EXHIBIT 10.16
PSS World Medical, Inc.
4345 Southpoint Boulevard
Jacksonville, Florida 32216
February 1, 2001
Mr. Kirk Zambetti
3693 E. Wexford Hollow
Jacksonville, FL 32224
Dear Kirk:
This letter will memorialize our agreement with respect to the termination
of your employment and provision of consulting services for a period of time
thereafter. Please acknowledge your agreement by signing in the space indicated
at the end of this letter.
1. Termination of Employment; Consulting Period. Effective as of February
1, 2001 (the "Date of Termination"), your employment with PSS World Medical,
Inc. (the "Company") is hereby terminated without cause, and you will begin a
3-month period of providing consulting services to the Company (such 3-month
period from February 1, 2001 to April 30, 2001 is referred to herein as the
"Consulting Period").
2. No Change of Control. You and the Company acknowledge that, as of the
date hereof, there has not occurred a Change of Control of the Company, as
defined in your Employment Agreement with the Company (the "Employment
Agreement"), or as defined in the PSS World Medical, Inc. Officer Retention
Bonus Plan, in which you are a participant (the "Retention Bonus Plan"). You and
we further acknowledge that your employment is not being terminated in
contemplation of or otherwise in connection with a Change of Control.
3. Severance Benefits. In consideration of your promises and covenants
contained in this agreement, and in accordance with the terms of the Employment
Agreement, the Company agrees to provide you the following severance benefits:
(i) the Company shall pay to you in a lump sum in cash within 30 days
after the Date of Termination (but not sooner than the expiration of the
seven-day revocation period described in Section 8(b) of this agreement),
the aggregate of the following amounts:
A. the sum of (1) your base salary through the Date of
Termination to the extent not theretofore paid, and (2) any
compensation previously deferred by you (together with any accrued
interest or earnings thereon), including without limitation deferrals
under the PSS World Medical, Inc. Amended and Restated Officer
Deferred Compensation Plan (ODIP), and any accrued vacation pay, in
each case to the extent not theretofore paid; and
B. the amount equal to twelve (12) times your monthly base salary
in effect as of the Date of Termination, for a total of $264,000 (the
"Severance Payment"); provided, however that (i) such amount shall be
reduced by the fair value of the personal property to be retained by
you, as shown on Schedule A, and (ii) $2,700 of such amount shall be
paid in nine installments of $300 each beginning on the first day of
the month next following the end of the Consulting Period; and
(ii) for twelve (12) months after the Date of Termination, the Company
shall continue benefits to you and/or your family at least equal to those
that would have been provided to you in accordance with the welfare plans,
programs, practices and policies of the Company described in Section 5(c)
of your Employment Agreement in which you were participating immediately
prior to the Date of Termination; provided, however, that if you become
re-employed with another employer and are 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 plan during such applicable period of
eligibility; and
(iii) the Company shall, within 30 days of receipt of reasonably
documented invoices therefor, reimburse your actual cost (not to exceed
$15,000) for outplacement expenses incurred within one year after the Date
of Termination; and
(iv) the Company shall, within 30 days of receipt of reasonably
documented invoices therefor, reimburse your actual cost (not to exceed
$1,000) for legal advice and counsel in connection with your entering into
this Agreement; and
(v) the Company shall, within 30 days of receipt of reasonably
documented invoices therefor, reimburse your actual cost (not to exceed
$10,000) for maintaining your membership in the professional organization
known as The Executive Committee; and
(vi) all of your unvested options to acquire stock of the Company (the
"Options") shall cease to vest of the Date of Termination and shall expire
as to any then-unvested shares, but those Options in which the exercise
price is in excess of $5.50 per share are hereby amended as of the Date of
Termination to provide that they shall remain exercisable as to all
then-vested shares until the end of the Retention Bonus Payment Period (as
defined in Section 4 below); and
(vii) the provisions of Section 10 of your Employment Agreement, which
relate to the excise tax-gross up obligations of the Company in the event
of a change of control of the Company, shall survive the Date of
Termination and continue in full force and effect for two years after the
end of the Retention Bonus Payment Period (as defined in Section 4 below);
and
(viii) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to you any other amounts or benefits required
to be paid or provided or which you are eligible to receive under any plan,
program, policy or practice or contract or agreement of the Company and its
affiliated companies.
You acknowledge that the payments and benefits described herein are in
exchange for your signing this agreement. You are reminded of your right to
purchase continued health insurance coverage for a period of up to eighteen (18)
months following the Date of Termination pursuant to the terms of applicable
law. Such eighteen (18) month period shall run concurrently with the period for
which the Company is providing coverage under Section 3(ii) above.
4. Substitute Retention Bonus. In lieu of any rights you may have under the
Retention Bonus Plan, which you hereby waive, the Company shall pay to you on
the first, second and third anniversaries, respectively, of your initial
participation in the Retention Bonus Plan (to the extent such amounts have not
previously been paid to you as Retention Bonus) the amounts equal to 50%
($175,000), 30% ($105,000) and 20% ($70,000), respectively, of the dollar amount
of your Retention Bonus (as defined therein) as in effect on the Date of
Termination, i.e., without future increase due to forfeitures by other
participants in the Retention Bonus Plan after the Date of Termination (the
"Substitute Retention Bonus"); provided, however, that upon the occurrence of a
Change of Control (as defined in the Retention Bonus Plan), any unpaid amount of
your Substitute Retention Bonus (calculated as set forth above) shall be paid to
you in a lump sum cash payment within 30 days after the occurrence of the Change
of Control. The period beginning on the Date of Termination and ending on the
last date that any portion of the Substitute Retention Bonus is due and payable
to you in accordance with this Section 4 shall be referred to herein as the
"Retention Bonus Payment Period."
5. Consulting Services. The parties acknowledge that during your employment
with the Company, you served in the capacity of President of Diagnostic Imaging,
division of the Company. During the Consulting Period, you agree to remain
available to assist the Company in transitioning to other personnel matters
relating to the "Zorro" project. During the Consulting Period, the Company will,
in addition to other payments required hereunder, pay you a consulting fee based
on an annual rate equal to your annual Base Salary as in effect on the Date of
Termination. Such payments shall begin on the later of (i) the Date of
Termination, or (ii) the expiration of the seven-day revocation period described
in Section 8(b) of this agreement (the "First Payment Date"), and shall be
payable over the 3-month period immediately following the First Payment Date in
equal monthly or more frequent installments as are customary under the Company's
payroll practices from time to time. If requested by the Company, you agree to
continue to provide consulting services to the Company from and after the end of
such 3-month period at the rate of $1,000 per hour.
6. Restrictions on Your Conduct.
(a) General. The restrictive covenants in this Section 6 replace the
restrictive covenants in your Employment Agreement. Such Employment
Agreement restrictive covenants shall be void and of no further force or
effect from and after the Date of Termination. You and the Company
understand and agree that the purpose of the provisions of this Section 6
is to protect legitimate business interests of the Company, as more fully
described below, and is not intended to eliminate your post-employment
competition with the Company per se, nor is it intended to impair or
infringe upon your right to work, earn a living, or acquire and possess
property from the fruits of your labor. You hereby acknowledge that the
post-employment restrictions set forth in this Section 6 are reasonable and
that they do not, and will not, unduly impair your ability to earn a living
after the Date of Termination.
Therefore, subject to the limitations of reasonableness imposed by law, and
in consideration of the severance benefits described in Section 3 of this
letter agreement and the consulting fee described in Section 5 of this
letter agreement, you shall be subject to the restrictions set forth in
this Section 6.
(b) Definitions. The following capitalized terms used in this Section
6 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 you will use or is likely to use any
Confidential Information or Trade Secrets of the Company, or in which you
have duties for, provide services to, or otherwise assist 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 the distribution of
medical supplies, equipment and pharmaceuticals to primary care and other
office-based physicians, or the distribution of medical diagnostic imaging
supplies, chemicals, equipment and service to the acute care and alternate
care market; provided, however, but without limitation, that Competitive
Services shall not include (i) the manufacture of medical supplies,
equipment or pharmaceuticals or medical diagnostic imaging supplies,
chemicals or equipment (collectively "Medical Products"), (ii) the
provisions of e-commerce or internet services with respect to the
dissemination of information or services related to the distribution of
Medical Products, or (iii) 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.
"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 Retention Bonus Payment Period.
"Restricted Territory" means each of the fifty states in the United
States of America.
"Restrictive Covenants" means the restrictive covenants contained in
Section 6(c) hereof.
"Trade Secret" means all information, without regard to form,
including, but not limited to, technical or nontechnical data, a formula, a
pattern, a 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) Restrictive Covenants.
(i) Restriction on Disclosure and Use of Confidential Information
and Trade Secrets. You understand and agree that the Confidential
Information and Trade Secrets constitute valuable assets of the
Company and its affiliated entities, and may not be converted to your
own use. Accordingly, you hereby agree that you 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 you 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.
During the Restricted Period, you 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 yourself or for others, without the prior written
consent of the Company. You and we acknowledge and agree that this
Section 6 is not intended to, and does not, alter either the Company's
rights or your obligations under any state or federal statutory or
common law regarding trade secrets and unfair trade practices.
(ii) Nonsolicitation of Protected Employees. You understand and
agree that the relationship between the Company and each of its
Protected Employees constitutes a valuable asset of the Company and
may not be converted through your solicitation to your own use.
Accordingly, you hereby agree that during the Restricted Period, you
will not directly or indirectly on your 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.
(iii) Restriction on Relationships with Protected Customers. You
understand and agree 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 your solicitation to your own
use. Accordingly, you hereby agree that, during the Restricted Period,
you will not, without the prior written consent of the Company,
directly or indirectly, on your 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 you had
Material Contact on the Company's behalf during the twelve (12) months
immediately preceding the Date of Termination. For purposes of this
Agreement, you had "Material Contact" with a Protected Customer if (a)
you had business dealings with the Protected Customer on the Company's
behalf; (b) you were responsible for supervising or coordinating the
dealings between the Company and the Protected Customer; or (c) you
obtained Trade Secrets or Confidential Information about the customer
as a result of your association with the Company.
(iv) Noncompetition with the Company. The parties acknowledge:
(A) that your services on behalf of the Company require special
expertise and talent in the provision of Competitive Services and that
you have had substantial contacts with customers of the Company; (B)
that pursuant to your employment with the Company, you have been in a
position of trust and responsibility and you have had access to a
substantial amount of Confidential Information and Trade Secrets and
that the Company has placed you in such position and given you access
to such information in reliance upon your agreement not to compete
with the Company during the Restricted Period; (C) that due to your
management duties, you have been the repository of a substantial
portion of the goodwill of the Company and would have an unfair
advantage in competing with the Company; (D) that you are capable of
competing with the Company; and (E) that you are 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
you hereunder, you hereby agree that, during the Restricted Period,
you 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 you 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; and provided further that the
restrictions of this subsection (iv) shall not apply in the event of a
default by the Company in the performance of any of its obligations
under this Agreement, excluding for this purpose an isolated,
insubstantial and inadvertent default not taken in bad faith and which
is remedied by the Company promptly after receipt of notice thereof.
(d) Exceptions from Disclosure Restrictions. Anything herein to the
contrary notwithstanding, you will not be restricted from disclosing or
using Confidential Information that: (a) is or becomes generally available
to the public other than as a result of an unauthorized disclosure by you
or your agent; (b) becomes available to you 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; (c) was known to you on a non-confidential basis and not
in contravention of applicable law or a confidentiality or other similar
agreement before its disclosure to you by the Company or its affiliated
entities or one of its or their officers, employees, agents or
representatives; or (d) is required to be disclosed by law, court order or
other legal process; provided, however, that in the event disclosure is
required by law, you 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 you.
(e) Reasonableness. The covenants contained in this Section 6 are
considered by the parties hereto to be fair, reasonable and necessary for
the protection of the legitimate business interests of the Company.
(f) Enforcement of Restrictive Covenants.
(i) Rights and Remedies Upon Breach. In the event you breach, or
threaten to commit a breach of, any of the provisions of the
Restrictive Covenants, the Company shall have the right and remedy to
enjoin, preliminarily and permanently, you from violating or
threatening to violate the Restrictive Covenants and to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, 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. Such right and remedy shall be in addition to, and not in
lieu of, any other rights and remedies available to the Company at law
or in equity.
(ii) Severability of Covenants. You acknowledge and agree 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. You and the Company agree that it is our
mutual intention that the Restrictive Covenants be enforced in
accordance with their terms to the maximum extent possible under
applicable law. You and the Company further agree that, in the event
any court of competent jurisdiction shall find that any 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.
7. Certain Additional Covenants.
(a) Agreement Not to Disparage. You and the Company agree that neither
shall say, write or communicate in any manner to any person or entity in
the medical community or the medical distribution industry anything
substantially derogatory about the other, regardless of the truth or
falsity of the information; provided, that nothing contained herein is
intended to or shall limit your or the Company's ability to comply with
applicable laws, rules or regulations, to obtain any benefits under any
bond and/or insurance policy, or to commence, institute, prosecute or
defend any lawsuit, action, claim or proceeding before or in any court,
regulatory, governmental, arbitral or other authority. In this connection,
you specifically agree that, for purposes hereof, the "Company" means and
includes the Company and its officers, directors, employees, affiliates and
representatives.
(b) Return of Company Property. At such time as you cease to be
affiliated with the Company in any capacity, you will deliver to the
Company all property belonging to the Company (except those items listed on
Schedule A hereto), including, without limitation, all confidential
information of the Company then in your possession, including soft and hard
copies thereof, and all keys to the Company premises.
8. General Release and Forbearance.
(a) Release by Employee. In consideration of the severance benefits
provided to you by the Company, you, for yourself, your successors, heirs,
legatees, personal and legal representatives, and assigns (the
"Releasors"), hereby forever release and discharge the Company, its
officers, directors, stockholders, employees, agents, corporate affiliates,
controlling persons, and successors, and their representatives (the
"Releasees") from any claims, demands, causes of action, suits, contracts
or liabilities whatsoever, in law or in equity, whether known or unknown or
suspected to exist by you, which you have had or may now have against the
Company or any of such related parties arising from or connected with your
employment with the Company or the termination of that employment, but
specifically excluding (i) whatever rights the Releasors might have to
indemnification or payment of expenses arising under the Company's charter
or bylaws or any other source, and (ii) the Company's obligations under
this Agreement (the "Release"). Such claims or causes of action shall
include, but not be limited to, (i) any claims, demands, suits or causes of
action (i) in connection with any privacy right, civil rights claim, claim
for emotional and mental distress; your employment with the Company; or the
termination of that employment; or (ii) pursuant to any federal, state, or
local employment laws, regulations, executive orders, or other
requirements, including without limitation those that may relate to sex,
race or other forms of discrimination, including, without limitation, Title
VII of the Civil Rights Act of 1964, The Americans With Disabilities Act,
and the Age Discrimination in Employment Act Title VII of the Civil Rights
Act of 1964; provided, however, that this Release covers only claims that
you may have under the Age Discrimination in Employment Act as of the
effective date of this Release. Without limiting the generality of the
foregoing, you hereby acknowledge and covenant that you have knowingly
relinquished and forever released any and all rights and remedies which
might otherwise be available to you, including claims for back pay,
liquidated damages, recovery of interest, costs, punitive damages or
attorneys' fees, and any claims for employment or reemployment with the
Company.
(b) Acknowledgments. You acknowledge that you have been advised in
writing to consult with an attorney before signing this agreement and the
Release. You acknowledge that you have read this Release and understand
that it is a general release of the Company from any past or existing claim
which you have against the Company, including any claim relating to your
employment or termination of employment. You acknowledge that you have had
twenty one (21) days from receipt of this Release to review it prior to
signing (or have voluntarily signed this Release prior to the expiration of
such 21-day prior review period) and have voluntarily decided to sign this
Release. You have the right to revoke this Release within seven (7) days
following the date of its execution by you. However, if you fail to execute
this Release or revoke this Release within such seven (7) day period, no
benefits will be payable to you under this agreement and you shall return
to the Company any payments thus received prior to that date.
9. Tax Matters. You and we acknowledge and agree that the payments and
benefits described herein may be taxable income, and we each covenant to comply
with all federal and state income and employment tax requirements, including all
reporting and withholding requirements, relating thereto.
10. Prior Agreements. You and the Company agree that, except as set forth
in Section 8(a) above with respect to any rights to indemnification or payment
of expenses, and except for the remaining time to exercise your Options and the
survival of the excise tax gross-up provisions of Section 10 in your Employment
Agreement, as stated in Section 3 above, this agreement supersedes and
terminates any and all prior employment, separation or similar agreements, oral
or written, between you and the Company, including without limitation the
Employment Agreement, and that the mutual benefits and obligations of each of
the parties are solely as provided for and contained in this agreement.
11. Governing Law. Except to the extent preempted by federal law, and
without regard to conflict of laws principles, the laws of the State of Florida
shall govern this agreement in all respects, whether as to its validity,
construction, capacity, performance or otherwise.
Again, to indicate your acknowledgment of our agreement as memorialized
above, please sign and date this letter and the enclosed duplicate copy in the
space provided below and return one originally executed copy to the Company.
Very truly yours,
PSS World Medical, Inc.
By: /s/ David A. Smith
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David A. Smith
President
THE UNDERSIGNED HAS CAREFULLY READ THIS RELEASE AND ACKNOWLEDGES THAT
IT CONSTITUTES A GENERAL RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS AGAINST THE
COMPANY UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT. THE UNDERSIGNED
ACKNOWLEDGES THAT THE UNDERSIGNED HAS HAD A FULL OPPORTUNITY TO CONSULT WITH AN
ATTORNEY OR OTHER ADVISOR OF HIS OR HER CHOOSING CONCERNING THE EXECUTION OF
THIS RELEASE AND THAT THE UNDERSIGNED IS SIGNING THIS RELEASE VOLUNTARILY AND
WITH THE FULL INTENT OF RELEASING THE COMPANY FROM ALL SUCH CLAIMS.
Acknowledged as being the true agreement of the parties, this 9th day of
February, 2001.
EMPLOYEE
/s/ Kirk Zambetti
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Kirk Zambetti