EXHIBIT 10.80
December 23, 1998
PERSONAL AND CONFIDENTIAL
Xx. Xxxx X. Xxx
Co-Chairman, Founder and President
of Clinical Services Council
Gentle Dental Service Corporation
000 Xxxxxxxxxx Xx., Xxxxx 0000
Xxxxxxxxx, XX 00000
RE: SEPARATION AGREEMENT AND MUTUAL RELEASE
Dear Dany:
This letter, when signed by you, will constitute our Agreement regarding
your separation from Gentle Dental Service Corporation ("Gentle Dental").
The parties to this Agreement are you and Gentle Dental.
1. TERMINATION OF EMPLOYMENT. Your employment with Gentle Dental will
continue through December 31, 1998 (the "Termination Date"), when your
employment with Gentle Dental will end. By execution of this Agreement, you
will resign as an employee, officer and director of Gentle Dental effective
as of December 31, 1998. In addition, your Employment Agreement with Gentle
Dental dated July 1, 1998 (the "Employment Agreement") is hereby terminated
effective as of December 31, 1998. Any and all post-termination obligations
of either party under the Employment Agreement are superseded and replaced by
this Agreement. The Proprietary Information Agreement between you and Gentle
Dental is not terminated.
2. CONSULTING AGREEMENT. During the period from January 1, 1999 to
December 31, 2000 (the "Consulting Period"), you agree to provide consulting
services to the Company on a project basis related to your area of expertise
(i.e. Clinical Services in Dentistry) at mutually agreeable times and
completion dates. You understand that the Company will not provide office
space as part of the consulting arrangement. You will be paid the following
annual amounts during the Consulting Period:
1999: $257,580 ($243,000 increased by 6%)
2000: $273,035 ($257,580 increased by 6%)
The consulting payments shall be made in monthly installments equal to 1/12th
of the annual amount. The first monthly consulting payment is due on January
31, 1999 and subsequent payments are due on the last day of each month during
the Consulting Period. All payments will be subject to applicable income tax
and employment tax withholding.
3. SEVERANCE PAYMENTS. Gentle Dental will pay you severance payments
from January 1, 2001 through June 30, 2003 (the "Severance Period"). You
will be paid the following annual amounts during the Severance Period:
2001: $289,417 ($273,035 increased by 6%)
2002: $306,782 ($289,417 increased by 6%)
2003: $162,594 (1/2 of $306,782 increased by 6%)
The severance payments shall be made in monthly installments equal to 1/12th
of the annual amount (1/6th of the annual amount in 2003). The first monthly
severance payment is due on January 31, 2001 and subsequent payments are due
on the last day of each month during the Severance Period. All payments will
be subject to applicable income tax and employment tax withholding.
4. STOCK OPTIONS. Effective on December 31, 1998, all options you
hold to purchase Gentle Dental stock will be fully vested and exercisable
consistent with the terms of the Employment Agreement. Under the terms of
the two stock options granted to you in 1998, you will be entitled to
exercise those options at any time until the expiration of three months after
the end of the Consulting Period. Under the terms of the three stock options
granted to you prior to 1998, you will be entitled to exercise those options
only until March 31, 1999.
5. COMPANY BENEFITS. Gentle Dental will request its health care
insurer that you and any dependents currently insured under its health
benefits plan (the "Plan") be continued as participants during the Consulting
and Severance Periods. If that request is allowed, Gentle Dental will pay
for the benefits or premiums on the same basis that it pays for its
employees. If you are entitled to participate in the Plan during the
Consulting and Severance Periods, to the extent permitted by the Plan, you
will be entitled to continue your group health coverage through Gentle Dental
under a federal law called COBRA after the end of the Severance Period.
Under COBRA, you may elect to purchase continued group health coverage
through Gentle Dental at the full premium rate plus an administrative fee for
up to an 18-month period.
If Gentle Dental's request to allow you and your dependents to remain on
the Plan is denied, or if the eligibility of you and your dependents to be
participants in the Plan ends before the end of the Consulting and Severance
Periods, and you elect COBRA benefits, Gentle Dental shall reimburse you for
the continuation of benefits for you and your dependents under COBRA until
the end of the Severance Period in the amount Gentle Dental would have paid
if you continued to be eligible under the Plan. If your elibility for COBRA
benefits ends before the end of the Consulting and Severance Periods, you
will arrange for your own health insurance coverage and Gentle Dental will
reimburse you on a monthly basis until the end of the Severance Period an
amount equal to the amount Gentle Dental would have paid to cover you under
the Plan if you were eligible.
Gentle Dental will also request its group life insurer that you be
continued as a participant in that plan during the Consulting and Severance
Periods. If that request is allowed, Gentle Dental will pay the premiums on
the same basis that it pays for its employees.
6. PROFESSIONAL CORPORATIONS. By execution of this Agreement, you
will resign effective as of December 31, 1998 any position you hold as an
officer or director of Xxxx Xxx,
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P.C., Tse, Saiget, Watanabe & XxXxxxx, Inc., P.S., and Gentle Dental of
Oregon, P.C. (the "Professional Corporations"). You acknowledge that under
the terms of the Shares Acquisition Agreements between Gentle Dental, you,
and each of the Professional Corporations, Gentle Dental intends to exercise
its right to cause you to transfer your stock in each of the Professional
Corporations to one or more eligible dentists. You agree to cooperate fully
and to sign any documents necessary or appropriate to effectuate those
transfers. You also agree to execute a Mutual Release with each of the
Professional Corporations.
7. RESTRICTIVE COVENANTS.
(a) NON-SOLICITATION. You agree that during the period from January 1,
1999 to December 31, 2000, you shall not, directly or indirectly, solicit,
entice, encourage or induce any person (other than your wife) who at any time
within one month prior to your termination of employment or at any time
during the Consulting Period shall have been an employee of Gentle Dental or
any of its subsidiaries, or who is a dentist who is employed by or performing
professional services for any dental practice managed by Gentle Dental or one
of its subsidiaries, to become employed by or associated with any person,
firm or corporation other than Gentle Dental, and you shall not approach any
such employee or dentist for such purpose or encourage the taking of such
actions by any other person, firm or corporation or assist any such person,
firm or corporation in taking such action; provided, however, that this
subsection shall not prohibit you from taking any such action with respect to
any employee or other person whose employment or service relationship was
terminated by Gentle Dental prior to any such action by you.
(b) NON-COMPETE. You agree that during the period from January 1,
1999 to December 31, 2000, you shall not, directly or indirectly, within a 50
mile radius of any location where Gentle Dental or any of its subsidiaries
owns, manages, develops, or operates any dental practice or assets, engage or
participate or make any financial investments in, or become employed by, or
act as an agent or principal of, or render advisory or other services to or
for, any person, firm or corporation that is engaged, directly or indirectly,
in any line of business of Gentle Dental (a "Competing Enterprise"). A
Competing Enterprise shall not include (i) any practice of dentistry with or
consulting to a group of 10 or fewer dentists or (ii) any practice of
dentistry with a group of more than 10 dentists or consulting with such a
group on clinical matters, provided that you do not consult on or participate
in acquisitions of dental practices or recruitment of dentists. Similarly,
nothing herein contained shall restrict you from engaging in the solo
practice of dentistry. Nothing herein contained shall restrict you from
holding investments in not more than three percent of the voting securities
of any Competing Enterprise whose stock is listed on a national securities
exchange or is actively traded on the National Association of Securities
Dealers Automated Quotation System, so long as in connection with such
investments you do not render services to a Competing Enterprise.
(c) NON-DISPARAGEMENT. You will not disparage Gentle Dental, its
officers, directors, managers or employees, and you will not assist, support
or cooperate with any other person or entity in asserting any type of claim
against Gentle Dental, its officers, directors, managers or employees unless
compelled to do so by law. Gentle Dental will not authorize any disparaging
statements about you, and will not assist, support or cooperate with any
other person or entity in asserting any type of claim against you unless
compelled to do so by law.
(d) CONSEQUENCES OF BREACH. You acknowledge that damages at law would
not be an
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adequate remedy for violation of this Section 7 and you therefore agree that
the provisions of this Section 7 may be specifically enforced against you in
any court of competent jurisdiction. Gentle Dental also may seek damages for
any breach by you of this Section 7, but Gentle Dental agrees that breach of
this Section 7 by you shall not give Gentle Dental a right to stop making
consulting and severance payments to you.
8. PUBLIC ANNOUNCEMENT. Gentle Dental will release a statement that
you have resigned from Gentle Dental and entered into a consulting agreement
in order to spend more time with your family and to pursue charitable
interests. Neither you nor Gentle Dental will make any other public
announcements regarding the other without the prior review and approval of
the other, except that Gentle Dental shall not be obligated to obtain your
approval for any public announcement that Gentle Dental reasonably believes
it is obligated to make under any law or rule applicable to it.
9. TERMINATION OF AFFILIATE STATUS. For all securities law purposes,
Gentle Dental will treat you as if you ceased to be an affiliate of Gentle
Dental as of December 31, 1998, and will instruct its transfer agent
accordingly in connection with any proposed sale by you of Gentle Dental
stock or the stock of the new parent holding company resulting from Gentle
Dental's proposed merger with Dental Care Alliance, Inc.
10. MUTUAL RELEASE. Except for the rights and claims created under this
Agreement or any other agreement entered into concurrently herewith, you
hereby waive any legal rights and release and forever discharge Gentle
Dental, and Gentle Dental hereby waives any legal rights and releases and
forever discharges you from any and all liability, demands, claims, suits,
actions, charges, damages, judgments, levies or executions, whether known or
unknown, liquidated, fixed, contingent, direct or indirect, which either
party has, could have or could raise against the other.
You and Gentle Dental each acknowledge the full and final waiver and
release of all claims of every kind, nature or description whatsoever you or
Gentle Dental has or may have against the other, specifically including but
not limited to all claims for relief or remedy of any type under any state or
federal laws, including but not limited to federal and state statutes and
common law claims based on alleged breach of contract, breach of fiduciary
duty, breach of statutory duty, misrepresentation, fraud, defamation,
interference, negligence or tortious conduct of any type whatsoever, or any
other common law theories. This Mutual Release specifically includes, but is
not limited to, claims relating to civil rights, employment discrimination
(based on race, color, age, sex, national origin, marital status, handicap,
veteran status, religion, workers' compensation and family relationship),
labor, employment rights or benefits, or relating to employment or
termination of employment, wage payments, and claims for additional
compensation, back pay or benefits of any type (except in accordance with the
terms of the Agreement); and including but not limited to any claim for
attorneys' fees or costs, for reinstatement or reemployment, or for
compensatory or punitive damages under any applicable statutes or common law
theories, except to the extent that waiver or release of future claims is
specifically prohibited by law.
This Mutual Release also specifically includes, but is not limited to,
all potential claims based upon Title VII of the Civil Rights Act of 1964,
the Post-Civil War Civil Rights Act (42 USC -Section-1981-1988), the Civil
Rights Act of 1991, the Equal Pay Act, the Age Discrimination in Employment
Act, the Older Workers' Benefit Protection Act, the Worker Adjustment and
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Retraining Notification Act, the Americans with Disabilities Act, the
Rehabilitation Act of 1973, the Family and Medical Leave Act, the Vietnam Era
Veterans Readjustment Assistance Act, the Fair Labor Standards Act, Executive
Order 11246, as amended, the civil rights, employment, and labor laws of any
state or the United States, all as amended, and any regulations under such
authorities. This Release covers all claims brought in any capacity
including but not limited to that of officer, shareholder or employee.
For purposes of this Mutual Release provision, the term "Gentle Dental"
includes Gentle Dental Service Corporation, its parent, subsidiary or
affiliated companies, its present and former agents, employees, insurers,
officers, directors, shareholders and assigns, and any related or successor
corporations, subsidiaries, franchises, or businesses.
Notwithstanding the foregoing, this Mutual Release shall not apply to
your right to be paid salary and reimbursed for expenses under the Employment
Agreement through the end of your employment, and this Mutual Release does
not affect your rights to indemnity or insurance coverage for claims of third
parties arising in connection with your service as an officer or director of
Gentle Dental.
11. ADDITIONAL ACKNOWLEDGMENTS. You acknowledge that Gentle Dental
has no legal obligation to provide you with these separation/transition
benefits except as part of this Agreement. These benefits are unique to you
and your circumstances and are in lieu of any other separation or severance
benefits to which you might otherwise be entitled under any policy, plan or
practice of Gentle Dental.
You further acknowledge that this Agreement contains the entire
agreement between you and Gentle Dental regarding the terms of your
separation from employment. You acknowledge that no representations have
been made to you by Gentle Dental other than those set forth in this
Agreement.
You further acknowledge that you have been given at least 21 days to
consider this Agreement and to discuss it with financial or legal counsel of
your choice, and that you voluntarily sign it and agree to be bound by its
terms. You understand that this Agreement must be signed within 21 days
after you receive it in order for you to be entitled to the benefits given
under it. However, you may revoke this Agreement by sending me a written
statement to that effect within 7 days after you have signed it. Unless you
revoke it, the Agreement will be effective 7 days after you have signed it;
Gentle Dental will then provide you with the benefits stated in this
Agreement.
You further acknowledge that you have not filed any complaint,
criticism, claim, charge, grievance, demand or other inquiry or proceeding
against Gentle Dental (as defined for purposes of Section 10) with any
governmental agency, arbitration board or association, court, administrative
or other enforcement or adjudicative body.
12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding on and
inure to the benefit of the parties hereto and their heirs, executors, legal
representatives, successors and assigns. Neither party shall have the right
to assign its obligations, or all or any portion of their rights or interests
under this Agreement without the prior written consent of the other party
hereto, and any attempt to do so will be null and void; provided, however,
that the rights and obligations of Gentle Dental under this Agreement and the
Proprietary Information Agreement
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shall be assigned to and assumed by the new parent holding
company resulting from Gentle Dental's proposed merger with Dental Care
Alliance, Inc. at the effective time of that merger.
13. GOVERNING LAW. This Agreement is made and entered into and is to
be governed by the internal laws of the State of Washington applicable to
agreements made and to be performed entirely within such state without regard
to the conflicts of law principles of such state.
14. AGREEMENT TO ARBITRATE ANY DISPUTES. Any controversy or claim
arising out of or relating to this Agreement, or the breach thereof, shall be
settled by arbitration administered by the American Arbitration Association
in accordance with its Commercial Arbitration Rules, and judgment on the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The arbitration panel shall be composed of three
persons with corporate business experience in management or legal positions.
The arbitration proceedings shall be conducted in Vancouver, Washington or
Portland, Oregon. The arbitrators shall have the authority to award such
remedies or relief that a court of the state where the arbitration take place
could order or grant in an action governed by Washington law.
To execute this Agreement, please sign the enclosed copy where indicated
and return the signed copy to me.
Sincerely,
GENTLE DENTAL SERVICE CORPORATION
By: /s/ XXXXXXX X. XXXXX
------------------------------------
Xxxxxxx X. Xxxxx
Co-Chairman, President and
Chief Executive Officer
ACKNOWLEDGMENT AND AGREEMENT:
I have read this entire Separation Agreement and Mutual Release. I
understand that by signing below I am entering a legal agreement and
releasing legal rights. I have chosen voluntarily to enter this Agreement
after careful consideration.
AGREED:
/s/ Xxxx X. Xxx
--------------------------------- Date: December 23, 1998
Xxxx X. Xxx -----------------------
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