EXHIBIT 10.5
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement"), effective as of August 11, 1998
("Effective Date"), is by and between APPLE ORTHODONTIX, INC., a Delaware
corporation ("Apple"), and XXXXXXX X. XXXXXX, an individual who resides in
Xxxxxx County, Texas ("Xxxxxx").
WITNESSETH:
WHEREAS, Xxxxxx will be an employee of Apple until August 11, 1998 at which
time his employment with Apple will terminate; and
WHEREAS, Apple desires Xxxxxx to hold himself available to perform and to
perform certain services;
NOW THEREFORE, the parties, in consideration of the mutual promises,
covenants and obligations contained herein, do hereby agree as follows:
1. During the term of this Agreement, Xxxxxx shall serve as consultant to
the management of Apple and provide as requested Consulting Services (as defined
in this Agreement) in connection with financing matters, acquisitions of
orthodontic practices and certain other items. Xxxxxx shall render his best
efforts and professional judgment in performance of these Consulting Services
consistent with good consulting practice, and the promotion, advancement and
successful conduct of the business of Apple. Xxxxxx agrees to be available, upon
reasonable notice and at mutually agreeable times, for such meetings, as Apple
and Xxxxxx xxxx necessary for proper conduct and communication of his
consultation. It is understood that Xxxxxx may be rendering services to others
during the term of this Agreement and, in using the Consulting Services of
Xxxxxx hereunder, Apple will exercise due regard for other commitments of
Xxxxxx.
2. (a) In consideration for holding himself available to provide and
providing the Consulting Services to be rendered pursuant to this Agreement,
Apple agrees to pay Xxxxxx the following consulting fees (the "Consulting
Fees"):
(i) For each proposed affiliation by Apple with practice that has existing
patient revenue and with respect to which Xxxxxx provides Consulting
Services, Xxxxxx will be paid an amount equal to the greater of (i) 5%
of the historical gross revenue of such practice in the year before it
was affiliated with Apple, and (ii) $25,000. In addition, for each
associate orthodontist other than the owner working in any such
practice. Xxxxxx will receive an additional fee in respect of such
associate equal to $12,500.
(ii) For each proposed affiliation by Apple with a doctor who is developing
a new practice and with respect to which doctor, affiliation
transaction, or both, Xxxxxx provides Consulting Services, Xxxxxx will
receive a Consulting Fee equal to $25,000.
(iii) For each executed transaction by Apple involving the association by a
doctor with an Apple-affiliated practice or the purchase of an
Apple-affiliated practice by a transitioning doctor with respect to
which Xxxxxx provides Consulting Services, Xxxxxx will receive a
Consulting Fee equal to $25,000.
(iv) For each executed transaction by Apple involving the development and
opening of a satellite or new office by an Apple-affiliated doctor
with respect to which Xxxxxx provides Consulting Services, Xxxxxx will
receive a Consulting Fee equal to $25,000.
(v) For each execution, amendment, modification, adjustment, expansion or
change to any of Apple's existing or future credit facilities, loans,
or other evidences of debt, Xxxxxx will receive a fee equal to the
greater of (i) 1% of the face amount of such debt, and (ii) $100,000.
(vi) For each sale of equity securities, excluding the issuance or grant of
stock options or warrants in the normal course of business consistent
with past practices to employees or orthodontist who affiliate with
Apple, of any kind of Apple, Xxxxxx will receive a fee equal to the
greater of (i) 1% of the gross amount of such offering, and (ii)
$100,000.
(vii) For the filing of a Shelf Registration Statement (original or
amended) on Form X-0, X-0 or S-4 with the Securities and Exchange
Commission, Xxxxxx will receive a fee equal to $200,000.
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(viii) An initial fee equal to $25,000 due on the effective date of this
Agreement.
(ix) In addition to the fees set forth in subparagraphs (i) through (viii)
above, Apple shall pay Xxxxxx an additional Consulting Fee of $200 per
hour for each hour spent by Xxxxxx providing Consulting Services to
Apple in excess of 20 hours per month.
(x) Xxxxxx shall invoice Apple for Consulting Fees earned as a result of
Consulting Services performed pursuant to this Agreement on a monthly
basis and Apple shall tender payment of the Consulting Fees billed
within 10 business days of receipt of Xxxxxx'x invoice, net of any
amounts due to Apple by Xxxxxx pursuant to paragraph 4 of this
Agreement.
The maximum aggregate amount of Consulting Fees to be paid to Xxxxxx
pursuant to this Agreement shall be $601,000. Upon such aggregate amount of
Consulting Fees having been paid to Xxxxxx (with, if any payment are past due,
interest as provided in this Agreement), Xxxxxx shall have no further obligation
to providing Consulting Services to Apple and shall have no further right to
receive Consulting Fees from Apple, except as provided in subparagraph (b)
below.
(b) Notwithstanding anything to the contrary contained herein, Xxxxxx, only
upon request by Apple, shall provide Consulting Services to Apple and its
managers and the members of its Board of Directors with respect to any proposed
transaction or series of transactions that would, if consummated, result in a
Change of Control (as defined in this Agreement). Such Consulting Services shall
be performed consistent with the other terms of this Agreement. In consideration
of such services, Apple will pay Xxxxxx his hourly rate set forth in
subparagraph (a)(ix) above with respect to his work on such transaction or
series of transactions and $200,000 in cash upon closing of such transaction
which would result in such Change in Control, except in the case of a
transaction which is executed within 45 days of the Effective Date of this
Agreement. Xxxxxx'x hourly rate will be paid pursuant to the schedule for such
payments shown in subparagraph (a)(ix) above, and the $200,000 cash payment
shall be paid upon closing of such transaction which would result in any such
Change of Control.
(c) For purposes of his entitlement to the Consulting Fees described in
Paragraph (a) or (b) above, performance by Xxxxxx of any of the following
activities shall constitute the performance of Consulting Services: having
contact with a doctor or his advisor in connection with a proposed or potential
transaction; preparing or reviewing a letter of intent, confidentiality
agreement or any other document in connection with a proposed or potential
transaction; preparing or reviewing a pro forma financial projection in
connection with a proposed or potential transaction; providing any written or
oral advice to any designated representative of Apple in connection with a
proposed or potential transaction; reviewing any documents in connection with a
proposed or potential transaction or performing in connection with a proposed or
potential transaction any services requested by any designated representatives
of Apple.
3. Apple agrees with respect to the options evidenced by the option
agreement attached hereto as Exhibit A that:
(a) Such options to the extent not fully exercisable at the Effective Date
shall become exercisable over time as if Xxxxxx had remained an
employee of Apple.
(b) Such options to the extent that they would terminate for any reason
other than by passage of time shall terminate only by reason of the
10th anniversary of the date of grant of such options having been
reached.
4. During the term of this Agreement, Xxxxxx may request and receive from
Apple draws against his Consulting Fees. The total amount of such draws shall
not exceed $200,000 at any time during the term of this Agreement. Xxxxxx will
request such draws in writing, delivered to the address for notices shown in
Paragraph 17 below. Apple will have 10 business days following the receipt of
such notice to deliver to Xxxxxx such draws in good funds to such accounts as
Xxxxxx may specify in his draw request. Any draws requested and received by
Xxxxxx will bear interest at LIBOR, plus 2%. Xxxxxx agrees to repay Apple all
draws requested and received pursuant to this paragraph 4, including accrued and
unpaid interest at the rate specified above. The Consulting Fees shall be
debited against such draws requested and received thereby reducing the amount of
such draws and accrued interest that Xxxxxx may be required to return to Apple.
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Xxxxxx'x obligation to repay any portion of draws and accrued interest shall be
the personal liability of Xxxxxx and secured by amounts due to Xxxxxx from Apple
pursuant to this Agreement.
5. Upon the occurrence of a "Change of Control" of Apple, Apple or its
successor shall pay Xxxxxx an amount equal to the difference between $601,000
and all amounts previously paid, including any outstanding draws and accrued
interest, to Xxxxxx pursuant to this Agreement and this Agreement shall
terminate. For purposes of this Paragraph 5, "Change of Control" means the
occurrence of any of the following events: (a) any Person becomes an Acquiring
Person; (b) at any time the then Continuing Directors cease to constitute a
majority of the members of the Board; (c) a merger of Apple with or into, or a
sale by Apple of its properties and assets substantially as an entirety to,
another Person occurs and, immediately after that occurrence, any Person, other
than an Exempt Person, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of twenty-five percent (25%) or more of
the total voting power of the then outstanding Voting Shares of the Person
surviving that transaction (in the case of a merger or consolidation) or the
Person acquiring those properties and assets substantially as an entirety. For
purposes of the preceding definition of "Change of Control", the following
terms shall have the following meanings.
(i) "Acquiring Person" means any Person who or which, together with all
Affiliates and Associates of such Person, is or are the Beneficial
Owner of twenty-five percent (25%) or more of the shares of Common
Stock then outstanding, but does not include any Exempt Person,
provided, however, that a Person shall not be or become an Acquiring
Person if such Person, together with its Affiliates and Associates,
shall become the Beneficial Owner of twenty-five percent (25%) or more
of the shares of Common Stock then outstanding solely as a result of a
reduction in the number of shares of Common Stock outstanding due to
the repurchase of Common stock by Apple, unless and until such time as
such Person or any Affiliate or Associate of such Person shall purchase
or otherwise become the Beneficial Owner of additional shares of Common
Stock constituting one percent (1%) or more of the then outstanding
shares of Common Stock or any other Person (or Persons) who is (or
collectively are) the Beneficial Owner of shares of Common Stock
constituting one percent (1%) or more of the then outstanding shares of
Common Stock shall become an Affiliate or Associate of such Person,
unless, in either such case, such Person, together with all Affiliates
and Associates of such Person, is not then the Beneficial Owner of
twenty-five percent (25%) or more of the shares of Common Stock then
outstanding.
(ii) "Affiliate" has the meaning ascribed to that term in the Securities
Exchange Act of 1934 Rule 12b-2.
(iii) "Associate" means, with reference to any Person, (a) any
corporation, firm, partnership, association, unincorporated
organization or other entity (other than Apple or a subsidiary of
Apple) of which that Person is an officer or general partner (or
officer or general partner of a general partner) or is, directly or
indirectly, the Beneficial Owner of 10% or more of any class of its
equity securities, (b) any trust or other estate in which that Person
has a substantial beneficial interest or for or of which the Person
serves as trustee or in a similar fiduciary capacity, (c) any
relative or spouse of that Person, or any relative of that spouse,
who has the same home as that Person and (d) any stockholder, partner
or owner of any equity in such Person.
(iv) "Board" means the board of directors of Apple.
(v) "Continuing Director" means at any time any individual who then (a)
is a member of the Board and was a member of the Board as of the
Effective Date or whose nomination for his first election, or that
first election, to the Board following that date was recommended or
approved by a majority of the then Continuing Directors (acting
separately or as a part of any action taken by the Board or any
committee thereof) and (b) is not an Acquiring Person, an Affiliate or
Associate of an Acquiring Person or a nominee or representative of an
Acquiring Person or of any such Affiliate or Associate.
(vi) "Exempt Person" means (a)(1) Apple, any subsidiary of Apple, any
employee benefit plan of Apple or of any subsidiary of Apple and (2)
any Person organized, appointed or established by
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Apple for or pursuant to the terms of any such plan or for the purpose
of funding any such plan or funding other employee benefits for
employees of Apple or any subsidiary of Apple and (b) Xxxxxx, any
Affiliate or Associate of Xxxxxx or any group (as that term is used in
the Securities Exchange Act of 1934 Rule 13d-5(b)) of which Xxxxxx or
any Affiliate or Associate of Xxxxxx is a member.
(vii) "Person" means any natural person, sole proprietorship,
corporation, partnership of any kind having a separate legal status,
limited liability company, business trust, unincorporated
organization or association, mutual company, joint stock company,
joint venture, estate, trust, union or employee organization or
governmental authority.
(viii) "Voting Shares" means: (a) in the case of any corporation, stock
of that corporation of the class or classes having general voting
power under ordinary circumstances to elect a majority of that
corporation's board of directors; and (b) in the case of any other
entity, equity interests of the class or classes having general
voting power under ordinary circumstances equivalent to the Voting
Shares of a corporation.
6. Unless sooner terminated pursuant to other provisions hereof, Apple
agrees to retain the services of Xxxxxx pursuant to this Agreement, and Xxxxxx
agrees to provide such services to this Agreement until both parties agree in
writing to terminate this Agreement. Notwithstanding the provisions of the
preceding sentence, Apple shall have the right to terminate this Agreement and
Xxxxxx'x services hereunder at any time for only the following reasons:
(a) Upon Xxxxxx'x death:
(b) Upon Xxxxxx'x becoming incapacitated by accident, sickness, or other
circumstances which render him mentally or physically incapable of
performing the services required of him hereunder for a period of at
least 120 consecutive days; or
(c) For cause, which for purposes of this Agreement shall mean only
Xxxxxx'x final conviction of a felony crime that involved moral
turpitude arising out of action taken by Xxxxxx with an intention to
injure materially (and which does injure materially) Apple.
(d) Upon the payment to Xxxxxx of $601,000 pursuant to paragraph 2(a) of
this Agreement.
If Apple desires to terminate Xxxxxx'x services hereunder at any time prior to
the termination of this Agreement as provided above, it shall do so by giving
written notice to Xxxxxx that it has elected to terminate Xxxxxx'x services
hereunder and stating the effective date and reason for such termination;
provided that no such action shall alter or amend any other provisions hereof or
rights arising hereunder. In the event that Xxxxxx'x services are terminated
hereunder prior to the expiration of the term of this Agreement, no further
compensation shall be payable hereunder except that in the event of a
termination of this Agreement pursuant to Paragraph 6(a) or (b) an amount equal
to the difference between $601,000 and the amount theretofore paid to Xxxxxx
pursuant to this Agreement shall be made to Xxxxxx (or his estate in the event
of his death) in a single lump sum payment within 30 days of the event described
in Paragraph 6(a) or (b) as applicable, after deducting any outstanding draws
and accrued interest.
7. (a) All reasonable out-of-pocket expenses incurred by Xxxxxx in the
performance of his services hereunder and properly accounted for shall be borne
by Apple. If not paid directly by Apple, Apple shall reimburse Xxxxxx for the
cost of such expenses in accordance with customary Apple practice. Xxxxxx shall
seek and obtain approval from Apple for any out-of-pocket expense which exceeds
$500.
(b) During the term of this Agreement, Apple will make available to Xxxxxx
medical and dental insurance which is comparable to the insurance provided to
Apple executives. Xxxxxx will pay Apple 100% of the cost of such insurance,
limited to $5,000 per year within 10 business days of receipt of an invoice for
same.
8. Apple agrees that it will offer Xxxxxx the opportunity to perform
Consulting Services pursuant to this Agreement with respect to:
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(a) Each practice affiliation opportunity granted by any source prior to
or during the term of this Agreement that Apple pursues during the
course of this Agreement.
(b) Each new practice development opportunity to be presented to a
resident, recent graduate or other doctor seeking to develop a new
practice by Apple;
(c) Each associate or transition opportunity with respect to any practice
considered by Apple;
(d) Each satellite or new office development opportunity with respect to
any practice considered by Apple;
(e) Each transaction for the issuance, amendment, modification,
adjustment, expansion or change to any of Apple's existing or future
credit facilities, loans, or other evidences of debt;
(f) Each offering of equity securities of any kind;
(g) Each filing of a Shelf Registration Statement (original or amended);
and
(h) Each proposed transaction or series of transactions that would, if
consummated, result in a Change of Control (as defined in this
Agreement)
Apple further agrees that Xxxxxx shall be entitled to a Consulting Fee in
respect of each such opportunity once Xxxxxx has performed any Consulting
Service in connection with a proposed or potential transaction, regardless of
the amount of Consulting Services performed by Xxxxxx so long as Apple
ultimately consummates the transaction. Apple agrees and covenants that it will
use its best efforts to provide Xxxxxx transaction opportunities for each month
during the term of this Agreement that will generate for Xxxxxx a minimum
Consulting Fee of $150,000.00 per quarter pursuant to subparagraphs 2(a)(i)-(x)
of this Agreement, and further agrees that should it fail, for any reason, to
provide Xxxxxx the opportunity to provide Consulting Services on each
transaction that comes within the scope of any subparagraphs (a) through (g) of
this Paragraph 8 in any two consecutive months, then Apple shall immediately be
in default of this Agreement and shall immediately pay Xxxxxx an amount equal to
the difference between $601,000 and all amounts previously paid, including any
outstanding draws and accrued interest, to Xxxxxx pursuant to this Agreement.
9. Apple, its officers and directors agree not to make disparaging or
negative comments concerning Xxxxxx'x job performance or character. Apple agrees
that any violation of the covenant described in this paragraph 9 shall cause
Apple to pay Xxxxxx an amount equal to the difference between $601,000 and all
amounts previously paid, including outstanding draws and accrued interest, to
Xxxxxx pursuant to this Agreement unless Apple promptly after written notice is
received from Xxxxxx that Xxxxxx believes a violation of this paragraph 9 has
occurred, retracts such comment or otherwise takes steps to correct such
violation.
10. Should any payments made by Apple to or for the benefit of Xxxxxx
pursuant to this Agreement or resulting from or in connection with his prior
employment with Apple, singly, in any combination or in the aggregate, be
determined or alleged to be subject to an excise or similar purpose tax pursuant
to Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"),
or any successor or other comparable federal, state or local tax law by reason
of being a "parachute payment" (within the meaning of Section 280G of the
Code), Apple shall pay to Xxxxxx such additional compensation as is necessary
(after taking into account all federal, state and local taxes payable by Xxxxxx
as a result of the receipt of such additional compensation) to place Xxxxxx in
the same after-tax position (including federal, state and local taxes) he would
have been in had no such excise or similar purpose tax (or interest or penalties
thereon) been paid or incurred. Apple hereby agrees to pay such additional
compensation within the earlier to occur of (i) five (5) business days after
Xxxxxx notifies Apple that Xxxxxx intends to file a tax return taking the
position that such excise or similar purpose tax is due and payable in reliance
on a written opinion of Xxxxxx'x tax counsel (such tax counsel to be chosen
solely by Xxxxxx) that it is more likely than not that such excise tax is due
and payable or (ii) twenty-four (24) hours of any notice of or action by Apple
that it intends to take the position that such excise tax is due and payable.
The reasonable costs of obtaining the tax counsel opinion referred to in clause
(i) of the preceding sentence shall be borne by Apple and Apple shall
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not be responsible for the cost of more than one tax counsel pursuant to this
paragraph 10. If Xxxxxx intends to make any payment with respect to any such
excise or similar purpose tax as a result of an adjustment to Xxxxxx'x tax
liability by any federal, state or local tax authority, Apple will pay such
additional compensation by delivering its cashier's check payable in such amount
to Xxxxxx within five (5) business days after Xxxxxx notifies Apple of his
intention to make such payment. Without limiting the obligation of Apple
hereunder, Xxxxxx agrees, in the event Xxxxxx makes any payment pursuant to the
preceding sentence, to negotiate with Apple in good faith with respect to
procedures reasonably requested by Apple which would afford Apple the ability to
contest the imposition of such excise or similar purpose tax; provided, however,
that Xxxxxx will not be required to afford Apple any right to contest the
applicability of any such excise or similar purpose tax unless it was determined
that Apple had a good faith basis to contest same, after consulting with its tax
counsel and providing Xxxxxx a written opinion of such tax counsel of its basis
to contest same.
11. If at any time during the term hereof or afterwards: (i) there should
exist a dispute or conflict between Xxxxxx and Apple or another person or entity
as to the validity, interpretation, or application of any term or condition
hereof, or as to Xxxxxx'x entitlement to any benefit intended to be bestowed
hereby, which is not resolved to the satisfaction of Xxxxxx, (ii) Xxxxxx must
(a) defend the validity of this Agreement, (b) contest any determination by
Apple concerning the amounts payable (or reimbursable) by Apple to Xxxxxx, or
(c) determine in any tax year of Xxxxxx the tax consequences to Xxxxxx of any
amounts payable (or reimbursable) under Paragraph 10, or (iii) Xxxxxx must
prepare responses to an Internal Revenue Service ("IRS") audit, of, or
otherwise defend, his personal income tax return for any year the subject of any
such audit, or an adverse determination, administrative proceedings or civil
litigation arising therefrom that is occasioned by or related to an audit by the
IRS of Apple's income tax returns, then Apple hereby unconditionally agrees:
(a) On written demand of Apple by Xxxxxx, to provide sums sufficient to
advance and pay on a current basis (either by paying directly or by
reimbursing Xxxxxx) not less than thirty (30) days after a written
request therefor is submitted by Xxxxxx, Xxxxxx'x reasonable out of
pocket costs and expenses (including attorney's fees, expenses of
investigation, travel, lodging, copying, delivery services and
disbursements for the fees and expenses of experts, etc.) incurred by
Xxxxxx in connection with any such matter.
(b) Xxxxxx shall be entitled, upon application to any court of competent
jurisdiction, to the entry of a mandatory injunction without the
necessity of posting any bond with respect thereto which compels Apple
to pay or advance such costs and expenses on a current basis; and
(c) Apple's obligations under this Paragraph 11 will not be affected if
Xxxxxx is not the prevailing party in the final resolution of any such
matter, except if Apple is the prevailing party Xxxxxx shall be
responsible for his own legal fee.
12. Apple agrees to pay all legal and other fees, costs and expenses
incurred by Xxxxxx in connection with the termination of his prior employment
with Apple and the negotiation and implementation of this Agreement, limited to
$5,000.
13. Xxxxxx acknowledges that Apple's business is highly competitive and
that Apple's methods, strategies, books, records, and documents, Apple's
technical information concerning its products, equipment, services, and
processes, procurement procedures and pricing techniques, and the names of and
other information (such as credit and financial data) concerning Apple's
customers, business affiliates, affairs, and operations all comprise
confidential business information and/or trade secrets ("Confidential
Information") of Apple which are valuable, special, and unique assets of Apple
which Apple uses in its business to obtain a competitive advantage over its
competitors which do not know or use this information. Xxxxxx further
acknowledges that protection of Apple's Confidential Information against
unauthorized disclosure and use is of critical importance to Apple in
maintaining its competitive position. Accordingly, Xxxxxx hereby agrees that,
notwithstanding any other provisions of this Agreement other than those
contained in the following sentences, he will not at any time during the term of
this Agreement, and for one (1) year
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thereafter, make any unauthorized disclosure of any Confidential Information of
Apple or make any unauthorized use thereof. However, Xxxxxx'x obligations under
this paragraph shall not extend to:
(a) Information which is or becomes a part of the public domain or is
available to the public by publication or otherwise without disclosure
by Xxxxxx;
(b) Information which was within Xxxxxx'x knowledge or in his possession
prior to his employment by Apple;
(c) Information which, either prior or subsequent to Apple's disclosure to
Xxxxxx, was disclosed to Xxxxxx, without an obligation of
confidentiality, by a third party who did not acquire such information,
directly or indirectly from Xxxxxx, Apple, or from any third party who
is under an obligation of confidentiality; or
(d) Any disclosure of Confidential Information by Xxxxxx which is required
by law, including deposition or trial testimony by Xxxxxx pursuant to
subpoena. If Xxxxxx is requested or required (by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, if reasonable possible under the circumstances as
determined in good faith by Xxxxxx, Xxxxxx will promptly notify Apple
of such request or requirements so that Apple may seek an appropriate
protective order or waive compliance with the provisions of this
Paragraph 13.
Money damages would not be sufficient remedy for any breach of this Paragraph
concerning Confidential Information by Xxxxxx, and Apple shall be entitled to
seek specific performance and injunctive relief as remedies for such breach or
threatened breach, as well as reasonable and necessary attorneys' fees, experts'
fees, and costs incurred in connection with such breach or threatened breach.
Such remedies shall not be deemed exclusive remedies for such a breach by Xxxxxx
but shall be in addition to all remedies available at law or in equity to Apple,
including the recovery of damages from Xxxxxx. For purposes of this Paragraph,
Apple shall be construed to include any parent, subsidiary, or other affiliate
of Apple. This Paragraph 13 shall survive the termination of this Agreement for
a period of one year.
14. Xxxxxx recognized that in each of the highly competitive businesses in which
Apple is engaged, personal contact is of primary importance in securing new
orthodontic practices and in retaining the accounts and goodwill of present
practices and protecting the business of Apple. Xxxxxx, therefore, agrees that
during the term of this Agreement, Xxxxxx will not: (i) accept employment or
render service to any person that is engaged in the orthodontic practice
management business or (ii) enter into or take part in or lend Xxxxxx'x name,
counsel or assistance to any business, either as proprietor, principal,
investor, partner, director, officer, employee, consultant, advisor, agent,
independent contractor, or in any other capacity whatsoever, for any purpose
that is engaged in the orthodontic practice management business. If the
provisions of this Paragraph 14 are violated in any material respect resulting
in material detriment to Apple, Apple shall be entitled, upon application to any
court of proper jurisdiction, to a temporary restraining order or preliminary
injunction (without the necessity of posting any bond with respect thereto) to
restrain and enjoin Xxxxxx from that violation. If the provisions of this
Paragraph 14 should ever be deemed to exceed the time, geographic or
occupational limitations permitted by the applicable law, Xxxxxx and Apple agree
that such provisions shall be and are hereby reformed to the maximum time,
geographic or occupational limitations permitted by the applicable law. This
Paragraph 14 shall survive the termination of this Agreement for a period of one
year.
15. Apple shall, without further remuneration to Xxxxxx, own, be entitled to
possession of, and have the right to use, publish, and disclose any results,
reports, product or data developed by Xxxxxx during the course of his services
hereunder, but identification of Xxxxxx with such results, reports, or data
shall not be made without Xxxxxx'x express consent.
16. Xxxxxx is engaged by Apple only for the purposes and to the extent set
forth in this Agreement, and his relationship to Apple hereunder is that of an
independent contractor. Nothing in this Agreement is intended to create an
employer/employee relationship between Apple or Xxxxxx or to allow Apple to
exercise control or direction over the manner and method by which Xxxxxx
performs the services which are the subject
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matter of this Agreement. Xxxxxx shall be responsible for payment of all income,
self-employment, or other taxes attributable to all compensation paid hereunder
by Apple to Xxxxxx, and Xxxxxx agrees to hold Apple harmless for withholding or
payment of such taxes.
17. For purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been duly
given when personally delivered or when mailed by United States, registered or
certified mail, return receipt requested, postage prepaid, if addressed as
follows:
If to Apple, to: Apple Orthodontix, Inc.
0000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Chief Executive
If to Xxxxxx, to: Xx. Xxxxxxx X. Xxxxxx
00000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
or such other addresses as either party may furnish to the other in writing, in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt.
18. Time is of the essence of this Agreement. Overdue payments under this
Agreement shall accrue interest at a rate of 10% per annum through the date of
full and complete payment. Any failure by Apple to pay any amounts due under
this Agreement that continues for more than 10 business days after written
notice (written notice includes the submission to Apple by Xxxxxx of an invoice
for Consulting Services and reasonable out-of-pocket expenses) shall constitute
a material breach by Apple of the Agreement, and Apple shall be immediately pay
Xxxxxx an amount equal to the difference between $601,000 and all amounts
previously paid to Xxxxxx pursuant to this Agreement. Any draw requested
pursuant to Paragraph 4 of this Agreement, plus accrued interest thereon, shall
constitute a payment due under this Agreement.
19. Xxxxxx shall be indemnified by Apple both with respect to his prior
employment with Apple and his engagement pursuant to this Agreement to the
maximum extent permitted by the laws of Delaware, the state of Apple's
incorporation, and the laws of the state of incorporation of any subsidiary of
Apple of which Xxxxxx is or at any time was a director, officer, employee or
consultant as same may be in effect from time to time. This Paragraph 19 shall
survive the termination of this Agreement for a period of six years.
20. Xxxxxx waives and releases all rights, claims, charges, demands and
causes of action against Apple, its predecessors, successors, parent companies,
subsidiaries and affiliates, and its officers, directors, employees, owners,
shareholders and agents, of any kind or character, both past and present, known
or unknown, including but not limited to those arising under the Age
Discrimination in Employment Act of 1967, Title VII of the Civil Rights Act of
1964, and the Employee Retirement Income Security Act of 1974, all as amended,
and any other state or federal statute, regulation or the common law (contract,
tort or other), which relate to Xxxxxx'x employment with Apple prior to August
, 1998 or termination of such employment, including but not limited to any
alleged discriminatory or retaliatory employment practices, any matter relating
to or arising under Xxxxxx'x Employment Agreement with Apple dated December 9,
1996 or any other matter. Apple understands and agrees that the foregoing waiver
and release shall not serve to waive or release any rights or claims that may
arise after the date this Agreement is executed whether relating to this
Agreement or otherwise. Apple waives and releases all rights, claims, charges,
demands and causes of Action against Xxxxxx of any kind or character, both past
and present, known or unknown, arising under any state or federal statute,
regulation or the common law (contract, tort or other), which relate to Xxxxxx'x
employment or termination of such employment any matter relating to Xxxxxx'x
Employment Agreement with Apple dated December 9, 1997, or any other matter.
Xxxxxx understands that the foregoing waiver and release shall not serve to
waive or release any rights or claims that may arise after the date this
Agreement is executed whether relating to this Agreement or otherwise.
21. This Agreement is entered into under and shall be governed for all
purposes by the laws of the State of Texas.
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22. No failure by either party hereto at any time to give notice of any
breach by the other party of, or to require compliance with, any condition or
provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same time at any prior or subsequent time.
23. If a court of competent jurisdiction determines that any provision of
this Agreement is invalid or unenforceable, than the invalidity or
unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect.
24. This Agreement and the rights and obligations of the parties hereunder
are personal, and neither this Agreement nor any right, benefit, or obligation
of either party hereto shall be subject to voluntary or involuntary assignment,
alienation, or transfer, whether by operation of law or otherwise, without the
prior written consent of the other party.
25. This Agreement represents the entire agreement between the parties
hereto with respect to the matters covered herein and may not be changed,
altered, or modified in any respect except by an instrument in writing signed by
both the parties hereto. Except as specifically provided herein, this Agreement
replaces and supersedes any and all agreements (including but not limited to
that Employment Agreement dated December 9, 1997, as it was amended from time to
time) entered into or existing between Xxxxxx and Apple prior to the Effective
Date.
IN WITNESS WHEREOF, the parties have executed this Agreement on the 11th
day of August, 1998, by their respective signatures below, effective as of the
Effective Date.
APPLE ORTHODONTIX, INC.
By: XXXX X. XXXXXXX
Xxxx X. Xxxxxxx, Chairman of
Board and Chief Executive Officer
XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
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