Exhibit 10.18
EMPLOYMENT AGREEMENT
Employment Agreement, dated this 22nd day of November, 1999, between
American Prepaid Professional Services, Inc. ("American Prepaid") and Xxxx
Xxxxxxx (the "Executive").
WITNESSETH
WHEREAS, American Prepaid desires to employ Executive in the capacity and
on the terms and conditions hereinafter set forth and Executive is willing to
serve in such capacity and on such terms and conditions.
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, American Prepaid
hereby employs the Executive and the Executive accepts such employment upon the
terms and conditions hereinafter set forth.
2. Term of Employment. The term of the Executive's employment pursuant to
this Agreement shall be effective as of the date of this Agreement, and shall
remain in effect for a period of five (5) years from said date or until
terminated in accordance with Section 6. The period during which the Executive
serves as an employee of American Prepaid or any of its subsidiary operations 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 Executive (a) shall serve as
an officer of American Prepaid, (b) shall perform such duties and
responsibilities as may be reasonably determined by the President of American
Prepaid consistent with the Executive's position as an officer of American
Prepaid, provided that such duties and responsibilities shall be within the
general area of the Executive's experience and skills, (c) upon the request of
the Board of Directors of American Prepaid, shall serve as an officer of any of
its subsidiaries; and (d) shall render all services incident to the foregoing.
The Executive agrees to use his best efforts in, and shall devote his full
working time, attention, skill and energies to, the advancement of the interests
of American Prepaid, CompDent Corporation (parent company of American Prepaid),
and their subsidiaries and Affiliates and the performance of his duties and
responsibilities hereunder.
4. Compensation.
(a) During the Term of Employment, American Prepaid shall pay the
Executive a salary (the "Base Salary") at an annual rate as shall be determined
from time to time by the President of American Prepaid, provided, however, that
such rate per annum shall not be less than $145,000. Such salary shall be
subject to withholding under applicable law and shall be
payable in periodic installments in accordance with American Prepaid's usual
practice for its executives, as in effect from time to time.
(b) Upon the completion of each calendar year, the Executive shall be
eligible to receive a bonus ("Bonus") provided he is employed by American
Prepaid at the end of such calendar year to the extent payable pursuant to a
bonus plan then in effect from time to time for executives of American Prepaid
of equivalent position and title, provided, however, during the first twelve
(12) months of this Agreement ("Initial Term"), Executive is guaranteed a Bonus
equal to fifteen (15%) percent of Executive's Base Salary paid during the
Initial Term ("Guaranteed Bonus"). Said Guaranteed Bonus shall be due and
payable first quarter, 2001.
5. Benefits.
(a) During the Term of Employment, the Executive shall be entitled to
participate in any and all bonus plans, medical, pension and dental insurance
plans and disability income plans as in effect from time to time for executives
of American Prepaid. Such participation shall be subject to (i) the terms of the
applicable plan documents, (ii) generally applicable policies of American
Prepaid, and (iii) the discretion of the Board of Directors of American Prepaid
or administrative or other committee provided for in or contemplated by such
plan.
(b) American Prepaid shall promptly reimburse the Executive for all
reasonable business expenses incurred by the Executive during the Term of
Employment in accordance with American Prepaid's practices for executives of
American Prepaid, as in effect from time to time.
(c) During the Term of Employment, the Executive shall receive paid
vacation annually in accordance with American Prepaid's practices for executives
of American Prepaid, as in effect from time to time.
(d) Except as contemplated by Sections 5 (b) and 5 (c), compliance
with provisions of this Section 5 shall in no way create or be deemed to create
any obligation, express or implied, on the part of American Prepaid or any of
its subsidiaries or Affiliates with respect to the continuation of any benefit
or other plan or arrangement maintained 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, the benefits
provided to the Executive during the Term of Employment will not be materially
less favorable in the aggregate than the benefits in effect for the executives
of American Prepaid as of the date of this Agreement.
6. Termination of Employment of the Executive. This Agreement and the
Executive's employment with American Prepaid and/or its subsidiaries may be
terminated as follows:
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(a) At any time by the mutual consent of the Executive and American
Prepaid.
(b) At any time for "cause" by American Prepaid upon written notice to
the Executive. For purposes of this agreement, a termination shall be for
"cause" if:
(i) the Executive shall commit an act of fraud, embezzlement,
misappropriation or breach of fiduciary duty against American Prepaid or any of
its subsidiaries or affiliates or shall be convicted by a court of competent
jurisdiction or shall plead guilty or nolo contendere to any felony or crime
involving moral turpitude;
(ii) the Executive shall commit a material breach of any of the
covenants, terms or provisions of Section 8 hereof;
(iii) the Executive shall commit a material breach of any of the
covenants, terms or provisions hereof (other than pursuant to Section 8 hereof)
which breach has not been remedied within thirty (30) days after delivery to the
Executive by American Prepaid of written notice thereof; or
(iv) the Executive shall consistently disobey reasonable written
instructions from American Prepaid's President consistent with the terms of this
Agreement and Executive's duties, title, and general area of expertise;
(v) the Executive shall fail or be unable to carry out
effectively Executive's duties and obligations to American Prepaid and/or its
subsidiaries, or to participate effectively and actively in the management of
American Prepaid as determined in the reasonable judgment of American Prepaid's
President, after written notice and an opportunity to cure.
Upon termination for cause as provided in this Section 6 (b), (A) all
obligations of American Prepaid under this Agreement shall thereupon immediately
terminate other than any obligations with respect to earned but unpaid Base
Salary; provided, however, that the Executive shall not be entitled to receive
any bonus from American Prepaid with respect to the year during which such
termination occurred, and (B) American Prepaid shall have any and all rights and
remedies under this Agreement and applicable law.
(c) Upon the earlier death or permanent disability (as defined below)
of Executive continuing for a period of ninety (90) days. Upon any such
termination of the Executive's employment, all obligations of American Prepaid
under this Agreement shall thereupon immediately terminate other than any
obligations with respect to (i) earned but unpaid salary including any earned
but unpaid bonus from the previous fiscal year, if applicable, through the date
of termination, (ii) bonus payments with respect to the calendar year which such
termination occurred on the basis of and to the extent contemplated in any bonus
plan then in effect with respect to executive officers of American Prepaid,
pro-rated on the basis of number
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of days of the Executive's actual employment hereunder during such calendar year
through such termination, and (iii) in the case of permanent disability
continuation of health insurance benefits until the first anniversary of the
date of termination to the extent permitted under Executive's group health
insurance policy. As used herein, the definition of the term "permanent
disability" or "permanently disabled shall parallel the definition of same as
provided under the long-term disability insurance policy then in effect on
executives of the Company. In the event that no such policy is in existence at
the time of the contended disability, "permanent disability" shall be defined as
the inability of the Executive, by reason of injury, illness or other similar
cause, to perform a major part of his duties and responsibilities in connection
with the conduct of the business and affairs of American Prepaid.
(d) At any time by the Executive upon sixty (60) days' prior written
notice to American Prepaid. Upon termination by the Executive as provided in
this Section 6 (d), all obligations of American Prepaid under this Agreement
shall thereupon immediately terminate other than any obligations with respect to
earned but unpaid Base Salary including any earned but unpaid bonus from the
previous fiscal year, if applicable, it being understood that the Executive
shall not be entitled to receive any bonus from American Prepaid with respect to
the year during which such termination occurred.
(e) At any time during the Term of Employment without "cause" (as
defined in Section 6 (b)) by American Prepaid upon thirty (30) days' prior
written notice to the Executive.
(f) At any time for "good reason" by Executive by written notice to
American Prepaid. For purposes of this Agreement, a termination shall be for
"good reason" if:
(i) American Prepaid materially breaches any of the terms or
conditions set forth in this Agreement and fails to cure its breach within
thirty (30) days after its receipt from the Executive of written notice of such
breach, which notice describes in reasonable detail the Executive's belief that
American Prepaid is in breach hereof;
(ii) American Prepaid materially diminishes the Executive's
duties or reassigns Executive to a position not consistent with Executive's
general area of knowledge, experience, and skills;
(iii) Any material diminution of the Executive's Base Salary;
(iv) Any relocation of Executive's principal place of employment
to more than thirty-five (35) miles from the principal place of employment
immediately preceding a Change in Control;
(v) American Prepaid transfers substantially all of its assets to
a successor entity and such entity fails to assume American Prepaid's
obligations under this Agreement.
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(g) Upon termination of the Executive's employment with American
Prepaid at any time, under this Agreement or otherwise, regardless of the
circumstances thereof, the Executive's obligations under Section 8 hereof shall
survive such termination.
7. Severance Payments.
In the event of termination of the Executive by American Prepaid
pursuant to Section 6(e), or by Executive pursuant to 6(f), then American
Prepaid shall, in lieu of the payments and arrangements specified above, pay the
Executive severance pay in an amount equal to one-half (1/2) times the
Executive's Base Salary on the termination date ("Severance Pay"). Such
Severance Pay shall be payable over six (6) months in equal monthly installments
and shall be subject to withholding to the extent required under applicable law.
The Severance Pay contemplated by this Section 7 is agreed by the parties hereto
to be in full satisfaction and compromise of any claim arising out of any
termination of the Executive's employment pursuant to Section 6(e) or 6(f).
Executive shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise.
8. Non-Competition.
(a) During any period in which the Executive serves as an employee of
American Prepaid and for the greater of (i) the period Executive continues to
receive Separation Pay, or (ii) a period of one (1) year after the date of
termination of the Executive's employment at any time, regardless of the
circumstances thereof, the Executive shall not, without the express written
consent of American Prepaid, directly or indirectly, engage, participate, invest
in, be employed by or assist, whether as owner, part-owner, shareholder,
partner, director, officer, trustee, employee, agent or consultant, or in any
other capacity, any Person other than American Prepaid and its Affiliates whose
activities, products, and/or services are in the Designated Industry. Without
limiting the foregoing, the foregoing covenant shall prohibit the Executive
during the period set forth above from (i) hiring or attempting to hire for or
on behalf of any Person in the Designated Industry any officer, Employee, or
Affiliated Person of American Prepaid or any of its Affiliates, (ii) encouraging
for or on behalf of any such Person in the Designated Industry any officer,
Employee, or Affiliated Person to terminate his or her relationship or
employment with American Prepaid or any of its Affiliates, (iii) soliciting for
or on behalf of any such Person in the Designated Industry any customer of
American Prepaid or any of its Affiliates and (iv) diverting to any such Person
in the Designated Industry any customer of American Prepaid or any of its
Affiliates; provided, however, that nothing herein shall be construed as
preventing the Executive from making passive investments in a Person in the
Designated Industry if the securities of such Person are publicly traded and
such investment constitutes less than five percent of the outstanding shares of
capital stock or comparable equity interests of such Person. As of the date of
this Agreement, the Executive is not performing any other duties for, and is not
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a party to any similar agreement with, any Person competing with American
Prepaid or any of its affiliates.
(b) In the course of performing services hereunder and otherwise, the
Executive has had, and it is anticipated that the Executive will from time to
time have, access to confidential records, data, customer lists, trade secrets
and similar confidential information owned or used in the course of business by
American Prepaid and its subsidiaries and affiliates (the "Confidential
Information"). The Executive agrees (i) to hold the Confidential Information in
strict confidence, (ii) not to disclose the Confidential Information to any
Person (other than in the regular business of American Prepaid), and (iii) not
to use, directly or indirectly, any of the Confidential Information for any
competitive or commercial purpose; provided, however, that the limitations set
forth above shall not apply to any Confidential Information which (A) is then
generally known to the public; (B) became or becomes generally known to the
public through no fault of the Executive; or (C) is disclosed in accordance with
an order of a court of competent jurisdiction or applicable law. Upon the
termination of the Executive's employment with American Prepaid, all data,
memoranda, customer lists, notes, programs and other papers and items, and
reproductions thereof relating to the foregoing matters in the Executive's
possession or control, shall be returned to American Prepaid and remain in its
possession.
(c) For purposes of this Section 8, the following terms shall have the
meanings specified unless defined otherwise herein:
(i) "Affiliates" shall mean any subsidiary company of American
Prepaid, whether wholly or partially owned.
(ii) "Affiliated Person" shall mean any individual, professional,
or otherwise, who is providing, or has provided, during a one-year period
immediately prior to the date of any hiring or solicitation for hire of such
individual, services to any dental office or facility under management by
American Prepaid Professional Services, Inc.;
(iii) "Employee" shall mean any individual employed currently or
during a one-year period immediately prior to the date of any hiring or
solicitation for hire of such individual by American Prepaid or its Affiliates;
(iv) "Designated Industry" shall mean (A) the business of
providing dental health care services and any and all activities relating
thereto, including, without limitation, the provision and administration of
discount fee-for-service dental plans, prepaid dental plans, PPO dental plans
and indemnity dental plans and operation and/or ownership of dental health care
practices, (B) the business of providing dental practice management, and (C) any
other revenue generating business conducted by American Prepaid or its
Affiliates;
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(v) "Person" shall mean an individual, a corporation, an
association, a partnership, an estate, a trust, and any other entity or
organization.
9. Specific Performance: Severability. It is specifically understood and
agreed that any breach of the provisions of this Agreement including, without
limitation, Section 8 hereof by the Executive is likely to result in irreparable
injury to American Prepaid and its subsidiaries and affiliates, that the remedy
at law alone will be inadequate remedy for such breach and that, in addition to
any other remedy it may have, American Prepaid shall be entitled to enforce the
specific performance of this Agreement by the Executive and to seek both
temporary and permanent injunctive relief (to the extent permitted by law),
without the necessity of 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 unenforceable provision had been limited or modified (consistent with its
general intent) to the extent necessary to 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.
10. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally or mailed by certified or registered mail (return receipt
requested) as follows:
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To American Prepaid:
000 Xxxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: President
To the Executive:
Xxxx Xxxxxxx
0000 Xxxx Xxxxxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
or to such other address of which any party may notify the other parties as
provided above. Notices shall be effective as of the date of such delivery or
mailing.
11. Entire Agreement. This Agreement supersedes any and all other
agreements, either oral or in writing, by and between the parties hereto with
respect to the employment of Executive by American Prepaid and/or its
subsidiaries. Each party to this Agreement acknowledges that no representations,
inducements, or other agreements, oral or otherwise, have been embodied herein,
and no other agreement, statement, or promise not contained in this Agreement
shall be valid or binding.
12. Arbitration. Disputes arising out of or relating to this Agreement
shall be determined by binding arbitration in accordance with the then current
Commercial Arbitration Rules of the American Arbitration Association, provided,
however, that any dispute arising out of the non-competition provision of this
Agreement (paragraph 8) shall not be subject to arbitration.
13. Miscellaneous. This Agreement shall be governed by and construed under
the laws of the State of Georgia, 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 successors of American
Prepaid by way of merger, consolidation or transfer of all or substantially all
of the assets of American Prepaid, and may not be assigned by the Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date first set forth above.
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AMERICAN PREPAID PROFESSIONAL SERVICES,
INC.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
EXECUTIVE:
/s/ Xxxx Xxxxxxx
----------------------------------------
Xxxx Xxxxxxx
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