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EXHIBIT 10.20
EMPLOYMENT AGREEMENT
(Xx. Xxxxx X. Xxxxx)
Employment Agreement, dated the 29th day of August, 1996, by and among
Xxxxx X. Xxxxx, D.D.S. (the "Employee"), Monarch Dental Corporation, a Delaware
corporation ("Parent") and Midwest Dental Management, Inc., a Wisconsin
corporation (the "Company").
W I T N E S S E T H
WHEREAS, the Employee is the founder and the president of Midwest
Dental Care, Mondovi, Inc. ("MDC-Mondovi"), Midwest Dental Care, Sheboygan,
Inc. ("MDC-Sheboygan") and Advance Dental Management, Inc. ("ADM")
(collectively "Midwest Dental Care"); and
WHEREAS, reference is made to that certain Stock Purchase Agreement
(the "Stock Purchase Agreement") relating to the sale of all of the capital
stock of MDC-Mondovi and MDC-Sheboygan to the Parent; and
WHEREAS, reference is made to that certain Asset Purchase Agreement
(the "Asset Purchase Agreement") relating to the sale of substantially all of
the assets of ADM to the Company; and
WHEREAS, the parties hereto desire to assure that the Employee's
knowledge and experience will continue to be available after the
above-described transactions.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
1. Employment. Subject to the provisions of Section 6, the
Company hereby employs the Employee and the Employee accepts such employment
upon the terms and conditions hereinafter set forth.
2. Term of Employment. Subject to the provisions of Section 6,
the term of the Employee's employment pursuant to this Agreement shall commence
on and as of the date hereof (the "Effective Date") and shall terminate on
December 31, 2001. The period during which the Employee serves as an employee
of the Company in accordance with and subject to the provisions of this
Agreement is referred to in this Agreement as the "Term of Employment."
3. Duties. During the Term of Employment, the Employee (a) shall
serve as an employee of the Company with the title and position of President of
the
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Company, (b) shall have such duties as may be prescribed from time to time by
the Chief Executive Officer of the Parent, consistent with the Employee's
general area of experience and skills, (c) as President of the Company, shall
have general supervisory responsibility over all aspects of its business, which
shall consist of the conduct of the business heretofore known as Midwest Dental
Care, subject to the supervision of the Chief Executive Officer of the Parent,
(d) upon the request of the Chief Executive Officer of the Parent, shall serve
as an officer of any of Parent's subsidiaries, and (e) shall render all
services reasonably incident to the foregoing. The Employee shall report to
the Chief Executive Officer of the Parent in carrying out his duties and
responsibilities hereunder, and such duties and responsibilities shall be
performed principally, and the Employee shall be based, at the Company's
offices in Mondovi, Wisconsin, subject to reasonable travel requirements for
business purposes consistent with the travel requirements of executive officers
of the Parent and the Company generally.
Employee also shall serve as the chairman of the working group which
shall consist of all of the leaders of group practices acquired by Parent or
its affiliates within the boundaries of the states of Wisconsin, Minnesota and
Iowa. Employee shall serve as the chairman of the working group beginning on
the date of this Agreement and continuing through December 31, 2001.
The Employee hereby accepts such employment, agrees to serve the
Company in the capacities indicated, and agrees to use his best efforts in, and
shall devote substantially all of his working time, attention, skill and
energies to, the advancement of the interests of the Company, the Parent and
each of their affiliates and the performance of his duties and responsibilities
hereunder, provided that the foregoing shall not be deemed to preclude service
on civic or professional boards to the extent not inconsistent with that
certain Non-Competition Agreement of even date executed by the Employee
concurrently herewith and in connection with the Stock Purchase Agreement and
Asset Purchase Agreement (the "Non-Competition Agreement").
4. Compensation. During the Term of Employment, the Company
shall pay the Employee a salary at the annual rate of $200,000.00 per annum
(the "Base Salary"). Such salary shall be subject to withholding under
applicable law, shall be pro rated for partial years and shall be payable in
periodic installments not less frequently than monthly in accordance with the
Company's usual practice for officers of the Company, as in effect from time to
time.
The Company agrees that Employee's then current Base Salary shall be
increased once each calendar year on the anniversary of the date hereof
beginning in calendar year 1997 by the amount necessary to reflect the increase
during the previous calendar year in the Consumer Price Index (as defined
below). The adjustment in Base Salary shall take effect as of each anniversary
of the date hereof after the official publication of the Consumer Price Index
for the end of the calendar year immediately
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preceding such anniversary. For the purposes of this Section 4, the Consumer
Price Index shall mean the "Consumer Price Index - Urban Wage Earners
(1967=100)" published by the Bureau of Labor Statistics of the United States
Department of Labor, utilizing the columns for Milwaukee, Wisconsin, "all
items," or any successor index.
5. Benefits.
(a) During the Term of Employment, the Employee shall be
entitled to participate in any and all medical, pension, dental and life
insurance plans and disability income plans, retirement arrangements and other
employment benefits as in effect from time to time for officers of the Parent.
Such participation shall be subject to (i) the terms of the applicable plan
documents (including, as applicable, provisions granting discretion to the
Board of Directors of the Parent or the Company or any administrative or other
committee provided for therein or contemplated thereby) and (ii) generally
applicable policies of the Company consistent with the terms herein.
(b) From the date hereof through November 1999, the
Company shall provide the Employee with the use of its Lexus LS400 automobile
and, beginning December 1999 through December 2001, the Company shall provide a
car allowance of $1,000 per month. In addition, the Company shall reimburse
Employee for gas, oil, maintenance and insurance for the business use of
Employee's automobile.
(c) During the Term of Employment, the Employee shall
receive paid vacation annually in accordance with the Company's and the
Parent's practices for executive officers, as in effect from time to time, but
in any event not less than four (4) weeks per calendar year.
(d) Compliance with the provisions of this Section 5
shall in no way create or be deemed to create any obligation, express or
implied, on the part of the Company, the Parent or any of their affiliates with
respect to the continuation of any particular benefit or other plan or
arrangement maintained by them or their predecessors as of or prior to the date
hereof or the creation and maintenance of any particular benefit or other plan
or arrangement at any time after the date hereof. Notwithstanding the
foregoing sentence to the contrary, the benefit conferred upon Employee
pursuant to Section 5(b) shall continue without interruption throughout the
Term of Employment.
6. Termination of Employment of the Employee. Prior to the
expiration of the Term of Employment as provided in Section 2 hereof, this
Agreement may or shall (as applicable) be terminated as follows:
(a) At any time by the mutual consent of the Employee and
the Company.
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(b) At any time for "cause" by the Company and the Parent
upon written notice to the Employee. For purposes of this Agreement,
a termination shall be for "cause" only if:
(i) the Employee shall be convicted by a court of
competent jurisdiction of, or shall plead guilty or nolo
contendere to, an act of fraud, embezzlement, misappropriation
or breach of fiduciary duty against the Company, Parent or any
of their affiliates, or shall be convicted by a court of
competent jurisdiction of, or shall plead guilty or nolo
contendere to, any felony, except a felony resulting from the
operation of a motor vehicle; or
(ii) the Employee shall commit a breach of any of
the covenants, terms or provisions hereof, which breach has
not been remedied within thirty (30) days after delivery to
the Employee by the Parent and the Company of written notice
of the facts constituting the breach (provided that if such
breach cannot reasonably be cured within such thirty (30) day
period, the Employee shall be granted such longer period as
may be necessary, so long as the Employee diligently pursues
such cure); or
(iii) the Employee shall commit a breach of any of
the covenants, terms or provisions of the Non-Competition
Agreement, which breach has not been remedied within thirty
(30) days after delivery to the Employee by the Parent and the
Company of written notice of the facts constituting such
breach; or
(iv) the Employee shall have failed to comply with
written instructions from the Parent's Chief Executive
Officer, which are reasonable and consistent with Section 3,
or shall have substantially failed to perform the Employee's
duties hereunder, after written notice from the Chief
Executive Officer of the Parent and after a fair hearing, at
which the Employee is allowed to present evidence or testimony
regarding the reasons for the Employee's actions and other
evidence bearing on the situation.
Upon termination for cause as provided in this Section 6(b), (A) all
obligations of the Company and the Parent under this Agreement shall thereupon
immediately terminate other than any obligation of the Company with respect to
earned but unpaid Base Salary and benefits contemplated hereby to the extent
then accrued or vested, it being understood that upon any such termination, the
Employee shall not be entitled to receive any continuation of benefits except
as may be required by law, and (B) the Company and the Parent shall have any
and all rights and remedies under this Agreement and applicable law.
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(c) Upon the death or upon the permanent disability (as
defined below) of the Employee continuing for a period in excess of
one hundred twenty (120) days. Upon any such termination of the
Employee's employment as provided in this Section 6(c), all
obligations of the Company and Parent under this Agreement shall
thereupon immediately terminate other than any obligation of the
Company with respect to earned but unpaid Base Salary and benefits
contemplated hereby to the extent then accrued or vested through the
date of termination. As used herein, the terms "permanent disability"
or "permanently disabled" shall mean the inability of the Employee, by
reason of injury, illness or other similar cause, to perform the
material functions of his duties and responsibilities in connection
with the conduct of the business and affairs of the Company, as
determined reasonably and in good faith by an independent physician
reasonably acceptable to the Employee and the Company and the Parent.
(d) At any time by the Employee upon ninety (90) days'
prior written notice to the Company. Upon termination by the Employee
as provided in this Section 6(d), all obligations of the Company and
the Parent under this Agreement thereupon immediately shall terminate
other than any obligation of the Company with respect to earned by
unpaid Base Salary and benefits contemplated hereby to the extent then
accrued or vested through the date of termination.
(e) At any time without "cause" (as defined in Section
6(b)) by the Company and the Parent upon written notice to the
Employee. In the event of termination of the Employee by the Company
and the Parent pursuant to this Section 6(e) or Section 6(f) below,
the Company shall (i) continue to make Base Salary payments to the
Employee from the date of termination through December 31, 2001, as
contemplated by Section 4, and (ii) continue the benefit arrangements
applicable to the Employee as contemplated by Section 5 through
December 31, 2001, with such amounts agreed by the parties hereto to
be in full satisfaction and compromise of all claims of Employee
arising out of this Agreement. The Employee shall not be under any
obligation to mitigate the Company's severance obligation under this
Section 6(e) by obtaining other employment.
(f) The Employee shall have the right to terminate his
employment hereunder in the event of a material default by the Company
or the Parent in the performance of its obligations hereunder after
the Employee has given written notice to the Company and the Parent
specifying such default by the Company or the Parent and giving the
Company or the Parent, as applicable, a reasonable time, not less than
thirty (30) days, to conform its performance to its obligations
hereunder. The rights and obligations of the parties shall be as set
forth in Section 6(e) in the event of any such termination. The
Employee
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shall not be under any obligation to mitigate the Company's severance
obligation under this Section 6(f) by obtaining other employment.
(g) Notwithstanding termination of this Agreement as
provided in this Section 6 or any other termination of the Employee's
employment with the Company, the Employee's obligations under Section
7 hereof and in the Non-Competition Agreement of even date herewith
shall survive any termination of the Employee's employment with the
Company at any time and for any reason unless and until it is
determined by a court of competent jurisdiction that the Company
materially breached this Agreement prior to a material breach of this
Agreement by the Employee.
7. Confidentiality: Proprietary Rights.
(a) In the course of performing services hereunder, on
behalf of the Company and the Parent, the Employee has had, and it is
anticipated that the Employee will from time to time have, access to
confidential records, data, customer lists, trade secrets and other
confidential information owned or used in the course of business by the
Company, the Parent and their affiliates and predecessors (the "Confidential
Information"). The Employee agrees (a) to hold the Confidential Information in
strict confidence, (b) not to disclose the Confidential Information to any
person (other than in the regular course of business of the Company, the Parent
or any of their affiliates), and (c) not to use, directly or indirectly, any of
the Confidential Information for any competitive or commercial purpose other
than on behalf of the Company, the Parent and their affiliates; provided,
however, that the limitations set forth above shall not apply to any
Confidential Information which (i) is then generally known to the public; (ii)
became or becomes generally known to the public through no fault of the
Employee; (iii) is disclosed in accordance with an order of a court of
competent jurisdiction or applicable law; or (iv) is disclosed by Company to
Midwest Dental Plan, Ltd. ("MDP") in connection with MDP's marketing or sale of
its dental plan(s). Upon the termination of the Employee's employment with the
Company for any reason, all Confidential Information (including, without
limitation, all data, memoranda, customer lists, notes, programs and other
papers and items, and reproductions thereof relating to the foregoing matters)
in the Employee's possession or control, shall be returned to the Company, the
Parent or the applicable affiliate and remain in its or their possession.
Notwithstanding the foregoing provisions of this Section 7(a), if the
employment of Employee with the Company is terminated by the Company without
cause (as defined in Section 6(b)), the Employee's obligations under this
Section 7(a) shall automatically cease during any period of time that the
Company or the Parent are in default of their obligations to make the severance
payments to Employee as provided in Sections 6(e) and 11. The Employee's
remedies in this Section 7(a) and elsewhere in this Agreement are cumulative.
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(b) The Employee recognizes that the Company, the Parent
and their affiliates possess a proprietary interest in all of the information
described in Section 7(a) and have the exclusive right and privilege to use,
protect by copyright, patent or trademark, or otherwise exploit the processes,
ideas and concepts described therein to the exclusion of the Employee, except
as otherwise agreed between the Company, the Parent and the Employee in
writing. The Employee expressly agrees that any products, inventions,
discoveries or improvements made by the Employee in the course of the
Employee's employment, during the Term of Employment, including any of the
foregoing which is based on or arising out of the information described in
Section 7(a), shall be the property of and inure to the exclusive benefit of
the Company or the Parent, as applicable. The Employee further agrees that any
and all products, inventions, discoveries or improvements developed by the
Employee (whether or not able to be protected by copyright, patent or
trademark) during the course of his employment, or involving the use of the
time, materials or other resources of the Company, the Parent or any of their
affiliates, shall be promptly disclosed to the Company and the Parent and shall
become the exclusive property of the Company or the Parent as applicable, and
the Employee shall execute and deliver any and all documents necessary or
appropriate to implement the foregoing.
(c) The Employee agrees, while he is employed by the
Company, to offer or otherwise make known or available to it, as directed by
the Chief Executive Officer of the Parent, and without additional compensation
or consideration, any business prospects, contracts or other business
opportunities that he may discover, find, develop or otherwise have available
to him in any field in which the Company, the Parent or their affiliates are
engaged, and further agrees that any such prospects, contracts or other
business opportunities shall be the property of the Company or the Parent, as
applicable.
(d) The Employee acknowledges that the Non-Competition
Agreement is an integral part of his employment arrangements with the Company.
8. Specific Performance; Severability. It is specifically
understood and agreed that any breach of the provisions of Section 7 hereof by
the Employee is likely to result in irreparable injury to the Company, the
Parent and/or its or their affiliates, that the remedy at law alone will be an
inadequate remedy for such breach and that, in addition to any other remedy it
may have, the Company shall be entitled to enforce the specific performance of
this Agreement by the Employee and to seek both temporary and permanent
injunctive relief (to the extent permitted by law), without the necessity of
posting a bond or proving actual damages. In case any of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, any such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had been limited or modified (consistent with its general intent) to
the extent necessary to
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make it valid, legal and enforceable, or if it shall not be possible to so
limit or modify such invalid, illegal or unenforceable provision or part of a
provision, this Agreement shall be construed as if such invalid, illegal or
unenforceable provision or part of a provision had never been contained in this
Agreement.
9. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if faxed (with transmission acknowledgment received), delivered
personally or mailed by certified or registered mail (return receipt
requested), as follows:
To the Company or the Parent:
Monarch Dental Corporation
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, D.D.S.
Fax No.: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Xxxxxx and Xxxxx, L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
To the Employee:
Xxxxx X. Xxxxx, D.D.S.
000 Xxxxx Xxx
Xxxxxxx, XX 00000
Fax No.: (000) 000-0000
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With a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxx Xxxxxxx & Xxxxxxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Fax No.: (000) 000-0000
or to such other address or fax number of which any party may notify the other
parties as provided above. Notices shall be effective as of the date of such
delivery, mailing or fax.
10. Miscellaneous. This Agreement shall be governed by and
construed under the laws of the State of Wisconsin, and shall not be amended,
modified or discharged in whole or in part except by an agreement in writing
signed by both of the parties hereto. The failure of either of the parties to
require the performance of a term or obligation or to exercise any right under
this Agreement or the waiver of any breach hereunder shall not prevent
subsequent enforcement of such term or obligation or exercise of such right or
the enforcement at any time of any other right hereunder or be deemed a waiver
of any subsequent breach of the provision so breached, or of any other breach
hereunder. This Agreement shall inure to the benefit of, and be binding upon,
successors of the Company by way of merger, consolidation or sale and may not
be otherwise assigned by the Company or the Employee. This Agreement
supersedes all prior understandings and agreements between the parties relating
to the subject matter hereof.
11. Guaranty by Parent. Parent unconditionally and irrevocably
guarantees the Company's performance and payment of the Company's obligations
to the Employee under this Agreement. Employee may immediately commence any
action against Parent to enforce his rights hereunder without first exhausting
his remedies against Company. This guarantee shall not be adversely effected
in any way due to a modification of the employment relationship between Company
and Employee nor due to a modification to the legal relationship between
Company and Parent. Parent represents and warrants that it benefits from
Employee's employment relationship with Company and therefore this guarantee is
supported by adequate consideration.
12. Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a person shall mean (i) with respect
to a person, any member of such person's family (including any child,
step-child, parent, step-parent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law); (ii) with
respect to an entity, any officer, director, stockholder, partner or investor
in such entity or of or in any affiliate of such entity; and (iii) with
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respect to a person or entity, any person or entity which directly or
indirectly controls, is controlled by, or is under common control with such
person or entity.
(b) "control" (including the terms "controlled by" and
"under common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of stock, as
trustee or executor, by contract or credit arrangement or otherwise;
(c) "person" means an individual, corporation,
partnership, association, trust or any unincorporated organization; and
(d) "subsidiary" of a person means any corporation more
than 50 percent of whose outstanding voting securities, or any partnership,
joint venture or other entity more than 50 percent of whose total equity
interest, is directly or indirectly owned by such person.
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IN WITNESS WHEREOF, the parties have executed this Agreement under
seal as of the date first set forth above.
COMPANY:
MIDWEST DENTAL MANAGEMENT, INC.
By: /s/ XXXX X. XXXX
---------------------------------
Xxxx X. Xxxx, Vice President
PARENT:
MONARCH DENTAL CORPORATION
By: /s/ XXXXXX X. XXXXXXX
---------------------------------
Xxxxxx X. Xxxxxxx, D.D.S.,
President
EMPLOYEE:
/s/ XXXXX X.XXXXX
------------------------------------------
Xxxxx X. Xxxxx, D.D.S.
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