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EXHIBIT 10.10
NON-COMPETITION AGREEMENT
(Xx. Xxxxxxx)
NON-COMPETITION AGREEMENT dated this 5th day of February, 1996 by and
between Monarch Dental Corporation, a Delaware corporation (the "Company"), and
Xx. Xxxxxx X. Xxxxxxx ("Xx. Xxxxxxx"). Reference is made to those Stock
Redemption and Asset Contribution Agreements (the "Purchase Agreements") dated
as of February 5, 1996, pursuant to which the Company has agreed to redeem
stock held by Xx. Xxxxxxx and to acquire certain assets held by him in
consideration of substantial cash payments and the issuance of shares of Common
Stock of the Company, subject to the terms and conditions set forth in the
Purchase Agreements. Capitalized terms used in this Agreement and not defined
herein shall have the meanings ascribed to them in the Purchase Agreements.
WITNESSETH
WHEREAS, Xx. Xxxxxxx beneficially owned substantially all of the
outstanding equity interest in the entities that have heretofore conducted the
Monarch Dental Associates business and has served as President and Chief
Executive Officer of such entities;
WHEREAS, as a material inducement to the Company to enter into the
Purchase Agreements and in consideration of the Company's covenants and
agreements contained in the Purchase Agreements, including the payment of the
substantial consideration specified therein, and of the payment made pursuant
to Section 1(b) hereof, and in further consideration of the covenants and
agreements set forth herein, and in reflection of the fact that investors are
making substantial investments in the Company concurrently herewith in partial
reliance on this Agreement, Xx. Xxxxxxx has agreed to execute and deliver this
Agreement; and
WHEREAS, the execution and delivery by Xx. Xxxxxxx of this Agreement is
a condition to the Company's willingness to consummate the transactions
specified in the Purchase Agreements.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
Section 1. Non-Competition. In view of the fact that any activity of
Xx. Xxxxxxx in violation of the terms hereof would deprive the Company and its
subsidiaries (as defined below) of the benefit of the Company's bargain under
the Purchase Agreements, as a material inducement to and a condition precedent
of the Company's payment of substantial consideration under the Purchase
Agreements, in consideration of the payment of the consideration to be paid by
the Company pursuant to Section 1(b) below and the other covenants set forth
herein, and to preserve the goodwill associated with the Monarch Dental
Associates business, Xx. Xxxxxxx hereby agrees to the following restrictions on
his activities:
(a) Non-Competition Agreement. Xx. Xxxxxxx hereby agrees that
during the period commencing on the date hereof and ending on the date which is
five (5) years after
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the date hereof, he will not, without the express written consent of the
Company, directly or indirectly, anywhere in the geographic area set forth in
Section 1(c) below, engage in any activity which is, or participate or invest
in, or provide or facilitate the provision of financing to, or assist (whether
as owner, part-owner, shareholder, partner, director, officer, trustee,
employee, agent or consultant, or in any other capacity), any business,
organization or person other than the Company (or any affiliate of the
Company), and including particularly any such business, organization or person
involving, or which is, a family member of Xx. Xxxxxxx, whose business,
activities, products or services are competitive with any of the business,
activities, products or services conducted or offered by the Company and its
subsidiaries (including for purposes of this Agreement any associated
professional corporation and the employees and independent contractors thereof
which or who provide dental services in connection with the business of the
Company and its subsidiaries (herein, "Dental Providers")) during any period in
which Xx. Xxxxxxx serves as an officer or employee of the Company or any of its
subsidiaries (but not during any consulting period as provided below), which
business, activities, products and services shall include in any event the
provision of dental health care services (including, without limitation, the
acquisition, ownership and/or operation of one or more dental health care
practices including group practices). Without implied limitation, the forgoing
covenant shall include hiring or engaging or attempting to hire or engage for
or on behalf of himself or any such competitor any officer or employee of, or
any Dental Provider who provides services in connection with the business of,
the Company or any of its direct and/or indirect subsidiaries, encouraging for
or on behalf of himself or any such competitor, any such officer, employee or
Dental Provider to terminate his, her or its relationship or employment with
the Company or any of its direct or indirect subsidiaries (including Dental
Providers), soliciting for or on behalf of himself or any such competitor any
client of the Company or any of its direct or indirect subsidiaries (including
Dental Providers) and diverting to any person (as hereinafter defined) any
client or business opportunity of the Company or of any of its direct or
indirect subsidiaries (including Dental Providers).
Notwithstanding anything herein to the contrary, (i) the provision of
dental services by Xx. Xxxxxxx as a sole practitioner shall be exempt from the
provisions of this Agreement, and (ii) Xx. Xxxxxxx may make passive investments
in any enterprise the shares of which are publicly traded if such investment
constitutes less than five (5) percent of the equity of such enterprise.
Neither Xx. Xxxxxxx nor any business entity controlled by him is a party
to any contract, commitment, arrangement or agreement which could, following
the date hereof, restrain or restrict the Company or any subsidiary or
affiliate of the Company from carrying on its business or restrain or restrict
Xx. Xxxxxxx from performing his obligations under his Employment Agreement with
the Company and a subsidiary of the Company of even date, and as of the date of
this Agreement Xx. Xxxxxxx has no business interests in the health care
industry whatsoever other than his interest in the Company, other than
interests in public companies of less than five (5) percent.
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For purposes of this Agreement, any reference to the subsidiaries of the
Company shall be deemed to include all entities directly or indirectly
controlled by it through an ownership of more than fifty percent (50%) of the
voting interests as well as any Dental Provider, and the term "person" shall
mean an individual, a corporation, an association, a partnership, an estate, a
trust, and any other entity or organization.
(b) Non-Competition Payment. In consideration of the
execution and delivery by Xx. Xxxxxxx of this Agreement, on the date hereof the
Company shall make a cash payment to Xx. Xxxxxxx in the amount of $10,000.
(c) Geographic Area. The provisions of Section 1 of this
Agreement shall apply in the following geographic areas:
(i) The state of Texas; and
(ii) All other states in which the Company or any of its
subsidiaries (including acquired businesses) commence conducting
business activities during the period during which Xx. Xxxxxxx serves as
an officer or employee of the Company or any of its subsidiaries, or in
which any company or business acquired or to be acquired by the Company
or any of its subsidiaries pursuant to an agreement entered into during
the period during which Xx. Xxxxxxx serves as an officer or employee of
the Company or any of its subsidiaries, conducts business, provided that
the Company shall notify Xx. Xxxxxxx promptly upon commencement of
business activities in any new market, whether on a de novo basis or
through acquisition.
(d) Consulting. As additional consideration for the covenants
hereunder, the Company shall engage Xx. Xxxxxxx as a consultant upon any
termination of his employment for any reason other than death or disability
prior to the fifth anniversary of the date hereof. Such engagement shall
continue until the fifth anniversary of the date hereof and Xx. Xxxxxxx shall
be paid $500 per month during such period, subject to withholding (if
applicable), by the Company or a subsidiary of the Company for his consulting
services. Xx. Xxxxxxx shall not be required to devote more than one (1) hour
per week to the performance of consulting services nor to travel from his
principal location in his performance of such services, and any consulting
services performed shall otherwise be mutually agreeable.
Section 2. Scope of Agreement. The parties acknowledge that the
time, scope, geographic area and other provisions of this Agreement have been
specifically negotiated by sophisticated commercial parties and agree that (a)
all such provisions are reasonable under the circumstances of the transactions
contemplated by the Purchase Agreements, (b) are given as an integral and
essential part of the transactions contemplated by the Purchase Agreements and
(c) but for the covenants of Xx. Xxxxxxx contained in this Agreement, the
Company would not have entered into the Purchase Agreements or consummated the
transactions contemplated thereby. Xx. Xxxxxxx has independently consulted
with his counsel and has been advised in
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all respects concerning the reasonableness and proprietary of the covenants
contained herein, with specific regard to the business to be conducted by
Company and its subsidiaries.
Section 3. Certain Remedies; Severability. It is specifically
understood and agreed that any breach of the provisions of this Agreement by
Xx. Xxxxxxx or any of his affiliates will result in irreparable injury to the
Company and its subsidiaries, 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, the Company and its subsidiaries (including, without limitation, the
limited partnership which employs Xx. Xxxxxxx as an intended beneficiary
hereof) shall be entitled to enforce the specific performance of this Agreement
by Xx. Xxxxxxx through both temporary and permanent injunctive relief without
the necessity of proving actual damages, but without limitation of their right
to damages and any and all other remedies available to them, it being
understood that injunctive relief is in addition to, and not in lieu of, such
other remedies. In the event that any covenant contained in this Agreement
shall be determined by any court of competent jurisdiction to be unenforceable
by reason of its extending for too great a period of time or over too great a
geographical area or by reason of its being too extensive in any other respect,
it shall be interpreted to extend only over the maximum period of time for
which it may be enforceable and/or over the maximum geographical area as to
which it may be enforceable and/or to the maximum extent in all other respects
as to which it may be enforceable, all as determined by such court in such
action. The existence of any claim or cause of action which Xx. Xxxxxxx may
have against the Company or any of its subsidiaries or affiliates shall not
constitute a defense or bar to the enforcement of any of the provisions of this
Agreement.
Section 4. Jurisdiction. The parties hereby irrevocably submit to
the non-exclusive jurisdiction of the courts of the State of Texas to construe
and enforce the covenants contained in this Agreement. In the event that the
courts of any state shall hold such covenants unenforceable (in whole or in
part) by reason of the breadth of such scope or otherwise, it is the intention
of the parties hereto that such determination shall not bar or in any way
affect the right of the Company or any its subsidiaries to the relief provided
for herein in the courts of any other state within the geographic scope of such
covenants, as to breaches of such covenants in such other respective states,
the above covenants as they relate to each state being, for this purpose,
severable into diverse and independent covenants.
Section 5. Notices. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given if delivered,
telecopied or mailed by certified or registered mail:
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To the Company: With a copy to:
Monarch Dental Corporation Xxxxxxx, Procter & Xxxx
0000 Xxxxxxx Xxxx, Xxxxx 000 Xxxxxxxx Xxxxx
Xxxxxx, XX 00000 Xxxxxx, XX 00000
Attn: Xxxx X. XxXxxxxx, P.C.
To Xx. Xxxxxxx: With a copy to:
Monarch Dental Corporation Xxxxxx and Xxxxx, L.L.P.
0000 Xxxxxxx Xxxx, Xxxxx 000 0000 XxxxxxxXxxx Xxxxx
Xxxxxx, XX 00000 Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
or to such other address of which any party may notify the other parties as
provided above. Notices shall be effective as of the date of such delivery or
mailing.
Section 6. Miscellaneous. This Agreement shall be governed by and
construed under the laws of the State of Texas, and shall not be modified or
discharged in whole or in part except by an agreement in writing signed by the
Company and Xx. Xxxxxxx. The prevailing party in any controversy hereunder
shall be entitled to reasonable attorneys' fees and expenses. The failure of
any 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 the Company by way of merger, consolidation or
transfer of substantially all the assets of the Company, and may not be
assigned by Xx. Xxxxxxx. This Agreement supersedes all prior understandings
and agreements between the parties relating to the subject matter hereof
(without limitation of the Purchase Agreements and the Employment Agreement
executed by Xx. Xxxxxxx as of the date 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 CORPORATION
By: /s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx, D.D.S., President
/s/ XXXXXX X. XXXXXXX
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Xx. Xxxxxx X. Xxxxxxx
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