Exhibit 10.1
SECOND AMENDED AND RESTATED
DCP HOLDING COMPANY
EMPLOYMENT AGREEMENT
This Agreement entered into effective the 1st day of January, 2006 (the
"Effective Date"), by and between DCP Holding Company, an Ohio corporation, with
its principal offices at 000 Xxxxxx Xxxxx Xxxxx, Xxxxxxxxxx, Xxxx 00000
("Company"), and Xxxxxxx X. Xxxx ("Employee").
In consideration of the mutual obligations and promises contained herein,
and intending to be legally bound, the parties hereto agree as follows:
1. EMPLOYMENT. Company hereby employs Employee as an employee of Company
and Employee hereby accepts such exclusive employment, under the terms and
conditions of this Agreement.
2. TERM. Subject to the provisions in Section 7 hereof, the term of
employment shall continue after the Effective Date for a period of one (1) year
ending on December 31, 2006, and shall be automatically extended for successive
one (1) year periods on the same terms and conditions as stated herein, unless
on or prior to November 15th of any year either party provides written notice to
the other party of termination of this Agreement effective upon the expiration
of the current one-year term.
3. OFFICE AND DUTIES. During the term of his employment hereunder, Employee
shall serve in the capacity of President and Chief Executive Officer of the
Company. In such capacity, Employee shall do all things necessary and incident
to this position, and otherwise shall perform such functions as the Board of
Directors of the Company may establish from time to time commensurate with
Employee's skill, position and background. The performance of the duties
hereunder shall be performed at such reasonable time and places as shall be
determined by the Board. The Employee shall report directly to the Board of
Directors. A description of the current duties is attached hereto as Exhibit A.
4. COMPENSATION AND BENEFITS. In consideration for Employee's performance
of services and the non-competition provisions as described below, and subject
to modifications as may be approved from time to time by Company and Employee,
Employee shall receive during the term of this Agreement compensation and
benefits as follows:
(A) Base Salary. Employee shall be paid a base annual salary in
accordance with the regular payroll practices of the Company and Exhibit B of
this agreement. Employee's base annual salary for 2006 and all subsequent years
of the term of this Agreement shall not be less than $254,800 or such higher
amount as is reflected on subsequent agreed revisions of Exhibit B.
(B) Bonus. Employee will be eligible to receive an annual bonus equal
to 30% of annual base salary in accordance with Exhibit B of this agreement, as
revised on an annual basis.
(C) Employee Benefits. Employee will be eligible to participate in all
health, welfare, insurance and other benefits available to all other employees
of the Company
(D) Vacations. Employee shall be entitled to three (3) weeks of
vacation per year effective immediately, and shall have three (3) additional
personal days and three (3) additional sick days each year.
(E) Automobile Allowance. The Company will pay up to Five Hundred
($500.00) Dollars per month for the lease of an automobile of Employee's choice
and will reimburse Employee for all documented fuel, insurance, maintenance and
other operational costs.
(F) Payroll Withholdings. Employee authorizes the Company to deduct
from any payment made pursuant to Section 4 hereof all amounts required to be
withheld by federal, state and/or local taxing authorities.
(G) Club Membership. The Company will pay up to Seventeen Thousand
($17,000) Dollars for 2006 and 2007 and Seven Thousand Two Hundred ($7,200)
Dollars for 2008 for fees and expenses for a club membership at Four Bridges
Country Club.
(H) Annual Performance Review. The Employee's performance of his
duties under this Agreement shall be reviewed by the Board of Directors or a
committee of the Board of Directors at least annually, and finalized within
thirty (30) days of the receipt of the annual audited financial statements. The
Board of Directors or a committee of the Board of Directors shall additionally
review the base salary, bonus and benefits provided to the Employee under this
Agreement and may, in their discretion, adjust the same, as outlined in Addendum
B of this agreement, provided, however, that Employee's annual base salary shall
not be less than the base salary set forth in Section 4(A) hereof.
5. EXPENSES. Company shall pay or reimburse Employee for all travel and out
of-pocket expense reasonably incurred or paid by Employee in connection with the
performance of his duties, upon presentation of expense statements or receipts
or such other supporting documentation as the Company may reasonably require.
6. OUTSIDE EMPLOYMENT. Employee shall devote his full time and attention to
the performance of the duties incident to his position with the Company, and
shall not have any other employment with any other enterprise or substantial
responsibility for any enterprise which would be inconsistent with Employee's
duty to devote his full time and attention to Company matters without the prior
consent of the Board of Directors.
7. TERMINATION AND SEVERANCE PAY.
(A) Death. This Agreement shall be terminated on the death of
Employee, effective as of the end of the month in which his death occurs.
(B) Disability. This Agreement may be terminated, at the option of the
Company, if, because of a disability Employee is unable to perform his job
responsibilities after reasonable accommodations. This section will be applied
consistent with the Company's obligations under applicable federal and state
law, including the Americans with Disabilities Act.
(C) Termination - Good Cause. Nothing in this Agreement shall be
construed to prevent the Company from terminating Employee's employment
hereunder for Good Cause at any time. For this purpose, "Good Cause" shall
include the following: alcohol or other drug dependence or addiction; conviction
for any crime involving moral turpitude, fraud or misrepresentation, material
neglect of duty; misappropriation, embezzlement or theft of Company funds or
property; conduct which
-2-
is materially injurious to the reputation, business or business relationships of
the Company; or violation of any law, Company policy or any of the provisions of
this Agreement. The effective date of such termination for Good Cause shall be
the date of receipt by Employee or his legal representative of written notice of
the termination stating the full basis for such cause or such later date as may
be specified in such notice. Termination of Employee's employment for Good Cause
shall not constitute a breach of this Agreement and Employee shall not be
entitled to any compensation arising on or after the effective date of such
termination. In the event the Company is sold, transferred and/or merged with or
to another entity, it shall not be deemed an event of good cause to terminate
Employee. If the new entity elects to retain Employee, Employee shall be
terminated only in accordance with Section 7 of this Agreement.
(D) Severance Pay. The Company may, by action of the Board, terminate
this Agreement without Good Cause upon the payment of the amounts described in
this subparagraph. If, and only if, the Company terminates this Agreement either
(i) in accordance with the notice provision of Section 2, or (ii) at any time
during the term of this Agreement without Good Cause, then the Employee shall be
entitled to severance pay as determined herein. Employee shall receive the
greater of (i) eight (8) months of severance pay or (ii) one (1) month of
severance pay for each month remaining under the initial or any renewal term of
the Agreement. One month of severance pay shall equal one month of the
Employee's base salary as in effect on the date of termination. Then the Company
shall pay such severance pay to the Employee monthly, beginning on the last
business day of the month following the effective date of the termination. If
the Employee secures other employment during the time in which severance pay is
to be paid pursuant hereto, the commencing with the date of such subsequent
employment Employer shall reduce the remaining severance pay to be paid
hereunder by one half. Employee hereby agrees to notify the Company of any and
all changes in his employment status and of the amount of all salary, wages,
commission or other income received from another Employer during the period he
is entitled to severance pay. Moreover, during stated severance pay period,
Employee is to receive all stated benefits as described in Section 4
Compensation and Benefits (4A through 4F).
8. CONFIDENTIAL INFORMATION. Employee recognizes and acknowledges that
information gained by Employee while employed by the Company, including without
limitation that concerning the Company's customers, suppliers and participating
providers, and the methods, techniques, devices and operations of the Company,
as they may exist from time to time, are of a confidential nature and are
valuable, special and unique assets of the Company's business. Employee shall
not during the term of, or after the termination of employment, disclose in any
way any such confidential information to any person, firm, corporation or any
other operation or entity, or use the same on the Employee's own behalf, for any
reason or purpose. Upon termination of employment, the Employee shall deliver up
to the Company all lists of the Company's customers, suppliers and participating
providers, and all copies thereof, and all notes, records, memoranda, complete
correspondence files and other papers, and all copies thereof, relating to the
methods, techniques, devices and operations of the Company, and the Employee
does not have nor can Employee acquire any property right therein or claim
thereto or in the underlying confidential information.
9. DIVERSION OF BUSINESS. The Employee shall not, during the period of
employment by the Company and for a period ending six months following
termination of employment (for any
-3-
reason), either for the Employee or on behalf of any person, firm, corporation
or any other operation or entity, directly or indirectly:
(A) Divert or attempt to divert from the Company any business
whatsoever by influencing or attempting to influence, or soliciting or
attempting to solicit any of the customers or participating providers of the
Company with whom Employee may have dealt at any time or who were customers or
participating providers of the Company on the date of termination of the
Employee's employment or had been customers or participating providers of the
Company prior thereto; or
(B) Divert or attempt to divert from the Company any person employed
by the Company by influencing or attempting to influence such person to leave
the Company's employ.
10. NON-COMPETITION AGREEMENT. For a period ending six (6) months from the
termination of Employee's employment with the Company for any reason, Employee
hereby agrees that he will not, directly or indirectly render any services as an
officer, director, employee, agent, consultant or in any other capacity to, or
own any interest (other than an interest of less than five percent (5%) of the
stock or a publicly held company), as an individual owner, stockholder, partner
or in any other manner in any person, firm, corporation, partnership or other
entity which is a Competitive Business in any standard metropolitan statistical
area in which the Company has customers or participating providers or has a
Certificate of Authority to do business at the time of such termination.
For the purpose of the Agreement, "Competitive Business" shall mean any
business operation (including a sole proprietorship), which engages in, as all
or a significant part of its business, the business of a dental care health
maintenance organization or engages in any other business in competition with
the Company in any geographic area in which the Company then operates.
11. ACKNOWLEDGMENT. The Company and Employee each hereby acknowledge and
agree as follows:
(A) The covenants, restrictions, agreements and obligations set forth
herein are founded upon valuable consideration, and with respect to the
covenants, restrictions, agreements and obligations set forth in Sections 9 and
10 hereof, are reasonable in duration and geographic scope;
(B) In the event of a breach or threatened breach by Employee of any
of the covenants, restrictions, agreements and obligations set forth herein,
monetary damages or the other remedies at law that may be available to the
Company for such breach or threatened breach will be inadequate and, without
prejudice to the Company's right to pursue any remedies at law or in equity
available to it for such breach or threatened breach, including, without
limitation, the recovery of damages from Employee, the Company will be entitled
to injunctive relief and
(C) In the event that the covenant not to compete contained in Section
10 is the subject of an arbitratable dispute pursuant to Section 15 and is found
to be invalid or unenforceable as to such time period and/or geographical area,
it will be valid and enforceable in such geographical area(s) and for such time
period (s) which the arbitrator(s) determine to be reasonable and enforceable.
Furthermore, any period of restriction or covenant herein stated shall not
include any period of violation or period of time required for arbitration or
litigation to enforce such restriction or covenant.
-4-
12. ASSIGNMENT, SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives, successors and assigns. The Company shall assign or otherwise
transfer its rights under this Agreement to any successor or affiliated business
or corporation (whether by sale or stock, merger, consolidation, sale of assets
or otherwise), but this Agreement may not be assigned, nor may the duties
hereunder be delegated by Employee. In the event that the Company assigns or
otherwise transfers its rights under this Agreement to any successor or
affiliated business or corporation (whether by sale of stock, merger,
consolidation, sale of assets or otherwise), for all purposes of this Agreement,
the "Company" shall then be deemed to include the successor or affiliated
business or corporation to which the Company assigned or otherwise transferred
its rights hereunder. Should an ownership transfer event, as described above,
occur, the Company may choose not to terminate this Agreement in which case
Section 7(D) (Severance Pay) would apply. Such action will not be deemed a
Termination for Good Cause.
13. NOTICE. Any notice required to or which may be given under the
provisions of this Agreement shall be in writing and shall be personally
delivered or sent by certified mail, return receipt requested. All notices shall
be deemed to have been given on the date personally delivered or, if mailed, on
the date received or three business days after the date of mailing, whichever is
earlier. If mailed to Company, such notice shall be mailed to its then principal
office. If mailed to Employee, it shall be addressed to Employee's home address
then shown on Company's records.
14. GOVERNING LAW. This Agreement shall be subject to, governed by and
interpreted in accordance with the laws of the State of Ohio without regard to
its rules as to conflicts of laws.
15. ARBITRATION OF DISPUTES. All disputes and controversies of every kind
and nature between the Company and Employee arising out of or in connection with
this Agreement including, but not limited to, the existence, validity,
interpretation or meaning, performance or nonperformance, breach, continuance,
termination, or any claim of discrimination by the Employee, shall be submitted
to arbitration with the American Arbitration Association in Xxxxxxxx County,
Ohio in accordance with its procedures and guidelines. The parties hereby agree
that the decision of such arbitration shall be a binding and final decision upon
the parties.
16. SEVERABILITY. Each of the provisions of this Agreement shall stand
independently and severally, and the invalidity of any one Section or portion
thereof shall not affect the validity of any other Section. In the event any
Section or portion thereof shall be construed to be invalid, no other Section of
this Agreement shall be affected thereby.
17. SURVIVAL. Any provision of the Agreement which imposes an obligation
after termination of employment under this Agreement shall survive the
termination of employment hereunder and shall be binding upon the parties
hereto.
18. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding between the Company and Employee and shall supersede all prior
oral or written statements of any kind whatsoever made by the parties. No
statement subsequent to this agreement purporting to modify any of its terms and
conditions shall be binding unless expressly agreed to in writing and signed by
both the Company and Employee. The foregoing restrictions shall not apply with
-5-
respect to any change by the Company of the Employees compensation or benefits
pursuant to Section 4, or to any change in the Employee's title or duties to
which Employee has acquiesced or consented.
19. WAIVER. No waiver by either party of any breach of this Agreement by
the other party shall operate or be construed as a waiver of any subsequent
breach of the same or any other provision. No waiver shall be effective unless
in writing.
IN WITNESS WHEREOF, the parties have hereunto set their hands effective as
of the date first above written.
EMPLOYEE: COMPANY:
DCP Holding Company
By:
------------------------------------- ------------------------------------
Xxxxxxx X. Xxxx Title:
---------------------------------
-6-
EXHIBIT "A"
DCP HOLDING COMPANY
Position Description
POSITION TITLE: President
REPORTS TO: Board of Directors
PURPOSE: Responsible for the direction and administration of DCP
Holding Company in accordance with Board policy, sound
business practices, and the legal requirements of Ohio,
Indiana and Kentucky.
DUTIES AND RESPONSIBILITIES:
1. ADMINISTRATIVE MANAGEMENT
A. Direct all areas of staff and Human Resource Administration.
B. Prescribe duties, limitations and responsibility of staff through
effective position descriptions, encouraging success and ongoing
communication.
C. Maintain effective, responsive and cost conscious daily operations.
2. BOARD RELATIONS
A. Develop and recommend corporate objectives, plans and policies to the
Board.
B. Implement corporate objectives, plans and policies approved by the
Board.
C. Plan and coordinate all Board and Board Committee meetings with the
Board Chair or Committee Chair.
D. Establish effective communication and rapport with all Board Members.
3. PROVIDER RELATIONS
A. Recognizing providers are the DCP Holding Company product -
continually promote their skills, quality, cost effectiveness and
value to all public.
B. Establish leadership, stability and effective communication with all
DCP Holding Company providers.
C. Continued awareness that the success of DCP Holding Company and their
providers grow together.
4. CUSTOMER RELATIONS
A. Actively promote DCP Holding Company in all Marketing, Sales, Public
Relations, and Community activity.
B. Strategize that the DCP Holding Company product is placed effectively
before the publics with emphases on "Agent/Broker"
C. Continually monitor the success, quality and effectiveness of DCP
Holding Company marketing
-7-
5. CORPORATE PROFITABILITY
A. Develop plans for future DCP Holding Company growth while ensuring the
soundness of corporate finances and profitability.
JOB SPECIFICATIONS:
- Degree in relevant field of study or related equal job experience.
- Five to seven years of related experience in the health/dental
insurance field in an executive management position, where budgetary,
policy and operational decision have been made.
-8-
EXHIBIT "B"
ADDENDUM TO DCP HOLDING COMPANY PRESIDENT EMPLOYMENT AGREEMENT
1. The salary range of the President shall be reviewed and adjusted annually
as recommended by the Compensation and Benefits Committee and approved by
the Board of Directors. The salary for 2006 shall be $254,800.
2. Bonus is a maximum of 30% of salary, reviewable annually, payable annually,
not to be included in the salary range.
3. Incumbent eligible for 3, 7, 11 or 15% of bonus, based upon average results
of the evaluation of the factors weighed in order to determine Employee's
bonus.
4. Bonus shall be awarded based on the following components, and each of the
following components shall comprise on-third of the total bonus awarded.
(a) Total Operating Revenue (as shown on the Company's audited financial
statements)
(b) Net Operating Income (as shown on the Company's audited financial
statements)
(c) Progress on Smart Growth Five Year Business Plan
5. The amount of Employee's bonus shall be determined as follows:
Total Operating Revenue - In the event that the Total Operating Revenue of
the Company exceeds $49,738,249.42 for 2006, a bonus of 10% of the base salary
shall be awarded.
In the event that Total Operating Revenue exceeds the prior year, but is
less than the bonus target level, a partial bonus can be paid in the
Compensation and Benefits Committee's discretion.
Net Operating Income - In the event that the Net Operating Income of the
Company for 2006 exceeds $1,068,555.78, a bonus shall be awarded in accordance
with the following formula: Five percent of allocable portion of bonus for each
1% by which Net Operating Income exceeds the bonus target level.
% of Total Possible
Amount in Excess Net Profitability Bonus
---------------- -----------------------
1% 5%
5% 25%
10% 50%
15% 75%
20% or more 100%
where the total possible Net Operating Income bonus, shall be one-third of the
maximum bonus (i.e. 10% of Employee's Salary).
-9-
Smart Growth Five Year Business Plan - The Board of Directors of the
Company or a committee thereof shall determine the amount of bonus to be awarded
Employee based on Employee's performance with respect to progress of the Smart
Growth Five Year Business Plan, provided that the total possible bonus shall not
exceed one-third of the maximum bonus (i.e., 10% of salary).
-10-
