EXHIBIT 10.12
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of January
6, 1997, by and between Safeguard Health Enterprises, Inc., a Delaware
Corporation ("Company") and Xxxx Xxxxxxx, D.D.S. ("Employee").
The Company desires to have the benefits of Employee's knowledge and
experience as a full-time employee and considers such employment a vital element
to protecting and enhancing the best interests of the Company, and Employee
desires to be employed full time by the Company. The Company and Employee
desire to enter into an agreement reflecting the terms under which the Company
will employ Employee as its Senior Vice President-Chief Dental Officer ("SVP")
until January 5, 2002. Therefore, the Company and Employee agree to the
following terms and conditions under which Employee will serve as SVP of the
Company:
1. EMPLOYMENT SERVICES AND DUTIES
The Company agrees to employ and retain the services of Employee as
SVP and Employee hereby agrees to continue employment with the Company as its
SVP for the term of this Agreement. During the term of this Agreement, Employee
agrees to perform his duties as SVP faithfully, to the best of his ability and
in the best interests of the Company, to perform both his regular duties and
other projects as requested by the Board of Directors, the Chief Executive
Officer and the Chief Operating Officer of the Company, and assume such other
additional reasonable duties or capacities as the Board of Directors, the Chief
Executive Officer and the Chief Operating Officer of the Company may provide.
2. TERM OF EMPLOYMENT
The Company agrees to employ Employee, and Employee agrees to serve,
as SVP for the period commencing with the effective date of this Agreement until
the earlier of January 5, 2002, the date of Employee's death, or the date of
termination pursuant to Sections 6 and 7 of this Agreement.
3. COMPENSATION TERMS
The Company agrees to compensate Employee for his services rendered as
SVP under this Agreement as follows:
(a) Base Salary. Effective January 6, 1997, and for the remainder of
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the term of employment, Employee shall receive a base salary of $155,000 per
year.
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(b) Bonuses. Employee shall receive such bonuses, if any, as
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determined by the appropriate committee of the Board of Directors of the
Company, in its sole and absolute discretion.
(c) Benefits. Subject to satisfaction of all eligibility
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requirements, Employee and his dependents shall be entitled to and shall receive
any and all benefits generally available to executive employees of the Company,
including participation in health, dental, vision and life insurance programs
and retirement plans.
(d) Indemnification. The Company shall indemnify Employee in
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accordance with the terms and conditions of its then current indemnification
agreements with directors and/or officers of the Company.
4. EXPENSES
(a) Business Expenses. The Company authorizes Employee to incur the
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reasonable and necessary expenses for promoting the business of the Company and
its subsidiaries according to the policies of the Company with respect thereto
and as may be determined from time to time by the Board of Directors of the
Company. The Company agrees to reimburse Employee for any such reasonable and
necessary expenses paid out of Employee's own fund. The Company also agrees to
reimburse Employee for all reasonable professional dues and licensing fees
required of Employee in connection with Employee's license to practice
dentistry.
(b) Transportation. During the term of this Agreement, the Company
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shall furnish to Employee an automobile, or an automobile expense allowance of
not less than $650 per month and a cellular telephone allowance of not less than
$100 per month, as may be determined by the Company's Chief Operating Officer.
During such time when the Company furnishes an automobile to Employee, the
Company shall be responsible for the insurance and non-routine expenses
associated with the operation of the automobile and the Employee shall be
responsible for gasoline, oil and routine expenses for such automobile.
5. VACATION
Unless otherwise agreed to orally or by written agreement between
Employee and the Company, Employee shall be entitled to four weeks of paid
vacation during any fiscal year. Such vacation may be taken at such times as
are mutually agreed upon by Employee and the Company, and pursuant to the
Company's vacation policy then in effect.
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6. TERMINATION BY COMPANY
(a) Termination. The Company may terminate Employee for "Cause."
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(b) "Cause" shall mean:
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(i) The failure of Employee to render services to the Company in
accordance with his employment duties, as determined by all of the independent
directors of the Company's Board of Directors;
(ii) The commission by Employee of an act of fraud or
embezzlement against Company or an act which Employee knew to be in violation of
his duties to the Company (including, but not limited to, the unauthorized
disclosure of confidential information);
(iii) The death or "permanent disability" of Employee. Permanent
disability shall occur if, during the term of this Agreement, Employee becomes
physically or mentally disabled such that he is substantially unable to perform
his duties hereunder and such disability continues for six (6) continuous
months; or
(iv) Good cause as determined by all of the independent directors
of the Company's Board of Directors to be a material breach justifying
termination of Employee.
(c) Notice of Termination. Any termination of Employee by the Company
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shall be communicated by a written Notice of Termination to Employee. For
purposes of this Agreement, a Notice of Termination shall specify the
termination provision of this Agreement relied upon to effect such termination
and shall set forth in reasonable detail the specific facts and circumstances
claimed to provide a basis for termination of Employee.
7. TERMINATION BY EMPLOYEE
(a) Termination. Upon thirty (30) days advance written notice
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delivered to the Company, Employee may terminate his employment with the
Company; or upon written notice delivered to the Company in accordance with
Section 6(c), Employee may terminate his employment hereunder for "Good Reason"
as is herein defined.
(b) "Good Reason" means;
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(i) the occurrence of a "Change in Control" of the Company (as
defined herein);
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(ii) a failure by the Company to comply with any material
provision of this Agreement that has not been cured within thirty (30) days
after notice of such noncompliance has been given by Employee to the Company; or
(iii) any purported termination of Employee's employment which is
not effected pursuant to a Notice of Termination as set forth in Paragraph 6(c).
(c) "Change in Control" occurs if (i) substantially all the assets of
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the Company are sold to, or the Company is merged with, any "person," as that
term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, other than a then existing shareholder or group of shareholders of the
Company (or affiliate thereof) owning fifty percent (50%) or more of the
combined voting power of the Company's then outstanding securities, or (ii) any
person or group becomes or is discovered to be a beneficial owner (as defined in
Rule 13d-3 under the Exchange Act as in effect on the date hereof) directly of
securities of the Company representing twenty-five percent (25%) or more of the
combined voting power of Company's then outstanding securities (unless such
person or group owns at least twenty-five percent (25%) of such voting power on
the effective date of this Agreement), and in connection with such change in
ownership the individuals who constitute the Board of Directors of Company
immediately prior to such change cease to constitute at least a majority of the
Board of Directors thereafter.
8. PAYMENT UPON TERMINATION
(a) Date. The "Termination Date" shall be the effective date
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specified in the Notice of Termination as provided for in Paragraphs 6(c) or
7(a).
(b) Termination by Company. In the event the Company terminates
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Employee pursuant to Paragraphs 6(b)(i), 6(b)(ii), or 6(b)(iv), the Company
shall pay to Employee his full salary through the Termination Date after which
the Company shall have no further obligation to Employee under this Agreement.
(c) Death. The Company shall maintain a life insurance policy owned
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by the Employee which provides for payment to Employee's estate or designated
beneficiary, a death benefit of $100,000.
(d) Permanent Disability. In the event the Company terminates
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Employee due to permanent disability pursuant to Paragraph 6(b)(iii), the
Company shall pay to Employee fifty percent (50%) of Employee's annual salary
then in effect, payable in equal amounts over a period of six (6) months
following termination. Such payments shall begin no later than thirty (30) days
following the Termination Date.
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(e) Wrongful Termination or Termination by Employee for Good Reason.
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If, in breach of this Agreement, the Company terminates Employee's employment
other than pursuant to Section 6 (it being understood that a termination
purported to be pursuant to Section 6 hereof which is disputed by Employee and
finally determined not to have been proper, shall be a termination by the
Company in breach of this Agreement) or if Employee terminates his employment
for Good Reason, then;
(i) The Company shall pay Employee his full salary through the
Termination Date at the rate in effect at the time the Notice of Termination is
given; and
(ii) In lieu of any further compensation payments to Employee for
periods subsequent to the Termination Date, the Company shall pay as severance
pay to Employee an amount equal to one (1) times Employee's average total
compensation for the five (5) full taxable years preceding the Change in
Control, as applicable, as determined in accordance with the "parachute
payments" provisions of the Internal Revenue Code in effect on the date of this
Agreement. If resulting from a termination based on a Change in Control of the
Company, such payments shall be made in a lump sum on or before the thirtieth
(30th) day following the Termination Date. If resulting from any other cause,
such payments shall be made in substantially equal semimonthly installments on
the fifteenth and last days of each month commencing with the month in which the
Termination Date occurs and continuing for twenty-four (24) consecutive
semimonthly payment dates (including the first such date as aforesaid); and
(iii) If termination of Employee's employment arises out of a breach
by the Company of this Agreement, the Company shall pay all other damages to
which Employee may be entitled as a result of such breach, including damages for
any and all loss of benefits to Employee under the Company's employee benefit
plans that Employee would have received if the Company had not breached this
Agreement and had Employee's employment continued for the full term as set forth
in Section 2 and including all legal fees and expenses incurred by Employee as a
result of such termination including, but not limited to, all such fees expended
in enforcement of this Agreement. If Employee resigns for Good Reason and the
Company contests its obligations, as hereunder, Employee shall be entitled to
recover as damages the amount of his legal fees and expenses, including costs of
investigation, related to his enforcement of the Agreement.
(f) No Duty to Mitigate. Employee shall not be required to mitigate
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the amount of any payment provided for in this Agreement by seeking other
employment or otherwise.
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9. SEVERABILITY
The provisions of this Agreement are severable. If a court of
competent jurisdiction determines that any one or more provisions of this
Agreement is invalid, void, or unenforceable, in whole or in part, it will be
severed therefrom. The remaining provisions of this Agreement shall then
continue in full force without being impaired or invalidated in any way.
10. ASSIGNMENT; BINDING EFFECT
(a) Assignability. This Agreement may be assigned by the Company to
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any successor to all or substantially all of the business and/or assets of the
Company.
(b) Company's Obligation Upon Assignment or Succession. The Company
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shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company or assignee of this Agreement, by agreement in form and
substance satisfactory to Employee, to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. Failure of the
Company to obtains such agreement prior to the effectiveness of any such
succession or assignment shall be a breach of this Agreement and shall entitle
Employee to compensation from the Company in the same amount and on the same
terms as he would be entitled to hereunder if he terminated his employment for
Good Reason, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Termination
Date. As used in this Agreement, "Company" shall mean the Company as herein
before defined and any successor to its business and/or assets as aforesaid
which executes and delivers the agreement provided for in this Section 10, or
which otherwise becomes bound by all the terms and provision of this Agreement
by operations of law.
(c) Successors and Assigns. This Agreement shall inure to the benefit
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of and be binding on the parties and their respective successors and assigns.
If Employee should die while any amounts would still be payable to him hereunder
if he had continued to live, all such amounts, unless otherwise provided for
herein, shall be paid in accordance with the terms of this Agreement to
Employee's devisee, legatee, or other designee or, if there be no such designee,
to Employee's estate.
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11. CONFIDENTIAL INFORMATION
Employee agrees that he shall not, during the term of this Agreement,
and for a period of five (5) years following its termination, absent the
Company's consent, disclose to any person, or otherwise use or exploit any non-
public proprietary or confidential information of material significance to the
Company and/or its affiliates, including without limitation trade secrets,
customer lists, records of research, memoranda, proposals, reports, methods,
processes, techniques, non-public financial information, contracts,
negotiations, business plans and strategies, marketing data or other non-public
information regarding the Company and/or any of its affiliates, their business,
properties or affairs ("Confidential Information") obtained by him at any time
prior to or subsequent to the execution of this Agreement, except to the extent
required by his performance of his assigned duties for the Company (including
its affiliates). Upon termination of employment, Employee shall surrender all
Confidential Information and all other property belonging to the Company and its
subsidiaries, it being understood by Employee that such documents are the sole
property of the Company and that Employee shall not make any copies thereof.
Additionally, the terms and conditions of this Agreement shall constitute
Confidential Information and shall not be disclosed by Employee except in
accordance with this Section 11.
12. CONFLICTING INVESTMENTS
During the term of this Agreement and for one (1) year after
termination of this Agreement, Employee shall not make or cause to be made on
his behalf, or maintain an investment in any business which is engaged, either
in whole or in part, in any business which is competitive with or detrimental to
any businesses of the Company, or its subsidiaries, except that Employee may
make or maintain an investment of no more than five percent (5%) of any
outstanding class of capital stock of any publicly traded company, provided such
class of capital stock is regularly traded by the public, without prior written
permission of the Company.
13. ENTIRE AGREEMENT
This Agreement constitutes the entire understanding between the
parties concerning the subject matter hereof. This Agreement supersedes all
negotiations, prior discussions, and preliminary agreements. This Agreement may
not be amended except in a writing executed by the Employee and the Company.
14. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of California, regardless of the application of conflicts
of laws principles.
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15. NOTICES
All notices, requests, demands and other communication required or
contemplated under this Agreement, shall be in writing and shall be deemed to
have been duly given when delivered personally or when enclosed in a properly
sealed and addressed envelope, registered or certified, return receipt
requested, and deposited (postage prepaid) in a post office or branch post
office regularly maintained by the United States Government.
Any notice given to the Company under the terms of this Agreement
shall be addressed to the Company at the following address:
Safeguard Health Enterprises, Inc.
Attention: Secretary
000 Xxxxx Xxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxx 00000-0000
Any notice to be given to Employee shall be addressed to him at his
home address last shown on the Company's records, or at such other address as
either party may hereafter designate in writing to the other.
16. WAIVER
No waiver of any of the provisions of this Agreement shall be deemed,
or shall constitute, a waiver of any other provision, whether or not similar,
nor shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
17. COUNTERPARTS
This Agreement may be executed in counterparts, and such counterparts
may be transmitted by facsimile, and all counterparts, taken together, will
constitute one and the same document.
18. ARBITRATION
Any dispute regarding any aspect of this Agreement or any act that
allegedly has or would violate any provision of this Agreement must be submitted
to arbitration in Orange County, California, in accordance with the rules of the
Judicial Arbitration and Mediations Service ("JAMS") as the exclusive remedy for
such claim or dispute. Either party may invoke this clause by serving on the
other, in writing, a request to arbitrate.
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Within thirty (30) days thereafter, either party may institute proceedings in
superior court to enforce this clause by way of reference pursuant to Section
638 of the California Code of Civil Procedure. If the parties cannot mutually
select a judge from the JAMS panel, the superior court shall make the selection.
The decision of JAMS will be final and binding. If Employee alleges in good
faith that he has resigned for Good Reason, then the Company is required to
advance to him any amounts necessary for legal fees and expenses, including
costs of investigation, related to the dispute, subject to the Company's receipt
of his undertaking to repay such amounts if it is ultimately determined by JAMS
that he is not entitled to keep such amounts as damages under Section 8(e)(iii).
IN WITNESS WHEREOF, the parties have duly executed this Agreement
effective January 6, 1997.
EMPLOYEE SAFEGUARD HEALTH ENTERPRISES, INC.
/s/ XXXX XXXXXXX, D.D.S. By: /s/ XXXX X. XXX
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XXXX XXXXXXX, D.D.S. XXXX X. XXX
Executive Vice President and
Chief Operating Officer
By: /s/ XXXXXX X. XXXXXXXX, X.X.
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XXXXXX X. XXXXXXXX, X.X.
Senior Vice President and
Secretary
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