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EXHIBIT 10.9
EMPLOYMENT AGREEMENT
(Xx. Xxxxxxx)
Employment Agreement, dated the 5th day of February, 1996 by and between
Xx. Xxxxxx X. Xxxxxxx (the "Employee") and Monarch Dental Corporation, a
Delaware corporation ("Monarch"), and Monarch Dental Associates, L.P., a Texas
limited partnership (the "Company").
W I T N E S S E T H
WHEREAS, the Employee is the founder and the president of Monarch Dental
Associates ("Monarch Dental"); and
WHEREAS, reference is made to that certain Stock Purchase Agreement (the
"Stock Purchase Agreement") and those certain Stock Redemption and Asset
Contribution Agreements (the "Monarch Agreements"), each dated as of February
5, 1996 pursuant to which (i) Monarch will issue shares of Convertible
Participating Preferred Stock in consideration of capital contributions
aggregating $10 million, and (ii) Monarch will redeem certain of its shares
held by the Employee and the Employee and a partner will contribute certain
assets to Monarch; and
WHEREAS, concurrently with the above-described transactions, Monarch
will acquire the assets of the MacGregor Dental Centers business; and
WHEREAS, the parties hereto desire to assure that the Employee's
knowledge and experience will continue to be available after the above-
described transactions.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
1. Employment. Subject to the provisions of Section 6, the Company
and Monarch hereby employ the Employee and the Employee accepts such employment
upon the terms and conditions hereinafter set forth.
2. Term of Employment. Subject to the provisions of Section 6, the
term of the Employee's employment pursuant to this Agreement shall commence on
and as of the date hereof (the "Effective Date") and shall terminate on the
fourth anniversary of the Effective Date; provided, however, that this
Agreement shall be extended automatically for successive one-year periods
ending on the relevant anniversary of Effective Date unless either party gives
the other notice not less than 180 days prior to the scheduled termination date
(i.e., the fourth anniversary of the Effective Date or any later anniversary)
of his or its determination not to extend this Agreement, whereupon it shall
terminate as of such anniversary date. The period during which the Employee
serves as an employee of the Company in accordance with and
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subject to the provisions of this Agreement is referred to in this Agreement as
the "Term of Employment."
3. Duties.
During the Term of Employment, the Employee (a) shall serve as an
employee of the Company and Monarch with the title and position of Chairman,
President and Chief Executive Officer of each Company, reporting to the Board
of Directors of Monarch, (b) shall have general supervisory responsibility in
such capacity over all aspects of the business of Monarch and its subsidiaries,
including the Company, as well as such other responsibilities as may be
specified from time to time by the Board of Directors of Monarch, consistent
with the Employee's position and general area of experience and skills,
provided that, in all cases the Employee shall be subject to the oversight and
supervision of the Board of Directors of Monarch in the performance of his
duties and provided further the Employee's duties and responsibilities shall be
performed principally, and the Employee shall be based, at the Company's
offices in Dallas, Texas, subject to reasonable travel requirements for
business purposes consistent with the travel requirements of executive officers
of Monarch and the Company generally, (c) upon the request of the Board of
Directors of Monarch, shall serve as an officer and/or director of any of
Monarch's subsidiaries, and (d) shall render all services reasonably incident
to the foregoing. The Employee hereby accepts such employment, agrees to serve
the Company and Monarch in the capacities indicated, and agrees to use his best
efforts in, and shall devote his full working time, attention, skill and
energies to, the advancement of the interests of the Company, Monarch and each
of their affiliates and the performance of his duties and responsibilities
hereunder, provided that the foregoing shall not be deemed to preclude service
on civic or professional boards to the extent not inconsistent with that
certain Non-Competition Agreement dated as of February 5, 1996 executed by the
Employee concurrently herewith and in connection with the Monarch Agreements.
During the Term of Employment, the Employee shall, as the
Chairman, President and Chief Executive Officer of Monarch, make
recommendations from time to time to the Board of Directors of Monarch (or the
Option or Compensation Committee thereof) with respect to grants of options
and/or restricted stock to employees and officers of the Company and its
subsidiaries (including himself) and dental providers involved with the
business of the Company and its subsidiaries, provided that the Employee shall
consider the best interests of the Company, consistent with his fiduciary
obligations, in making such recommendations. The parties agree that any grant
of any such option or restricted stock by the Company in the absence of such
recommendation by the Employee shall constitute a default under this Agreement
for purposes of Section 6(f) hereof. It is understood that the Employee's role
in the granting of options and restricted stock shall cease to be a matter
governed by this Agreement, and the provisions of the preceding sentence shall
terminate, upon completion of the initial public offering of Monarch or any
successor to Monarch.
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4. Salary and Bonus.
(a) During the Term of Employment, the Company shall pay the
Employee a salary at the annual rate of $300,000 per annum (the "Base Salary").
Such salary shall be subject to withholding under applicable law, shall be pro
rated for partial years and shall be payable in periodic installments not less
frequently than monthly in accordance with the Company's and Monarch's usual
practice for executive officers of the Company and Monarch as in effect from
time to time.
(b) The Employee shall not receive a bonus in respect of the
year ending December 31, 1996. For each calendar year or portion thereof
thereafter during the Term of Employment (including any extensions thereof),
the Employee shall be eligible to receive a bonus if and to the extent
determined by and in the discretion of the Compensation Committee of the Board
of Directors of Monarch, or the Board of Directors of Monarch if a Compensation
Committee is not then appointed, in its discretion, based upon its evaluation
of the Employee's performance during such year or portion thereof.
5. Benefits.
(a) During the Term of Employment, the Employee shall be
entitled to participate in any and all medical, pension, dental and life
insurance plans and disability income plans, retirement arrangements and other
employment benefits as in effect from time to time for executive officers of
Monarch and the Company generally. Such participation shall be subject to (i)
the terms of the applicable plan documents (including, as applicable,
provisions granting discretion to the Board of Directors of Monarch and the
general partner of the Company or any administrative or other committee
provided for therein or contemplated thereby) and (ii) generally applicable
policies of Monarch and the Company. In the event the Company elects to
maintain term life insurance with respect to the Employee, upon termination of
the Employee's employment for any reason other than death the Employee shall
have the right, to the extent permitted under the relevant policy, to assume
the Employer's obligations thereunder.
(b) The Company shall promptly reimburse the Employee for all
reasonable business expenses incurred by the Employee during the Term of
Employment in accordance with Monarch's and the Company's practices for
executive officers of Monarch and the Company with a similar level of
responsibility, as in effect from time to time.
(c) During the Term of Employment, the Employee shall receive
paid vacation annually in accordance with the Company's and Monarch's practices
for executive officers, as in effect from time to time, but in any event not
less than four (4) weeks per calendar year.
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(d) Car Allowance. During the Term of Employment, the Company
shall provide the Employee with a car allowance of $1,000 per month and shall
reimburse the Employee for all gas, oil, maintenance and insurance for the
Employee's automobile.
(e) Compliance with the provisions of this Section 5 shall in
no way create or be deemed to create any obligation, express or implied, on the
part of the Company, Monarch or any of their affiliates with respect to the
continuation of any particular benefit or other plan or arrangement maintained
by them or their subsidiaries as of or prior to the date hereof or the creation
and maintenance of any particular benefit or other plan or arrangement at any
time after the date hereof.
6. Termination of Employment of the Employee. Prior to the
expiration of the Term of Employment as provided in Section 2 hereof, this
Agreement may or shall (as applicable) be terminated as follows:
(a) At any time by the mutual consent of the Employee and
Monarch and the Company.
(b) At any time for "cause" by Monarch and the Company upon
written notice to the Employee. For purposes of this Agreement, a
termination shall be for "cause" if:
(i) the Employee shall commit an act of fraud,
embezzlement, misappropriation or breach of fiduciary duty
against Monarch or any of its subsidiaries (including the Company
and also including for purposes of this Section 6, Xxxxxx X.
Xxxxxxx, D.D.S., P.C.), or shall be convicted by a court of
competent jurisdiction of, or shall plead guilty or nolo
contendere to, any felony or any crime involving moral turpitude;
or
(ii) the Employee shall commit a breach of any of the
covenants, terms or provisions hereof, which breach has not been
remedied within thirty (30) days after delivery to the Employee
by the Boards of Directors of Monarch and the Company's general
partner of written notice of the facts constituting the breach
(provided that if such breach cannot reasonably be cured within
such thirty (30) day period, the Employee shall be granted such
longer period as may be necessary, so long as the Employee
diligently pursues such cure); or
(iii) the Employee shall commit a breach of any of the
covenants, terms or provisions of that certain Non-Competition
Agreement of even date herewith executed by the Employee and such
other parties, which breach has not been remedied within thirty
(30) days after delivery to the Employee by Monarch and the
Company of written notice of the facts constituting the breach;
or
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(iv) the Employee shall have failed to comply with
written instructions from Monarch's Board of Directors, which are
reasonable and consistent with Section 3, or shall have
substantially failed to perform the Employee's duties hereunder,
after written notice from Monarch and the Company and after a
fair hearing at which the Employee is allowed to present evidence
or testimony regarding the reasons for the Employee's actions and
other evidence bearing on the situation.
Upon termination for cause as provided in this Section 6(b), (A) all
obligations of Monarch and the Company under this Agreement shall
thereupon immediately terminate other than any obligation of the Company
with respect to earned but unpaid Base Salary and benefits contemplated
hereby to the extent then accrued or vested, it being understood that
upon any such termination (1) the Employee shall not be entitled to
receive any bonus or portion thereof from the Company, Monarch or any of
their affiliates to the extent granted in the discretion of the Company
or Monarch but not then paid with respect to any period during or after
the Term of Employment or (2) any continuation of benefits except as may
be required by law, and (B) Monarch and the Company shall have any and
all rights and remedies under this Agreement and applicable law.
(c) Upon the death or upon the permanent disability (as
defined below) of the Employee continuing for a period in excess of one
hundred eighty (180) consecutive days. Upon any such termination of the
Employee's employment as provided in this Section 6(c), all obligations
of Monarch and the Company under this Agreement shall thereupon
immediately terminate other than any obligation of the Company with
respect to earned but unpaid Base Salary and benefits contemplated
hereby to the extent accrued or vested through the date of termination.
As used herein, the terms "permanent disability" or "permanently
disabled" shall mean the inability of the Employee, by reason of injury,
illness or other similar cause, to perform a major part of his duties
and responsibilities in connection with the conduct of the business and
affairs of Monarch and the Company, as determined reasonably and in good
faith by an independent physician reasonably acceptable to the Employee
and Monarch and the Company.
(d) At any time by the Employee upon forty-five (45) days'
prior written notice to Monarch and the Company. Upon termination by
the Employee as provided in this Section 6(d), all obligations of the
Company and Monarch under this Agreement thereupon immediately shall
terminate other than any obligation of the Company with respect to
earned by unpaid Base Salary and benefits contemplated hereby to the
extent accrued or vested through the date of termination, it being
understood that in the event of such a termination the Employee shall
not be entitled to receive any bonus not then paid from the Company,
Monarch or any of their affiliates not then paid with respect to any
period during or after the Term of Employment.
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(e) At any time without "cause" (as defined in Section 6(b))
by Monarch and the Company upon written notice to the Employee. In the
event of termination of the Employee by the Company pursuant to this
Section 6(e), the Company shall (i) continue to make Base Salary
payments to the Employee from the date of termination through (a) the
later of the fourth anniversary of the Effective Date or the first
anniversary of the date on which such a termination occurs, if such
termination occurs prior to February 5, 2000, or (b) the first
anniversary of the date in which such termination occurs, if such
termination occurs on or after February 5, 2000 during any extension
year of the Term of Employment hereunder, in any such case in the manner
contemplated by Section 4(a), and (ii) continue the benefit arrangements
applicable to the Employee for as long as Base Salary payments continue,
with such amounts agreed by the parties hereto to be in full
satisfaction and compromise of any claims arising out of any termination
of the Employee's employment pursuant to this Section 6(e) or Section
6(f). The Employee shall not be under any obligation to mitigate the
Company's severance obligation under this Section 6(e) by obtaining
other employment.
(f) The Employee shall have the right to terminate his
employment hereunder in the event of a material default by Monarch or
the Company in the performance of its obligations hereunder, including,
among others, any material change in the Employee's title or duties
under Section 3, after the Employee has given written notice to the
Monarch and the Company specifying such default by Monarch or the
Company and giving Monarch or the Company, as applicable, a reasonable
time, not less than 30 days, to conform its performance to its
obligations hereunder. The rights and obligations of the parties shall
be as set forth in Section 6(e) in the event of any such termination.
The Employee shall not be under any obligation to mitigate the Company's
severance obligation under this Section 6(f) by obtaining other
employment.
(g) In the event either party gives a notice of non-renewal to
be effective as of the fourth anniversary of the Effective Date or any
subsequent anniversary thereof, then all obligations of the parties
hereunder shall terminate as of the end of the Term of Employment except
as contemplated by Sections 6(h) and 7 hereof.
(h) Notwithstanding termination of this Agreement as provided
in this Section 6 or any other termination of the Employee's employment
with Monarch or the Company, the Employee's obligations under Section 7
hereof and in the Employee's Non-Competition Agreement of even date
herewith shall survive any termination of the Employee's employment with
Monarch or the Company at any time and for any reason.
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7. Confidentiality; Proprietary Rights.
(a) In the course of performing services hereunder, on behalf
of the Company, Monarch and their affiliates and predecessors, and otherwise,
the Employee has had, and it is anticipated that the Employee will from time to
time have, access to confidential records, data, customer lists, trade secrets
and other confidential information owned or used in the course of business by
the Company, Monarch and their affiliates and predecessors (the "Confidential
Information"). The Employee agrees (a) to hold the Confidential Information in
strict confidence, (b) not to disclose the Confidential Information to any
person (other than in the regular business of the Company, Monarch or any of
their affiliates), and (c) not to use, directly or indirectly, any of the
Confidential Information for any competitive or commercial purpose other than
on behalf of his Company, Monarch and their affiliates; provided, however, that
the limitations set forth above shall not apply to any Confidential Information
which (i) is then generally known to the public; (ii) became or becomes
generally known to the public through no fault of the Employee; or (iii) is
disclosed in accordance with an order of a court of competent jurisdiction or
applicable law. Upon the termination of the Employee's employment with the
Monarch and the Company for any reason, all Confidential Information
(including, without limitation, all data, memoranda, customer lists, notes,
programs and other papers and items, and reproductions thereof relating to the
foregoing matters), in the Employee's possession or control, shall be returned
to Monarch, the Company or the applicable affiliate and remain in its or their
possession.
(b) The Employee recognizes that the Company, Monarch and
their affiliates possess a proprietary interest in all of the information
described in Section 7(a) and have the exclusive right and privilege to use,
protect by copyright, patent or trademark, or otherwise exploit the processes,
ideas and concepts described therein to the exclusion of the Employee, except
as otherwise agreed between the Company, Monarch and the Employee in writing.
The Employee expressly agrees that any products, inventions, discoveries or
improvements made by the Employee or his agents or affiliates in the course of
the Employee's employment, during the Term of Employment, including any of the
foregoing which is based on or arising out of the information described in
Section 7(a), shall be the property of and inure to the exclusive benefit of
the Company or Monarch as applicable. The Employee further agrees that any and
all products, inventions, discoveries or improvements developed by the Employee
(whether or not able to be protected by copyright, patent or trademark) during
the course of his employment, or involving the use of the time, materials or
other resources of the Company, Monarch or any of their affiliates, shall be
promptly disclosed to the Company and Monarch and shall become the exclusive
property of the Company or Monarch, as applicable, and the Employee shall
execute and deliver any and all documents necessary or appropriate to implement
the foregoing.
(c) The Employee agrees, while he is employed by the Company
or Monarch, to offer or otherwise make known or available to them, as directed
by the Board of Directors of Monarch and without additional compensation or
consideration, any business prospects, contracts or other business
opportunities that he may discover, find, develop or
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otherwise have available to him in any field in which the Company, Monarch or
their affiliates are engaged, and further agrees that any such prospects,
contracts or other business opportunities shall be the property of the Company
or Monarch as applicable.
(d) The Employee acknowledges that the Non-Competition
Agreement executed and delivered concurrently herewith is an integral part of
his employment arrangements with the Company and Monarch.
8. Specific Performance; Severability. It is specifically
understood and agreed that any breach of the provisions of Section 7 hereof by
the Employee is likely to result in irreparable injury to the Company, Monarch
and/or its or their affiliates, that the remedy at law alone will be an
inadequate remedy for such breach and that, in addition to any other remedy it
may have, Monarch and the Company shall be entitled to enforce the specific
performance of this Agreement by the Employee and to seek both temporary and
permanent injunctive relief (to the extent permitted by law), without the
necessity of posting a bond or proving actual damages. In case any of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, any such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement, but this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had been limited or modified (consistent with its
general intent) to the extent necessary to make it valid, legal and
enforceable, or if it shall not be possible to so limit or modify such invalid,
illegal or unenforceable provision or part of a provision, this Agreement shall
be construed as if such invalid, illegal or unenforceable provision or part of
a provision had never been contained in this Agreement.
9. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
faxed (with transmission acknowledgment received), delivered personally or
mailed by certified or registered mail (return receipt requested) as follows:
To Monarch or the Company:
Monarch Dental Corporation
Monarch Dental Associates, L.P.
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
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With a copy to:
Xxxx X. XxXxxxxx, P.C.
Xxxxxxx, Procter & Xxxx
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
To the Employee:
Xx. Xxxxxx X. Xxxxxxx
c/o Monarch Dental Corporation
0000 Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Xxxxxx and Xxxxx, L.L.P.
0000 Xxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
or to such other address or fax number of which any party may notify the other
parties as provided above. Notices shall be effective as of the date of such
delivery, mailing or fax.
10. Miscellaneous. This Agreement shall be governed by and construed
under the laws of the State of Texas, and shall not be amended, modified or
discharged in whole or in part except by an agreement in writing signed by both
of the parties hereto. The failure of either of the parties to require the
performance of a term or obligation or to exercise any right under this
Agreement or the waiver of any breach hereunder shall not prevent subsequent
enforcement of such term or obligation or exercise of such right or the
enforcement at any time of any other right hereunder or be deemed a waiver of
any subsequent breach of the provision so breached, or of any other breach
hereunder. This Agreement shall inure to the benefit of, and be binding upon,
successors of Monarch and the Company by way of merger, consolidation or sale
and may not be otherwise assigned by Monarch and the Company or the Employee.
This Agreement supersedes all prior understandings and agreements between the
parties relating to the subject matter hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the date first set forth above.
MONARCH DENTAL ASSOCIATES, L.P.
By: Oral Health Concepts, Inc.,
General Partner
By: /s/ XXXXXX X. XXXXXXX
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Name: Xxxxxx X. Xxxxxxx, D.D.S.
Title: President
MONARCH DENTAL CORPORATION
By: /s/ XXXXXX X. XXXXXXX
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Name: Xxxxxx X. Xxxxxxx, D.D.S.
Title: President
/s/ XXXXXX X. XXXXXXX
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Xx. Xxxxxx X. Xxxxxxx
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