EXHIBIT 10.28
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of May
19, 1996 (the "Effective Date"), by and between Castle Dental Centers of
Florida, Inc., a Florida corporation (the "Company"), and Xxxxxx X. Xxxxxxxxx,
D.D.S. ("Employee").
RECITALS:
Prior to the date hereof, Employee was the owner of 1st Dental Care,
Inc., which along with the Company and the Employee is a party to that certain
Asset Purchase Agreement dated as of May 19, 1996 (the "Asset Purchase
Agreement"). As a condition to the consummation of the transactions contemplated
by the Asset Purchase Agreement and as an inducement for the Company and
Employee to perform their respective obligations under the Asset Purchase
Agreement, the Company and Employee have entered into this Agreement.
The parties agree as follows:
ARTICLE I
1.1 EMPLOYMENT.
(a) The Company agrees to, and hereby does, employ Employee, on the
terms and conditions set forth herein, to hold such offices, have such titles
and perform such duties as are contemplated hereby.
(b) Employee shall perform substantially those services for the Company
that Employee previously performed for 1st Dental Care, Inc. To the extent not
inconsistent therewith, Employee shall participate in the development and
implementation of the strategic plan of the Company for specified markets in
Florida, including, but not be limited to, analyzing markets selected by the
Company and identifying acquisition candidates. The performance of Employee's
role as described herein shall be subject to the supervision of the Company's
senior management.
(c) Employee shall devote such amount of his full business time, efforts
and abilities to the business of the Company as he did for 1st Dental Care, Inc.
Employee shall use his reasonable best efforts to promote the interests of the
Company. To the extent such activities do not interfere
-1-
with his responsibilities to the Company or conflict with the provisions of
Article VI hereof, Employee may engage in other business activities.
ARTICLE II
2.1 SALARY. As compensation for his service during the term of this
Agreement (or until terminated pursuant to the provisions hereof), the Company
shall pay Employee a salary at the rate of $150,000 per annum (the "Base
Salary"), through and until the Expiration Date, as herein defined, payable in
accordance with the regular payroll practices of the Company as in effect from
time to time. Such Base Salary shall be subject to withholding for the
prescribed federal and state income tax, social security and other items as
required by law, and for other items consistent with the Company's policy with
respect to health insurance and other benefit plans for similarly situated
employees.
2.2 INCENTIVE BONUS COMPENSATION. The Company hereby establishes the
Castle Dental Centers of Florida, Inc. Incentive Bonus Plan (the "Plan") which
provides for the Company to set aside for grant to certain management employees
selected by a committee consisting of Employee and the chief executive officer
of Castle Dental Centers, Inc., a Delaware corporation ("Castle") with the
approval of the Compensation Committee of the Board of Directors of Castle an
aggregate of ten percent (10%) of the pretax income of the Company in excess of
$710,000 per year, attributable to the operations of the Company under the
direct management of Employee in Florida, computed without general overhead
allocation or charge with respect to the general and administrative expenses of
Castle, but taking into account direct costs incurred by Castle on behalf of the
Company and including a deduction equal to the cost of capital invested
(exclusive of initial acquisition costs) in the Company by Castle. For the
purposes of this Agreement, Castle's cost of capital shall be deemed to be the
prime rate established from time to time by NationsBank of Texas, N.A. plus four
percent, but in no event to be less than 10%. The Employee is hereby granted the
right to participate in the Plan for each year prior to the Expiration Date. The
annual amount which the Employee shall be entitled to receive from the Plan
shall be determined by a committee consisting of Employee and the chief
executive officer of Castle with the approval of the Compensation Committee of
the Board of Directors of Castle.
2.3 BENEFITS. During the terms of this Agreement, Employee shall be
entitled to receive such benefits as are made available to other personnel of
the Company in comparable positions, with comparable service credit and with
comparable duties and responsibilities, which shall include, in the case of
Employee, up to four weeks paid vacation each year during the terms of this
Agreement, plus one week paid leave to the extent such week is devoted to
required continuing dental education. Such benefits shall be subject to the
terms of the applicable plan documents, summary plan descriptions and/or
employment policies and shall be subject to
-2-
modification, amendment or revocation in accordance with the terms of such
documents, policies and procedures.
2.4 REIMBURSEMENT OF EXPENSES. The Company shall reimburse all
reasonable travel and entertainment expenses incurred by Employee in connection
with the performance of his duties pursuant to this Agreement, consistent with
the Company's policies then in effect. Employee shall provide the Company with
written expense reports of his expenses in accordance with the usual customary
practice of the Company.
ARTICLE III
3.1 TERM. Upon the terms and subject to the conditions of this
Agreement, the Company hereby employs Employee and Employee accepts employment
with the Company for a term commencing on the date hereof and ending on May 18,
1999 (the "Expiration Date"), subject to the right of either party to terminate
this agreement as provided below.
3.2 DEATH; DISABILITY. Subject to the provisions of Section 3.5(a), this
Agreement shall be automatically terminated on the death of Employee or on the
permanent disability of Employee if he is no longer able, with reasonable
accommodation, to perform the essential functions of his position with the
Company. In the event of Employee's disability, this Agreement shall not
terminate unless and until Employee has been unable to perform the essential
functions of his position hereunder for a period of three (3) consecutive months
as a result of the Employee's disability.
3.3 TERMINATION WITHOUT CAUSE. Either the Company or Employee may
terminate this Agreement at any time, without cause, by giving the other thirty
(30) days' written notice of termination.
3.4 TERMINATION WITH CAUSE. In addition to the Company's right to
terminate this Agreement without cause as provided in Section 3.3 hereof, the
Company may terminate this Agreement for "Cause." "Cause" means the termination
by the Company of Employee's employment for any of the following grounds:
(a) the commission of any act of fraud on the part of Employee
resulting or intending to result in personal gain or enrichment at the expense
of the Company;
(b) misappropriation, embezzlement, theft or willful and material
damage of or to any asset of the Company or the use of the Company funds or
assets for any illegal purpose;
-3-
(c) a good faith determination by the Board of Directors of the
Company that Employee has violated this Agreement or committed an act of gross
negligence or willful misconduct (in the case of a breach, following notice
thereof to Employee by the Company and a thirty day period thereafter within
which Employee shall have the opportunity to cure such breach) that has or is
reasonably expected to have a material adverse effect on the business or affairs
of the Company;
(d) the commission of any felony on the part of Employee which,
in the sole discretion of the Board of Directors of the Company, materially and
adversely, directly or indirectly, affects the name or goodwill of the Company;
or
(e) for so long as Employee is a majority shareholder of New PC,
the termination of the Management Services Agreement by and between the Company
and Castle 1st Dental Care, P.A. pursuant to Section 7.2(d) thereof.
A notice of termination pursuant to this Section 3.4 shall be in writing
and shall state the alleged reason for termination. Within not less than five
(5) nor more than twenty (20) days after such notice, Employee shall be given
the opportunity to appear before the Board of Directors of the Company, or a
committee thereof, to rebut or dispute the alleged violation. If the Board of
Directors or committee determines, by vote of a majority of the directors other
than Employee (if Employee is then a director), that one or more grounds exist
for termination of Employee for Cause, the Company may immediately terminate
Employee's employment under this Section 3.4. The Company may elect, during the
pendency of such inquiry, to relieve Employee of his regular duties.
3.5 SEVERANCE PAY. In the event of termination, Employee shall be
entitled to compensation (the "Severance Pay") in accordance with the following:
(a) If Employee's employment is terminated by reason of his death
or disability, the Company agrees to offer employment on substantially the same
terms and conditions as are contained herein to Xxxxx Xxxxxxxxx for the
employment period remaining in the initial three year term. Xxxxx Xxxxxxxxx
shall be under no obligation to accept such offer of employment. In the event
Xxxxx Xxxxxxxxx desires to accept the Company's offer of employment, she shall
so advise the Company within 30 days of the Company's offer of employment, and
the Company and Xxxxx Xxxxxxxxx shall enter into an Employment Agreement
containing substantially the same terms and conditions as this Agreement as soon
as reasonably practical.
(b) If Employee's employment is terminated by reason of his
disability, and Xxxxx Xxxxxxxxx declines to accept the Company's offer of
employment described in Section 3.5(a), the Company shall continue to pay
Employee's monthly Base Salary, (at his then current Base Salary rate excluding
any increases that would have taken effect beyond the date of termination and
any
-4-
bonus and noncash benefits) the Employee would have earned for the three month
period subsequent to the effective date of termination, payable at such time or
times as would have been paid to Employee had he remained employed by the
Company.
(c) If (i) Employee voluntarily terminates his employment, or
(ii) the Company terminates this Agreement for Cause, or (iii) if Employee's
employment is terminated by reason of his death and Xxxxx Xxxxxxxxx declines to
accept the Company's offer of employment described in Section 3.5(a), Employee
shall not be entitled to receive any additional salary, bonus or benefits beyond
those earned or accrued as of the effective date of the termination of his
employment.
(d) If Employee's employment hereunder is terminated prior to the
Expiration Date of this Agreement, and such termination is either (i) due to a
breach of this Agreement by the Company, or (ii) by the Company and not for
Cause, Employee shall be entitled to Severance Pay in an amount equal to the
amount of Base Salary that the Employee would have earned between the effective
date of termination through the Expiration Date, less applicable payroll
deductions (and any other deductions authorized in writing by the Employee),
payable at such time or times as would have been paid to Employee had he
remained employed by the Company through the Expiration Date; provided, however,
prior to the termination of this Agreement as the result of a breach hereof by
the Company, Employee shall give written notice of such breach and a thirty day
period within which to even such breach.
3.6 EFFECT OF TERMINATION ON AGREEMENT. Any termination of Employee's
employment shall not release either the Company or Employee from their
respective obligations under this Agreement that are required to be performed
subsequent to the date of such termination, including but not limited to those
obligations set forth under Articles III, IV, V and VI.
3.7 PAYMENTS TO ESTATE. If Employee should die before all amounts
payable to him pursuant to Section 3.5 have been paid, such unpaid amounts shall
be paid to the personal representative of Employee's estate.
ARTICLE IV
4.1 ADDITIONAL ACTS BY EMPLOYEE. Employee further agrees at the request
of the Company (but without additional compensation from the Company during his
employment by the Company) to execute any and all papers and (at the expense of
the Company) perform all lawful acts that the Company deems necessary to realize
the benefits of the transaction contemplated by the Asset Purchase Agreement and
related documents.
-5-
ARTICLE V
5.1 NONDISCLOSURE AND NONUSE OF CONFIDENTIAL INFORMATION. Employee
understands and agrees that his employment by the Company creates a relationship
of confidence and trust between himself and the Company with respect to
Confidential Information (as defined below). Employee recognizes that he will
have access to and knowledge of Confidential Information. Employee will not,
during or after the term of his employment by the Company, in whole or in part,
disclose such Confidential Information to any person, firm, corporation,
association, or other entity for any reason or purpose whatsoever, nor shall he
make use of any such Confidential Information for his own purposes or for the
purposes of others; provided, however, that nothing in this Article shall be
construed to prohibit the disclosure of such Confidential Information by the
Employee (i) to another officer, director employee or agent of the Company; (ii)
as is reasonably necessary for the performance of his duties and
responsibilities under this Agreement; or (iii) as otherwise required by law. If
Employee is required by law to disclose "Confidential Information," Employee
shall notify the Company's Board of Directors, in writing, of the nature of such
disclosure and the Confidential Information to be disclosed, as soon as is
possible and/or practical, and permit the Company the opportunity to contest or
limit such disclosure.
5.2 CONFIDENTIAL INFORMATION DEFINED. The term "Confidential
Information" shall mean and include any and all records, computer programs,
data, patent applications, trade secrets, customer lists, customer databases,
video programs and programming, proprietary information, technology, pricing
policies, financial information, methods of doing business, policy and/or
procedure manuals, training and recruiting procedures, accounting procedures,
the status and content of the Company's contracts with its customers, the
Company's business philosophy, and servicing methods and techniques at any time
used, developed, or investigated by the Company, before or during Employee's
tenure of employment, or other information of any kind expressed or recorded on
any medium arising out of, concerning, or acquired in connection with the
research, development, commercialization and other activities of the Company;
but "Confidential Information" does not include information (i) generally known
or available in the industry, through no fault of Employee; or (ii) available
from a third party without violation of any duty of confidentiality by Employee
or others.
5.3 DELIVERY OF MATERIALS. Employee further agrees to deliver to the
Company at the termination of his employment, or at any other time upon request
by the Company, all correspondence, memoranda, notes, records (including
computer records and data), drawings, sketches, plans, customer lists, and other
documents, which are made, composed, or received by Employee, solely or jointly
with others, during the term of his employment and which are in Employee's
possession, custody, or control at such date and which are related in any manner
to the past, present or anticipated business of the Company.
-6-
ARTICLE VI
6.1 NONINTERFERENCE WITH EMPLOYMENT RELATIONSHIPS. During the term of
Employee's employment and during the twenty-four months following the
termination of the Employee's employment, Employee agrees not to solicit or
induce any employee of the Company or 1st Dental Care, Inc. to terminate his or
her employment, accept employment with anyone else, or to interfere in a similar
manner with the business of the Company or 1st Dental Care, Inc.
6.2 NONSOLICITATION OF CUSTOMERS AND SUPPLIERS During the employment of
the Employee pursuant to this Agreement and during the twenty-four months
following the termination of the Employee's employment, Employee agrees not to
contact, communicate with or solicit any customer, supplier, vendor,
distributor, promoter, contractor or prospective customer of the Company or 1st
Dental Care, Inc. for the purpose of engaging in the Same or Similar Business
(as defined below) as the Company.
6.3 NONCOMPETITION. Employee recognizes that in connection with the
performance of the Employee's duties and obligations under this Agreement, the
Company will provide Employee with confidential, proprietary and trade secret
information, which is necessary to Employee's employment with the Company, and
which Employee has agreed to protect and maintain as confidential, proprietary
and trade secret information for the Company's benefit. To protect and maintain
the confidentiality of the information, Employee agrees that, during the
employment of the Employee pursuant to this Agreement, including the period
during which Employee is receiving Severance Pay hereunder, and during the
twenty-four months following such period, Employee shall not directly or
indirectly engage in, manage, operate, join, control, or participate in the
ownership, management, operation, or control of, or be employed or engaged or
act as a consultant to in any manner by, any business competing in the Same or
Similar Business as the Company or 1st Dental Care, Inc. within a ten mile
radius around the city limits of any city in the State of Florida in which the
Company is operating or managing a location providing dental service as of the
date of Employee's employment hereunder.
6.4 SAME OR SIMILAR BUSINESS DEFINED. For purposes of this Article VI,
the "Same or Similar Business" as the Company or 1st Dental Care, Inc. shall be
defined as any business that is engaged to a significant extent in the provision
of dental care and services, including but not limited to the practice of
general dentistry, orthodontics and all related dental care services, the
management of such services or practices, or the management of or consulting
with dental practice management companies or insurance companies.
6.5 REASONABLENESS OF RESTRICTIONS. Employee has carefully read and
considered the provisions of this Article VI and, having done so, agrees that
the restrictions set forth in such Article contain reasonable limitations as to
time, geographical area, scope of activity to be restrained, and
-7-
do not impose a greater restraint than is necessary to protect the goodwill or
other legitimate business interests of the Company. The Employee further
understands and agrees that, if at some later date, a court of competent
jurisdiction determines that the scope, duration or geographic area of any
covenant set forth in this Article is overbroad or unenforceable for any reason,
these covenants shall be reformed by the court and enforced to the maximum
extent permissible under Florida law.
ARTICLE VII
7.1 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
parties and their heirs, legal representatives, successors and assigns. The
Company may assign its interest in this Agreement, and all covenants, conditions
and provisions hereunder shall inure to the benefit of and be enforceable by its
assignee or successor in interest. The rights and obligations of Employee under
this Agreement are personal to him, and no such rights, benefits or obligations
shall be assignable, except that his personal representatives and heirs may
enforce the obligations of the Company hereunder.
7.2 WAIVER OF BREACH. The waiver by any party to this Agreement of a
breach or violation of any provisions hereof shall not operate or be construed
to be a waiver of any subsequent breach hereof.
7.3 NOTICES. Any and all notices required or permitted to be given under
this Agreement shall be sufficient if furnished in writing and given in person,
or shall be deemed given five (5) days after sent by certified mail, return
receipt requested, to the address as set forth below on the signature pages of
this Agreement. If any party hereto desires to amend its address hereunder, that
party shall send written notice of the new address to all other parties hereto.
7.4 GOVERNING LAW. This Agreement shall be interpreted, construed and
governed in accordance with the laws of the State of Florida without regard to
conflict of laws provision. This Agreement is performable in Pinellas County,
Florida.
7.5 HEADINGS. The paragraph headings contained in this Agreement are for
convenience only, and shall in no manner be construed to be part of this
Agreement.
7.6 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same agreement. A fully executed copy of
this Agreement shall be delivered to each party hereto.
7.7 LEGAL CONSTRUCTION. In case anyone or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal,
or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not effect any other provision hereof, and this
-8-
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. In addition, such invalid, illegal or
unenforceable provision shall be modified to the minimum extent necessary to
permit it to be valid, legal and enforceable. For all purposes hereof "day"
shall mean calendar day and shall include weekends and holidays; provided,
however, that if any notice period terminates on a weekend or holiday, the
person who is required to deliver the notice shall have until the next business
day to complete the notice requirement.
7.8 AMENDMENT. No modification, amendment, addition to, or termination
of this Agreement, nor waiver of any of its provisions, shall be valid or
enforceable unless it is in writing and signed by all of the parties hereto.
7.9 PRIOR AGREEMENTS SUPERSEDED. This Agreement constitutes the sole and
only Agreement of the parties hereto and supersedes any prior understanding or
written or oral agreements, correspondence or communications between the parties
respecting the subject matter hereof.
7.10 ARBITRATION. EXCEPT FOR THE REMEDY PROVIDED UNDER SECTION 7.11
BELOW, ANY CLAIM OR DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT OR THE
EMPLOYMENT OF EMPLOYEE BY THE COMPANY SHALL BE SUBMITTED TO FINAL AND BINDING
ARBITRATION IN CLEARWATER, FLORIDA PURSUANT TO THE EMPLOYMENT DISPUTE RESOLUTION
RULES OF THE AMERICAN ARBITRATION ASSOCIATION. THE PARTIES AGREE THAT ANY PARTY
REQUESTING ARBITRATION OF ANY DISPUTE UNDER THIS SECTION MUST GIVE FORMAL
WRITTEN NOTICE OF THE PARTY'S DEMAND FOR ARBITRATION ("ARBITRATION NOTICE")
WITHIN ONE HUNDRED TWENTY (120) DAYS AFTER SUCH DISPUTE FIRST ARISES AND FAILURE
TO TIMELY COMMUNICATE ARBITRATION NOTICE SHALL CONSTITUTE A WAIVER OF SUCH
DISPUTE. THE PARTIES FURTHER AGREE THAT EACH PARTY MAY BE REPRESENTED BY COUNSEL
IN ANY PROCEEDING UNDER THIS SECTION, AND THAT ALL EXPENSES AND FEES INCURRED IN
CONNECTION WITH ANY PROCEEDING UNDER THIS SECTION SHALL BE PAID BY THE
NON-PREVAILING PARTY (AS DETERMINED BY THE ARBITRATORS). BOTH PARTIES AGREE THAT
NOTHING IN THIS SECTION SHALL BE CONSTRUED TO REQUIRE THE ARBITRATION OF ANY
DISPUTE OR CLAIM (i) ARISING UNDER ARTICLES IV, V OR VI OF THIS AGREEMENT; (ii)
FOR UNEMPLOYMENT COMPENSATION BENEFITS; OR (iii) FOR WORKERS' COMPENSATION
BENEFITS. BY THEIR EXECUTION OF THIS AGREEMENT, EACH PARTY TO THIS AGREEMENT
CONSENTS, ON BEHALF OF HIMSELF OR ITSELF AND THEIR RESPECTIVE SUCCESSORS, HEIRS
AND ASSIGNS, TO SUCH BINDING ARBITRATION IN ACCORDANCE WITH THE TERMS OF THIS
SECTION.
-9-
7.11 REMEDIES. Employee agrees that the remedy at law for any breach of
any provision of Articles IV, V and VI will be inadequate and that the Company
will be entitled to injunctive and equitable relief for any such breach, in
addition to all other remedies permitted by law.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement in Clearwater, Florida as of the date first set forth above.
THE COMPANY:
CASTLE DENTAL CENTERS OF FLORIDA, INC.
By:
Name: Xxxx X. Xxxxxx, Xx.
Title: President
Address:
ATTENTION: President
EMPLOYEE:
Xxxxxx X. Xxxxxxxxx, D.D.S.
Address:
-10-