terminates employment during the Employment Period, other than for Good
Reason, the Company shall pay the Executive, or shall cause the Executive to be paid, the
Executives base salary through the Date of Termination that has not been paid and the amount of
any declared but unpaid bonuses, accrued but unpaid vacation pay, and unreimbursed employee
business expenses, and the Company shall have no further obligations under this Agreement or
otherwise to or with respect to the Executive other than for any entitlements under the terms of
any other plans or programs of the Company in which the Executive participated and under which the
Executive has become entitled to a benefit.
6.
Change in Control
. It is the intention of the parties that payments to be made to
the Executive whether under the terms of this Agreement or otherwise shall not constitute excess
parachute payments within the meaning of Section 280G of the Code and any regulations thereunder.
If the independent accountants serving as auditors for the Company on the date of this Agreement
(or any other independent certified public accounting firm designated by the Company) determine
that any payment or distribution by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise) would be nondeductible by the Company pursuant to Section 280G of the Code (or any
successor provision), then the amounts payable or distributable under this Agreement will be
reduced to the maximum amount which may be paid or distributed without causing such payments or
distributions to be nondeductible. The determination shall take into account (a) whether the
payments or distributions are parachute payments under Section 280G, (b) the amount of payments
and distributions under this Agreement that constitute reasonable compensation, and (c) the present
value of such payments and distributions determined in accordance
with Treasury Regulations in effect from time to time. If a reduction is required in
accordance with this Section 6, cash payments will be reduced before any acceleration of vesting or
forfeiture conditions are eliminated and future payments will be reduced before amounts that are
immediately payable.
7.
Non-exclusivity of Rights
. Nothing in this Agreement shall prevent or limit the
Executives continuing or future participation in any plan, program, policy or practice provided by
the Company for which the Executive may qualify. Vested benefits and other amounts that the
Executive is otherwise entitled to receive on or after the Date of Termination under any plan,
policy, practice or program of, or any contract or agreement with, the Company shall 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.
6
8.
No Mitigation
. 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.
9.
Confidential Information; Non-solicitation; Non-competition
.
(a) The Executive agrees and acknowledges that by reason of his employment by and service to
the Company, he will have access to, become exposed to and/or become knowledgeable about
confidential information of the Company (the Confidential Information) from time to time during
the Employment Period, including, without limitation, proposals, plans, inventions, practices,
systems, programs, processes, methods, techniques, research, records, supplier sources, customer
lists and other forms of business information that are not known to the Companys competitors, are
not recognized as being encompassed within standard business or management practices and/or are
kept secret and confidential by the Company. Executive agrees that at no time during or after the
Employment Period will he disclose or use the Confidential Information except as may be required in
the prudent course of business for the benefit of the Company. The Executive also agrees to be
subject to the Companys Code of Ethics and Business Conduct as in effect from time to time during
the Employment Period.
(b) The Executive acknowledges that the Company is generally engaged in business throughout
the United States. During the Executives employment by the Company and for two years after the
Date of Termination or the expiration of the Employment Period, the Executive agrees that he will
not, unless acting with the prior written consent of the Company, directly or indirectly, own,
manage, control, or participate in the ownership, management or control of, or be employed or
engaged by, or otherwise affiliated or associated with, as an officer, director, employee,
consultant, independent contractor or otherwise, any other corporation, partnership,
proprietorship, firm, association or other business entity, which is engaged in any business,
including the wholesale distribution of pharmaceutical products, that, or otherwise engage in any
business that, as of the Date of Termination or expiration of the Employment Period, as applicable,
is engaged in by the Company, has been reviewed with the Board for development to be owned or
managed by the Company, and/or has been divested by the Company but as to which the Company has an
obligation to refrain from involvement, but only for so long as such restriction applies to the
Company; provided, however, that the ownership of not more than 5% of the equity of a publicly
traded entity shall not be deemed to be a violation of this paragraph. During such two-year
period, Executive also agrees to make himself reasonably available to the Company for consulting at
a per diem rate that reflects his annual salary as in an effect prior to his termination of
employment (plus reimbursement of Executives reasonable expenses). Notwithstanding the foregoing,
the Executive shall be relieved of the covenants provided for in this subsection in the event that
the Company fails to make payments to Executive as provided for in Section 5(a) of this Agreement.
(c) The Executive also agrees that he will not, directly or indirectly, during the period
described in paragraph (b) of this Section 9 induce any person who is an employee, officer,
director, or agent of the Company, to terminate such relationship, or employ, assist in employing
or otherwise be associated in business with any present or former employee or officer of the
Company, including without limitation those who commence such positions with the Company after the
Date of Termination.
7
(d) The Executive acknowledges and agrees that the restrictions contained in this Section 9
are reasonable and necessary to protect and preserve the legitimate interests, properties, goodwill
and business of the Company, that the Company would not have entered into this Agreement in the
absence of such restrictions and that irreparable injury will be suffered by the Company should the
Executive breach the provisions of this Section. The Executive represents and acknowledges that
(i) the Executive has been advised by the Company to consult the Executives own legal counsel in
respect of this Agreement, (ii) the Executive has consulted with and been advised by his own
counsel in respect of this Agreement, and (iii) the Executive has had full opportunity, prior to
execution of this Agreement, to review thoroughly this Agreement with the Executives counsel.
(e) The Executive further acknowledges and agrees that a breach of the restrictions in this
Section 9 will not be adequately compensated by monetary damages. The Executive agrees that actual
damage may be difficult to ascertain and that, in the event of any such breach, the Company shall
be entitled to injunctive relief in addition to such other legal or equitable remedies as may be
available to the Company. In the event that the provisions of this Section 9 should ever be
adjudicated to exceed the limitations permitted by applicable law in any jurisdiction, it is the
intention of the parties that the provision shall be amended such that those provisions are made
consistent with the maximum limitations permitted by applicable law, that such amendment shall
apply only within the jurisdiction of the court that made such adjudication and that those
provisions otherwise be enforced to the maximum extent permitted by law.
(f) If the Executive breaches his obligations under this Section 9, he agrees that suit may be
brought, and that he consents to personal jurisdiction, in the United States District Court for the
Eastern District of Pennsylvania, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in Chester County, Pennsylvania; consents to the
non-exclusive jurisdiction of any such court in any such suit, action or proceeding; and waives any
objection which he may have to the laying of venue of any such suit, action or proceeding in any
such court. The Executive also irrevocably and unconditionally consents to the service of any
process, pleadings, notices or other papers.
(g) For purposes of this Section 9, the term Company shall be deemed to include subsidiaries
and affiliates of the Company.
10.
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 otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by the Executives
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.
(c) The Company shall 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 expressly to assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such succession had taken
place. As used in this Agreement, Company shall mean both the Company as defined above and any
such successor that assumes and agrees to perform this Agreement, by operation of law or otherwise.
8
11.
Miscellaneous
.
(a) This Agreement shall be governed by, and construed in accordance with, the laws of the
Commonwealth of Pennsylvania, without reference to principles of conflict of laws. The captions of
this Agreement are not 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 to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive
, to the address on file with the Company.
If to the Company
:
AmerisourceBergen Corporation
1300 Morris Drive
Chesterbrook, PA 19087
Attention: Chief Executive Officer
or to such other address as either party furnishes to the other in writing in accordance with
this paragraph (b) of Section 11. 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. If any provision of this
Agreement shall be held invalid or unenforceable in part, the remaining portion of such provision,
together with all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.
(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 Executives or the Companys 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
5 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.
(f) Anything to the contrary herein notwithstanding, all benefits or payments provided by the
Company to the Executive that would be deemed to constitute nonqualified deferred
compensation within the meaning of Section 409A are intended to comply with Section 409A of
the Code. If, however, any such benefit or payment is deemed to not comply with Section 409A of
the Code, the Company and the Executive agree to renegotiate in good faith any such benefit or
payment (including, without limitation, as to the timing of any severance payments payable hereof)
so that either (i) Section 409A of the Code will not apply or (ii) compliance with Section 409A
will be achieved.
(g) This Agreement may be executed in several counterparts, each of which shall be deemed an
original, and said counterparts shall constitute but one and the same instrument.
9
12. The respective rights and obligations of the parties hereunder shall survive any
termination of the Executives employment to the extent necessary to the intended preservation of
such rights and obligations, including, but not by way of limitation, those rights and obligations
set forth in Sections 3, 5, 6, 9 and 11.
IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the
authorization of the Committee, the Company has caused this Agreement to be executed in its name on
its behalf, in each case on the date(s) set forth below.
|
|
|
|
|
|
|
AMERISOURCEBERGEN CORPORATION
|
|
|
|
|
|
|
|
By:
|
|
/s/ R. David Yost
|
|
|
|
|
|
|
|
|
|
Name:
|
|
R. David Yost
|
|
|
|
|
Title:
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
Date: 11/24/08
|
|
|
|
|
|
|
|
|
|
EXECUTIVE
|
|
|
|
|
|
|
|
/s/ John G. Chou
|
|
|
|
|
|
John G. Chou
|
|
|
|
|
|
|
|
|
|
Date: 11/24/08
|
|
|
10
ANNEX 1
SEPARATION OF EMPLOYMENT AGREEMENT
AND GENERAL RELEASE
THIS SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE (the Agreement) is made as of
this
_____
day of
,
_____, by and between AmerisourceBergen Corporation (the Company) and
(the Executive).
WHEREAS, Executive formerly was employed as _____;
WHEREAS, Executive and Company entered into an Employment Agreement, dated
_____, _____, (the Employment Agreement) which provides for certain severance benefits in the event that
Executives employment is terminated on account of a reason set forth in the Employment Agreement;
WHEREAS, Executive and the Company mutually desire to terminate Executives employment on an
amicable basis, such termination to be effective
_____, _____ (the Date of Resignation);
and
WHEREAS, in connection with the termination of Executives employment, the parties have agreed
to a separation package and the resolution of any and all disputes between them.
NOW, THEREFORE, IT IS HEREBY AGREED by and between Executive and the Company as follows:
1. (a) Executive, for and in consideration of the commitments of the Company as set forth in
Paragraph 5 of this Agreement, and intending to be legally bound, does hereby REMISE, RELEASE AND
FOREVER DISCHARGE the Company, its affiliates, subsidiaries and parents, and its officers,
directors, employees, and agents, and its and their respective successors and assigns, heirs,
executors, and administrators (each, a Releasee and collectively, Releasees) from all causes of
action, suits, debts, claims and demands whatsoever in law or in equity, which Executive ever had,
now has, or hereafter may have, whether known or unknown, or which Executives heirs, executors, or
administrators may have, by reason of any matter, cause or thing whatsoever, from the beginning of
Executives employment to the date of this Agreement, and particularly, but without limitation of
the foregoing general terms, any claims arising from or relating in any way to Executives
employment relationship with the Company and/or its predecessors, subsidiaries or affiliates, the
terms and conditions of that employment relationship, and the termination of that employment
relationship, including, but not limited to, any claims arising under the Age Discrimination in
Employment Act, the Older Workers Benefit Protection Act (OWBPA), Title VII of The Civil Rights
Act of 1964, the Americans with Disabilities Act, the Family and Medical Leave Act of 1993, the
Employee Retirement Income Security Act of 1974, the Pennsylvania Human Relations Act, and any
other claims under any federal, state or local common law, statutory, or regulatory provision, now
or hereafter recognized, and any claims for attorneys fees and costs. This Agreement is effective
without regard to the legal nature of the claims raised and without regard to whether any such
claims are based upon tort, equity, implied or express contract or discrimination of any sort.
11
(b) To the fullest extent permitted by law, and subject to the provisions of Paragraph 10
below, Executive represents and affirms that (i) Executive has not filed or caused to be filed on
Executives behalf any claim for relief against the Company or any Releasee and, to the best of
Executives knowledge and belief, no outstanding claims for relief have been filed or asserted
against the Company or any Releasee on Executives behalf; (ii) Executive has not reported any
improper, unethical or illegal conduct or activities to any supervisor, manager, department head,
human resources representative, agent or other representative of the Company, to any member of the
Companys legal or compliance departments, or to the ethics hotline, and has no knowledge of any
such improper, unethical or illegal conduct or activities; and (iii) Executive will not file,
commence, prosecute or participate in any judicial or arbitral action or proceeding against the
Company or any Releasee based upon or arising out of any act, omission, transaction, occurrence,
contract, claim or event existing or occurring on or before the date of this Agreement.
(c) Nothing in the Agreement will be deemed to release the Company from (i) claims solely to
enforce this Agreement, (ii) claims for indemnification under the Companys By-Laws, or (iii)
claims for payment or reimbursement pursuant to any employee benefit plan, policy or arrangement of
the Company.
2. In consideration of the Companys agreements as set forth in Paragraph 5 herein, Executive
agrees to be bound by the terms of Section 9 of the Employment Agreement.
3. Executive agrees and recognizes that Executive has permanently and irrevocably severed
Executives employment relationship with the Company, that Executive shall not seek employment with
the Company or any affiliated entity at any time in the future, and that the Company has no
obligation to employ Executive in the future.
4. Executive further agrees that Executive will not disparage or subvert the Company, or make
any statement reflecting negatively on the Company, its affiliated corporations or entities, or any
of their officers, directors, employees, agents or representatives, including, but not limited to,
any matters relating to the operation or management of the Company, Executives employment and the
termination of Executives employment, irrespective of the truthfulness or falsity of such
statement. The Company agrees that none of its officers, directors, employees, agents or
representatives will disparage or subvert the Executive, or make any statement reflecting
negatively on the Executive, including, but not limited to, any matters relating to the Executives
performance or the termination of Executives employment, irrespective of the truthfulness or
falsity of such statement.
5. In consideration for Executives agreement as set forth herein, the Company agrees that the
Company shall provide the following:
[
insert description of severance benefits to which Executive is entitled under the
Employment Agreement
]; and
[(b)] To the extent covered by directors and officers liability insurance on the Date
of Resignation, the Company will maintain, for no less than 6 years following the Date of
Resignation, directors and officers liability insurance covering the Executives potential
liability in connection with his employment by the Company in amounts and on terms that are
commensurate with the coverage provided to its active officers and directors of the Company.
6. Executive understands and agrees that the payments, benefits and agreements provided in
this Agreement are being provided to Executive in consideration for Executives acceptance and
execution of, and in reliance upon Executives representations in, this Agreement. Executive
acknowledges that if Executive had not executed this Agreement containing a release of all claims
against the Company, Executive would only have been entitled to the payments provided in the
Companys standard severance pay plan for employees.
12
7. Executive acknowledges and agrees that the Company previously has satisfied any and all
obligations owed to Executive under any employment agreement or offer letter Executive has with the
Company and, further, that this Agreement supersedes any employment agreement or offer letter
Executive has with the Company, and any and all prior agreements or understandings, whether written
or oral, between the parties shall remain in full force and effect to the extent not inconsistent
with this Agreement, and further, that, except as set forth expressly herein, no promises or
representations have been made to Executive in connection with the termination of Executives
employment agreement or offer letter with the Company, or the terms of this Agreement.
8. Executive agrees not to disclose the terms of this Agreement to anyone, except Executives
spouse, attorney and, as necessary, tax/financial advisor. Likewise, the Company agrees that the
terms of this Agreement will not be disclosed except as may be necessary to obtain approval or
authorization to fulfill its obligations hereunder or as required by law. It is expressly
understood that any violation of the confidentiality obligation imposed hereunder constitutes a
material breach of this Agreement.
9. Executive represents that Executive does not presently have in Executives possession any
records and business documents, whether on computer or hard copy, and other materials (including
but not limited to computer disks and tapes, computer programs and software, office keys,
correspondence, files, customer lists, technical information, customer information, pricing
information, business strategies and plans, sales records and all copies thereof) (collectively,
the Corporate Records) provided by the Company and/or its predecessors, subsidiaries or
affiliates or obtained as a result of Executives prior employment with the Company and/or its
predecessors, subsidiaries or affiliates, or created by Executive while employed by or rendering
services to the Company and/or its predecessors, subsidiaries or affiliates. Executive
acknowledges that all such Corporate Records are the property of the Company. In addition,
Executive shall promptly return in good condition any and all beepers, credit cards, cellular
telephone equipment, business cards and computers. As of the Date of Resignation, the Company will
make arrangements to remove, terminate or transfer any and all business communication lines
including network access, cellular phone, fax line and other business numbers.
10. Nothing in this Agreement shall prohibit or restrict Executive from: (i) making any
disclosure of information required by law; (ii) providing information to, or testifying or
otherwise assisting in any investigation or proceeding brought by, any federal regulatory or law
enforcement agency or legislative body, any self-regulatory organization, or the Companys
[
designated legal, compliance or human resources officer
]; or (iii) filing, testifying,
participating in or otherwise assisting in a proceeding relating to an alleged violation of any
federal, state or municipal law relating to fraud, or any rule or regulation of the Securities and
Exchange Commission or any self-regulatory organization.
11. The parties agree and acknowledge that the agreement by the Company described herein, and
the settlement and termination of any asserted or unasserted claims against the Releasees, are not
and shall not be construed to be an admission of any violation of any federal, state or local
statute or regulation, or of any duty owed by any of the Releasees to Executive.
12. Executive agrees and recognizes that should Executive breach any of the obligations or
covenants set forth in this Agreement, the Company will have no further obligation to provide
Executive
with the consideration set forth herein, and will have the right to seek repayment of all
consideration paid up to the time of any such breach. Further, Executive acknowledges in the event
of a breach of this Agreement, Releasees may seek any and all appropriate relief for any such
breach, including equitable relief and/or money damages, attorneys fees and costs.
13
13. Executive further agrees that the Company shall be entitled to preliminary and permanent
injunctive relief, without the necessity of proving actual damages, as well as to an equitable
accounting of all earnings, profits and other benefits arising from any violations of this
Agreement, which rights shall be cumulative and in addition to any other rights or remedies to
which the Company may be entitled.
14. This Agreement and the obligations of the parties hereunder shall be construed,
interpreted and enforced in accordance with the laws of the Commonwealth of Pennsylvania.
15. Executive certifies and acknowledges as follows:
(a) That Executive has read the terms of this Agreement, and that Executive understands its
terms and effects, including the fact that Executive has agreed to RELEASE AND FOREVER DISCHARGE
the Company and each and every one of its affiliated entities from any legal action arising out of
Executives employment relationship with the Company and the termination of that employment
relationship;
(b) That Executive has signed this Agreement voluntarily and knowingly in exchange for the
consideration described herein, which Executive acknowledges is adequate and satisfactory to
Executive and which Executive acknowledges is in addition to any other benefits to which Executive
is otherwise entitled;
(c) That Executive has been and is hereby advised in writing to consult with an attorney prior
to signing this Agreement;
(d) That Executive does not waive rights or claims that may arise after the date this
Agreement is executed;
(e) That the Company has provided Executive with a period of twenty-one (21) days within which
to consider this Agreement, and that Executive has signed on the date indicated below after
concluding that this Agreement is satisfactory to Executive; and
(f) Executive acknowledges that this Agreement may be revoked by Executive within seven (7)
days after execution, and it shall not become effective until the expiration of such seven day
revocation period. In the event of a timely revocation by Executive, this Agreement will be deemed
null and void and the Company will have no obligations hereunder.
[
SIGNATURE PAGE FOLLOWS
]
14
Intending to be legally bound hereby, Executive and the Company executed the foregoing
Separation of Employment Agreement and General Release this
_____ day of _____, _____.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Witness:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[
Executive
]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMERISOURCEBERGEN CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
Witness:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15