1
EXHIBIT 10.2
October 18, 2000
CONFIDENTIAL
BY FEDERAL EXPRESS
Xx. Xxxx X. Xxxx
0 Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Re: Termination of Employment
Dear Xxxx:
The purpose of this letter agreement (this "Agreement") is to serve as
written notice of the election by Monarch Dental Corporation (the "Company") not
to renew your employment with the Company and to set forth the terms of your
departure from the Company. For purposes of this Agreement, all references to
the "Company" shall include Monarch Dental Corporation, a Delaware corporation,
and any of its subsidiaries and affiliated companies including associated
professional corporations, and any successor thereto by merger or otherwise.
Pursuant to Section 1.3 of that certain Xxxxxxx and Restated Employment
Agreement effective as of January 1, 2000 (the "Employment Agreement"), the
Company hereby notifies you that the Company has elected not to renew your
Employment Agreement upon completion of the Initial Term (as defined in the
Employment Agreement). Accordingly, your employment with the Company will
terminate (the "Termination") effective upon the earlier of (i) the expiration
of the Initial Term on December 31, 2000 or (ii) the date upon which you execute
and deliver this Agreement to the Company (as provided in paragraph 1 below)
(the "Termination Date").
In exchange for the promises of you and the Company set forth below,
you and the Company agree as follows:
1. TERMINATION OF EMPLOYMENT. Notwithstanding the terms of your
Employment Agreement, you and the Company hereby agree that your employment with
the Company shall
GEH GWC
------ -----
2
Xx. Xxxx X. Xxxx
October 18, 2000
Page 2
terminate effective as of the date on which you execute and deliver this
Agreement to the Company.
2. TREATMENT OF TERMINATION UNDER EMPLOYMENT AGREEMENT. Notwithstanding
any provision of paragraph 7 below, the Company hereby confirms to you that the
Termination shall constitute a termination Without Cause (as defined in the
Employment Agreement) under Section 1.6(c) of the Employment Agreement.
3. REMAINING BENEFITS UNDER EMPLOYMENT AGREEMENT. Notwithstanding that
the Termination Date may be prior to December 31, 2000, the Company hereby
agrees to pay your (a) Base Salary (as defined in the Employment Agreement), (b)
Bonus Compensation (as defined in the Employment Agreement) and (c) retention
payments (as set forth in Section 1.4(c) of the Employment Agreement) in
accordance with the terms of the Employment Agreement through the remainder of
the Initial Term as if your employment had continued until December 31, 2000
(including, without limitation, for purposes of determining the amount of your
Bonus Compensation under Section 1.4(b) of the Employment Agreement) (the
"Remaining Compensation"). You and the Company hereby agree that the aggregate
amount of Remaining Compensation is equal to $255,000. The Company hereby
confirms to you that you shall receive any continued employee benefits required
to be provided to you pursuant to Section 1.7(f) of the Employment Agreement
upon a termination Without Cause and that nothing contained herein or in the
Employment Agreement shall limit any rights you and your beneficiaries may have
to continue certain benefits in accordance with and subject to the law known as
COBRA.
4. SEVERANCE UNDER EMPLOYMENT AGREEMENT. The Company confirms to you
that you shall be entitled to the severance payment described in Section 1.7(d)
of the Employment Agreement, which as calculated in accordance with the terms
thereof shall be equal to $745,511 (the "Severance Payment"). The Severance
Payment shall be due and payable to you on the fifteenth day after the date
hereof in accordance with the terms of the Employment Agreement. For purposes of
the last sentence of Section 1.7(d) of the Employment Agreement relating to
payment of a Transaction Fee (as defined in the Employment Agreement), the
Company hereby confirms to you that if any current or past discussions with any
party result in the consummation of a Transaction (as defined in the Employment
Agreement), or execution of a definitive agreement regarding a Transaction,
within 15 months of the Termination, you shall be entitled to the payment of a
Transaction Fee under Section 1.4(d) of the Employment Agreement in accordance
with the last sentence of Section 1.7(d) of the Employment Agreement.
GEH GWC
------ -----
3
Xx. Xxxx X. Xxxx
October 18, 2000
Page 3
5. ESCROW. On the date you execute and deliver this Agreement, the
Remaining Compensation and the Severance Payment (in each case net of
withholding taxes) shall be deposited in a joint account with two signatures
required (one from you and one from Xxxx X. Xxxxxxxx on behalf of the Company)
with Bank of America (the "Escrow Account"). The Company and you hereby agree
that the withdrawal of any funds from the Escrow Account shall require your both
your signature and the signature of Xxxx X. Xxxxxxxx on behalf of the Company.
The Company hereby agrees to take all actions necessary to release to you the
Remaining Compensation and the Severance Payment (in each case net of
withholding taxes) when the respective amounts comprising the Remaining
Compensation and the Severance Payment are due to you pursuant to the terms of
the Employment Agreement. You hereby agree that all interest accruing on the
amounts held in the Escrow Account shall belong to the Company and shall sign
any necessary instruments from time to time necessary to permit the Company to
withdraw such interest from the Escrow Account.
6. STOCK OPTIONS. The Company hereby confirms to you that your stock
options to purchase 100,000 shares of the Company"s Common Stock, par value $.01
per share, set forth in a Non-qualified Stock Option Agreement dated February
10, 2000 by and between you and the Company (the "Stock Option Agreement") shall
become fully vested upon the Termination in accordance with the terms thereof.
7. RESIGNATION FROM ALL POSITIONS. You hereby resign effective as of
the date set forth beneath your signature below as Chief Executive Officer of
Monarch Dental Corporation and from any other position (whether as an officer,
director or employee) currently held by you with Monarch Dental Corporation,
including, without limitation, as a member of the Board of Directors of Monarch
Dental Corporation, or any of its subsidiaries or affiliated companies including
associated professional corporations effective as of such date. Said
resignations are hereby accepted by the Company.
8. NON-COMPETITION; CONFIDENTIALITY. You hereby acknowledge that you
are still subject to the terms and covenants contained (i) in Article 2 of the
Employment Agreement and (ii) in that certain Non-Competition Agreement dated as
of July 1, 1997 by and between you and the Company (the "Non-Competition
Agreement") and you hereby reaffirm and readopt all of such terms and covenants
as if they were completely restated herein.
9. INDEMNIFICATION. The Company hereby acknowledges that it remains
subject to the terms and covenants contained in that certain Indemnification
Agreement dated as of March 11, 1996
GEH GWC
------ -----
4
Xx. Xxxx X. Xxxx
October 18, 2000
Page 4
by and between you and the Company (including any amendments thereto, the
"Indemnification Agreement"), and it hereby reaffirms and readopts all of
such terms and covenants as if they were completely restated herein.
10. RETURN OF PROPERTY. The Company and you hereby acknowledge that all
documents, records, materials, software, equipment, information and other
physical or intellectual property that have come into your possession or been
produced or created by you in connection with your employment with or for the
Company ("Property") have been and remain the sole property of the Company. You
hereby acknowledge that you have returned to the Company all such Property.
11. NON-DISPARAGEMENT AND COOPERATION. On or prior to the first
anniversary of this Agreement, you agree not to make or cause to be made,
directly or indirectly, any statement to any person criticizing or disparaging
the Company or any of its stockholders, directors, officers or employees or
commenting unfavorably or falsely on the character, business judgment, business
practices or business reputation of the Company or any of its stockholders,
directors, officers or employees. You agree that from the date of your execution
of this Agreement, you will cooperate fully with the Company in all reasonable
respects in arranging for an orderly and professional transition of your
responsibilities. You further agree that you will present the circumstances of
your departure in a light that will not reflect unfavorably on the Company. In
the event you breach the covenant set forth in this paragraph 11, you shall be
responsible for repaying to the Company any amounts received by you pursuant to
Section 1.7(d) of the Employment Agreement within thirty (30) days of such
breach.
12. ANNOUNCEMENTS OF YOUR TERMINATION. The Company hereby agrees that
it shall not issue any press release with respect to your Termination or any
internal written notice of your Termination to the Company's employees, the form
and substance of which you have not consented to in advance, which consent shall
not be unreasonably withheld. It is expressly understood that this paragraph 12
shall not be applicable to any filings made by the Company with the United
States Securities and Exchange Commission.
13. RELEASE. The Company and you hereby irrevocably and unconditionally
release, acquit and forever discharge the other and each of the Company's
current and former officers, directors, agents, employees, representatives,
co-venturers, parents, subsidiaries, affiliates, predecessors, successors,
assigns, insurers and stockholders (collectively, the "Company Released
Parties") from any and all claims, demands, causes of action, obligations,
damages,
GEH GWC
------ -----
5
Xx. Xxxx X. Xxxx
October 18, 2000
Page 5
losses, expenses and liabilities of any kind or nature whether legal, equitable
or statutory, liquidated or unliquidated, known or unknown, suspected or
unsuspected, fixed or contingent, which the Company or you may have had from the
beginning of time to the date hereof, including but not limited to any such
claims concerning or related, directly or indirectly, to your employment at the
Company and/or the cessation thereof or your status as a stockholder or director
of the Company. This release includes actions claiming violation of Title VII of
the Civil Rights Act of 1964, as amended, 42 U.S.C. 2000e et seq., the Age
Discrimination in Employment Act, the Americans with Disabilities Act, the Texas
Commission on Human Rights Act, all other labor laws of Texas, and any other
federal, state, or local law, order or regulation. This release also includes
any claims for wrongful discharge or that the Company has dealt with you
unfairly or in bad faith, and actions raising tortious claims, actions raising
any claim of express or implied contract of employment, or any other cause of
action or claims of violation of common law. This release is for any and all
relief, without regard to its form or characterization. Included in this release
are any and all claims for attorneys" fees and for future damages allegedly
arising from the alleged continuation of the effects of any past action,
omission or event. Notwithstanding anything in this release to the contrary,
this release shall not be construed to terminate any party"s rights arising
directly under the Employment Agreement (except to the extent otherwise agreed
herein), this Agreement, the Indemnification Agreement or the Stock Option
Agreement or any other stock option agreement between you and the Company or to
in any way limit or modify your obligations under the Non-Competition Agreement
or Article 2 of your Employment Agreement.
14. MISCELLANEOUS. You have been advised to consult with an attorney
before signing this Agreement and hereby confirm that you have done so.
By signing this Agreement, you acknowledge that you are doing so
voluntarily and only after consultation with your personal attorney. You also
acknowledge that you are not relying on any representations by the undersigned
or any other representative of the Company concerning the meaning of any aspect
of this Agreement.
You acknowledge that you have been given the opportunity, if you so
desired, to consider this Agreement for twenty-one (21) days before executing
it. If not signed by you and returned to Xx. Xxxx X. Xxxxxxxx, Chief Financial
Officer, Monarch Dental Corporation, 0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 000, Xxxxxx,
Xxxxx 00000, so that she receives it by close of business on the twenty-second
(22nd) day after your receipt of the Agreement, this Agreement will not be
valid. In addition, if you breach any of the conditions of the Agreement within
the twenty-one (21) day period, the offer of this Agreement will be withdrawn
and your execution of the Agreement will
GEH GWC
------ -----
6
Xx. Xxxx X. Xxxx
October 18, 2000
Page 6
not be valid. In the event that you execute and return this Agreement within
twenty-one (21) days or less of the date of its delivery to you, you acknowledge
that such decision was entirely voluntary and that you had the opportunity to
consider this letter agreement for the entire twenty-one (21) day period. The
Company acknowledges that for a period of seven (7) days from the date on which
you execute this Agreement, you shall retain the right to revoke this Agreement
by written notice delivered to Xx. Xxxxxxxx at the address indicated above, and
that this Agreement shall not become effective or enforceable until the
expiration of such revocation period.
In the event of any dispute, this Agreement will be construed as a
whole, will be interpreted in accordance with its fair meaning, and will not be
construed strictly for or against either you or the Company. The laws of Texas
will govern any dispute about this Agreement, including any interpretation or
enforcement of this Agreement. In the event that any provision or portion of a
provision of this Agreement shall be determined to be unenforceable, the
remainder of this Agreement shall be enforced to the fullest extent possible as
if such provision or portion of a provision were not included. In the event
there is any conflict between any provision of this Agreement and any provision
of the Employment Agreement, the terms of this Agreement shall control. This
Agreement may be modified only by a written agreement signed by you and an
authorized representative of the Company.
All disputes, claims, or controversies arising out of or relating to
this Agreement or any of the agreements referenced herein or the negotiation,
validity or performance hereof or thereof, that are not resolved by mutual
agreement, shall be resolved solely and exclusively by binding arbitration in
accordance with the terms of Section 4.9 of the Employment Agreement.
Notwithstanding anything to the contrary contained herein or in Section 4.9 of
the Employment Agreement, this arbitration provision shall not prevent any party
hereto from seeking any temporary restraining order or preliminary injunctive
relief to which such party may be entitled hereunder pending and subject to the
resolution of the subject matter thereof in an arbitration proceeding initiated
pursuant to the terms hereof or thereof. In addition, the provisions set forth
in the first sentence of Section 4.12 of the Employment Agreement shall apply to
any good faith enforcement of the provisions of this Agreement.
This Agreement is complete, reflects the entire agreement of the
parties with respect to all matters between such parties, and supersedes all
previous written or oral negotiations, commitments and writings except the
Employment Agreement (except as modified by this Agreement), the Non-Competition
Agreement, the Indemnification Agreement, the Stock Option
GEH GWC
------ -----
7
Xx. Xxxx X. Xxxx
October 18, 2000
Page 7
Agreement and any other stock option agreement between you and the Company, and
the Non-Competition Agreement.
The Company is executing this Agreement with you on behalf of itself
and each of its subsidiaries and affiliated companies.
If you agree to these terms, please sign and date below and return this
Agreement to the undersigned within the time limitation set forth above.
Sincerely,
MONARCH DENTAL CORPORATION
By:
----------------------------------
Xxxxx X. Xxxxxxxx, By Direction
of the Board of Directors
ACCEPTED AND AGREED TO:
---------------------------------
Xxxx X. Xxxx
Dated:
---------------------------
cc: Xxxxxx X. Xxxxxxx, Xxx.
Xxxxxxxx & Xxxxxx L.L.P.
GEH GWC
----- -----
