Exhibit 10.5
EMPLOYMENT AND NON-COMPETITION AGREEMENT
This EMPLOYMENT AND NON-COMPETITION AGREEMENT (this "AGREEMENT"), dated as
of April 15, 1997, is between HealthDrive Michigan Corporation, a Michigan
corporation (the "EMPLOYER"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, DDS (the "EMPLOYEE").
WHEREAS, the Employer wishes to employ the Employee as a dentist, and the
Employee wishes to work as a dentist for the Employer, on the terms set forth
below.
NOW, THEREFORE, it is hereby agreed as follows:
Section 1. EMPLOYMENT. The Employer hereby employs the Employee, and the
Employee hereby accepts employment, upon the terms and subject to the conditions
hereinafter set forth.
Section 2. DUTIES. The Employee shall be employed as a dentist for the
Employer. In such capacity, the Employee shall have such responsibilities and
duties as are assigned by the Employer's Board of Directors or the Chief
Executive Officer of the Employer. The Employee agrees to devote his full time
and best efforts to the performance of his duties to the Employer.
Section 3. TERM. The initial term of employment of the Employee hereunder
shall commence on the date hereof (the "COMMENCEMENT DATE") and shall continue
until the fifth anniversary of the Commencement Date (the "INITIAL TERM"),
unless earlier terminated pursuant to Section 7. The Initial Term may be
extended at any time prior to its termination upon mutual agreement of the
Employer and the Employee.
Section 4. COMPENSATION AND BENEFITS. Until the termination of the
Employee's employment hereunder, in consideration for the services of the
Employee hereunder, the Employer shall compensate the Employee as follows:
(a) BASE SALARY. Subject to the provisions of Section 4(b) below, the
Employer shall pay the Employee, monthly in arrears, a base salary equal to
$84,000 per annum (the "BASE SALARY"). Such Base Salary may be increased from
time to time at the sole discretion of the Employer's Board of Directors (the
"BOARD") and is in addition to the other benefits set forth herein.
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(b) INCREASES OR DECREASES TO BASE SALARY. The Base Salary payable to the
Employee pursuant to Section 4(a) above shall be reduced by an amount equal to
the product of (i) 0.42 MULTIPLIED BY (ii) the excess, if any, of (A) $175,000
OVER (B) the portion of the gross revenues, after all contractual adjustments,
of the Employer derived from professional services rendered by the Employee as
shown on the Employer's revenue tracking system ("EMPLOYEE GROSS REVENUES")
during any fiscal year of the Employer. Any such reduction in Base Salary shall
be paid in full in cash by the Employee to the Employer within 30 days after the
end of the fiscal year. In addition, the Employee shall be entitled to receive
from the Employer, for each fiscal year of the Employer, a bonus (the "BONUS")
in an amount equal to the product of (i) 0.33 MULTIPLIED BY (ii) the excess, if
any, of (A) Employee Gross Revenues for such fiscal year OVER (B) $250,000. The
Bonus shall be paid quarterly in arrears, in an amount equal to the excess, if
any, of (A) the product of (i) 0.33 MULTIPLIED BY (ii) the excess, if any, of
(w) total Employee Gross Revenues for the fiscal quarter of the Employer then
ended and all prior fiscal quarters in such fiscal year OVER, (x) the product of
(y) $62,500 MULTIPLIED BY (z) the number of full fiscal quarters then completed
for such fiscal year, OVER (B) the total amounts previously paid to Employee in
respect of the Bonus for such fiscal year. In the event that the amount computed
pursuant to clause (B) of the immediately preceding sentence exceeds the amount
computed pursuant to clause (A) of the immediately preceding sentence as of the
end of any fiscal quarter, the amount of such excess shall be credited towards
the next payment (whether of Base Salary, Bonus or otherwise) due from Employer
to Employee hereunder. In the event that Employee's employment hereunder
terminates for any reason at any time when a credit remains outstanding pursuant
to the immediately preceding sentence, the amount of such credit shall be due
and payable by Employee to Employer immediately upon such termination. In the
event that the computations described in this Section 4(b) shall be made for any
period constituting less than a full fiscal year or fiscal quarter, the amount
of Employee Gross Revenues for such period shall be used in making such
computation and the references to $175,000, $250,000 and $62,500 shall be
appropriately pro rated for the portion of such fiscal year or fiscal quarter,
as the case may be, included within such period.
(c) STOCK OPTIONS. The Employer and the Employee acknowledge that
contemporaneously herewith the Employee will receive options ("OPTIONS") to
purchase 5,000 shares of common stock of HealthDrive Corporation, pursuant to a
stock option agreement of even date herewith (the "STOCK OPTION AGREEMENT"). As
described more fully in the Stock Option Agreement, the Options will vest in
equal installments of 1,000 shares on each of the first five anniversaries of
the date of this Agreement, assuming Employee's continued employment with
Employer hereunder on each such anniversary.
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(d) VACATION. The Employee shall be entitled to three (3) weeks vacation
each calendar year. Any vacation shall be taken at the reasonable and mutual
convenience of the Employer and the Employee. Accrued vacation not taken in any
calendar year will not be carried forward or used in any subsequent calendar
year.
(e) INSURANCE; OTHER BENEFITS. Accident, disability, life and health
insurance for the Employee shall be provided by the Employer subject to required
employee contributions under group accident, disability, life and health
insurance plans maintained by the Employer for its full-time, salaried employees
as such employment benefits may be modified from time to time by the Board for
all full-time, salaried employees.
Section 5. EXPENSES. The Employer shall reimburse the Employee for use of
his personal automobile for travel to and from nursing home sites at a rate of
25.5 cents per mile driven after the first 50 miles per day and for all
reasonable expenses of types authorized in writing by the Employer and incurred
by the Employee in the performance of his duties hereunder. The Employee shall
comply with such budget limitations and approval and reporting requirements with
respect to expenses as the Employer may establish from time to time.
Section 6. EXISTING DENTAL CONTRACTS. The Employee represents and
warrants that (i) SCHEDULE 6 hereto sets forth all of the Employee's existing
written or oral contracts (the "EXISTING CONTRACTS") for dental services
(whether entered into by Employee, or his affiliate, Mobile Dental Service
("MDS")) and (ii) each of the Existing Contracts is in full force and effect as
of the date hereof and no default exists by any party thereto thereunder. The
Employee hereby covenants and agrees, in consideration of the compensation and
other benefits to be received by Employee hereunder, to use his best efforts to
cause the other parties to the Existing Contracts to terminate their applicable
Existing Contract and to enter into new contracts with the Employer on terms
mutually agreeable to the Employer and such other parties (the "MODIFIED
CONTRACTS"). In addition, the Employee hereby agrees to assign and transfer all
Existing Contracts requested by the Employer, in its sole discretion, to be
assigned to Employer, and in any such case, Employer will assume all obligations
of Employee (or MDS, as applicable) thereunder.
Section 7. TERMINATION. The Employee's employment hereunder shall
commence on the Commencement Date and continue as described in Section 3 above
except that the employment of the Employee hereunder shall earlier terminate as
follows:
(a) DEATH OR DISABILITY. Employee's employment shall terminate
immediately upon the death of the Employee during the term of his employment
hereunder or, at the option of the Employer, in the event of the Employee's
disability, upon thirty (30) days' written notice from the Employer. The
Employee shall be deemed disabled if an independent medical doctor (selected by
the Employer's health or
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disability insurer) certifies that the Employee has for three (3) months,
consecutive or non-consecutive, in any twelve (12) month period been disabled in
a manner which seriously interferes with his ability to perform his
responsibilities under this Agreement. Any refusal by the Employee to submit to
a medical examination for the purpose of certifying disability under this
Section 7(a) shall be deemed to constitute conclusive evidence of the Employee's
disability.
(b) FOR CAUSE. Employee's employment hereunder may be terminated by
Employer for "Cause" immediately upon written notice by the Employer to the
Employee. For purposes of this Agreement, a termination shall be for Cause if
the Board shall determine that any one or more of the following has occurred:
(i) the Employee shall have committed an act of fraud, embezzlement,
misappropriation or breach of fiduciary duty against the Employer,
including, but not limited to, the offer, payment, solicitation or
acceptance of any unlawful bribe or kickback with respect to the Employer's
business; or
(ii) the Employee shall have been convicted by a court of competent
jurisdiction of, or pleaded guilty or nolo contendere to, any felony or any
crime involving moral turpitude; or
(iii) the Employee shall have been chronically absent from work
(excluding vacations, illnesses or leaves of absence approved by the
Employer) and such absence shall have continued after written notice from
the Employer to the Employee; or
(iv) the Employee shall have refused, after explicit written notice,
to obey any lawful resolution of or direction by the Employer which is
consistent with his duties hereunder; or
(v) the Employee shall have engaged in the unlawful use (including
being under the influence) or possession of illegal drugs on the Employer's
premises; or
(vi) the Employee shall have failed to perform the duties incident to
his employment with the Employer on a regular basis (except as a result of
the Employee's disability), and such failure shall have continued for a
period of 20 days after written notice to the Employee specifying such
failure in reasonable detail; or
(vii) the Employee shall have breached any of the provisions of this
Agreement or the Stock Option Agreement, and such breach shall have
continued for a period of 20 days after written notice to the Employee
specifying such breach in reasonable detail; or
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(viii) Employee Gross Revenues in any fiscal year of the Employer do
not exceed $150,000.
(c) WITHOUT CAUSE. Employer or Employee may, at any time, terminate
Employee's employment hereunder without Cause upon thirty (30) days' written
notice by either party hereto to the other.
(d) RIGHTS AND REMEDIES ON TERMINATION. (i) In the event that the
Employee's employment hereunder is terminated for any reason, the Employee shall
not be entitled to any severance or other compensation after termination other
than payment of any portion of his Base Salary and Bonus through the date of his
termination (subject to the provisions of Section 4(b) hereof) and any expense
reimbursements under Section 5 hereof for expenses incurred in the performance
of his duties prior to termination.
(ii) If the Employee's employment hereunder is terminated by the
Employer (as opposed to the Employee) pursuant to Section 7(c), or if the
Employer chooses to abandon its business in the State of Michigan (other than
through a sale of all of the outstanding capital stock or substantially all of
the assets of the Employer), the Employer shall use its best efforts to assign
and transfer all of the Existing Contracts which are in effect at such time (or
all Modified Contracts in effect at such time, as applicable) to the Employee or
his designee as soon as possible after termination.
Section 8. INVENTIONS; ASSIGNMENT. All rights to discoveries, inventions,
improvements and innovations (including all data and records pertaining thereto)
related to the Employer's business, whether or not patentable, copyrightable,
registrable as a trademark, or reduced to writing, that the Employee may
discover, invent or originate during the term of his employment hereunder, and
for a period of twelve (12) months thereafter, either alone or with others and
whether or not during working hours or by the use of the facilities of the
Employer ("INVENTIONS"), shall be the exclusive property of the Employer. The
Employee shall promptly disclose all Inventions to the Employer, shall execute
at the request of the Employer any assignments or other documents the Employer
may deem necessary to protect or perfect its rights therein, and shall assist
the Employer, at the Employer's expense, in obtaining, defending and enforcing
the Employer's rights therein. The Employee hereby appoints the Employer as his
attorney-in-fact to execute on his behalf any assignments or other documents
deemed necessary by the Employer to protect or perfect its rights to any
Inventions. This excludes a one-step denture process and a book on geriatric
dentistry insofar as it does not reveal information designated as confidential
by the Employer.
Section 9. CONFIDENTIAL INFORMATION. The Employee recognizes and
acknowledges that certain assets of the Employer, including without limitation
information regarding customers, pricing policies, methods of operation,
proprietary production processes, proprietary computer programs, sales,
products, profits, costs, markets, key personnel, formulae, product
applications, technical processes, and trade secrets (hereinafter called
"CONFIDENTIAL INFORMATION") are valuable, special, and unique
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assets of the Employer and its affiliates. The Employee shall not, during or
after his term of employment, disclose any or any part of the Confidential
Information to any person, firm, corporation, association, or any other entity
for any reason or purpose whatsoever, directly or indirectly, except as may be
required pursuant to his employment hereunder; PROVIDED, that Confidential
Information shall in no event include (a) Confidential Information which was
generally available to the public at the time of disclosure by the Employee or
(b) Confidential Information which becomes publicly available other than as a
consequence of the breach by the Employee of his confidentiality obligations
hereunder. In the event of the termination of his employment, whether voluntary
or involuntary and whether by the Employer or the Employee, the Employee shall
deliver to the Employer all documents and data pertaining to the Confidential
Information and shall not take with him any documents or data of any kind or any
reproductions (in whole or in part) or extracts of any items relating to the
Confidential Information.
Section 10. NON-COMPETITION. During the term of the Employee's employment
hereunder and for the Designated Period (as defined below) after termination of
the Employee's employment hereunder, the Employee will not (a) anywhere within
the State of Michigan, engage, directly or indirectly, alone or as a shareholder
(other than as a holder of less than five percent (5%) of the common stock of
any publicly traded corporation), partner, officer, director, employee or
consultant of any other business organization that is engaged or becomes engaged
in the dental business limited to extended care and assisted living facilities
in competition with the Employer or any of its affiliates (including HealthDrive
Corporation or any professional corporations) (the "DESIGNATED INDUSTRY"), (b)
divert to any competitor of the Employer or any of its affiliates (including
HealthDrive Corporation or any professional corporations) any customer of the
Employer or any of its affiliates (including HealthDrive Corporation or any
professional corporations), or (c) solicit or encourage any officer, employee or
consultant of the Employer or any of its affiliates (including HealthDrive
Corporation or any professional corporations) to leave their employ for
alternative employment, or hire or offer employment to, directly or indirectly,
any person whom the Employer or any of its affiliates (including HealthDrive
Corporation or any professional corporations) then employs or to whom the
Employer or any of its affiliates (including HealthDrive Corporation or any
professional corporations) has offered employment. For purposes hereof, the
term "DESIGNATED PERIOD" shall mean (i) with respect to termination of the
Employee's employment hereunder (a) pursuant to Section 7(a) hereof, or (b)
pursuant to Section 7(b) hereof, or (c) by the Employee pursuant to Section 7(c)
hereof, a period of eighteen (18) months following the date of such termination,
and (ii) with respect to termination of the Employee's employment hereunder by
the Employer pursuant to Section 7(c) hereof, through such date of termination.
The Employee acknowledges that the provisions of this Section 10 are essential
to protect the business and goodwill of the Employer. The Employee will
continue to be bound by the provisions of this Section 10 until their expiration
and shall not be entitled to any compensation from the Employer with respect
thereto except as provided above. If
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at any time the provisions of this Section 10 shall be determined to be invalid
or unenforceable, by reason of being vague or unreasonable as to area, duration
or scope of activity, this Section 10 shall be considered divisible and shall
become and be immediately amended to only such area, duration and scope of
activity as shall be determined to be reasonable and enforceable by the court or
other body having jurisdiction over the matter; and the Employee agrees that
this Section 10 as so amended shall be valid and binding as though any invalid
or unenforceable provision had not been included herein.
Section 11. GENERAL.
(a) NOTICES. All notices and other communications hereunder shall be in
writing or by written telecommunication, and shall be deemed to have been duly
given if delivered personally or if mailed by certified mail, return receipt
requested, postage prepaid or sent by written telecommunication or telecopy, to
the relevant address set forth below, or to such other address as the recipient
of such notice or communication shall have specified to the other party hereto
in accordance with this Section 11(a):
If to the Employer, to:
HealthDrive Michigan Corporation
c/o HealthDrive Corporation
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
If to the Employee, to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, DDS
Mobile Dental Service
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(b) EQUITABLE REMEDIES. Each of the parties hereto acknowledges and
agrees that upon any breach by the Employee of his obligations under Sections 8,
9 and 10 hereof, the Employer will have no adequate remedy at law, and
accordingly will be entitled to specific performance and other appropriate
injunctive and equitable relief.
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(c) SEVERABILITY. If any provision of this Agreement is or becomes
invalid, illegal or unenforceable in any respect under any law, the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired.
(d) WAIVERS. No delay or omission by either party hereto in exercising
any right, power or privilege hereunder shall impair such right, power or
privilege, nor shall 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 shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(f) ASSIGNS. Employee's obligations hereunder shall not be assignable or
delegable by Employee to any other person. This Agreement shall be binding upon
and inure to the benefit of the heirs and successors of each of the parties
hereto, including any entity which acquires substantially all of the assets or
stock of the Employer.
(g) ENTIRE AGREEMENT. This Agreement contains the entire understanding of
the parties, supersedes all prior agreements and understandings relating to the
subject matter hereof and shall not be amended except by a written instrument
hereafter signed by each of the parties hereto.
(h) GOVERNING LAW. This Agreement and the performance hereof shall be
construed and governed in accordance with the laws of the State of Michigan.
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IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed as of the date and year
first above written.
HEALTHDRIVE MICHIGAN CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.
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Title: CEO
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, DDS
Accepted and Agreed:
MOBILE DENTAL SERVICES
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Owner