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Exhibit 10.40
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of June 1, 1997, by and between
LINCARE HOLDINGS INC., a Delaware corporation (the "Company"), and XXXX X.
XXXXX ("Employee").
W I T N E S S E T H:
WHEREAS, prior to the date hereof, the Employee has been an
employee of the Company; and
WHEREAS, the Company desires to induce the Employee to
continue in the employ of the Company for the period provided in this
Agreement, and the Employee is willing to accept such employment with the
Company on a full-time basis, all in accordance with the terms and conditions
set forth below.
NOW, THEREFORE, for and in consideration of the premises
hereof and the mutual covenants contained herein, the parties hereto do hereby
covenant and agree as follows:
1. Employment. (a) The Company hereby employs the
Employee, and the Employee hereby accepts such employment with the Company, for
the period set forth in Section 2 hereof, all upon the terms and conditions
hereinafter set forth.
(b) The Employee affirms and represents that he is under
no obligation to any former employer or other party which is in any way
inconsistent with, or which imposes any restriction upon, the Employee's
acceptance of employment hereunder with the Company, the employment of the
Employee by the Company, or the Employee's undertakings under this Agreement.
2. Term of Employment. Unless earlier terminated as
hereinafter provided, the initial term of the Employee's employment under this
Agreement shall be for a period beginning on the date hereof and ending on
December 31, 2001 (such period from the date hereof until December 31, 2001 or,
if the Employee's employment hereunder is earlier terminated, such shorter
period, being hereinafter called the "Initial Employment Term"). In the event
that the Employee continues in the full-time employ of the Company after the
end of the Initial Employment Term (it being expressly understood and agreed
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the Company does not now, nor hereafter shall, have any obligation to
continue the Employee in its employ, whether or not on a full-time basis),
then, unless otherwise expressly agreed to by the Employee and the Company in
writing, the Employee's continued employment with the Company shall,
notwithstanding anything to the contrary expressed or implied herein, continue
to be subject to the terms and conditions of this Agreement. As used in this
Agreement, the term "Employment Term" shall mean the period beginning on the
date hereof and ending on the date of the Employee's cessation of employment
with the Company, whether such date is before, on or after the expiration of
the Initial Employment Term.
3. Duties. The Employee shall be employed as the Chief
Financial Officer of the Company, shall faithfully and competently perform such
duties as are specified by the By-laws of the Company and shall also perform
and discharge such other reasonable employment duties and responsibilities as
the Board of Directors of the Company may from time to time prescribe. The
Employee shall perform his duties at such places and times as the Board of
Directors of the Company may reasonably prescribe. Except as may otherwise be
approved in advance by the Company, and except during vacation periods and
reasonable periods of absence due to sickness, personal injury or other
disability, the Employee shall devote his full time throughout the Employment
Term to the services required of him hereunder. Except as may otherwise be
approved in advance by the Company, the Employee shall render his services
exclusively to the Company during the Employment Term and shall use his best
effort, judgment and energy to improve and advance the business and interest of
the Company in a manner consistent with the duties of his position.
4. Salary and Bonus. (a) Salary. As compensation for
the complete and satisfactory performance by the Employee of the services to be
performed by the Employee hereunder during the Employment Term, the Company
shall pay the Employee a base salary at the annual rate of ONE HUNDRED SEVENTY
FIVE THOUSAND DOLLARS ($175,000) (said amount, together with any increases
thereto during the Employment Term, being hereinafter referred to as the
"Salary"). Any Salary payable hereunder shall be paid in regular intervals in
accordance with the Company's payroll practices. The Salary payable to the
Employee pursuant to this Section 4(a) shall be increased annually as of
January 1, 1998 and each January 1 thereafter for the twelve (12) month period
then commencing, by an amount equal to: (i) the annual percentage increase in
the Consumer Price Index for All Urban Consumers, All
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Items, for the most recent twelve (12) month period for which such figures are
then available as reported in the Monthly Labor Review published by the Bureau
of Labor Statistics of the U.S. Department of Labor or (ii) such higher amount
as may be determined from time to time by the Board of Directors of the Company
in its sole discretion.
(b) Bonus. During the Employment Term, in addition to
Salary, the Company shall also pay bonus compensation to the Employee in
respect of each calendar year (or applicable portion thereof) during the
Employment Term, such bonus compensation ("Bonus") to be an amount equal to the
Bonus Amount (as hereinafter defined) for such calendar year (or applicable
portion thereof).
For the purposes of this Agreement, the following terms shall
have the meanings set forth below:
"Bonus Amount" for any full calendar year shall mean an amount
equal to: (a) the Employee's Salary for such calendar year; MULTIPLIED
BY (b) the percentage set forth on the table below which corresponds
to the increase in the Company's fully diluted earnings per share in
respect of such calendar year over the fully diluted earnings per
share of the Company during the immediately preceding calendar year.
FULLY DILUTED BONUS AS % OF
EPS GROWTH BASE SALARY
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Less than 20% 0%
20% or more but less than 21% 40%
21% or more but less than 22% 46%
22% or more but less than 23% 52%
23% or more but less than 24% 58%
24% or more but less than 25% 64%
25% or more but less than 26% 70%
26% or more but less than 27% 76%
27% or more but less than 28% 82%
28% or more but less than 29% 88%
29% or more but less than 30% 94%
30% 100%*
*If the fully diluted EPS growth is greater than 30%, then the
Employee shall receive an additional 6% of his Base Salary for each full
percentage point of EPS growth achieved.
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In the event that the Employment Term ends at any time other
than the conclusion of a full calendar year, the Employee's Bonus Amount in
respect of such calendar year shall be prorated, and shall be an amount equal
to: (a) the Employee's Salary for such calendar year; MULTIPLIED BY (b) the
percentage set forth on the table above which corresponds to the increase in
the Company's year-to-date fully diluted earnings per share (as determined by
the then-most recently announced fully diluted earnings per share of the
Company) over the fully diluted earnings per share of the Company during the
comparable period in the immediately preceding calendar year; MULTIPLIED BY (c)
a percentage equal to the number of full calendar months included in the
Employment Term for the current calendar year divided by twelve.
The Company's Board of Directors (or an authorized committee
thereof) shall have the discretion to adjust upward or downward the Bonus
Amount for any applicable period to account equitably for: (a) any
extraordinary charges; (b) any unusual non-recurring items; or (c) changes
after the date hereof in accounting principles required under generally
accepted accounting principles; which events impacted the Company's fully
diluted earnings per share in respect of any such applicable period or
comparable prior year period.
Nothing contained herein and no action taken in respect of any
Bonus (or otherwise in respect of this Section 4(b)) shall create or be
construed to create a trust of any kind. The Employee's right to receive any
Bonus pursuant to this Section 4(b) shall be no greater than the right of an
unsecured general creditor of the Company to receive payment from the Company.
All Bonuses under this Section 4(b) shall be paid from the general funds of the
Company, and no special or separate fund shall be established, and no
segregation of assets shall be made, to assure payment of any Bonuses
hereunder.
(c) Withholding. The payment of any Salary and Bonus
hereunder shall be subject to applicable withholding and payroll taxes, and
such other deductions as may be required under the Company's employee benefit
plans.
5. Benefits. During the Employment Term, the Employee
shall:
(a) be eligible to participate in all employee fringe
benefits and any pension and/or profit sharing plans that
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may be provided by the Company for its key executive employees in
accordance with the provisions of any such plans, as same may be in
effect on and after the date hereof;
(b) be eligible to participate in any medical and health
plans or other employee welfare benefit plans that may be provided by
the Company for its key executive employees in accordance with the
provisions of any such plans, as same may be in effect on and after
the date hereof;
(c) be entitled to annual paid vacation in accordance
with the Company policy that may be applicable on and after the date
hereof to key executive employees;
(d) be entitled to sick leave, sick pay and disability
benefits in accordance with any Company policy that may be applicable
on and after the date hereof to key executive employees; and
(e) be entitled to reimbursement for all reasonable and
necessary out-of-pocket living and travel expenses incurred by the
Employee while away from his usual place of business in the
performance of his duties hereunder in accordance with the Company's
policies applicable on and after the date hereof in respect thereto.
6. Inventions and Confidential Information. The
Employee hereby covenants, agrees and acknowledges as follows:
(a) The Company is engaged in a continuous program of
research, design, development, production, marketing and servicing
with respect to its business and that as part of the Employee's
employment by the Company the Employee is (or may be) expected to make
new contributions and inventions of value to the Company.
(b) The Employee's employment hereunder creates a
relationship of confidence and trust between the Employee and the
Company with respect to certain information pertaining to the business
of the Company and its Affiliates (as hereinafter defined) or
pertaining to the business of any client or customer of the Company or
its Affiliates which may be made known to the Employee by the Company
or any of its Affiliates or by any client or customer of the
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Company or any of its Affiliates or learned by the Employee during the
period of his employment.
(c) The Company possesses and will continue to possess
information that has been created, discovered or developed by, or
otherwise become known to it (including, without limitation,
information created, discovered, developed or made known by the
Employee during the period of or arising out of his employment
hereunder) or in which property rights have been or may be assigned or
otherwise conveyed to the Company, which information has commercial
value in the business in which the Company is engaged and is treated
by the Company as confidential.
(d) Any and all inventions, products, discoveries,
improvements, processes, manufacturing, marketing and service methods
or techniques, formulae, designs, styles, specifications, data bases,
computer programs (whether in source code or object code), know-how,
strategies and data, whether or not patentable or registrable under
copyright or similar statutes, made, developed or created by the
Employee (whether at the request or suggestion of the Company, any of
its Affiliates, or otherwise, whether alone or in conjunction with
others, and whether during regular hours of work or otherwise) during
the period of his employment by the Company (collectively, hereinafter
referred to as "Inventions"), which may pertain to the business,
products, or processes of the Company or any of its Affiliates, will
be promptly and fully disclosed by the Employee to an appropriate
executive officer of the Company (other than the Employee) and shall
be the Company's exclusive property, and the Employee will promptly
execute and/or deliver to an appropriate executive officer of the
Company (other than the Employee) without any additional compensation
therefor, all papers, drawings, models, data, documents and other
material pertaining to or in any way relating to any Inventions made,
developed or created by him as aforesaid. For the purposes of this
Agreement, the term "Affiliate" or "Affiliates" of the Company shall
mean any corporation or other entity which is controlled, directly or
indirectly, by the Company. As used in the preceding sentence, the
word "control" shall mean, with respect to any entity, the power to
vote or direct the voting of more than 50% of the voting equity
interests in such entity.
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(e) The Employee will keep confidential and will hold for
the Company's sole benefit any Invention which is to be the exclusive
property of the Company under this Section 6 for which no patent,
copyright, trademark or other right or protection is issued.
(f) The Employee also agrees that he will not without the
prior written consent of an appropriate executive officer of the
Company (other than the Employee) use for his benefit or disclose at
any time during his employment by the Company, or thereafter, except
to the extent required by the performance by him of his duties as an
employee of the Company, any information obtained or developed by him
while in the employ of the Company with respect to any Inventions or
with respect to any customers, clients, suppliers, products,
employees, financial affairs, or methods of design, distribution,
marketing, service, procurement or manufacture of the Company or any
of its Affiliates, or any confidential matter, except information
which at the time is generally known to the public other than as a
result of disclosure by him not permitted hereunder, or if such
information is required to be disclosed under court order or other
applicable law.
(g) The Employee acknowledges and agrees that a remedy at
law for any breach or threatened breach of the provisions of this
Section 6 would be inadequate and, therefore, agrees that the Company
and its Affiliates shall be entitled to injunctive relief in addition
to any other available rights and remedies in case of any such breach
or threatened breach; provided, however, that nothing contained herein
shall be construed as prohibiting the Company or any of its Affiliates
from pursuing any other rights and remedies available for any such
breach or threatened breach.
(h) The Employee agrees that upon termination of his
employment hereunder for any reason, the Employee shall forthwith
return to the Company all documents and other property in his
possession belonging to the Company or any of its Affiliates.
(i) Without limiting the generality of Section 10 hereof,
the Employee hereby expressly agrees that the foregoing provisions of
this Section 6 shall be binding upon the Employee's heirs, successors
and legal representatives.
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7. Termination. (a) The Employment Term shall
end and the Employee's employment hereunder shall be terminated upon the
occurrence of any of the following:
(i) the death of the Employee;
(ii) termination of the Employee's employment hereunder by
the Company based upon the inability of the Employee to perform his
duties on account of disability or incapacity for a period of one
hundred eighty (180) or more days, whether or not consecutive,
occurring within any period of twelve (12) consecutive months;
provided, however, that such employment shall not be terminated by the
Company if it can reasonably accommodate the Employee's disability or
incapacity;
(iii) the termination of the Employee's employment hereunder
by the Employee at any time for any reason whatsoever (including,
without limitation, resignation or retirement);
(iv) termination of the Employee's employment hereunder by
the Company at any time for "cause", such termination to take effect
immediately upon written notice from the Company to the Employee;
(v) termination of the Employee's employment hereunder by
the Company at any time other than for "cause", such termination to
take effect immediately upon written notice from the Company to the
Employee; or
(vi) upon a Change of Control of the Company.
The following actions, failures or events by or affecting the
Employee shall constitute "cause" for termination within the meaning of clause
(iv) above: (1) conviction of having committed a felony; (2) determination by
at least two-thirds of the members of the Board of Directors that the Employee
has committed acts of dishonesty or moral turpitude; (3) failure to follow
reasonable and lawful directives of the Board of Directors of the Company; or
(4) gross negligence or willful misconduct by the Employee in the performance
of his obligations hereunder. The term "willful" shall mean any act or failure
to act taken or omitted to be taken by the Employee not in good faith and
without reasonable belief that the act or omission was in the best interest of
the Company.
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As used herein the term "Change of Control of the Company"
shall mean any of the following:
(i) sale or other disposition (or the last such
sale or other disposition) resulting in the transfer of more than
50% of the outstanding common stock of the Company to an unrelated
and unaffiliated third party purchaser; or
(ii) the consolidation or merger of the Company
with or into any other entity (other than a merger in which the
Company is the surviving corporation and which does not result in more
than 50% of the capital stock of the Company outstanding immediately
after the effective date of such merger being owned of record or
beneficially by persons other than the holders of its capital stock
immediately prior to such merger); or
(iii) a sale of substantially all of the
properties and assets of the Company as an entirety to an unrelated
and unaffiliated third party purchaser; or
(iv) the time at which any person (including a
person's affiliates and associates) or group (as that term is
understood under Section 13(d) of the Exchange Act and the rules and
regulations thereunder), files a Schedule 13-D or 14D-1 (or any
successor schedule, form or report under the Exchange Act) disclosing
that such person or group has become the beneficial owner (as defined
under Rule 13d-3 or any successor rule or regulation promulgated under
the Exchange Act) of shares of capital stock of the Company giving
such person or group a majority of the voting power of all outstanding
capital stock of the Company with the right to vote generally in an
election for directors or other capital stock of the Company into
which the common stock or other voting stock is reclassified or
changed.
(b) (i) If the Employment Term ends by reason of
Employee being terminated by the Company other than for "cause", then the
Company shall pay to the Employee, as severance pay or liquidated damages or
both, an amount equal to his then-current annual Salary in effect immediately
prior to such termination.
(ii) If the Employment Term ends by reason of the
occurrence of an event described in Section 7(a)(vi), the Company shall pay to
the Employee, as severance pay or liquidated damages or both, an amount equal
to his then-current annual Salary in
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effect immediately prior to the occurrence of such event plus an amount equal to
his bonus compensation in respect of the immediately preceding calendar year.
(iii) If the Employment Term ends by reason of the
Employee being terminated by the Company other than for "cause", then any such
payable amounts shall be paid in twelve (12) equal monthly installments
commencing on the first day of the calendar month immediately following the
termination of the Employment Term. If the Employment Term ends by reason of
the occurrence of an event described in Section 7(a)(vi) hereof, then such
amounts shall be payable no later than ten (10) business days after the end of
the Employment Term. It is understood and agreed that this Section 7(b) shall
survive the expiration or termination of this Agreement and the provisions
hereof shall be binding upon any successor in interest of the Company.
(c) Notwithstanding anything to the contrary expressed or
implied herein, and except as set forth in Section 7(b) hereof, the Company
(and its Affiliates) shall not be obligated to make any payments to the
Employee or on his behalf of whatever kind or nature by reason of the
Employee's cessation of employment other than: (A) such amounts, if any, of his
Salary and bonus compensation as shall have accrued and remained unpaid as of
the date of said cessation (including, but not limited to, the amount of any
bonus compensation payable in respect of the then-current calendar year); and
(B) such other amounts which may be otherwise payable to the Employee from the
Company's retirement plans or other benefit plans on account of such cessation
of employment (including, but not limited to, payment for any vested but unused
vacation); and (C) Company shall cover the Employee under its medical and
dental plan, and life insurance through the end of the last calendar day of the
month during which the Employment Term ends, thereafter, the Employee shall be
given COBRA conversion rights for the Company's medical and dental plan.
Nothing in this Section 7(c) shall limit the Employee's right to contest any
termination of the Employee's employment hereunder by appropriate legal
proceedings. It is understood and agreed that this Section 7(c) shall survive
the expiration or termination of this Agreement and the provisions hereof shall
be binding upon any successor in interest of the Company.
(d) No interest shall accrue on or be paid with respect
to any portion of any payments hereunder paid in accordance with the terms of
this Agreement.
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8. Non-Assignability. (a) Neither this
Agreement nor any right or interest hereunder shall be assignable by the
Employee, his beneficiaries, or legal representatives without the Company's
prior written consent; provided, however, that nothing in this Section 8(a)
shall preclude the Employee from designating a beneficiary to receive any
benefit payable hereunder upon his death. Neither this Agreement nor any right
or interest hereunder shall be assignable by the Company, nor shall any
obligations of the Company hereunder be delegated.
(b) Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to exclusion, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.
9. Competition. During the Employee's employment by the
Company and during the twelve (12) month period commencing on the date of
cessation of the Employee's employment for any reason whatsoever:
(a) The Employee will not make any statement or perform
any act intended to advance an interest of any existing or prospective
competitor of the Company or any of its Affiliates in any way that
will or may injure an interest of the Company or any of its Affiliates
in its relationship and dealing with existing or potential customers
or clients, or solicit or encourage any other employee of the Company
or any of its Affiliates to do any act that is disloyal to the Company
or any of its Affiliates or inconsistent with the interest of the
Company or any of its Affiliate's interests or in violation of any
provision of this Agreement;
(b) The Employee will not discuss with any existing or
potential customers or clients of the Company or any of its Affiliates
the present or future availability of services or products by a
business, if the Employee has or expects to acquire a proprietary
interest in such business or is or expects to be an employee, officer
or director of such business, where such services or products are
competitive with services or products which the Company or any of its
Affiliates provides during the Employment Term;
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(c) The Employee will not make any statement or do any
act intended to cause any existing or potential customers (with whom
the Company has made contact) or clients of the Company or any of its
Affiliates to make use of the services or purchase the products of any
competitive business in which the Employee has or expects to acquire a
proprietary interest or in which the Employee is or expects to be made
an employee, officer or director, if such services or products in any
way relate to or arise out of the services or products sold or
provided by the Company or any of its Affiliates to any such existing
customer or client during the Employment Term;
(d) The Employee will not directly or indirectly (as a
director, officer, employee, manager, consultant, independent
contractor, advisor or otherwise) engage in competition with, or own
any interest in, perform any services for, participate in or be
connected with (i) any business or organization which engages in
competition with the Company or any of its Affiliates in any
geographical area where any business is presently carried on by the
Company or any of its Affiliates, or (ii) any business or organization
which engages in competition with the Company or any of its Affiliates
in any geographical area where any business shall be hereafter, during
the period of the Employee's employment by the Company, carried on by
the Company or any of its Affiliates, if such business is then being
carried on by the Company or any of its Affiliates in such
geographical area; provided, however, that the provisions of this
Section 9(d) shall not be deemed to prohibit the Employee's ownership
of not more than 1% of the total shares of all classes of stock
outstanding of any publicly held company;
(e) The Employee will not directly or indirectly solicit
for employment, or advise or recommend to any other person that they
employ or solicit for employment, any employee of the Company or any
of its Affiliates; and
(f) The Employee will not directly or indirectly hire,
engage, send any work to, place orders with, or in any manner be
associated with any supplier, contractor, subcontractor or other
person or firm which rendered manufacturing or other services, or sold
any products, to the Company or any of its Affiliates if such action
by him would have a material adverse effect on the business, assets
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or financial condition of the Company or any of its Affiliates.
For purposes of this Section 9, a person or entity (including,
without limitation, the Employee) shall be deemed to be a competitor of the
Company or any of its Affiliates, or a person or entity (including, without
limitation, the Employee) shall be deemed to be engaging in competition with
the Company or any of its Affiliates, if such person or entity in any way
conducts, operates, carries out or engages (i) in the business of delivering
medical oxygen, respiratory therapy services, or durable medical equipment to
customers in their homes or (ii) in any other business engaged in by the
Company or any of its Affiliates on or prior to the date upon which such
Employee ceases to be employed hereunder.
In connection with the foregoing provisions of this Section 9,
the Employee represents that his experience, capabilities and circumstances are
such that such provisions will not prevent him from earning a livelihood. The
Employee further agrees that the limitations set forth in this Section 9
(including, without limitation, any time or territorial limitations) are
reasonable and properly required for the adequate protection of the business of
the Company (and of its Affiliates). It is understood and agreed that the
covenants made by the Employee in this Section 9 (and in Section 6 hereof)
shall survive the expiration or termination of this Agreement.
For purposes of this Section 9, proprietary interest in a
business is ownership, whether through direct or indirect stock holdings or
otherwise, of one percent (1%) or more of such business.
The Employee acknowledges and agrees that a remedy at law for
any breach or threatened breach of the provisions of this Section 9 would be
inadequate and, therefore, agrees that the Company and any of its Affiliates
shall be entitled to injunctive relief in addition to any other available
rights and remedies in cases of any such breach or threatened breach; provided,
however, that nothing contained herein shall be construed as prohibiting the
Company or any of its Affiliates from pursuing any other rights and remedies
available for any such breach or threatened breach.
10. Binding Effect. Without limiting or diminishing the
effect of Section 8 hereof, this Agreement shall inure to the
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benefit of and be binding upon the parties hereto and their respective heirs,
successors, legal representatives and permitted assigns.
11. Notices. Any notice required or permitted to be
given under this Agreement shall be sufficient if in writing and either
delivered in person or sent by first class certified or registered mail,
postage prepaid, if to the Company, at the Company's principal place of
business, and if to the Employee, at his home address most recently filed with
the Company, or to such other address or addresses as either party shall have
designated in writing to the other party hereto.
12. Law Governing. This Agreement shall be governed by
and construed in accordance with the laws of the State of Florida.
13. Severability. If any provision of this Agreement
shall be determined to be invalid, illegal or unenforceable in whole or in
part, neither the validity of the remaining part of such provision nor the
validity of any other provision of this Agreement shall in any way be affected
thereby.
14. Waiver. Failure to insist upon strict compliance
with any of the terms, covenants or conditions hereof shall not be deemed a
waiver of such term, covenant or condition, nor shall any waiver or
relinquishment of any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
15. Entire Agreement; Modifications. This Agreement
constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes all prior agreements, oral and written, between
the parties hereto with respect to the subject matter hereof. This Agreement
may be modified or amended only by an instrument in writing signed by both
parties hereto
16. Survival. The provisions of Sections 6, 7 and 9
hereof shall survive and continue after the expiration or termination of this
Agreement.
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17. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Employee have duly
executed and delivered this Agreement as of the day and year first above
written.
LINCARE HOLDINGS INC.
By:_____________________________________
Title:__________________________________
________________________________________
XXXX X. XXXXX
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