Exhibit 10.11b
Xxxxx Xxxxx - Level 1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into this
1/st/ day of January, 2002 by and between PSS World Medical, Inc., a Florida
corporation (hereinafter, the "Company" which term shall include the Company's
other subsidiaries, affiliates and successors), and Xxxxx X. Xxxxx (hereinafter,
"Executive").
BACKGROUND
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The Company desires to engage Executive in the executive capacities set
forth herein, in accordance with the terms and conditions of this Agreement.
Executive is willing to serve as such in accordance with the terms and
conditions of this Agreement.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Effective Date. This Agreement is effective as of January 1, 2002 (the
"Effective Date").
2. Employment. Executive is currently employed as the President and Chief
Executive Officer of PSS World Medical, Inc. The purpose of this Agreement is to
set forth the terms of Executive's employment. Executive's responsibilities
under this Agreement shall be in accordance with the policies and objectives
established by the Board of Directors of the Company (the "Board") and shall be
consistent with the responsibilities of similarly situated executives of
comparable companies in similar lines of business.
3. Employment Period. Unless earlier terminated herein in accordance with
Section 7 hereof, Executive's employment shall be for a three-year term (the
"Employment Period"), beginning on the Effective Date. The Employment Period
shall, without further action by Executive or the Company, be extended by an
additional one-year period on each anniversary of the Effective Date; provided,
however, that either party may, by notice to the other, cause the Employment
Period to cease to extend automatically. Upon such notice, the Employment Period
shall terminate upon the expiration of the then-current term, including any
prior extensions. Notwithstanding the foregoing, if a Change in Control occurs
the Employment Period shall be automatically extended through the later of (i)
the third anniversary of the Change in Control, or (ii) the normal expiration of
the then-current term, including any prior extensions.
4. Extent of Service. During the Employment Period, and excluding any
periods of vacation and sick leave to which Executive is entitled, Executive
agrees to devote his business time, attention, skill and efforts exclusively to
the faithful performance of his duties hereunder; provided, however, that it
shall not be a violation of this Agreement for Executive to (i) devote
reasonable periods of time to charitable and community activities and, with the
approval of the Company, industry or professional activities, and/or (ii) manage
personal business interests and investments, so long as such activities do not
materially interfere with the performance of Executive's responsibilities under
this Agreement.
5. Compensation and Benefits.
(a) Base Salary. During the Employment Period, the Company will pay to
Executive a base salary in an amount not less than that in effect for Executive
on the Effective Date ("Base Salary"), less normal withholdings, payable in
equal monthly or more frequent installments as are customary under the Company's
payroll practices from time to time. The Compensation Committee of the Board
shall review Executive's Base Salary annually and in its sole discretion,
subject to approval of the Board, may increase Executive's Base Salary from year
to year. The annual review of Executive's salary by the Board will consider,
among other things, Executive's own performance and the Company's performance.
(b) Incentive, Savings and Retirement Plans. During the Employment
Period, Executive shall be entitled to participate in all incentive, savings and
retirement plans, practices, policies and programs applicable generally to
senior executive officers of the Company and its affiliated companies ("Peer
Executives"), and on the same basis as such Peer Executives.
(c) Welfare Benefit Plans. During the Employment Period, Executive and
Executive's family shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and programs provided
by the Company and its affiliated companies (including, without limitation,
medical, prescription, dental, disability, employee life, group life, accidental
death and travel accident insurance plans and programs) to the extent applicable
generally to Peer Executives.
(d) Expenses. During the Employment Period, Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
Executive in accordance with the policies, practices and procedures of the
Company and its affiliated companies to the extent applicable generally to Peer
Executives.
(e) Fringe Benefits. During the Employment Period, Executive shall be
entitled to fringe benefits in accordance with the plans, practices, programs
and policies of the Company and its affiliated companies in effect for Peer
Executives.
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6. Change in Control. A "Change in Control" shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of either (i) 25%
or more of the then outstanding shares of common stock of the Company ("Company
Common Stock"), or (ii) securities of the Company representing 25% or more of
the combined voting power of the then outstanding securities of the Company
eligible to vote for the election of directors (the "Company Voting
Securities"); provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change in Control: (w) an
acquisition directly from the Company, (x) an acquisition by the Company or any
corporation controlled by the Company, (y) an acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (z) any acquisition pursuant to a
Non-Qualifying Transaction (as defined in subsection (c) of this definition); or
(b) Individuals who, as of the Effective Date, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the Effective Date whose election, or nomination for election by
the Company's stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, provided, however, that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to the election
or removal of directors ("Election Contest") or other actual or threatened
solicitation of proxies or consents by or on behalf of any Person other than the
Board ("Proxy Contest"), including by reason of any agreement intended to avoid
or settle any Election Contest or Proxy Contest, shall be deemed an Incumbent
Director; or
(c) Consummation of a reorganization, merger or consolidation,
statutory share exchange or similar form of corporate transaction involving the
Company or a corporation controlled by the Company, or the sale or other
disposition of all or substantially all of the Company's assets, or the
acquisition by the Company of assets or stock of another corporation (any of
such transactions, a "Business Transaction"), unless immediately following such
Business Transaction, all of the following are true: (i) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the outstanding Company Common Stock and outstanding Company
Voting Securities immediately prior to such Business Transaction beneficially
own, directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Transaction (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries, the
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"Surviving Corporation") in substantially the same proportions as their
ownership, immediately prior to such Business Transaction of the outstanding
Company Common Stock and outstanding Company Voting Securities, as the case may
be, and (ii) no Person (other than (x) the Company or any subsidiary of the
Company, (y) the Surviving Corporation or its ultimate parent corporation, or
(z) any employee benefit plan (or related trust) sponsored or maintained by any
of the foregoing) beneficially owns, directly or indirectly, 25% or more of the
total common stock of the Surviving Corporation or 25% or more of the combined
voting power of the then outstanding voting securities eligible to elect
directors of the Surviving Corporation, except to the extent that such ownership
existed prior to the Business Transaction, and (iii) at least a majority of the
members of the board of directors of the Surviving Corporation were members of
the Incumbent Board at the time of the Board approval of the execution of the
initial agreement providing for such Business Transaction (any Business
Transaction which satisfies all of the criteria specified in (i), (ii) and (iii)
above shall be deemed to be a "Non-Qualifying Transaction").
7. Termination of Employment.
(a) Death, Retirement or Disability. Executive's employment shall
terminate automatically upon Executive's death or Retirement during the
Employment Period. For purposes of this Agreement, "Retirement" shall mean
normal retirement as defined in the Company's then-current retirement plan, or
if there is no such retirement plan, "Retirement" shall mean voluntary
termination after age 65 with ten years of service. If the Company determines in
good faith that the Disability of Executive has occurred during the Employment
Period (pursuant to the definition of Disability set forth below), it may give
Executive written notice in accordance with Section 15(f) of this Agreement of
its intention to terminate Executive's employment. In such event, Executive's
employment with the Company shall terminate effective on the 30th day after
receipt of such written notice by Executive (the "Disability Effective Date"),
provided that, within the 30 days after such receipt, Executive shall not have
returned to full-time performance of Executive's duties. For purposes of this
Agreement, "Disability" shall mean a mental or physical disability as determined
by the Board in accordance with standards and procedures similar to those under
the Company's employee long-term disability plan, if any. At any time that the
Company does not maintain such a long-term disability plan, Disability shall
mean the inability of Executive, as determined by the Board, to perform the
essential functions of his regular duties and responsibilities (with or without
reasonable accommodation) due to a medically determinable physical or mental
illness which has lasted (or can reasonably be expected to last) for a period of
six consecutive months.
(b) Termination by the Company. The Company may terminate Executive's
employment during the Employment Period with or without Cause. For purposes of
this Agreement, "Cause" shall mean:
(i) the willful and continued failure of Executive to perform
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substantially Executive's duties with the Company (other than any such failure
resulting from incapacity due to physical or mental illness, and specifically
excluding any failure by Executive, after reasonable efforts, to meet
performance expectations), after a written demand for substantial performance is
delivered to Executive by the Board which specifically identifies the manner in
which the Board believes that Executive has not substantially performed
Executive's duties, or
(ii) the willful engaging by Executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by Executive in bad faith or without reasonable belief that Executive's
action or omission was in the best interests of the Company. Any act, or failure
to act, based upon authority given pursuant to a resolution duly adopted by the
Board or based upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by Executive in good faith and in
the best interests of the Company. The cessation of employment of Executive
shall not be deemed to be for Cause unless and until there shall have been
delivered to Executive a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the entire membership of the Board
(excluding Executive) at a meeting of the Board called and held for such purpose
(after reasonable notice is provided to Executive and Executive is given an
opportunity, together with counsel, to be heard before the Board), finding that,
in the good faith opinion of the Board, Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.
(c) Termination by Executive. Executive's employment may be terminated
by Executive for Good Reason or no reason. For purposes of this Agreement, "Good
Reason" shall mean:
(i) without the written consent of Executive, the assignment to
Executive of any duties materially inconsistent with Executive's position
(including status, offices, titles and reporting requirements), authority,
duties or responsibilities as in effect on the Effective Date, or any other
action by the Company which results in a material diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by
Executive;
(ii) a reduction by the Company in Executive's Base Salary and
benefits as in effect on the Effective Date or as the same may be increased from
time to time, unless a similar reduction is made in salary and benefits of Peer
Executives generally;
(iii) after the occurrence of a Change in Control, the Company's
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requiring Executive to be based at any office or location other than in the
greater Jacksonville, Florida metropolitan area or the Company's requiring
Executive to travel on Company business to a substantially greater extent than
required immediately prior to the Effective Date;
(iv) any failure by the Company to comply with and satisfy
Section 14(b) of this Agreement; or
(v) any termination by Executive for any reason or no reason
during the 30-day period beginning on the first anniversary of a Change in
Control.
(d) Notice of Termination. Any termination by the Company for Cause,
or by Executive for Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 15(f) of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means a
written notice that (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated, and (iii) if the Date
of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than 30
days after the giving of such notice). The failure by Executive or the Company
to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
Executive or the Company, respectively, hereunder or preclude Executive or the
Company, respectively, from asserting such fact or circumstance in enforcing
Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if
Executive's employment is terminated by the Company for Cause, or by Executive
for Good Reason, the date of receipt of the Notice of Termination or any later
date specified therein (which date shall be not more than 30 days after the
giving of such notice), as the case may be, (ii) if Executive's employment is
terminated by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies Executive of such
termination or any later date specified in the Notice of Termination (which date
shall be not more than 30 days after the giving of such notice), and (iii) if
Executive's employment is terminated by reason of death, Retirement or
Disability, the Date of Termination shall be the date of death or Retirement of
Executive or the Disability Effective Date, as the case may be.
8. Obligations of the Company upon Termination.
(a) Termination by Executive for Good Reason; Termination by the
Company Other Than for Cause, Death or Disability. If, during the Employment
Period, the Company shall terminate Executive's employment other than for Cause,
death or Disability, or Executive shall terminate employment for Good Reason
within a period of
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30 days after the occurrence of the event giving rise to Good Reason, then in
consideration of Executive's services rendered prior to such termination and as
reasonable compensation for his compliance with the Restrictive Covenants in
Section 13 hereof, and, with respect to the payments and benefits described in
clauses (i)(B) and (ii) below, only if Executive executes a Release in
substantially the form of Exhibit A hereto (the "Release"):
(i) the Company shall pay to Executive in a lump sum in cash
within 30 days after the Date of Termination or, with respect to the prorata
bonus described in clause A(2) below, within 30 days after the determination of
the bonus amount, the aggregate of the following amounts:
A. the sum of (1) Executive's Base Salary through the Date
of Termination to the extent not theretofore paid, (2) if the Date of
Termination occurs after or in connection with the occurrence of a Change
in Control, the product of (x) Executive's annual bonus that would have
been payable with respect to the fiscal year in which the Date of
Termination occurs (determined at the end of such year based on actual
performance results through the end of such year) and (y) a fraction, the
numerator of which is the number of days in the current fiscal year through
the Date of Termination, and the denominator of which is 365, and (3) any
accrued vacation pay, to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2) and (3) shall be hereinafter referred
to as the "Accrued Obligations"); and
B. the amount equal to two times the sum of (1) Executive's
annual Base Salary in effect as of the Date of Termination, and (2)
Executive's target annual bonus for the year in which the Date of
Termination occurs ("Target Bonus") (such amount is referred to as the
"Severance Payment"); provided, however, that if the Date of Termination
occurs after or in connection with the occurrence of a Change in Control,
the Severance Payment shall be the amount equal to three times the sum of
(1) Executive's annual Base Salary in effect as of the Date of Termination,
and (2) Executive's Target Bonus; and
(ii) for two years after Executive's Date of Termination (or
three years in the event that the Date of Termination occurs after or in
connection with the occurrence of a Change in Control), or such longer period as
may be provided by the terms of the appropriate plan, program, practice or
policy, the Company shall continue benefits to Executive and/or Executive's
family at least equal to those which would have been provided to them in
accordance with the welfare plans, programs, practices and policies described in
Section 5(c) of this Agreement if Executive's employment had not been terminated
or, if more favorable to Executive, as in effect generally at any time
thereafter with respect to Peer Executives and their families, provided,
however, that if Executive becomes re-employed with another employer and is
eligible to receive medical or other welfare benefits under another employer
provided plan, the medical and other welfare benefits described herein shall be
secondary to those provided under such other
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plan during such applicable period of eligibility ("Welfare Benefits"); and
(iii) the Company shall, within 30 days of receipt of reasonably
documented invoices therefor, reimburse Executive's actual cost (not to exceed
$60,000) for outplacement expenses incurred within one year after the Date of
Termination; and
(iv) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to Executive any other amounts or benefits required
to be paid or provided or which Executive is eligible to receive under any plan,
program, policy or practice or contract or agreement of the Company and its
affiliated companies (such other amounts and benefits shall be hereinafter
referred to as the "Other Benefits").
(b) Death. If Executive's employment is terminated by reason of
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to Executive's legal representatives under this
Agreement, other than for payment of Accrued Obligations (excluding the pro-rata
bonus described in clause 2 of Section 8(a)(i)(A)) and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to Executive's
estate or beneficiary, as applicable, in a lump sum in cash within 30 days of
the Date of Termination. With respect to the provision of Other Benefits, the
term Other Benefits as used in this Section 8(b) shall include, without
limitation, and Executive's estate and/or beneficiaries shall be entitled to
receive, benefits under such plans, programs, practices and policies relating to
death benefits, if any, as applicable to Executive on the Date of Termination.
(c) Disability. If Executive's employment is terminated by reason of
Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to Executive, other than for payment of
Accrued Obligations (excluding the pro-rata bonus described in clause 2 of
Section 8(a)(i)(A)) and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to Executive in a lump sum in cash within 30
days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as used in this Section 8(c) shall include,
without limitation, and Executive shall be entitled after the Disability
Effective Date to receive, disability and other benefits under such plans,
programs, practices and policies relating to disability, if any, as applicable
to Executive on the Date of Termination.
(d) Retirement. If Executive's employment is terminated by reason of
Executive's Retirement during the Employment Period, this Agreement shall
terminate without further obligations to Executive, other than for payment of
Accrued Obligations (excluding the pro-rata bonus described in clause 2 of
Section 8(a)(i)(A)) and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to Executive in a lump sum in cash within 30
days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as used in this Section 8(d) shall include,
without limitation, and Executive shall be entitled after the Date of
Termination to receive, retirement and other benefits under such plans,
programs, practices and
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policies relating to retirement, if any, as applicable to Executive on the Date
of Termination.
(e) Cause or Voluntary Termination without Good Reason. If Executive's
employment shall be terminated for Cause during the Employment Period, or if
Executive voluntarily terminates employment during the Employment Period without
Good Reason, this Agreement shall terminate without further obligations to
Executive, other than for payment of Accrued Obligations (excluding the pro-rata
bonus described in clause 2 of Section 8(a)(i)(A)) and the timely payment or
provision of Other Benefits.
9. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies
and for which Executive may qualify, nor, subject to Section 15(d), shall
anything herein limit or otherwise affect such rights as Executive may have
under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
10. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any benefit,
payment or distribution by the Company to or for the benefit of Executive
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section 10) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise tax, together
with any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then: Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by Executive
of all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this
Section 10(a), if it shall be determined that Executive is entitled to a
Gross-Up Payment, but that Executive, after taking into account the Payments and
the Gross-Up Payment, would not receive a net after-tax benefit of at least
$50,000 (taking into account both income taxes and any Excise Tax) as compared
to the net after-tax proceeds to Executive resulting from an elimination of the
Gross-Up Payment and a reduction of the Payments, in the aggregate, to an amount
(the "Reduced Amount") such that the receipt of Payments would not give
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rise to any Excise Tax, then no Gross-Up Payment shall be made to Executive and
the Payments, in the aggregate, shall be reduced to the Reduced Amount.
Executive may select the Payments to be limited or reduced.
(b) Subject to the provisions of Section 10(c), all determinations
required to be made under this Section 10, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be used in arriving at such determination, shall be made by the Company's
regular independent accounting firm at the expense of the Company or, at the
election and expense of Executive, another nationally recognized independent
accounting firm (the "Accounting Firm") which shall provide detailed supporting
calculations. Any determination by the Accounting Firm shall be binding upon the
Company and Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 10(c) and Executive thereafter
is required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Executive.
(c) Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after Executive is informed in
writing of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. Executive shall not
pay such claim prior to the expiration of the 30-day period following the date
on which it gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is due). If the
Company notifies Executive in writing prior to the expiration of such period
that it desires to contest such claim, Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
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provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation of the foregoing provisions of
this Section 10(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive to pay such
claim and xxx for a refund, the Company shall advance the amount of such payment
to Executive, on an interest-free basis and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by Executive of an amount advanced by the
Company pursuant to Section 10(c), Executive becomes entitled to receive any
refund with respect to such claim, Executive shall (subject to the Company's
complying with the requirements of Section 10(c)) promptly pay to the Company
the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto).
11. Costs of Enforcement. In any action taken in good faith relating to the
enforcement of this Agreement or any provision herein after the occurrence of a
Change in Control, Executive shall be entitled to be paid any and all costs and
expenses incurred by him in enforcing or establishing his rights thereunder,
including, without limitation, reasonable attorneys' fees, whether suit be
brought or not, and whether or not incurred in trial, bankruptcy or appellate
proceedings. In all other circumstances, each party in any such action shall pay
his or its own such costs and expenses.
12. Representations and Warranties. Executive hereby represents and
warrants to the Company that Executive is not a party to, or otherwise subject
to, any covenant not to compete (other than as contained herein) with any person
or entity, and Executive's execution of this Agreement and performance of his
obligations hereunder will not violate the terms or conditions of any contract
or obligation, written or oral, between
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Executive and any other person or entity.
13. Restrictions on Executive's Conduct.
(a) General. Executive and the Company understand and agree that the
purpose of the provisions of this Section 13 is to protect legitimate business
interests of the Company, as more fully described below, and is not intended to
eliminate Executive's post-employment competition with the Company per se, nor
is it intended to impair or infringe upon Executive's right to work, earn a
living, or acquire and possess property from the fruits of his labor. Executive
hereby acknowledges that Executive has received good and valuable consideration
for the post-employment restrictions set forth in this Section 13 in the form of
the compensation and benefits provided for herein. Executive hereby further
acknowledges that the post-employment restrictions set forth in this Section 13
are reasonable and that they do not, and will not, unduly impair Executive's
ability to earn a living after the Date of Termination. Therefore, subject to
the limitations of reasonableness imposed by law, Executive shall be subject to
the restrictions set forth in this Section 13.
(b) Definitions. The following capitalized terms used in this Section
13 shall have the meanings assigned to them below, which definitions shall apply
to both the singular and the plural forms of such terms:
"Competitive Position" means any position with a Competitor as a
Principal or Representative in which Executive will use or is likely to use any
Confidential Information or Trade Secrets of the Company, or in which Executive
has duties for, provides services to, or otherwise assists such Competitor where
such duties, services or assistance involve Competitive Services.
"Competitive Services" means any activities engaged in by the
Company as of the Date of Termination that relate directly to (a) the
distribution of medical supplies, equipment and pharmaceuticals to (i) primary
care and other office-based physicians, or (ii) nursing homes, extended care
facilities, assisted living facilities, or home care or visiting nurse
associations or agencies, or (b) the distribution of medical diagnostic imaging
supplies, chemicals, equipment and service to the acute care and alternate care
market; provided, however, that Competitive Services shall not include (x) the
manufacture of medical supplies, equipment or pharmaceuticals or medical
diagnostic imaging supplies, chemicals or equipment (collectively "Medical
Products"), (y) the provision of e-commerce or internet services with respect to
the dissemination of information or services related to the distribution of
Medical Products (but which is not the distribution of Medical Products), or (z)
the provision of group purchasing, contract pricing or cost analyses for
physicians or medical practices.
"Competitor" means any Person engaged, wholly or in material part,
in Competitive Services.
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"Confidential Information" means all information regarding the
Company, its activities, business or clients that is the subject of reasonable
efforts by the Company to maintain its confidentiality and that is not generally
disclosed by practice or authority to persons not employed by the Company, but
that does not rise to the level of a Trade Secret. "Confidential Information"
shall include, but is not limited to, financial plans and data concerning the
Company; management planning information; business plans; operational methods;
market studies; marketing plans or strategies; product development techniques or
plans; customer lists; details of customer contracts; current and anticipated
customer requirements; past, current and planned research and development;
business acquisition plans; and new personnel acquisition plans. "Confidential
Information" shall not include information that has become generally available
to the public by the act of one who has the right to disclose such information
without violating any right or privilege of the Company. This definition shall
not limit any definition of "confidential information" or any equivalent term
under state or federal law.
"Person" means any individual or any corporation, partnership,
joint venture, limited liability company, association or other entity or
enterprise.
"Principal or Representative" means a principal, owner, partner,
shareholder, joint venturer, investor, member, trustee, director, officer,
manager, employee, agent, representative or consultant.
"Protected Customers" means any Person to whom the Company has
sold its products or services or to whom the Company has submitted a written
proposal to sell its products or services during the twelve (12) months prior to
the Date of Termination.
"Protected Employees" means employees of the Company who were
employed by the Company at any time within six (6) months prior to the Date of
Termination.
"Restricted Period" means the term of Executive's employment
hereunder and a period extending until eighteen (18) months from the Date of
Termination.
"Restricted Territory" means the territory in which Executive
provided Competitive Services to the Company at any time during the twenty-four
(24) month period prior to the Date of Termination.
"Restrictive Covenants" means the restrictive covenants contained
in Section 13(d) hereof.
"Trade Secret" means all information, without regard to form,
including, but not limited to, technical or nontechnical data, a formula, a
pattern, a
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compilation, a program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, product plans, distribution lists or a list of
actual or potential customers, advertisers or suppliers which is not commonly
known by or available to the public and which information: (A) derives economic
value, actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic
value from its disclosure or use; and (B) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy. Without limiting the
foregoing, Trade Secret means any item of confidential information that
constitutes a "trade secret(s)" under the common law or statutory law of the
State of Florida.
(c) Protectable Employer Interests. Executive and the Company
acknowledge and agree as follows: (i) that Executive's services on behalf of the
Company require special expertise and talent in the provision of Competitive
Services and, pursuant to Executive's employment with the Company, the Company
shall devote time and money to the enhancement of Executive's professional
skills and education through specialized training; (ii) that Executive is in a
position of trust and responsibility and will have access to a substantial
amount of Confidential Information and Trade Secrets belonging to the Company;
(iii) that, during the term of Executive's employment by the Company, Executive
will develop substantial relationships with prospective and existing customers
of the Company; and (iv) that as a manager of the Company, Executive will be the
repository of a substantial portion of the goodwill of the Company.
(d) Restrictive Covenants.
(i) Restriction on Disclosure and Use of Confidential
Information and Trade Secrets. Executive understands and agrees that the
Confidential Information and Trade Secrets constitute valuable assets of the
Company and its affiliated entities, and may not be converted to Executive's own
use. Accordingly, Executive hereby agrees that Executive shall not, directly or
indirectly, at any time during the Restricted Period reveal, divulge, or
disclose to any Person not expressly authorized by the Company any Confidential
Information, and Executive shall not, directly or indirectly, at any time during
the Restricted Period use or make use of any Confidential Information in
connection with any business activity. For a period of five years after the date
of Termination, Executive shall not directly or indirectly transmit or disclose
any Trade Secret of the Company to any Person, and shall not make use of any
such Trade Secret, directly or indirectly, for himself or for others, without
the prior written consent of the Company. Executive and the Company acknowledge
and agree that this Section 13 is not intended to, and does not, alter either
the Company's rights or Executive's obligations under any state or federal
statutory or common law regarding trade secrets and unfair trade practices.
Notwithstanding the above, this covenant shall expire (except with respect to
Trade Secrets) upon the occurrence of a Change in Control.
(ii) Nonsolicitation of Protected Employees. Executive
understands and agrees that the relationship between the Company and each of its
Protected
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Employees constitutes a valuable asset of the Company and may not be converted
through Executive's solicitation to Executive's own use. Accordingly, Executive
hereby agrees that during the Restricted Period, Executive will not, directly or
indirectly, on his own behalf or as a Principal or Representative of any Person
or otherwise, solicit or induce any Protected Employee to terminate his or her
employment relationship with the Company or to enter into any relationship of
employment, agency or independent contractorship with any other Person.
Notwithstanding the above, this covenant shall expire upon the occurrence of a
Change in Control.
(iii) Restriction on Relationships with Protected Customers.
Executive understands and agrees that the relationship between the Company and
each of its Protected Customers constitutes a valuable asset of the Company and
may not be converted through Executive's solicitation to Executive's own use.
Accordingly, Executive hereby agrees that, during the Restricted Period,
Executive will not, without the prior written consent of the Company, directly
or indirectly, on his own behalf or as a Principal or Representative of any
Person, solicit, divert, or attempt to solicit or divert a Protected Customer
for the purpose of providing or selling Competitive Services; provided, however,
that the prohibition of this covenant shall apply only to Protected Customers
with whom Executive had Material Contact on the Company's behalf during the
twelve (12) months immediately preceding the Date of Termination. For purposes
of this Agreement, Executive had "Material Contact" with a Protected Customer if
(a) Executive had business dealings with the Protected Customer on the Company's
behalf; (b) Executive was responsible for supervising or coordinating the
dealings between the Company and the Protected Customer; or (c) Executive
obtained Trade Secrets or Confidential Information about the customer as a
result of Executive's association with the Company. Notwithstanding the above,
this covenant shall expire upon the occurrence of a Change in Control.
(iv) Noncompetition with the Company. Executive understands and
agrees that he is capable of obtaining gainful, lucrative and desirable
employment that does not violate the restrictions contained in this Agreement.
In consideration of the compensation and benefits being paid and to be paid by
the Company to Executive hereunder, Executive hereby agree that, during the
Restricted Period, Executive will not, without prior written consent of the
Company, directly or indirectly seek or obtain a Competitive Position in the
Restricted Territory with a Competitor; provided, however, that the provisions
of this Agreement shall not be deemed to prohibit the ownership by Executive of
any securities of the Company or its affiliated entities or not more than five
percent (5%) of any class of securities of any corporation having a class of
securities registered pursuant to the Securities Exchange Act of 1934, as
amended. Notwithstanding the above, this covenant shall expire upon the
occurrence of a Change in Control.
(e) Exceptions from Disclosure Restrictions. Anything herein to the
contrary notwithstanding, Executive will not be restricted from disclosing or
using Confidential Information that: (i) is or becomes generally available to
the public other
-15-
than as a result of an unauthorized disclosure by Executive or Executive's
agent; (ii) becomes available to Executive in a manner that is not in
contravention of applicable law from a source (other than the Company or its
affiliated entities or one of its or their officers, employees, agents or
representatives) that is not bound by a confidential relationship with the
Company or its affiliated entities or by a confidentiality or other similar
agreement; (iii) was known to Executive on a non-confidential basis and not in
contravention of applicable law or a confidentiality or other similar agreement
before its disclosure to Executive by the Company or its affiliated entities or
one of its or their officers, employees, agents or representatives; or (iv) is
required to be disclosed by law, court order or other legal process; provided,
however, that in the event disclosure is required by law, Executive will provide
the Company with prompt notice of such requirement so that the Company may seek
an appropriate protective order prior to any such required disclosure by
Executive.
(f) Reasonableness. The covenants contained in this Section 13 are
considered by the parties hereto to be fair, reasonable and necessary for the
protection of the legitimate business interests of the Company.
(g) Enforcement of Restrictive Covenants.
(i) Rights and Remedies Upon Breach. In the event Executive
breaches, or threatens to commit a breach of, any of the provisions of the
Restrictive Covenants, the Company shall have the following rights and remedies,
which shall be independent of any others and severally enforceable, and shall be
in addition to, and not in lieu of, any other rights and remedies available to
the Company at law or in equity: (1) the right and remedy to enjoin,
preliminarily and permanently, Executive from violating or threatening to
violate the Restrictive Covenants and to have the Restrictive Covenants
specifically enforced, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to the Company and that
money damages would not provide an adequate remedy to the Company; and (2) the
right and remedy to cease any further Severance Payment or provision of Welfare
Benefits to Executive under Section 8 of this Agreement and to require Executive
to account for and pay over to the Company any Severance Payment previously paid
to Executive under Section 8.
(ii) Severability of Covenants. Executive acknowledges and agrees
that the Restrictive Covenants are reasonable and valid in time and scope and in
all other respects. If any court determines that any of the Restrictive
Covenants, or any part thereof, are invalid or unenforceable, the remainder of
the Restrictive Covenants will not thereby be affected and will be given full
effect, without regard to the invalid portions.
(iii) Reformation. Executive and the Company agree that it is
their mutual intention that the Restrictive Covenants be enforced in accordance
with their terms to the maximum extent possible under applicable law. Executive
and the Company further agree that, in the event any court of competent
jurisdiction shall find that any
-16-
provision hereof is not enforceable in accordance with its terms, the court
shall reform the Restrictive Covenants such that they will be enforceable to the
maximum extent permissible at law.
(iv) Survival of the Restrictive Covenants. Executive and the
Company agree that the terms of this Section 13 shall survive the termination or
expiration of the Employment Period, unless expressly terminated by a writing
signed by both parties hereto, which makes specific reference to this Section
13.
14. Assignment and Successors.
(a) Executive. This Agreement is personal to Executive and without the
prior written consent of the Company shall not be assignable by Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by Executive's legal
representatives.
(b) The Company. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company will
require any successor to all or substantially all of the business and/or assets
of the Company (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to assume expressly and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. As used in this Agreement, "the
Company" shall mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law or otherwise.
15. Miscellaneous.
(a) Waiver. Failure of either party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted in this Agreement or of the future performance of any such
term or condition or of any other term or condition of this Agreement, unless
such waiver is contained in a writing signed by the party making the waiver.
(b) Severability. If any provision or covenant, or any part thereof,
of this Agreement should be held by any court to be invalid, illegal or
unenforceable, either in whole or in part, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
the remaining provisions or covenants, or any part thereof, of this Agreement,
all of which shall remain in full force and effect.
(c) Other Agents. Nothing in this Agreement is to be interpreted as
limiting the Company from employing other personnel on such terms and conditions
as may be satisfactory to it.
-17-
(d) Entire Agreement. Except as provided herein, this Agreement
contains the entire agreement between the Company and Executive with respect to
the subject matter hereof, and it supersedes and invalidates any previous
agreements or contracts between them which relate to the subject matter hereof.
No representations, inducements, promises or agreements, oral or otherwise,
which are not embodied herein shall be of any force or effect.
(e) Choice of Law; Forum Selection. The validity, interpretation and
performance of this Agreement shall be governed by and controlled in accordance
with the laws of the State of Florida, including said State's choice of law
rules. The parties hereto voluntarily submit themselves to the jurisdiction of
the state or federal district courts in the State of Florida which shall have
exclusive jurisdiction over any case or controversy arising under or in
connection with this Agreement, including with respect to an action to remedy
any breach of or otherwise to enforce the terms and conditions of this
Agreement.
(f) Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered or three days after mailing if mailed, first class,
certified mail, postage prepaid:
To Company: PSS World Medical, Inc.
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Facsimile No. (000) 000-0000
Attention: Chairman of the Board
To Executive: Xxxxx X. Xxxxx
000 Xxx Xxxxxxx Xxx
Xxxxx Xxxxx Xxxxx, XX 00000
Any party may change the address to which notices, requests, demands and other
communications shall be delivered or mailed by giving notice thereof to the
other party in the same manner provided herein.
(g) Amendments and Modifications. This Agreement may be amended or
modified only by a writing signed by both parties hereto, which makes specific
reference to this Agreement.
(signatures on following page)
-18-
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Employment Agreement as of the date first above written.
PSS WORLD MEDICAL, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Xxxxxxx X. Xxxxx
Chairman of the Compensation
Committee
EXECUTIVE:
By: /s/ Xxxxx X. Xxxxx
---------------------------------
Xxxxx X. Xxxxx
-19-
EXHIBIT A
Form of Release of Claims
-------------------------
This Release ("Release") is granted effective as of the __ day of _______,
____, by Xxxxx X. Xxxxx ("Executive") in favor of PSS World Medical, Inc. (the
"Company"). This is the Release referred to that certain Employment Agreement
dated as of January 1, 2002 by and between the Company and Executive (the
"Employment Agreement"). Executive gives this Release in consideration of the
Company's promises and covenants as recited in the Employment Agreement, with
respect to which this Release is an integral part.
1. Release of the Company. Executive, for himself, his successors,
assigns, attorneys, and all those entitled to assert his rights, now and forever
hereby releases and discharges the Company and its respective officers,
directors, stockholders, trustees, employees, agents, parent corporations,
subsidiaries, affiliates, estates, successors, assigns and attorneys (the
"Released Parties"), from any and all claims, actions, causes of action, sums of
money due, suits, debts, liens, covenants, contracts, obligations, costs,
expenses, damages, judgments, agreements, promises, demands, claims for
attorney's fees and costs, or liabilities whatsoever, in law or in equity, which
Executive ever had or now has against the Released Parties arising by reason of
or in any way connected with any employment relationship which existed between
the Company or any of its parents, subsidiaries, affiliates, or predecessors,
and Executive. It is understood and agreed that this Release is intended to
cover all actions, causes of action, claims or demands for any damage, loss or
injury arising from the aforesaid employment relationship, or the termination of
that relationship, that Executive has, had or purports to have, from the
beginning of time to the date of this Release, whether known or unknown, that
now exists related to the aforesaid employment relationship including but not
limited to claims for employment discrimination under federal or state law,
except as provided in Paragraph 2; claims arising under Title VII of the Civil
Rights Act, 42 U.S.C. Section 2002(e), et seq. or the Americans With
Disabilities Act, 42 U.S.C. Section 12101 et seq.; claims for statutory or
common law wrongful discharge, including any claims arising under the Fair Labor
Standards Act, 29 U.S.C. Section 201 et seq.; claims for attorney's fees,
expenses and costs; claims for defamation; claims for wages or vacation pay;
claims for benefits, including any claims arising under the Employee Retirement
Income Security Act, 29 U.S.C. Section 1001, et seq.; and provided, however,
that nothing herein shall release the Company of their obligations to Executive
under the Employment Agreement or any other contractual obligations between the
Company or its affiliates and Executive, or any indemnification obligations to
Executive under the Company's bylaws, articles of incorporation, Florida law or
otherwise.
2. Release of Claims Under Age Discrimination in Employment Act.
Without limiting the generality of the foregoing, Executive agrees that by
executing this Release, he has released and waived any and all claims he has or
may have as of the date of this Release for age discrimination under the Age
Discrimination in Employment Act,
29 U.S.C. Section 621, et seq. It is understood that Executive is advised to
consult with an attorney prior to executing this Release; that he in fact has
consulted a knowledgeable, competent attorney regarding this Release; that he
may, before executing this Release, consider this Release for a period of
twenty-one (21) calendar days; and that the consideration he receives for this
Release is in addition to amounts to which he was already entitled. It is
further understood that this Release is not effective until seven (7) calendar
days after the execution of this Release and that Executive may revoke this
Release within seven (7) calendar days from the date of execution hereof.
Executive agrees that he has carefully read this Release and is signing it
voluntarily. Executive acknowledges that he has had twenty one (21) days from
receipt of this Release to review it prior to signing or that, if Executive is
signing this Release prior to the expiration of such 21-day period, Executive is
waiving his right to review the Release for such full 21-day period prior to
signing it. Executive has the right to revoke this Release within seven (7) days
following the date of its execution by him. However, if Executive revokes this
Release within such seven (7) day period, no severance benefit will be payable
to him under the Employment Agreement and he shall return to the Company any
such payment received prior to that date.
EXECUTIVE HAS CAREFULLY READ THIS RELEASE AND ACKNOWLEDGES THAT IT
CONSTITUTES A GENERAL RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS AGAINST THE
COMPANY AND ITS AFFILIATES UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT.
EXECUTIVE ACKNOWLEDGES THAT HE HAS HAD A FULL OPPORTUNITY TO CONSULT WITH AN
ATTORNEY OR OTHER ADVISOR OF HIS CHOOSING CONCERNING HIS EXECUTION OF THIS
RELEASE AND THAT HE IS SIGNING THIS RELEASE VOLUNTARILY AND WITH THE FULL INTENT
OF RELEASING THE COMPANY AND ITS AFFILIATES FROM ALL SUCH CLAIMS.
By:
---------------------------------
Xxxxx X. Xxxxx
Date:
-------------------------------
-2-
