EXHIBIT 10.1
NON-COMPETITION AGREEMENT
This Non-Competition Agreement (the "Agreement") is entered into as of
December 31, 2001 by and among Midwest Dental, Inc., a Minnesota corporation
(the "Buyer"), Midwest Dental Management, Inc., a Wisconsin corporation ("MD
Management"), Midwest Dental Care, Mondovi, Inc., a Wisconsin corporation ("MD
Mondovi"), Midwest Dental Care, Sheboygan, Inc., a Wisconsin corporation ("MD
Sheboygan", Midwest Dental Plan, Ltd., a Wisconsin corporation ("MD Plan") and
Monarch Dental Corporation, a Delaware corporation (the "Seller").
BACKGROUND
A. The Buyer has agreed to purchase all of the issued and outstanding
capital stock of MD Management, MD Mondovi, and MD Sheboygan from the Seller
pursuant to the Stock Purchase Agreement dated December 31, 2001 (the "Stock
Purchase Agreement"), by and among the Buyer, the Seller, MD Management, MD
Mondovi, and MD Sheboygan.
B. MD Management owns 79% of the issued and outstanding capital stock
of MD Plan. MD Management, MD Mondovi, MD Sheboygan and MD Plan are referred to
in this Agreement collectively as the "Acquired Companies."
C. It is a condition to the obligations of the Buyer to consummate the
transactions contemplated by the Stock Purchase Agreement that the Seller enter
into this Agreement and provide the Buyer Group (as defined below) the
assurances set forth in this Agreement.
NOW THEREFORE, in consideration of the foregoing and other mutual
covenants and obligations hereinafter set forth, the Buyer and the Seller agree
as follows:
1. Defined Terms. The following terms will have the meanings indicated for
all purposes of this Agreement:
(a) "Business" means the business of providing dental services
(including, without limitation, periodontic and orthodontic
services), managing dental practices, operating dental
laboratories, and providing any other dental related services
offered by the Acquired Companies at any time during the
one-year period immediately preceding the date hereof.
(b) "Buyer Group" means the Buyer and the Acquired Companies.
(c) "Restrictive Period" means the period commencing on the date
hereof and ending on the seventh anniversary of the date
hereof.
(d) "Territory" means the States of Wisconsin and Minnesota
(excluding Hennepin County, Minnesota).
2. Non-Competition. During the Restrictive Period, the Seller will not
directly or indirectly engage in the Business in the Territory,
including, without limitation, as a stockholder, general partner,
limited partner, manager, member, consultant, agent or joint venturer
in any other business. Notwithstanding the foregoing, this Section 2
will not be binding upon or enforceable against any successor to, or
future acquiror of, the Seller if such successor or future acquiror of
the Seller conducts the Business in the Territory prior to its
acquisition of the Seller.
3. Non-Solicitation.
(a) During the Restrictive Period, the Seller will not directly or
indirectly solicit any customer of the Acquired Companies for
the purpose of providing or services for or on behalf of such
customer which are competitive with the Business in the
Territory, or in any way cause such customer to discontinue or
reduce its business relationship with the Acquired Companies.
(b) During the Restrictive Period, the Seller will not directly or
indirectly (i) interfere with the contractual relations
between any member of the Buyer Group and any of its employees
employed in the Territory; or (ii) employ or cause to be
employed in any capacity or retain or cause to be retained as
a consultant any person who was employed as an officer or
dentist by any Acquired Company during the twelve (12) month
period ending on the date hereof.
(c) Notwithstanding the foregoing, this Section 3 will not be
binding upon or enforceable against any successor to, or
future acquiror of, the Seller if such successor or future
acquiror of the Seller conducts the Business in the Territory
prior to its acquisition of the Seller.
4. Confidential Information. All knowledge and information not already
available to the public which the Seller has acquired with respect to
private or confidential matters of the Acquired Companies (such as
those concerning sales, costs, profits, organizations, customer lists,
pricing methods, etc.) will be regarded by the Seller as strictly
confidential and will not be disclosed to any person, corporation or
firm. All of the foregoing knowledge and information are collectively
termed "Confidential Information." The Seller's obligations under this
paragraph will not apply to any information which (i) is or becomes
known to the general public under circumstances involving no breach by
the Seller of the terms of this paragraph, (ii) is approved for release
by written authorization of the Buyer's Board of Directors, or (iii)
the Seller is obligated by law, rule, regulation or order to disclose.
5. Remedies. The Seller acknowledges that the restrictions set forth in
paragraphs 1, 2 and 3 are reasonably necessary to protect the
legitimate business interests of the Buyer Group. It is understood that
if the Seller violates its obligations under paragraphs 1, 2 or 3
hereof,
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the Buyer Group will suffer irreparable harm for which a recovery of
money damages would be an incomplete and inadequate remedy. It is
therefore agreed that the Buyer Group, in addition to any remedies at
law, will be entitled, as a matter of right, in any court of competent
jurisdiction, to a preliminary injunction restraining the Seller
pending litigation, as well as a permanent injunction upon final
determination thereof, from violating this Agreement, and the Seller
waives the requirements that the Buyer Group provide any bond as a
condition precedent to obtaining such relief.
6. Severability. The parties intend that the covenants and agreements
contained in this Agreement will be deemed to be a series of separate
covenants and agreements, one for each and every state of the United
States included in the Territory. If, in any judicial proceeding, a
court refuses to enforce any of the separate covenants deemed included
in such action, then such unenforceable covenants will be deemed
eliminated from the provisions of this Agreement for the purpose of
such proceeding to the extent necessary to permit the remaining
covenants to be enforced in such proceeding. Further, in the event that
any provision is held to be overbroad as written, such provision shall
be deemed amended to narrow its application to the extent necessary to
make the provision enforceable according to applicable law and enforced
as amended.
7. Binding Effect. The covenants and agreements of paragraphs 1, 2 and 3
will not be terminated by the voluntary dissolution of any or all
members of the Buyer Group (or any parent, subsidiary or successor
thereto) or merger whereby any or all members of the Buyer Group (or
any parent, subsidiary or successor thereto) is not the surviving or
resulting corporation, or any transfer of substantially all the assets
of any or all members of the Buyer Group, unless no transferee or
successor continues to carry on the Business. In the event of any such
merger or consolidation or transfer of assets, the provisions of this
Agreement will inure to the benefit of and be binding upon the
surviving or resulting corporation or the corporation to which such
assets are transferred.
8. Entire Agreement. From and after the date of this Agreement the terms
and provisions of this Agreement constitute the entire agreement
between the parties and this Agreement supersedes any previous oral or
written communications, representations or agreements with respect to
the subject matter hereof.
9. Waiver and Interpretation. The waiver by either party of a breach of
any provision of this agreement by the other party shall not operate or
be construed as a waiver of any subsequent breach by the breaching
party. No waiver shall be valid unless in writing and signed by the
party providing such waiver.
10. Applicable Law. All questions pertaining to the validity, construction,
execution and performance of this agreement shall be construed and
governed in accordance with Minnesota law without regard to conflict of
law principles of any jurisdiction.
11. Notice. Any notice required or desired to be given under this Agreement
will be deemed given if it complies with the notice requirements set
forth in the Stock Purchase Agreement.
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12. Counterparts. This Agreement may be executed in one or more
counterparts, and will become effective when one or more counterparts
have been signed by each of the parties.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first set forth above.
THE BUYER GROUP: THE SELLER:
MIDWEST DENTAL, INC. MONARCH DENTAL CORPORATION
By: /s/ Xxxxxxx X. Xxxx, DDS By: /s/ Xxxx X. Xxxxxxxx
------------------------ --------------------
Its: President Its: Chief Financial and
-------------------- Administrative Officer
--------------------------
MIDWEST DENTAL MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxx, DDS
--------------------------
Its:
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MIDWEST DENTAL CARE,
MONDOVI, INC.
By: /s/ Xxxxxxx X. Xxxx, DDS
--------------------------
Its:
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MIDWEST DENTAL CARE,
SHEBOYGAN, INC.
By: /s/ Xxxxxxx X. Xxxx, DDS
--------------------------
Its:
-----------------------
MIDWEST DENTAL PLAN, LTD.
By: /s/ Xxxxxxx X. Xxxx, DDS
--------------------------
Its:
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