Exhibit 10.13
Employment AGREEMENT
This EMPLOYMENT Agreement (this "Agreement") is made and entered into this
4th day of March, 1998 by and between Physician Sales & Service, Inc., a Florida
corporation (hereinafter, the "Company" which term shall include the Company's
other subsidiaries, affiliates and successors), and David A. Smith (hereinafter,
"Executive").
BACKGROUND
The Company desires to engage Executive in 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 March 4, 1998 (the
"Effective Date").
2. Employment. Executive is hereby employed on the Effective Date as the
Executive Vice President and Chief Financial Officer of PSS/World Medical, Inc.
Executive's responsibilities under this Agreement shall be in accordance with
the policies and objectives established by the President or the Board of
Directors of the Company and shall be consistent with the responsibilities of
similarly situated executives of comparable companies in similar lines of
business. In his capacity as Executive Vice President and Chief Financial
Officer of PSS/World Medical, Inc., Executive will report directly to the
Chairman of the Board of Directors of the Company and the Board of Directors of
the Company.
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.
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 of $255,000.00 per year ("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 of
Directors of the Company shall review Executive's Base Salary annually and
in its sole discretion, subject to approval of the Board of Directors of
the Company, 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 peer executives 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.
6. Change of Control. Subject to the last sentence of this Section 6, for
the purpose of this Agreement, a "Change of 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
50% or more of the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (a), the following acquisitions shall
not constitute a Change of Control: (i) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or
any corporation controlled by the Company, or (ii) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii)
and (iii) of subsection (c) of this Section 6; 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,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination, (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 Combination beneficially own, directly or
indirectly, more than 80% 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 Combination
(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) in
substantially the same proportions as their ownership, immediately prior to
such Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no Person
(excluding the Company or any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 25% or more of the combined
voting power of the then outstanding voting securities of such corporation
resulting from such Business Combination except to the extent that such
ownership existed prior to the Business Combination, and (iii) at least a
majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination.
Notwithstanding the above definition, a Change of Control will not be
deemed to have occurred for purposes of this Agreement if, immediately after the
event that otherwise would constitute a Change of Control, Patrick Kelly and at
least a majority of the 12 next most highly compensated officers of the Company
and its subsidiaries (as measured immediately prior to such transaction) remain
employed by the Company for at least one year or mutually agree to new
employment contacts, the resulting or surviving company, or its or their
subsidiaries.
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 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 to 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 of Directors of the Company 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 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 President or the Board of
Directors of the Company which specifically identifies the manner
in which such Board or the President 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, or
(iii) Executive engages in any misconduct involving moral
turpitude whether occurring in the performance of his duties or
otherwise.
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 three-quarters of the entire membership of the Board of
the Company at a meeting of such 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 such Board), finding
that, in the good faith opinion of such Board, Executive is guilty of the
conduct described in subparagraph (i), (ii) or (iii) 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, or the failure by the Company
to increase Executive's Base Salary each year during the Employment
Period by an amount which at least equals, on a percentage basis, the
mean average percentage increase in base salary for Peer Executives,
unless such failure to increase is based on nonarbitrary criteria
applied to Executive and Peer Executives;
(iii) after the occurrence of a Change of Control, the Company's
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 of 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 which (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, 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 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 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:
(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 of 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 compensation previously deferred by Executive (together
with any accrued interest or earnings thereon) and any accrued
vacation pay, in each case 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 one times Executive's annual Base
Salary in effect as of the Date of Termination (the "Severance
Payment"); provided, however, that if the Date of Termination
occurs after or in connection with the occurrence of a Change of
Control, the Severance Payment shall be the amount equal to two
times Executive's annual Base Salary in effect as of the Date of
Termination; and
(ii) for one year after Executive's Date of Termination (or two
years in the event that the Date of Termination occurs after or in
connection with the occurrence of a Change of 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 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 $30,000) 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)),
the timely payment or provision of Other Benefits, and a lump sum amount
equal to two (2) months' salary, based on Executive's Base Salary in effect
as of the date of death. 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 utilized 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 utilized 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 utilized 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 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)),
the continuation of Welfare Benefits for a period of 30 days after the Date
of Termination, payment of a lump sum amount equal to 30 days' salary,
based on Executive's Base Salary in effect as of the Date of Termination.
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 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. The
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 utilized 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; 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 sue 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 sue 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 of 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 Executive and any other person or
entity.
13. Restrictions on Conduct of Executive.
(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 the post-employment
restrictions set forth in this Section 13 are reasonable and that they do
not, and will not, unduly impair his ability to earn a living after the
termination of this Agreement. Therefore, subject to the limitations of
reasonableness imposed by law upon the restrictions set forth herein,
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 Services" means any services provided by Company at the
Determination Date, including, but not limited to the marketing, sale and
distribution of medical supplies, equipment and pharmaceuticals to primary
care and other office-based physicians; the marketing, sale and
distribution of medical diagnostic imaging supplies, chemicals, equipment
and service to the acute care and alternate care market; and the provisions
of special group purchasing contract pricing and periodic cost analyses to
help manage the supply needs of individual physicians or practices.
"Confidential Information" means any confidential or proprietary
information possessed by the Company or its affiliated entities or relating
to its or their business, including without limitation, any confidential
"know-how", customer lists, details of client or consultant contracts,
current and anticipated customer requirements, pricing policies price
lists, market studies, business plans, operational methods, marketing plans
or strategies, product development techniques or plans, computer software
programs (including object code and source code), data and documentation,
data base technologies, systems, structures and architectures, inventions
and ideas, past, current and planned research and development,
compilations, devices, methods, techniques, processes, financial
information and data, business acquisition plans, new personnel acquisition
plans and any other information that would constitute a Trade Secret (as
defined herein).
"Determination Date" means the date of termination of Executive's
employment with the Company for any reason whatsoever or any earlier date
(during the Employment Period) of an alleged breach of the Restrictive
Covenants by Executive.
"Person" means any individual or any corporation, partnership, joint
venture, 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 Clients" means any Person to whom the Company provided
services or submitted a written proposal therefor, within eighteen (18)
months prior to the Determination Date.
"Protected Employees" means employees of the Company who were employed
by the Company at any time within six (6) months prior to the Determination
Date.
"Restricted Period" means the term of Executive's employment hereunder
and a period extending until eighteen (18) months from the Date of
Termination; provided, however that such period shall be extended by any
length of time during which Executive is in breach of the Restricted
Covenants.
"Restrictive Covenants" means the restrictive covenants contained in
Section 13(c) hereof.
"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. Executive understands and agrees that the Confidential
Information constitutes a valuable asset 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 other than that of the Company; provided, however,
in the event the Confidential Information constitutes a Trade Secret,
the Restricted Period referred to above shall be five (5) years.
Notwithstanding the above, this covenant shall expire (except with
respect to Trade Secrets) upon the occurrence of a Change of Control.
(ii) Nonsolicitation of Protected Employees. Executive
understands and agrees that the relationship between the Company and
each of its Protected Employees constitutes a valuable asset of the
Company and may not be converted to Executive's own use. Accordingly,
Executive hereby agrees that during the Restricted Period Executive
shall not directly or indirectly on Executive's 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 of Control.
(iii) Restriction on Relationships with Protected Clients.
Executive understands and agrees that the relationship between the
Company and each of its Protected Clients constitutes a valuable asset
of the Company and may not be converted to Executive's own use.
Accordingly, Executive hereby agrees that during the Restricted Period
Executive shall not, without the prior written consent of the Company,
become a Principal or Representative of a Protected Client or
otherwise provide services to a Protected Client as a consultant or
independent contractor. Notwithstanding the above, this covenant shall
expire upon the occurrence of a Change of Control.
(iv) Noncompetition with the Company. During the Restricted
Period Executive, unless acting in accordance with the Company's prior
written consent, will not directly provide any Competitive Services
to, and will not, directly or indirectly, (i) own, manage, operate,
join, control, finance or participate in the ownership, management,
operation, control or financing of, or (ii) be connected as a
Principal or Representative or otherwise with, or (iii) permit
Executive's name to be used by or in connection with, any Person
engaged in providing Competitive Services to any Person conducting
business activities within the territory in which the Company is or
was engaged in the provision of the Competitive Services on the
Determination Date; 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 of
Control.
(d) Exceptions from Disclosure Restrictions. Anything herein to the
contrary notwithstanding, Executive shall 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 Executive or his agent; (b) 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; (c) 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 (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, Executive shall 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.
(e) 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:
A. 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 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; and
B. the right and remedy to require Executive to account for and pay
over to the Company all compensation, profits, monies, accruals, increments
or other benefits derived or received by Executive as the result of any
transactions constituting a breach of the Restrictive Covenants.
(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 shall not
thereby be affected and shall be given full effect, without regard to
the invalid portions.
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.
(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, including without limitation that certain Contract of
Employment, dated as of May 30, 1992 by and between Executive and the
Company. No representations, inducements, promises or agreements, oral or
otherwise, which are not embodied herein shall be of any force or effect.
(e) 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.
(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.
4345 Southpoint Boulevard
Jacksonville, Florida 32216
Facsimile No. (904) 332-3209
Attention: President
To Executive: David A. Smith
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; provided, however, that if, in the
opinion of the Corporation's accountants, any provision of this Agreement
would preclude the use of "pooling of interest" accounting treatment for a
Change of Control transaction that (1) would otherwise qualify for such
accounting treatment, and (2) is contingent upon qualifying for such
accounting treatment, then Executive and the Company agree to negotiate in
good faith to amend this Agreement so that it will not preclude the use of
"pooling of interest" accounting treatment for such Change of Control
transaction.
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/ Patrick Kelly
---------------------------
Patrick Kelly
Chairman of the Board
EXECUTIVE:
/s/ David A. Smith
---------------------------
David A. Smith