Exhibit 10.12
EMPLOYMENT AGREEMENT
Employment Agreement (the "Agreement"), dated to be effective as
hereinafter provided, by and between Pentegra Dental Group, Inc., a Delaware
corporation (the "Company"), and Xxxxx X. Xxxxxxxx ("Employee").
In consideration of the mutual premises and conditions contained herein,
the parties hereto agree as follows:
SECTION 1. EMPLOYMENT. The Company hereby agrees to employ Employee, and
Employee hereby accepts employment by the Company, upon the terms and subject to
the conditions hereinafter set forth.
SECTION 2. DUTIES. Employee is employed in accordance with the terms and
conditions of this Agreement. Employee will have the duties associated with the
title and position of Sr. Vice President - Sales and Marketing, with such other
duties or titles as determined necessary or appropriate from time to time by the
Company's President. Employee agrees to devote his full time and best efforts to
the performance of his duties to Employer. Employee will not seek or obtain
employment with or by any other employer while this Agreement remains in effect,
provided however that Employee may seek employment during the ninety (90) day
period prior to the expiration of the Term or any renewal thereof. All of the
Employee's powers and authorities shall be subject to the direction and control
of the Company's President.
SECTION 3. TERM. Unless earlier terminated as provided for herein, the term
of this Agreement shall be the one (1) year period beginning on July 16, 2000
(the "Commencement Date") and ending on the first annual anniversary of the
Commencement Date (the "Term").
SECTION 4. COMPENSATION AND BENEFITS. In consideration for the services of
the Employee hereunder, the Company will compensate Employee as follows:
(a) During the Term of this Agreement and until terminated, Employee shall
receive monthly compensation equal to the greater of: (i) Fourteen
Thousand Five Hundred Eighty Three and 33/100 Dollars ($14,583.33)
(the "Base Salary")per month, or (ii) such amount as determined by the
President in writing. Employee's Base Salary shall be paid in
accordance with Company's standard policy regarding payment of
compensation to employees but no less frequently than monthly.
(b) Beginning with the Commencement Date, Employee shall be eligible to
receive a cash bonus of up to One Hundred Thousand and 00/100 Dollars
($100,000.00) (the "Bonus"). One half (1/2) of the Employee's Bonus
will not be based upon any performance criteria and will be paid in
two installments, the first installment on the six (6) month
anniversary of the Commencement Date and the second installment on the
annual anniversary of the Commencement Date. The other one half (1/2)
of the Employee's Bonus will be conditioned upon certain annual
targets and performance criteria established from time to time by the
Company's President.
(c) Employee shall be allowed to participate in, and be entitled to
benefits, plans and programs, including improvements or modifications
of the same, which are now, or may hereafter be, those available to
employees of a like position. Specifically Company will be responsible
for payment of the total premium costs associated with the Employee's
medical and dental insurance, (not including deductibles and/or
co-payments) covering the Employee and the Employee's spouse and
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children. The effective date of medical and dental insurance coverage
shall be the first (1st) of the month following the Commencement Date.
Employee will be entitled to compensated absences in accordance with
the Company's policies and procedures which are available to employees
of a like position. Specifically Employee shall be entitled to (15)
days of vacation and fourteen (14) days of other compensated absences,
(like sick leave and personal day benefits), with the accrual and
credit of such compensated absences always in accordance with the
Company's policies and procedures as determined from time to time by
the Company's President.
SECTION 5. EXPENSES. It is acknowledged by the parties that Employee, in
connection with the services to be performed by Employee pursuant to the terms
of this Agreement, may be required to make payments for travel, entertainment of
business associates, mobile telephone and similar expenses (the "Out of Pocket
Expenses"). The Company will reimburse Employee for all reasonable Out of Pocket
Expenses incurred by Employee in the performance of Employee's duties. Employee
will comply with such budget limitations and approval and reporting requirements
with respect to any Out of Pocket Expenses as the Company may establish from
time to time. In addition to reimbursement of Out of Pocket Expenses, the
Company will provide to Employee an auto allowance for use of Employee's
automobile in an amount equal to six hundred and 00/100 dollars ($600.00) per
month.
SECTION 6. TERMINATION BY COMPANY FOR CAUSE. The Company may terminate this
Agreement for cause if Employee: (a) willfully fails to perform his duties with
the Company or materially breaches any provision of this Agreement (other than
any such failure resulting from incapacity due to physical or mental illness);
(b) willfully engages in misconduct which is injurious to the Company; or, (c)
is convicted of a felony or charged with a crime involving, theft, fraud,
dishonesty or moral turpitude which the President reasonably believes will
result in injury to the Company or which would disqualify employee for coverage
by the Company's surety bond. The Company will provide notice of termination in
writing (or provided orally confirmed in writing within fourteen (14) days),
specifying the reasons for termination as well as the date upon which the
termination is to become effective (the "Termination Date"). In the event of the
termination of this Agreement pursuant to this Section, then Employee will not
be entitled to any Bonus, Severance or any other consideration, except for any
portion of the Base Salary accrued but unpaid from the last monthly payment date
to the Termination Date, together with any Out of Pocket Expenses incurred but
unpaid prior to the Termination Date.
SECTION 7. TERMINATION OTHER THAN FOR CAUSE. This Agreement shall terminate
upon the happening of any of the following events: (a) death of Employee (with
the "Termination Date" being Employee's date of death); (b) the physical or
mental disability of Employee which prevents a return to the performance of his
duties for a period of ninety (90) days (with the "Termination Date" being the
date that Employee is determined to be disabled; or, (c) Employee gives notice
of his intention to terminate this Agreement either in writing, (or orally and
then confirmed in writing within three (3) days of the date of such oral
notice), specifying the reasons for termination as well as the date upon which
the termination is to become effective (the "Termination Date"); or, (d) the
Company gives notice of its intention to terminate this Agreement either in
writing, (or orally and then confirmed in writing within three (3) days of the
date of such oral notice), specifying the reasons for termination as well as the
date upon which the termination is to become effective (the "Termination Date").
In the event of the termination of this Agreement, the Company will pay Employee
the portion of his Base Salary accrued but unpaid from the last monthly payment
date to the Termination Date, and any Out of Pocket Expenses incurred in the
performance of his duties hereunder prior to the Termination Date, but shall not
be responsible for the payment of any accrued but unpaid Bonus. In the event of
the termination of this Agreement by the Company pursuant to Subsection (d) of
this Section (termination without cause by Company), and only in that event,
then the Company will additionally pay Employee, as Employee's sole and
exclusive remedy in connection with such termination, liquidated damages in the
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form of severance pay (the "Severance Pay") as follows: (a) if before the
expiration of the six (6) months from the Commencement date, then an amount
equal to Employee's monthly base salary in effect on the Termination Date
multiplied by three (3) months; or (b) if after the expiration of six (6) months
from the Commencement date, then an amount equal to Employee's monthly base
salary in effect on the Termination Date multiplied by six (6) months.
Additionally and notwithstanding the foregoing, if the acquisition between the
Company and Xxxxx.xxx, Inc. ("Dexpo") does not close with the Company and Dexpo
terminating their Letter of Understanding, then either Company or Employee may
terminate this Agreement and the Company will pay Employee the portion of his
Base Salary accrued but unpaid from the last monthly payment date to the
Termination Date, and any Out of Pocket Expenses incurred in the performance of
his duties hereunder prior to the Termination Date, but shall not be responsible
for the payment of any accrued but unpaid Bonus. The Company will be entitled to
offset or mitigate the amount due under this subsection by any amounts due to
the Company from the Employee.
SECTION 8. STOCK OPTIONS. Employee will receive the right to purchase
100,000 shares of Pentegra's common stock (the "Stock Options"), with an
exercise price of $1.00 per share. Company will provide an Employee Stock Option
Agreement and Incentive Stock Option Agreement contemporaneously with the
execution of this Agreement. The effect of the termination of the Employee's
employment on such options shall be determined by the terms of the option plan
under which the options are issued and the option agreement related to such
options. Specifically however the Stock Option Agreement will contain a
provision which provides vesting of ten percent (10%) of the options each six
(6) month period beginning with the Commencement Date. One half of the total
options will be issued as "non-qualified stock options" and one half as
"employee incentive stock options." The stock option agreement of Employee shall
provide that Employee upon termination of this Agreement shall retain those
options which are vested and shall have ninety (90) days to exercise those
vested options or such option shall expire.
SECTION 9. REPRESENTATIONS AND COVENANTS.
(a) COVENANT NOT TO SOLICIT: Employee covenants, warrants and represents
that during the Term of this Agreement and for the one (1) year period
beginning with the Termination Date, that Employee (either personally,
or through any individual, association, partnership, corporation or
other entity) shall not: (i) solicit, induce or attempt to induce
directly or indirectly any dental practice affiliated with the Company
(a "Practice) for the purpose of having that Practice cease or alter
its relationship with the Company; (ii) solicit, induce or attempt to
induce directly or indirectly any employee of the Company or any
employee of a Practice for the purpose of having that employee cease
their employment with the Company or a Practice.
(b) COVENANT NOT-TO-COMPETE. Employee covenants, warrants and represents
that during the Term of this Agreement and for the two (2) year period
beginning with the Termination Date, that Employee (either personally,
or through any individual, association, partnership, corporation or
other entity) shall not: (i) engage directly or indirectly in any
business activities which relate to the acquisition or management of
dental practices (the "Designated Industry"); (ii) divert to any
competitor of the Company in the Designated Industry any potential
dentist affiliate or potential employee of the Company; or, (iii)
accept employment by any company which is a competitor of the Company
in the Designated Industry. The parties hereto acknowledge that
Employee's non-competition obligations hereunder will not preclude
Employee from owning less than 5% of the common stock of any publicly
traded corporation conducting business activities in the Designated
Industry. Employee will continue to be bound by the provisions of this
Section until their expiration and will not be entitled to any
compensation from the Company with respect thereto. If at any time the
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provisions of this Section are determined to be invalid or
unenforceable, by reason of being vague or unreasonable as to area,
duration or scope of activity, this Section will be considered
divisible and will become and be immediately amended to only such
area, duration and scope of activity as will be determined to be
reasonable and enforceable by the court or other body having
jurisdiction over the matter. Employee agrees that the restrictions,
time period and geographic scope contained in these restrictions are
reasonable, valid and binding. Employee acknowledges and recognizes
that enforcement of these convents will not interfere with his ability
to pursue a proper livelihood. Employee recognizes and agrees that the
enforcement of this Agreement is necessary to ensure the preservation
and continuity of the business and goodwill of the Company.
(c) COVENANT OF CONFIDENTIALITY. Employee recognizes the proprietary
interest of any confidential and proprietary information of the
Company (or its successor, assigns and affiliated dental practices)
(together the "Employer Group"). The term " Confidential and
Proprietary Information" means all trade secrets and other
confidential and/or proprietary information of the Employer,
including, without limitation, information derived from reports,
investigations, research, work in progress, codes, marketing and sales
programs, financial projections, cost summaries, pricing formula,
contracts analyses, financial information, projections, confidential
filings with any state or federal agency, and all other confidential
concepts, methods of doing business, ideas, materials or information
prepared or performed for, by or on behalf of the Company by its
employees, officers, directors, agents, representatives, or
consultants. Employee acknowledges and agrees that any and all
Confidential and Proprietary Information communicated to, learned of,
developed or otherwise acquired by him during the Term shall be the
property of the Company. Employee further acknowledges and understands
that his disclosure of any Confidential and Proprietary Information
will result in irreparable injury and damage to the Company. Employee
acknowledges and agrees that the Company is entitled to prevent the
disclosure of Confidential and Proprietary Information. Employee
agrees at all times during the Term and thereafter to hold in
strictest confidence and not to disclose to any person any
Confidential and Proprietary Information, other than in the course of
performing his duties hereunder and with the consent of Company, which
consent shall not unreasonably be withheld, in accordance with
Company's policies and regulations, as established from time to time,
for the protection of Company's Confidential and Proprietary
Information. The term "Confidential and Proprietary Information" does
not include, and there shall be no obligation hereunder with respect
to (i) information that is obvious, or that may readily be determined
by any person reasonably knowledgeable in the industry in which
Company operates by diligent review and examination of public sources,
or that becomes generally available to the public other than as a
result of a disclosure by Employee or any agent or other
representative thereof, and (ii) office practices and procedures
applicable to Company's business. Employee shall not have any
obligation hereunder to keep confidential any Confidential and
Proprietary Information to the extent disclosure of any thereof is
required by law, or determined in good faith by Employee to be
necessary or appropriate to comply with any legal or regulatory order,
regulation or requirement; provided, however, that in the event
disclosure is required by law, Employee shall provide Company with
reasonable notice of such requirement so that Company may seek an
appropriate protective order. Upon termination of employment, all
tangible evidence of such confidential or proprietary information in
the possession of Employee shall be returned to Company, and Employee
shall not make or retain any copies or excerpts thereof except that
Employee may retain copies of all materials that may be of a personal
nature to Employee.
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(d) PROHIBITION ON DISPARAGING REMARKS. Employee covenants, warrants and
represents that Employee shall not make disparaging, negative or other
similar remarks concerning the Company to any third party, except to
the extent that Employee; (i) is required to make such remarks by
applicable law or regulation or judicial or regulatory process or (ii)
makes such remarks in or in connection with any pending or threatened
litigation or other legal proceeding. Employee agrees that, in
addition to monetary damages, the Company shall have the right to
prevent any breach of this provision by means of injunctive relief.
(e) REFORMATION AND SURVIVAL. In the event that any one or more of
provisions contained in this Section shall, for any reason, be held to
be too broad as to duration, geographical scope, activity or subject,
such provision shall be construed as limiting and reducing it as
determined by a court of competent jurisdiction and shall be
enforceable to the extent compatible with applicable law.
Notwithstanding anything to the contrary in this Agreement, the
covenants, warranties and representations of Employee contained in
this Section, and the obligations arising therefrom, shall survive the
termination of this Agreement and the Employee's employment under this
Agreement regardless of the reason for termination. The covenants,
warranties and representations contained in this Section are hereby
deemed to be independent of any other provision of this Agreement, and
the existence of any claim or cause of action by against , whether
predicated on this Agreement or otherwise, shall not constitute a
defense to these representations, covenants and warranties.
SECTION 10. GENERAL.
(a) NOTICES. All notices and other communications hereunder will be in
writing or by written telecommunication, and will be deemed to have been
duly given if delivered personally or if mailed by certified mail, return
receipt requested or by written telecommunication, to the relevant address
set forth below, or to such other address as the recipient of such notice
or communication will have specified to the other party hereto in
accordance with this Section 10(a):
TO THE COMPANY AT:
Pentegra Dental Group, Inc.
0000 X. 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Fax (000) 000-0000
Attn: CHIEF EXECUTIVE OFFICER
TO EMPLOYEE AT:
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(b) WITHHOLDING AND OFFSET. All payments required to be made by the
Company under this Agreement to Employee will be subject to the withholding
of such amounts, if any, relating to federal, state and local taxes as may
be required by law or governmental regulation or ruling ("Payroll Taxes")
and all other normal employee deductions made with respect to Company's
employees generally. Any payments or compensation arising under this
Agreement will be subject to offset or reduction by any amount Employee may
owe to the Company.
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(c) SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision will be fully severable
and this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision never comprised a part hereof; and the
remaining provisions hereof will remain in full force and effect and will
not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom.
(d) WAIVERS. No delay or omission by either party hereto in exercising
any right, power or privilege hereunder will impair such right, power or
privilege, nor will any single or partial exercise of any such right, power
or privilege preclude any further exercise thereof or the exercise of any
other right, power or privilege.
(e) COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which will be deemed an original, and all of which
together will constitute one and the same instrument.
(f) CAPTIONS. The captions in this Agreement are for convenience of
reference only and will not limit or otherwise affect any of the terms or
provisions hereof.
(g) REFERENCE TO AGREEMENT. Use of the words "herein," "hereof,"
"hereto" and the like in this Agreement refer to this Agreement only as a
whole and not to any particular subsection or provision of this Agreement,
unless otherwise noted.
(h) BINDING AGREEMENT. This Agreement will be binding upon and inure
to the benefit of the parties and will be enforceable by the personal
representatives and heirs of Employee and the successors of the Company. If
Employee dies while any amounts would still be payable to him hereunder,
such amounts will be paid to Employee's estate. This Agreement is not
otherwise assignable by Employee.
(i) ENTIRE AGREEMENT. Except as provided in the benefit plans and
programs referenced herein, this Agreement contains the entire
understanding of the parties, supersedes all prior agreements and
understandings relating to the subject matter hereof and may not be amended
except by a written instrument hereafter signed by each of the parties
hereto.
(j) GOVERNING LAW. This Agreement and the performance hereof will be
construed and governed in accordance with the laws of the State of Arizona,
without regard to its choice of law principles. Any modification of this
Agreement shall be effective only if it is in writing and signed by the
Parties hereto.
(k) ATTORNEY'S FEES. If legal action is commenced by either party to
enforce or defend its rights under this Agreement, the prevailing party in
such action shall be entitled to recover its costs and reasonable
attorneys' fees in addition to any other relief granted. If either party
commences legal action or arbitration to enforce or defend its rights under
this Agreement, the prevailing party in such action shall be entitled to
recover its costs, including travel, lodging and meals for itself, counsel
and witnesses, actual witness fees paid and legal fees actually paid,
including costs of associating local counsel with regular counsel, if
actually paid.
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SECTION 11. DISPUTE RESOLUTION.
(a) MEDIATION. If any dispute arises between the parties which arises
out of or relates to this contract, or the breach thereof, and if such
dispute cannot be settled by negotiation between the parties, the parties
agree first to try to settle the dispute by mediation to be conducted by
one mediator as the parties may agree pursuant to the Commercial Mediation
Rules of the American Arbitration Association. If the parties are unable to
agree upon a mediator, the American Arbitration Association will select a
mediator pursuant to its Commercial Mediation Rules. Once a mediator is
appointed, he/she will be required to conclude mediation efforts within
forty-five (45) days of appointment.
(b) BINDING ARBITRATION. In the event that Mediation fails to resolve
such dispute, then the Parties agree that such dispute arising from this
Agreement, or the breach thereof, shall be settled exclusively by binding
arbitration in Phoenix, Arizona, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect.
Judgment upon the award rendered by the arbitrator(s) may be entered in,
and enforced by, any court having jurisdiction thereof.
EXECUTED by the undersigned parties as indicated below to be effective as
indicated above.
EMPLOYER:
PENTEGRA DENTAL GROUP, INC.
By: /s/ Xxxxx Xxxxxx
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Xxxxx X. Xxxxxx, Xx.,
President
Date: June 30, 2000
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EMPLOYEE:
Xxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
Date: June 30, 2000
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