<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
File by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
MONARCH DENTAL CORPORATION
(Name of Registrant as Specified in its charter)
Inapplicable
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11
(1) Title of each class of securities to which transaction
applies: Inapplicable
(2) Aggregate number of securities to which transaction
applies: Inapplicable
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: Inapplicable
(4) Proposed maximum aggregate value of transaction: Inapplicable
(5) Total fee paid: Inapplicable
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid: Inapplicable
(2) Form, Schedule or Registration Statement No.: Inapplicable
(3) Filing party: Inapplicable
(4) Date Filed: Inapplicable
<PAGE> 2
MONARCH DENTAL CORPORATION
4201 SPRING VALLEY ROAD, SUITE 320
DALLAS, TEXAS 75244
April 9, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Monarch Dental Corporation (the "Annual Meeting") to be held on Thursday, May
14, 1998, at 1:00 p.m., local time, at the Westin Galleria Hotel, 13340 Dallas
Parkway, Dallas, Texas.
The Annual Meeting has been called for the purpose of (i) electing one
Class I Director for a three-year term and (ii) considering and voting upon such
other business as may properly come before the Annual Meeting or any
adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 17, 1998 as
the record date for determining stockholders entitled to notice of, and to vote
at, the Annual Meeting and any adjournments or postponements thereof.
The Board of Directors of the Company recommends that you vote "FOR" the
election of the nominee of the Board of Directors as a Director of the Company.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE
ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY CARD.
Sincerely,
/s/ WARREN F. MELAMED, D.D.S.
Warren F. Melamed, D.D.S.
Chairman, President and Chief Dental
Officer
<PAGE> 3
MONARCH DENTAL CORPORATION
4201 SPRING VALLEY ROAD, SUITE 320
DALLAS, TEXAS 75244
(972) 702-7446
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 14, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Monarch
Dental Corporation (the "Company") will be held on Thursday, May 14, 1998, at
1:00 p.m., local time, at the Westin Galleria Hotel, 13340 Dallas Parkway,
Dallas, Texas (the "Annual Meeting"), for the purpose of considering and voting
upon:
1. The election of one Class I Director for a three-year term; and
2. Such other business as may properly come before the Annual Meeting
and any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 17, 1998 as
the record date for determination of stockholders entitled to notice of, and to
vote at, the Annual Meeting and any adjournments or postponements thereof. Only
holders of Common Stock of record at the close of business on that date will be
entitled to notice of, and to vote at, the Annual Meeting and any adjournments
or postponements thereof.
In the event there are not sufficient shares to be voted in favor of any of
the foregoing proposals at the time of the Annual Meeting, the Annual Meeting
may be adjourned in order to permit further solicitation of proxies.
By Order of the Board of Directors
[/s/ STEVEN G. PETERSON]
Steven G. Peterson
Secretary and Chief Financial
Officer
Dallas, Texas
April 9, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF
YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE> 4
MONARCH DENTAL CORPORATION
4201 SPRING VALLEY ROAD, SUITE 320
DALLAS, TEXAS 75244
(972) 702-7446
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 14, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Monarch Dental Corporation (the "Company")
for use at the Annual Meeting of Stockholders of the Company to be held on
Thursday, May 14, 1998 at 1:00 p.m., local time, at the Westin Galleria Hotel,
13340 Dallas Parkway, Dallas, Texas, and any adjournments or postponements
thereof (the "Annual Meeting").
At the Annual Meeting, the stockholders of the Company will be asked to
consider and vote upon the following matters:
1. The election of one Class I Director for a three-year term, such
term to continue until the annual meeting of stockholders in 2001
and until such Director's successor is duly elected and qualified;
and
2. Such other business as may properly come before the meeting and any
adjournments or postponements thereof.
The Notice of Annual Meeting, Proxy Statement and Proxy Card are first
being mailed to stockholders of the Company on or about April 9, 1998 in
connection with the solicitation of proxies for the Annual Meeting. The Board of
Directors has fixed the close of business on March 17, 1998 as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
Annual Meeting (the "Record Date"). Only holders of Common Stock of record at
the close of business on the Record Date will be entitled to notice of, and to
vote at, the Annual Meeting. As of the Record Date, there were approximately
10,235,000 shares of Common Stock outstanding and entitled to vote at the Annual
Meeting and approximately sixty-one stockholders of record. Each holder of a
share of Common Stock outstanding as of the close of business on the Record Date
will be entitled to one vote for each share held of record with respect to each
matter submitted at the Annual Meeting.
The presence, in person or by proxy, of a majority of the total number of
outstanding shares of Common Stock is necessary to constitute a quorum for the
transaction of business at the Annual Meeting. A quorum being present, the
affirmative vote of a plurality of the votes cast is necessary to elect the
nominee as a Director of the Company.
Shares that reflect abstentions or "broker non-votes" (i.e., shares
represented at the meeting held by brokers or nominees as to which instructions
have not been received from the beneficial owners or persons entitled to vote
such shares and with respect to which the broker or nominee does not have
discretionary voting power to vote such shares) will be counted for purposes of
determining whether a quorum is present for the transaction of business at the
meeting. With respect to the election of the Director, votes may be cast in
favor of or withheld from the nominee; votes that are withheld will be excluded
entirely from the vote and will have no effect. Broker non-votes will also have
no effect on the outcome of the election of the Director.
STOCKHOLDERS OF THE COMPANY ARE REQUESTED TO COMPLETE, DATE, SIGN AND
RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE. COMMON STOCK
REPRESENTED BY PROPERLY EXECUTED PROXIES RECEIVED BY THE COMPANY AND NOT REVOKED
WILL BE VOTED AT THE ANNUAL MEETING IN ACCORDANCE WITH THE INSTRUCTIONS
CONTAINED THEREIN. IF INSTRUCTIONS ARE NOT GIVEN THEREIN, PROPERLY EXECUTED
PROXIES WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEE FOR DIRECTOR LISTED IN
THIS PROXY STATEMENT. IT IS NOT ANTICIPATED THAT ANY MATTERS OTHER THAN THE
<PAGE> 5
ELECTION OF DIRECTORS, WILL BE PRESENTED AT THE ANNUAL MEETING. IF OTHER MATTERS
ARE PRESENTED, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE DISCRETION OF THE
PROXY HOLDERS.
Any properly completed proxy may be revoked at any time before it is voted
on any matter (without, however, affecting any vote taken prior to such
revocation) by giving written notice of such revocation to the Secretary of the
Company, or by signing and duly delivering a proxy bearing a later date, or by
attending the Annual Meeting and voting in person. Attendance at the Annual
Meeting will not, by itself, revoke a proxy.
The Annual Report of the Company, including financial statements for the
year ended December 31, 1997 is being mailed to stockholders of the Company
concurrently with this Proxy Statement. The Annual Report, however, is not a
part of the proxy solicitation material.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of five members and is
divided into three classes, with one Director in Class I, two Directors in Class
II and two Directors in Class III. Directors serve for three-year terms with one
class of Directors being elected by the Company's stockholders at each annual
meeting.
At the Annual Meeting, one Class I Director will be elected to serve until
the annual meeting of stockholders in 2001 and until such Director's successor
is duly elected and qualified. The Board of Directors has nominated John E.
Maupin, Jr., D.D.S. for re-election as the Class I Director. Unless otherwise
specified in the proxy, it is the intention of the persons named in the proxy to
vote the shares represented by each properly executed proxy for the re-election
of Dr. Maupin as a Director. The nominee has agreed to stand for re-election and
to serve, if elected, as a Director. However, if the person nominated by the
Board of Directors fails to stand for election or is unable to accept election,
the proxies will be voted for the election of such other person as the Board of
Directors may recommend.
VOTE REQUIRED FOR APPROVAL
A quorum being present, the affirmative vote of a plurality of the votes
cast is necessary to elect the nominee as a Director of the Company.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE ELECTION OF
THE NOMINEE OF THE BOARD OF DIRECTORS AS A DIRECTOR OF THE COMPANY.
INFORMATION REGARDING DIRECTORS
The Board of Directors of the Company held seven meetings during 1997.
During 1997, each of the incumbent Directors attended at least 75% of the total
number of meetings of the Board and of the committees of which he was a member.
The Board of Directors has established an Audit Committee (the "Audit
Committee") and a Compensation and Option Committee (the "Compensation
Committee"). The Audit Committee recommends the firm to be appointed as
independent accountants to audit financial statements and to perform services
related to the audit, reviews the scope and results of the audit with the
independent accountants, reviews with management and the independent accountants
the Company's annual operating results, considers the adequacy of the internal
accounting procedures and considers the effect of such procedures on the
accountants' independence. The Compensation Committee reviews and recommends the
compensation arrangements for officers and other senior level employees, reviews
general compensation levels for other employees as a group, determines the
options or stock to be granted to eligible persons under the Company's 1996
Stock Option and Incentive Plan (the "1996 Stock Plan") and takes such other
action as may be required in connection with the Company's compensation and
incentive plans. The Audit Committee consists of Glenn E. Hemmerle, Roger B.
Kafker and John E. Maupin, Jr., D.D.S. and held two meetings during 1997. The
Compensation Committee consists of Glenn E. Hemmerle and Roger B. Kafker and
held two meetings during 1997.
2
<PAGE> 6
Non-employee directors other than Mr. Kafker (the "Independent Directors")
receive a fee of $1,000 for each regularly scheduled quarterly meeting of the
Board of Directors that they attend and each director is reimbursed for travel
and other expenses incurred in attending meetings. Each Independent Director
acquired 10,000 shares of restricted Common Stock or options to purchase 10,000
shares of Common Stock at the time he joined the Board. The Company intends to
grant options to purchase approximately 10,000 shares of Common Stock to
Independent Directors who join the Board in the future.
Set forth below is certain information regarding the Directors of the
Company, including the Class I Director who has been nominated for the election
at the Annual Meeting, based on information furnished by them to the Company.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE
---- --- --------
<S> <C> <C>
CLASS I -- TERM EXPIRES 1998
John E. Maupin, Jr., D.D.S.(1)*............................. 51 1997
CLASS II -- TERM EXPIRES 1999
Roger B. Kafker(1)(2)....................................... 36 1996
Warren F. Melamed, D.D.S.................................... 51 1983
CLASS III -- TERM EXPIRES 2000
Gary W. Cage................................................ 53 1997
Glenn E. Hemmerle(1)(2)..................................... 52 1996
</TABLE>
- ---------------
* Nominee for re-election.
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
The principal occupation and business experience for at least the last five
years for each Director of the Company is set forth below.
Gary W. Cage has served as the Chief Executive Officer of the Company since
March 1997 and served as the Chief Operating Officer of the Company from March
1996 to March 1997. Prior to joining the Company, he served as the Chief
Financial Officer, Senior Vice President, Treasurer and Secretary of EmCare
Holdings Inc., a provider of management services to emergency physicians, from
October 1992 to March 1996; as the Chief Financial Officer of Team Bancshares,
Inc., a bank holding company, from 1989 to October 1992; and as Chief Financial
Officer of Texas American Bancshares, Inc., a bank holding company, from 1974 to
1989.
Glenn E. Hemmerle has served as a director of the Company since August
1996. He has served as the President and Chief Executive Officer of The Johnny
Rockets Group, Inc., a restaurant-chain operator, since February 1997. Prior to
February 1997, Mr. Hemmerle served as the President and Chief Executive Officer
of Pearl Vision, Inc., a retail eyeglass company, from July 1994 to November
1996; and as the President and Chief Executive Officer of Crown Books Inc., a
retail bookseller, from August 1992 to July 1994. Mr. Hemmerle is also a
director of The Bombay Company, a retail furniture company.
Roger B. Kafker has served as a director of the Company since February
1996. He has been associated with TA Associates, Inc. or its predecessor since
1989 and became a Principal of that firm in 1994 and a Managing Director in
1995. Mr. Kafker is also a director of Affiliated Managers Group, Inc., an asset
management holding company, ANSYS, Inc., a software company, and Boron, LePore &
Associates, Inc., a company providing outsourced marketing services to the
pharmaceutical industry.
John E. Maupin, Jr., D.D.S. has served as a director of the Company since
September 1997. He has served as the president of Meharry Medical College in
Nashville, Tennessee since July 1994. Prior to July 1994 Dr. Maupin was the
executive vice president of the Morehouse School of Medicine in Atlanta,
Georgia.
3
<PAGE> 7
Warren F. Melamed, D.D.S., founded the Company in 1983 and has served as
its President and Chairman since then. From 1985 until March 1997, Dr. Melamed
served as the Chief Executive Officer of the Company and since March 1997 has
served as the Chief Dental Officer of the Company.
EXECUTIVE OFFICERS
The names and ages of all executive officers of the Company and the
principal occupation and business experience for at least the last five years
for each are set forth below (unless previously set forth above) as of December
31, 1997.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Warren F. Melamed, 51 Chairman of the Board, President and Chief Dental
D.D.S.................... Officer
Gary W. Cage............... 53 Chief Executive Officer
David L. Hehli. D.D.S...... 54 President, Midwest Dental Care
Steven G. Peterson......... 32 Chief Financial Officer and Secretary
</TABLE>
David L. Hehli, D.D.S., founded Midwest Dental Care in 1975 and has served
as its President since then, including following the completion of the Company's
acquisition of Midwest Dental Care.
Steven G. Peterson has served as the Chief Financial Officer of the Company
since April 1997 and served as the Director of Finance of the Company from April
1996 to April 1997. Prior to joining the Company, he served as the Director of
Finance of EmCare Holdings Inc. from October 1993 to April 1996. From June 1990
until October 1993, Mr. Peterson served in numerous positions with Bank One,
Texas, N.A., and its predecessor, Team Bancshares, Inc., most recently as Vice
President and Director of Planning and Budgeting.
Each of the officers holds his respective office until the regular annual
meeting of the Board of Directors following the annual meeting of stockholders
and until his successor is elected and qualified or until his earlier
resignation or removal.
4
<PAGE> 8
EXECUTIVE COMPENSATION
The following sections of this Proxy Statement set forth and discuss the
compensation paid or awarded during the last two years to the Company's Chief
Executive Officer and the four most highly compensated executive officers who
earned in excess of $100,000 during 1997 (the "Named Executive Officers").
SUMMARY COMPENSATION
Summary Compensation. The following summary compensation table sets forth
information concerning compensation for services rendered in all capacities
awarded to, earned by or paid to the Named Executive Officers during each of the
last two completed years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
----------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
----------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (SHARES) ($)
--------------------------- ---- ---------- --------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Warren F. Melamed, D.D.S. 1997 300,000 150,000 150,000 14,702(1)
Chairman, President and 1996 275,000 -- -- 10,717(1)
Chief Dental Officer
Gary W. Cage(2) 1997 193,269 100,000 175,000 2,000(5)
Chief Executive Officer 1996 134,615 70,000 25,000 --
David L. Hehli, D.D.S.(3) 1997 200,000 1,600 -- 16,379(6)
President, Midwest Dental Care 1996 66,667 800 -- 5,460(6)
Steven G. Peterson(4) 1997 84,231 36,000 20,000 1,038(5)
Chief Financial Officer 1996 51,923 27,500 -- --
Charles G. Shears, D.D.S.(7) 1997 177,885 -- -- --
Executive Vice President 1996 224,657 -- -- 11,000(6)
</TABLE>
- ---------------
(1) Includes $2,000 contributed by the Company to Dr. Melamed's 401(k) account
as a matching contribution in each year and $12,702 and $8,717 paid to Dr.
Melamed as a car allowance in 1997 and 1996, respectively.
(2) Employment commenced in March 1996.
(3) Employment commenced in September 1996.
(4) Employment commenced in April 1996.
(5) Includes contributions by the Company to Mr. Cage's and Mr. Peterson's
401(k) accounts as a matching contribution.
(6) Includes payments to Dr. Hehli and Dr. Shears as a car allowance.
(7) Retired from the Company effective September 1997.
5
<PAGE> 9
Option Grants. The following table sets forth certain information
concerning the individual grant of options to purchase Common Stock of the
Company to the Named Executive Officers of the Company who received such grants
during 1997.
OPTION GRANTS IN LAST YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF PERCENT VALUE AT ASSUMED
SECURITIES OF TOTAL ANNUAL RATES OF
UNDERLYING OPTIONS EXERCISE STOCK PRICE APPRECIATION
OPTIONS GRANTED OR BASE FOR OPTION TERM(1)
GRANTED TO EMPLOYEES PRICE PER EXPIRATION -------------------------
NAME (#)(2) IN YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- ------------ --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Warren F. Melamed, D.D.S. ..... 150,000 37.4% $13.00 5/27/07 $1,226,345 $3,107,798
Gary W. Cage................... 25,000 6.2% 7.70 3/28/07 121,062 306,795
150,000 37.4% 13.00 5/27/07 1,226,345 3,107,798
Steven G. Peterson............. 20,000 5.0% 13.00 5/27/07 163,513 414,373
</TABLE>
- ---------------
(1) This column shows the hypothetical gain or option spreads of the options
granted based on assumed annual compound stock appreciation rates of 5% and
10% over the full 10-year term of the options. The 5% and 10% assumed rates
of appreciation are mandated by the rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of
future Common Stock prices. The gains shown are net of the option exercise
price, but do not include deductions for taxes or other expenses associated
with the exercise of the option or the sale of the underlying shares, or
reflect non-transferability, vesting or termination provisions. The actual
gains, if any, on the exercises of stock options will depend on the future
performance of the Common Stock.
(2) The options set forth above become exercisable in four equal installments,
commencing on the first anniversary of the grant date. All options are
subject to the employee's continued employment and terminate ten years after
the grant date. All options were granted at fair market value as determined
by the Compensation Committee of the Board of Directors of the Company on
the date of grant. See "1996 Stock Option and Incentive Plan."
Option Exercises and Option Values. The following table sets forth
information concerning the number and value of unexercised options to purchase
Common Stock of the Company held by the Named Executive Officers of the Company
who held such options at December 31, 1997. No Named Executive Officer of the
Company exercised any options to purchase Common Stock during 1997.
AGGREGATED YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT DECEMBER 31, 1997(#)(1) AT DECEMBER 31, 1997($)(1)(2)
---------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Warren F. Melamed, D.D.S....... -- 150,000 -- 37,500
Gary W. Cage................... 6,250 193,750 64,063 368,438
Steven G. Peterson............. -- 20,000 -- 5,000
</TABLE>
- ---------------
(1) The options set forth above become exercisable in four equal installments,
commencing on the first anniversary of the grant date. All options are
subject to the employee's continued employment and terminate ten years after
the grant date. All options were granted at fair market value as determined
by the Compensation Committee of the Board of Directors of the Company on
the date of grant. See "1996 Stock Option and Incentive Plan."
(2) Based on the last reported sale price on the Nasdaq National Market on
December 31, 1997 ($13.25 per share) less the option exercise price.
6
<PAGE> 10
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Compensation Committee is responsible for the oversight of all of the
Company's compensation policies and practices including benefits and
perquisites. Compensation is defined as base salary, all forms of variable pay
and pay-for-performance, and stock options, restricted stock or any other plans
directly or indirectly related to the Company's stock. Members of the
Compensation Committee will be appointed from the Board of Directors annually at
the first meeting of the Board following the annual meeting of stockholders. Not
less than a majority of the Compensation Committee will consist of outside
directors. It is also envisioned that the composition of the Compensation
Committee will reflect the requirements of Rule 16b-3 under the Securities
Exchange Act of 1934 as in effect from time to time.
Compensation Philosophy. The objective of the Company's Compensation
Committee is to provide compensation that will attract and retain executives,
motivate each executive toward the achievement of the Company's short and
long-term financial goals and objectives and recognize individual contributions
as well as overall business results. In order to achieve this objective, the
primary focus of the Compensation Committee has been on the competitiveness of
each of the key elements of executive compensation (base salary, bonus and stock
option grants) and the compensation package as a whole. In general, the
Compensation Committee believes that total compensation should reflect both the
relative performance of the Company among its peer group of dental practice
management companies and other public companies of similar size as well as the
Company's performance as measured against its own financial objectives. The
Company's objectives include quantitative factors that directly improve the
Company's short-term financial performance and qualitative factors that
strengthen the Company's ability to enhance profitable growth over the
long-term, such as demonstrated leadership ability, management development,
insuring compliance with health care and other laws and Company policies, and
anticipating and responding to changing market and economic conditions.
Compensation of the Chief Executive Officer. In determining Mr. Cage's
compensation for 1997, the Compensation Committee reviewed information regarding
the compensation paid to the Chief Executive Officers of comparable companies,
and evaluated achievement of corporate, individual and organizational objectives
for the year. Mr. Cage's annual compensation for 1997 was $193,269. Like other
executive officers, Mr. Cage also received an incentive bonus determined on the
basis of (i) successfully completed acquisitions during 1997, representing the
addition of 39 dental offices and 74 dentists, and (ii) the successful
completion of the Company's initial public offering in July 1997 resulting in
proceeds to the Company of approximately $37.2 million. Mr. Cage was awarded an
incentive bonus of $100,000 for 1997. In addition, Mr. Cage was awarded options
to purchase 175,000 shares of the Company's Common Stock at a weighted average
exercise price of $12.24 per share in order to provide him with a long-term
incentive tied to the Company's performance.
Deductibility of Executive Compensation. Beginning in 1994, the Internal
Revenue Code of 1986, as amended (the "Code"), limited the federal income tax
deductibility of compensation paid to the Company's Chief Executive Officer and
to each of the other four most highly compensated executive officers. For this
purpose, compensation can include, in addition to cash compensation, the
difference between the exercise price of stock options and the value of the
underlying stock on the date of exercise. The Company may deduct compensation
with respect to any of these individuals only to the extent that during any year
such compensation does not exceed $1 million or meets certain other conditions
(such as stockholder approval). Considering the Company's current compensation
plans and policy, the Company and the Committee believe that, for the near
future, there is little risk that the Company will lose any significant tax
deduction relating to executive compensation. If the deductibility of executive
compensation becomes a significant issue, the Company's compensation plans and
policy will be modified to maximize deductibility if the Company and the
Committee determine that such action is in the best interests of the Company.
COMPENSATION COMMITTEE
Glenn E. Hemmerle
Roger B. Kafker
7
<PAGE> 11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Since April 1996, all executive officer compensation decisions have been
made by the Compensation Committee. Between February 1996 and April 1996,
executive officer compensation decisions were made by Dr. Melamed and Mr.
Kafker. The Compensation Committee reviews and makes recommendations to the
Board of Directors regarding the compensation for senior management and key
employees of the Company, including salaries and bonuses. The current members of
the Compensation Committee are Messrs. Hemmerle and Kafker, neither of whom is
an executive of the Company.
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the percentage change in the
cumulative total shareholder return on the Company's Common Stock, based on the
market price of the Company's Common Stock, with the total return of companies
included within the Nasdaq National Market Composite Index and a peer group of
companies described below that the Company selected for purposes of this
comparison (the "Peer Group") for the period commencing July 18, 1997, the date
of the Company's initial public offering, and ending December 31, 1997. The
calculation of total cumulative return assumes a $100 investment in the
Company's Common Stock, the Nasdaq National Market Composite Index and the Peer
Group on July 18, 1997. The return of each Company in the Peer Group has been
weighted to reflect its relative stock market capitalization.
<TABLE>
<CAPTION>
Nasdaq
National
Monarch Market
Measurement Period Dental Peer Group Composite
(Fiscal Year Covered) Corporation Index Index
<S> <C> <C> <C>
July 18, 1997 100.00 100.00 100.00
December 31, 1997 101.92 98.93 101.51
</TABLE>
The Peer Group is comprised of Coast Dental Services, Inc., Gentle Dental
Services Corporation and Orthodontic Centers of America, Inc. The companies in
the Peer Group are all engaged in the dental practice management
line-of-business within the healthcare industry.
8
<PAGE> 12
1996 Stock Option and Incentive Plan. The 1996 Stock Plan was initially
adopted by the Board of Directors in February 1996 and was subsequently approved
by the Company's stockholders. The 1996 Stock Plan permits (i) the grant of
Incentive Options, (ii) the grant of Non-Qualified Options, (iii) the issuance
or sale of Common Stock with or without vesting or other restrictions ("Stock
Grants") (iv) the issuance or sale of Common Stock without restrictions
("Unrestricted Stock"), (v) the grant of Common Stock upon the attainment of
specified performance goals ("Performance Share Awards") and (vi) the grant of
the right to receive cash dividends with the holders of the Common Stock as if
the recipient held a specified number of shares of the Common Stock ("Dividend
Equivalent Rights"). These grants may be made to officers and other employees,
directors, advisors, consultants and other key persons of the Company and its
subsidiaries. The 1996 Stock Plan provides for the issuance of 1,376,250 shares
of Common Stock of which (i) 556,750 shares were subject to outstanding options
with a weighted average exercise price of $12.19 per share at December 31, 1997
and (ii) 345,208 were sold pursuant to restricted stock awards for an aggregate
cash purchase price of $73,184 and remained outstanding at December 31, 1997. On
and after the date the 1996 Stock Plan becomes subject to Section 162(m) of the
Internal Revenue Code of 1986, as amended, options with respect to no more than
150,000 shares of Common Stock may be granted to any one individual in any
calendar year. During 1997, Non-Qualified Options to purchase 531,750 shares of
Common Stock with a weighted average exercise price of $12.62 per share were
granted under the 1996 Stock Plan.
The 1996 Stock Plan is administered by the Compensation Committee. Subject
to the provisions of the 1996 Stock Plan, the Compensation Committee has full
power to determine from among the persons eligible for grants under the 1996
Stock Plan the individuals to whom grants will be made, the combination of
grants to participants and the specific terms of each grant, including vesting.
Incentive Options may be granted only to officers or other full-time employees
of the Company or its subsidiaries, including members of the Board of Directors
who are also full-time employees of the Company or its subsidiaries.
The option exercise price of options granted under the 1996 Stock Plan is
determined by the Compensation Committee but, in the case of Incentive Options,
may not be less than 100% of the fair market value of the underlying shares on
the date of grant. If any employee of the Company or any subsidiary owns (or is
deemed to own) at the date of grant shares of stock representing in excess of
10% of the combined voting power of all classes of stock of the Company or any
parent or subsidiary, the option exercise price for Incentive Options granted to
such employee may not be less than 110% of the fair market value of the
underlying shares on that date. Non-Qualified Options may be granted at prices
less than the fair market value of the underlying shares on the date granted.
Options typically are subject to vesting schedules, terminate 10 years from the
date of grant and may be exercised for specified periods subsequent to the
termination of the optionee's employment or other business relationship with the
Company. At the discretion of the Compensation Committee, any option may include
a "reload" feature pursuant to which an optionee exercising an option receives
in addition to the number of shares of Common Stock due on the exercise of such
an option an additional option with an exercise price equal to the fair market
value of the Common Stock on the date such additional option is granted. Upon
the exercise of options, the option exercise price must be paid in full either
in cash or by certified or bank check or other instrument acceptable to the
Compensation Committee or, in the sole discretion of the Compensation Committee,
by delivery of shares of Common Stock already owned by the optionee.
The 1996 Stock Plan also permits Stock Grants, Performance Share Awards and
grants of Dividend Equivalent Rights. Stock Grants may be made to persons
eligible under the 1996 Stock Plan, subject to such conditions and restrictions
as the Compensation Committee may determine. Prior to the vesting of shares,
recipients of Stock Grants generally will have all the rights of a stockholder
with respect to the shares, including voting and dividend rights, subject only
to the conditions and restrictions set forth in the 1996 Stock Plan or in any
agreement. The Compensation Committee may also make Stock Grants to persons
eligible under the 1996 Stock Plan in recognition of past services or other
valid consideration, or in lieu of cash compensation. In the case of Performance
Share Awards, the issuance of shares of Common Stock will occur only after the
conditions and restrictions set forth in the grant agreement are satisfied. In
addition, the Compensation Committee may grant Dividend Equivalent Rights in
conjunction with any other grant made pursuant to the 1996 Stock Plan or as a
free-standing grant. Dividend Equivalent Rights may be paid currently
9
<PAGE> 13
or deemed to be reinvested in additional shares of Common Stock, which may
thereafter accrue further dividends.
The Compensation Committee may, in its sole discretion, accelerate or
extend the date or dates on which all or any particular option or options
granted under the 1996 Stock Plan may be exercised or vest. To the extent not
exercised, all options granted under the 1996 Stock Plan terminate upon the
merger, liquidation or sale of substantially all of the assets of the Company,
except for options to purchase 350,000 shares of Common Stock issued to Dr.
Melamed and Mr. Cage which accelerate automatically in such circumstances,
unless assumed by a successor entity or otherwise determined by the Compensation
Committee. All shares of restricted Common Stock issued under the 1996 Stock
Plan are generally treated as fully vested on any merger, liquidation or sale of
substantially all of the assets of the Company.
Restricted Stock Grants. Since adopting the 1996 Stock Plan, the Company
has sold an aggregate of 345,208 shares of restricted Common Stock to employees
and directors of the Company under the 1996 Stock Plan. These shares generally
vest in equal monthly installments (or annually in the case of the shares sold
to Dr. Melamed) over four years beginning with the date of sale, with unvested
shares subject to repurchase at cost upon the termination of the purchaser's
employment or other relationship with the Company. All shares of restricted
Common Stock issued are generally treated as fully vested on any merger,
liquidation or sale of substantially all of the assets of the Company.
1997 Employee Stock Purchase Plan. The Company's 1997 Employee Stock
Purchase Plan (the "Purchase Plan") was adopted by the Board of Directors and
approved by the Company's stockholders. Up to 250,000 shares of Common Stock may
be issued under the Purchase Plan. The Purchase Plan is administered by the
Compensation Committee.
Offerings under the Purchase Plan commence on each January 1 and July 1 and
have a duration of six months. Generally, all employees who are customarily
employed for more than 20 hours per week as of the first day of the applicable
offering period are eligible to participate in the Purchase Plan. Any employee
who owns or is deemed to own shares of stock representing in excess of 5% of the
combined voting power of all classes of stock in the Company may not participate
in the Purchase Plan.
During each offering, an employee may purchase shares under the Purchase
Plan by authorizing payroll deductions of up to 10% of his or her cash
compensation during the offering period. The maximum number of shares which may
be purchased by any participating employee during any offering period is limited
to 1,000 shares (as adjusted by the Compensation Committee from time to time).
Unless the employee has previously withdrawn from the offering, his or her
accumulated payroll deductions will be used to purchase Common Stock on the last
business day of the period at a price equal to 85% of the fair market value of
the Common Stock on the first or last day of the offering period, whichever is
lower. Under applicable tax rules, an employee may purchase no more than $25,000
worth of Common Stock in any calendar year. The Company issued a total of 4,089
shares of Common Stock in January 1998 under the Purchase Plan.
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
The Company has entered into employment agreements with Dr. Warren F.
Melamed and Gary W. Cage. The terms of the agreements are substantially similar
except with respect to minimum annual base salary ($300,000 for Dr. Melamed and
$200,000 for Mr. Cage). The agreements have initial employment terms ending on
June 30, 2001 and automatically renew for one year periods thereafter. In the
event of a termination of employment without cause or a material breach by the
Company, the agreements provide for severance equal to the greater of the
executive's unpaid compensation under the agreement through the end of the
initial term or two year's average total compensation over the three most
recently completed years. Upon termination by the Company of the executive's
employment without cause or upon resignation by the executive for Good Reason
(as defined) within twelve months following a change in control of the Company
(as defined), the executive is entitled to receive severance equal to the
greater of the executive's unpaid total compensation under the agreement up to a
maximum of three year's total compensation or two year's average total
compensation. As provided in the employment agreements, the executives have also
entered into non-competition agreements with the Company pursuant to which they
may not engage in certain competitive
10
<PAGE> 14
activities in the dental industry without the Company's consent prior to the
later of June 30, 2001 or the date on which they stop receiving severance
payments following the termination of employment for any reason.
The Company entered into an Employment Agreement with Dr. Hehli in
connection with the acquisition of Midwest Dental Care ("Midwest") pursuant to
which Dr. Hehli continues to serve as President of Midwest. The agreement
provides for (i) an annual base salary of $200,000, subject to annual inflation
adjustments beginning in 1997, (ii) an employment term ending on December 31,
2001 and (iii) the continuation of base salary payments and other benefits until
December 31, 2001 in the event such employment is terminated by the Company
without cause (as defined) or by Dr. Hehli following a material breach of the
agreement by the Company.
The Company also entered into a Non-Competition Agreement with Dr. Hehli
and certain entities affiliated with Dr. Hehli. The agreement provides that Dr.
Hehli and each such entity affiliated with Dr. Hehli will not engage in certain
competitive activities without the Company's consent prior to one year following
the later to occur of the termination of Dr. Hehli's employment with the Company
or the receipt by Dr. Hehli of his last base salary payment.
CERTAIN TRANSACTIONS
The Company provides administrative services to Midwest Dental Plan, Ltd.
(the "Midwest Plan"), a capitated managed dental care plan of which Dr. Hehli
owns a majority interest, pursuant to an administrative services and management
agreement. The Company receives a percentage of the gross premiums or other
amounts received by the Midwest Plan under existing contracts with employer
groups. In addition, Midwest is a provider of dental services under the Midwest
Plan in exchange for capitation payments and co-payments from plan members. The
Company received $1.5 million under these arrangements during 1997.
The Company leases one facility from Dr. Melamed, nine facilities from
entities controlled by Dr. Shears and four facilities from Dr. Hehli, in
connection with which the Company made aggregate lease payments of $74,000,
$306,000 and $261,000 to Drs. Melamed, Shears and Hehli, respectively, during
1997. The Company believes that these leases are on terms and at rates no less
favorable to the Company than could have been obtained from unaffiliated third
parties.
The Company has entered into a Management Agreement dated as of February 6,
1996 with Modern Dental Professionals, P.C., a dental professional corporation
owned by Dr. Melamed (the "Texas P.C."), which employs or contracts with all of
the dental professionals practicing at the Company's dental offices in Texas
under the Management Agreement. The Company provides the Texas P.C. with, among
other things, the facilities, administrative personnel and supplies, as well as
numerous services, including administrative, accounting, cash management,
financial statements and reports, budgeting including capital expenditures,
recruiting, insurance, litigation management, managed care contracting,
management information systems, billing and collection services. The Management
Agreement is for a term of 40 years, with automatic renewal thereafter, and
generally may be terminated by the Texas P.C. only for cause, which includes an
uncured breach of the agreement by the Company, or upon the Texas P.C.'s
bankruptcy or voluntary dissolution. The Management Agreement may be terminated
by the Company as of any anniversary date of the Management Agreement upon 90
days' prior written notice.
The Company receives a management fee under the Management Agreement with
the Texas P.C. equal to the Company's costs plus the lower of (i) 30% of the
Texas P.C.'s net revenues or (ii) the P.C.'s net pre-tax income. The Company's
costs include all direct and indirect costs, overhead and expenses relating to
the Company's provision of services to the Texas P.C. under the Management
Agreement.
In addition to the Management Agreement with the Texas P.C., the Company
has a contractual right to designate or approve the licensed dentist or dentists
who own the Texas P.C.'s capital stock in the event Dr. Melamed ceases to be
affiliated with the Company for any reason.
The Company has adopted a policy providing that all material transactions
between the Company and its officers, directors and other affiliates must (i) be
approved by a majority of the members of the Company's
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<PAGE> 15
Board of Directors and by a majority of the disinterested members of the
Company's Board of Directors and (ii) be on terms no less favorable to the
Company than could be obtained from unaffiliated third parties. In addition,
this policy will require that any loans by the Company to its officers,
directors or other affiliates be for bona fide business purposes only.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and Directors, and persons who own more than 10% of the Company's
outstanding shares of Common Stock (collectively, "Section 16 Persons"), to file
initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission ("SEC") and The Nasdaq Stock Market, Inc.
Section 16 Persons are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain Section 16 Persons that no Section 16(a)
reports were required for such persons, the Company believes that during 1997,
the Section 16 Persons complied with all Section 16(a) filing requirements
applicable to them, except that John E. Maupin, Jr., D.D.S. failed to file a
Form 3 on a timely basis upon being elected as a director of the Company and
failed to file one Form 4 disclosing the issuance to him of an option to
purchase 10,000 shares of Company's Common Stock (which event was subsequently
reported on his Form 3).
PRINCIPAL AND MANAGEMENT STOCKHOLDER
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table represents certain information about persons or
entities known to the Company to own, directly or indirectly, more than five
percent of the Company's Common Stock as of March 1, 1998.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
--------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
------------------------------------ --------- -------
<S> <C> <C>
TA Associates Group........................................ 2,673,200(1)(2) 26.2%
c/o TA Associates, Inc.
High Street Tower
125 High Street, Suite 2500
Boston, MA 02110-2720
Warren F. Melamed, D.D.S................................... 2,015,932(1) 19.7%
c/o Monarch Dental Corporation
4201 Spring Valley Road, Suite 320
Dallas, TX 75244
The Kaufmann Fund, Inc..................................... 600,000(1) 5.9%
140 East 45th Street, 43rd Floor
New York, NY 10017
</TABLE>
- ---------------
(1) The information reported is based upon Schedule 13G's filed with the
Securities and Exchange Commission and delivered to the Company reporting
beneficial ownership as of December 31, 1997.
(2) Includes (i) 1,829,029 shares of Common Stock owned by Advent VII L.P., (ii)
631,433 shares of Common Stock owned by Advent Atlantic and Pacific II L.P.,
(iii) 182,885 shares of Common Stock owned by Advent New York L.P. and (iv)
29,853 shares of Common Stock owned by TA Venture Investors Limited
Partnership. Advent VII L.P., Advent Atlantic and Pacific II L.P., Advent
New York L.P. and TA Venture Investors Limited Partnership are part of an
affiliated group of investment partnerships referred to, collectively, as
the TA Associates Group. The general partner of Advent VII L.P. is TA
Associates VII L.P. The general partner of Advent Atlantic and Pacific II
L.P. is TA
12
<PAGE> 16
Associates AAP II Partners L.P. The general partner of Advent New York L.P.
is TA Associates VI L.P. The general partner of each of TA Associates VII
L.P., TA Associates AAP II Partners L.P. and TA Associates VI L.P. is TA
Associates, Inc. In such capacity, TA Associates, Inc. exercises sole voting
and investment power with respect to all of the shares held of record by the
named investment partnerships, with the exception of those shares held by TA
Venture Investors Limited Partnership; individually, no stockholder,
director or officer of TA Associates, Inc. is deemed to have or share such
voting or investment power. Principals and employees of TA Associates, Inc.
(including Mr. Kafker, a director of the Company) comprise the general
partners of TA Venture Investors Limited Partnership. In such capacity, Mr.
Kafker may be deemed to share voting and investment power with respect to
the 29,853 shares held of record by TA Venture Investors Limited
Partnership. Mr. Kafker disclaims beneficial ownership of such shares,
except as to 5,115 shares as to which he holds a pecuniary interest.
(3) Includes 150,000 shares of restricted stock held by Dr. Melamed, 75,000
shares of which had vested as of March 1, 1998, and the remainder of which
vest in equal annual installments of 37,500 shares on each of February 6,
1999 and 2000, and are subject to repurchase at a price of $0.21 per share
upon a termination of Dr. Melamed's employment prior to the relevant vesting
date. Does not include 289,830 shares held by irrevocable trusts for the
benefit of members of Dr. Melamed's family of which Dr. Melamed is not a
trustee, as to which shares Dr. Melamed disclaims beneficial ownership.
Excludes 150,000 shares subject to options not exercisable within 60 days.
SECURITY OWNERSHIP OF MANAGEMENT
The following table represents certain information as to each director and
Named Executive Officer of the Company as of March 1, 1998 (other than Dr.
Melamed whose beneficial ownership is set forth above), based on representations
to the Company by each director and Named Executive Officer with respect to such
person's beneficial ownership. All individuals listed in the table have sole
voting and investment power over the shares reported as owned unless otherwise
indicated, subject to community property laws where applicable.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
--------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
------------------------------------ ----------- ---------
<S> <C> <C>
David L. Hehli, D.D.S....................................... 347,841 3.4%
Charles G. Shears, D.D.S.................................... 115,930 1.1%
Gary W. Cage(1)............................................. 112,500 1.1%
Glenn E. Hemmerle(2)........................................ 10,000 *
Steven G. Peterson(3)....................................... 10,000 *
Roger B. Kafker(4).......................................... 5,115 *
John E. Maupin, Jr., D.D.S.(5).............................. -- *
All executive officers and directors as a group (8
persons)(6)............................................... 2,617,318 25.6%
</TABLE>
- ---------------
* Less than 1%.
(1) Includes 100,000 shares of restricted stock held by Mr. Cage, approximately
45,833 of which were vested as of March 1, 1998, and the remainder of which
will become vested in equal monthly installments of approximately 2,083
shares and are subject to repurchase at a price of $0.21 per share upon a
termination of Mr. Cage's employment prior to the relevant vesting date.
Includes 12,500 shares subject to options exercisable within 60 days.
Excludes 187,500 shares subject to options not exercisable within 60 days.
(2) Constitutes 10,000 shares of restricted stock held by Mr. Hemmerle,
approximately 3,958 shares of which are vested as of March 1, 1998, and the
remainder of which will become vested in equal monthly installments of
approximately 208 shares and are subject to repurchase at a price of $0.21
per share upon a termination of Mr. Hemmerle's service as a director prior
to the relevant vesting date. Excludes 10,000 shares subject to options not
exercisable within 60 days.
(3) Constitutes 10,000 shares of restricted stock held by Mr. Peterson,
approximately 4,583 of which were vested as of March 1, 1998, and the
remainder of which will become vested in equal monthly installments of
approximately 208 shares and are subject to repurchase at a price of $0.21
per share upon a termination
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<PAGE> 17
of Mr. Peterson's employment prior to the relevant vesting date. Excludes
20,000 shares subject to options not exercisable within 60 days.
(4) Includes 5,115 shares of Common Stock beneficially owned by Mr. Kafker
through TA Venture Investors Limited Partnership, all of which shares are
included in the 2,673,200 shares described in footnote (2) under "Security
Ownership of Certain Beneficial Owners." Does not include any shares
beneficially owned by Advent VII L.P., Advent Atlantic and Pacific II L.P.
or Advent New York L.P., of which Mr. Kafker disclaims beneficial ownership.
(5) Excludes 10,000 shares subject to options not exercisable within 60 days.
(6) Includes 260,000 shares of restricted stock held by executive officers and
directors which are subject to repurchase in certain circumstances and
12,500 shares subject to options exercisable within 60 days.
MARKET VALUE
On December 31, 1997, the closing price of a share of the Company's Common
Stock on the Nasdaq National Market was $13.25.
EXPENSES OF SOLICITATION
The Company will pay the entire expense of soliciting proxies for the
Annual Meeting. In addition to solicitations by mail, certain Directors,
officers and regular employees of the Company (who will receive no compensation
for their services other than their regular compensation) may solicit proxies by
telephone, telegram or personal interview. Banks, brokerage houses, custodians,
nominees and other fiduciaries have been requested to forward proxy materials to
the beneficial owners of shares held of record by them and such custodians will
be reimbursed for their expenses.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Stockholder proposals intended to be presented at the Company's 1999 annual
meeting of stockholders must be received by the Company on or before February
28, 1999 in order to be considered for inclusion in the Company's proxy
statement and form of proxy for that meeting. The Company's By-laws provide that
any stockholder of record wishing to have a stockholder proposal considered at
an annual meeting must provide written notice of such proposal and appropriate
supporting documentation, as set forth in the By-laws, to the Company at its
principal executive office not less than 75 days or more than 120 days prior to
the first anniversary of the date of the preceding year's annual meeting. In the
event, however, that the annual meeting is scheduled to be held more than 30
days before such anniversary date or more than 60 days after such anniversary
date, notice must be so delivered not later than (i) the 15th day after the date
of public disclosure of the date of such meeting or (ii) the 75th day prior to
the scheduled date of such meeting. Any such proposal should be mailed to:
Secretary, Monarch Dental Corporation, 4201 Spring Valley Road, Suite 320,
Dallas, Texas 75244.
INDEPENDENT ACCOUNTANTS
The Company has selected Arthur Andersen LLP as the independent public
accountants for the Company for the year ending December 31, 1998. The firm of
Arthur Andersen LLP has served as the Company's independent public accountants
since 1996. A representative of Arthur Andersen LLP will be present at the
Annual Meeting and will be given the opportunity to make a statement if he or
she so desires. The representative will be available to respond to appropriate
questions.
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<PAGE> 18
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement which will be presented for action at the
Annual Meeting. If other matters are duly presented, proxies will be voted in
accordance with the best judgment of the proxy holders.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
15
<PAGE> 19
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEE AS DIRECTOR. PLEASE MARK
YOUR VOTE AS [X]
INDICATED IN
THIS EXAMPLE
ELECTION OF DIRECTOR Nominee: John E. Maupin, Jr., D.D.S.
FOR nominee WITHHOLD
listed to the right AUTHORITY
(except as marked to vote for nominee
to the contrary) listed to the right
PLAN TO ATTEND MEETING [ ]
[ ] [ ]
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON THIS PROXY WILL BE VOTED AS DIRECTED
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING HEREON, OR IF RETURNED EXECUTED WITH NO
OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF. DIRECTION GIVEN, WILL BE VOTED FOR THE
ELECTION OF THE NOMINEE AS DIRECTOR.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN
THE ENCLOSED ENVELOPE.
THE PROXY SHOULD BE SIGNED EXACTLY AS
NAME APPEARS HEREON.
EXECUTORS, ADMINISTRATORS, TRUSTEES,
ATTORNEYS, ETC., SHOULD GIVE FULL TITLE
AS SUCH. IF THE SIGNER IS A CORPORATION
OR PARTNERSHIP, PLEASE SIGN FULL CORPORATE
OR PARTNERSHIP NAME BY DULY AUTHORIZED
OFFICER.
SIGNATURE ________________________________ SIGNATURE ____________________________________ DATE _________________
NOTE: PLEASE SIGN AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
o FOLD AND DETACH HERE o
</TABLE>
<PAGE> 20
MONARCH DENTAL CORPORATION
4201 SPRING VALLEY ROAD, SUITE 320
DALLAS, TEXAS 75244
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR
THE ANNUAL MEETING OF STOCKHOLDERS, MAY 14, 1998
The undersigned hereby appoints Warren F. Melamed and Gary W. Cage and
each or any of them, attorneys and proxies with full power of substitution, to
represent the undersigned and to vote all shares of stock of Monarch Dental
Corporation which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of Monarch Dental Corporation to be held at the Westin Galleria
Hotel, Dallas, Texas on Thursday, May 14, 1998, at 1:00 p.m., local time, or at
any adjournments or postponements thereof, upon all matters as set forth in the
Notice of Annual Meeting and Proxy Statement, receipt of which is hereby
acknowledged.
(CONTINUED, AND TO BE SIGNED AND DATED, ON REVERSE SIDE)
o FOLD AND DETACH HERE o
