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EXHIBIT 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------
(Gary W. Cage)
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") effective
as of January 1, 2000 by and between Monarch Dental Corporation. a Delaware
corporation whose principal executive offices are in Dallas, Texas ("Company")
and Gary W. Cage ("Executive").
RECITALS:
Company recognizes that Executive has made significant contributions
to the financial success of the Company, and that Executive has certain
knowledge and business contacts in Company's business.
Company desires to continue Executive's employment and to obtain the
benefit of Executive's contacts and knowledge in the business as well as his
valuable judgment, extensive experience, good counsel and advice.
To award Executive for his contributions to the financial success of
the Company, to induce Executive to continue his employment with the Company,
and to encourage Executive to exert his very best efforts toward the completion
of a Transaction, the Company has agreed to provide Executive certain
compensation, management arrangements, and incentives as set forth in this
Agreement.
The Board of Directors of the Company has determined that it is in the
best interests of the Company to retain the Executive's services and to
reinforce and encourage the continued attention and dedication of members of
the Company's management, including the Executive, to their assigned duties
without distraction in potentially disturbing circumstances arising from the
possibility of a change in control of the Company or the assertion of claims
and actions against employees.
The Company desires to assure itself of the services of the Executive
for the period provided in this Agreement and the Executive desires to stay in
the employ of the Company on the terms and conditions hereinafter provided.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
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ARTICLE I
EMPLOYMENT
1.1 Employment. The Company hereby employs the Executive and the
Executive hereby accepts employment by the Company for the period and upon the
terms and conditions contained in this Agreement.
1.2 Office and Duties.
(a) Position. The Executive shall serve the Company as Chief
Executive Officer, with authority, duties and responsibilities not
less than the Executive has on the date of this Agreement, with his
actions at all times subject to the direction of the Board of
Directors of the Company.
(b) Commitment. Throughout the term of this Agreement, the
Executive shall devote substantially all of his time, energy, skill
and best efforts to the performance of his duties hereunder in a
manner that will, faithfully and diligently further the business and
interests of the Company. Subject to the foregoing, the Executive may
serve, or continue to serve, on the boards of directors of, and hold
any other offices or positions in, companies or organizations that are
disclosed to the Board of Directors and that will not materially
affect the performance of the Executive's duties pursuant to this
Agreement.
1.3 Term. Subject to the provisions hereof, the term of this Agreement
shall be for a period ending on December 31, 2000, ("Initial Term"), and shall
be automatically renewed thereafter for successive one year terms (each a
"Renewal Term") unless either party gives to the other written notice of
termination no fewer than 60 days prior to the expiration of the Initial Term
or any Renewal Term that it does not desire to extend this Agreement (the
Initial Term and any Renewal Term(s) shall be collectively referred to herein
as the "Term").
1.4 Compensation.
(a) Base Salary. The Company shall pay the Executive as
compensation an aggregate salary ("Base Salary") of $300,000 per year
during the Term retroactive to January 1, 1999, or such greater amount
as shall be approved by the Compensation Committee of the Company's
Board of Directors. The Compensation Committee shall review the
Executive's Base Salary at least annually. The Base Salary for each
year shall be paid by the Company in accordance with the regular
payroll practices of the Company. To effect such retroactivity,
Executive is being paid in cash by the Company contemporaneously with
the execution of the Agreement the amount of $111,153.84 (net of
withholding taxes).
(b) Bonus Compensation. The Executive shall be paid by the
Company annual bonus compensation ("Bonus Compensation") for the
periods set forth below as follows:
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<TABLE>
<CAPTION>
Bonus Date of
Year Amount Payment
----- ------ -------
<S> <C> <C>
2000 And $12,500 x Number of Months Executive To be Paid on earlier of Closing Date or
After is employed by the Company during December 31 of year in which Bonus earned
such calendar year (Full and Partial)
prior to Closing Date
</TABLE>
(c) Retention Payment. The Executive shall be paid by the
Company, retroactively to January 1, 2000, on the first day of each
month, provided Executive is employed by the Company on such date, a
monthly retention payment of $15,000 until the earlier to occur of the
Closing Date or December 31 of the year in which earned. To effect
such retroactivity, Executive is being paid in cash by the Company
contemporaneously with the execution of this Agreement the amount of
$60,000 (net of withholding taxes).
(d) Transaction Fee. Contemporaneously with, as a part of,
and as a condition to, the Transaction and, except as set forth in
Section 1.7(d) hereto, provided Executive is employed by the Company
on such date, Executive shall be paid a transaction incentive fee
("Transaction Fee") in lump sum, cash as provided below (with linear
interpolation between share points):
<TABLE>
<CAPTION>
Transaction Incentive Fee
Price Per Share (bps below times Total Equity Value)
--------------- ------------------------------------
<S> <C>
$7.00 60 bps
$7.50 65 bps
$8.00 70 bps
$8.50 75 bps
$9.00 80 bps
</TABLE>
The Transaction Fee will be equal to the Total Equity Value times the
applicable basis point figure. For any Transaction below $7.00, the
Transaction Fee will be equal to 50 basis points multiplied by the
Total Equity Value.
(e) Stock Options. In addition to options heretofore granted
to Executive, the Company hereby grants the Executive stock options to
purchase 100,000 shares of the Company's common stock at a per share
price of $2.719 in accordance with the terms and conditions of that
certain Stock Option Agreement dated as of February 10, 2000.
(f) Certain Additional Payments by the Company.
Notwithstanding anything to the contrary in this Agreement, in the
event that any payment or distribution to or for
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the benefit of the Executive, whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise
(a "Payment"), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended or any interest
or penalties with respect to such excise tax (such excise tax,
together with any such interest or penalties, are hereinafter
collectively referred to as the "Excise Tax"), the Company shall pay
to the Executive an additional payment (a "Gross-up Payment") in an
amount such that after payment by the Executive of all taxes upon such
Gross-up Payment (including any interest or penalties imposed with
respect to such taxes), including any Excise Tax imposed on any
Gross-up Payment, the Executive retains an amount of the Gross-up
Payment equal to the Excise Tax imposed upon the Payments. (The
Gross-Up Payment is not intended to compensate the Executive for any
income taxes payable with respect to the Payment.) All determinations
required to be made under this Section 1.4(f), including whether a
Gross-up Payment is required and the amount of such Gross-up Payment,
shall be made by Arthur Andersen LLP or any other nationally
recognized accounting firm selected by the Company and Executive (the
"Accounting Firm"), which shall provide detailed supporting
calculations both to the Company and the Executive as is reasonably
requested by the Company or the Executive. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive.
The amount of the Gross-up Payment shall be paid (in estimate)
contemporaneously with, as a part of and as a condition, to the
Closing, with the actual amount finally to be determined, settled and
paid by the Company to Executive or by Executive to the Company, as
the case may be, upon at the time of filing of the applicable federal
income tax return. The Executive shall notify the Company immediately
in writing of any claim by the Internal Revenue Service which, if
successful, would require the Company to make a Gross-up Payment (or a
Gross-up Payment in excess of that, if any, initially determined by
the Accounting Firm) within five days of the receipt of such claim.
The Company shall notify the Executive in writing at least five days
prior to the due date of any response required with respect to such
claim if it plans to contest the claim. If the Company decides to
contest such claim, the Executive shall cooperate fully with the
Company in such action; provided, however, the Company shall bear and
pay directly or indirectly all costs and expenses (including
additional interest and penalties) incurred in connection with such
action and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax, including interest
and penalties with respect thereto, imposed as a result of the
Company's action. If, as a result of the Company's action with respect
to a claim, the Executive receives a refund of any amount paid by the
Company with respect to such claim, the Executive shall promptly pay
such refund to the Company. If the Company fails to timely notify the
Executive whether it will contest such claim or the Company determines
not to contest such claim, then the Company shall immediately pay to
the Executive the portion of such claim, if any, which it has not
previously paid to the Executive.
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1.5 Employment Benefits. In addition to any other compensation payable
to Executive hereunder, Executive shall be entitled to the following benefits
upon satisfaction by Executive of the eligibility requirements therefor, if
any, subject to the following limitations:
(a) Health and Dental Insurance. During the Term, the
Company, at its own expense, shall provide Executive (and all
dependents of Executive at the request of Executive) with welfare
benefits which shall include health and dental insurance in amounts
and with coverage comparable to the coverage currently provided to
officers of the Company as of the date of this Agreement.
(b) Vacations. Executive shall be entitled to a paid vacation
of not less than 20 business days each year during the Term of this
Agreement, exclusive of holidays and weekends, which vacation shall be
taken by Executive in accordance with the business requirements of the
Company at the time and its personnel policies then in effect relative
to this subject. Executive shall also be entitled to all paid holidays
given by the Company to its employees.
(c) Working Facilities. During the Term of this Agreement,
the Company shall provide, at its expense, adequate office space,
furniture, equipment, supplies and personnel (including professional,
clerical, support and other personnel) as shall be suitable to
Executive's position and adequate for Executive's use in performing
his duties and responsibilities under this Agreement.
(d) Fringe Benefits and Perquisites. During the Term, the
Executive shall be entitled to participate in or receive benefits
under any plan or arrangement made available by the Company to its
senior executive officers, subject to and on a basis consistent with
the terms, conditions and overall administration of such plans and
arrangements. Nothing paid to the Executive under any plan or
arrangement made available to the Executive shall be deemed to be in
lieu of compensation hereunder.
(e) Payment and Reimbursement of Expenses. During the Term,
the Company shall pay or reimburse the Executive for all reasonable
travel and other expenses incurred by the Executive in performing his
obligations under this Agreement in accordance with the policies and
procedures of the Company for its senior executive officers, provided
that the Executive properly accounts therefor in accordance with the
regular policies of the Company.
1.6 Termination.
(a) Disability. The Company may terminate this Agreement for
Disability, "Disability" shall exist if because of ill health,
physical or mental disability, or my other reason beyond his control,
and notwithstanding reasonable accommodations made by the Company, the
Executive shall have been unable, unwilling or shall have failed to
perform
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his duties under this Agreement, as determined in good faith by the
Compensation Committee of the Company's Board of Directors. or, if a
Compensation Committee is not appointed, by the Board of Directors,
for a period of 180 consecutive days, or if, in any 12-month period,
the Executive shall have been unable or unwilling or shall have failed
to perform his duties for a. period of 270 days, irrespective of
whether or not such days are consecutive.
(b) Cause. The Company may terminate the Executive's
employment for Cause. Termination for "Cause" shall mean termination
because of the Executive's (i) willful gross misconduct that causes
material economic harm to the Company or that brings substantial
discredit to the Company's reputation, (ii) final, nonappealable
conviction of a felony involving moral turpitude, or (iii) material
breach of any provision of this Agreement. Item (iii) of this
subsection shall not constitute Cause unless the Company notifies the
Executive thereof, in writing, specifying in reasonable detail the
basis therefor and stating that it is grounds for Cause, and unless
the Executive fails to cure such matter within 60 days after such
notice is sent or given under this Agreement. The Executive shall be
permitted to respond and to defend himself before the Board of
Directors or any appropriate committee thereof within a reasonable
time after written notification of any proposed termination for Cause
under item (i) or (iii) of this subsection.
(c) Without Cause. During the Term, the Company may terminate
the Executive's employment Without Cause, subject to the provisions of
subsection 1.7(d) (Termination Without Clause or for Good Reason).
Termination "Without Cause" shall mean termination of the Executive's
employment by the Company other than termination for Cause or for
Disability or by reason of the non-renewal of this Agreement, by
either party, at the end of the Term.
(d) Good Reason. During the Term, the Executive may terminate
his employment hereunder for Good Reason. For purposes of this
Agreement, the termination of Executive's employment hereunder by
Executive because of the occurrence of one or more of the following
events shall be deemed to have occurred for "Good Reason":
(i) any material breach of this Agreement by the
Company; provided, however, that a material breach of this
Agreement by the Company shall not constitute Good Reason
unless the Executive notifies the Company in writing of the
breach, specifying in reasonable detail the nature of the
breach and stating that such breach is grounds for Good
Reason, and unless the Company fails to cure such breach
within 60 days after such notice is sent or given under this
Agreement;
(ii) a relocation of the Company's principal
executive offices to any county other than Dallas County or
Collin County, Texas; provided, however, that
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no relocation shall constitute Good Reason unless the
Executive advises the Board of Directors, in writing and
prior to the relocation, of the Executive's objection to such
relocation;
(iii) a material change in the nature or scope of
Executive's authorities, powers, functions, duties or
responsibilities that the Executive has on the date of this
Agreement and that is reasonably determined by Executive in
good faith to be adverse to Executive (specifically
including, but not limited to a material increase in travel);
or
(iv) any reduction in Executive's Base Salary or
Bonus Compensation or any other failure by the Company to
comply with Sections 1.4 or 1.5 hereof that is not consented
to or approved by Executive.
(e) Change in Control. If, within 12 months of a Change in
Control, either (i) the Executive's employment is terminated by the
Company Without Cause, or (ii) the Executive terminates his employment
for Good Reason, then, the provisions of subsection 1.7(e)
(Termination Upon a Change in Control) shall apply. For purposes of
this Agreement "Change in Control" shall mean any of the following:
(i) any consolidation or merger of the Company in
which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's
common stock would be converted into cash securities or other
property, other than a merger of the Company in which the
holders of the Company's common stock immediately prior to
the merger, own more than 50% of the combined voting power of
the merged or consolidated company's then outstanding voting
securities entitled to vote generally in the election of
directors;
(ii) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of more
than 50% of the assets of the Company;
(iii) any approval by the stockholders of the
Company of any plan or proposal for the liquidation or
dissolution of the Company;
(iv) the cessation of control (by virtue of their
not constituting a majority of directors) of the Company's
Board of Directors by the individuals (the "Continuing
Directors") who (x) at the date of this Agreement were
directors or (y) become directors after the date of this
Agreement and whose election or nomination for election by
the Company's stockholders, was approved by a vote of at
least two-thirds of the directors then in office who were
directors at the date of this Agreement or whose election or
nomination for election was previously so approved); or
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(v) the acquisition of beneficial ownership (within
the meaning of Rule l3d-3 under the Securities Exchange Act
of 1934, as amended) of an aggregate of 50% or more of the
voting power of the Company's outstanding voting securities
by any person or group (as such term is used in Rule l3d-5
under such Act); provided, however, that notwithstanding the
foregoing, an acquisition shall not constitute a Change in
Control hereunder if the acquiror is (w) the Executive, (x) a
trustee or other fiduciary holding securities under an
employee benefit plan of the Company and acting in such
capacity, or (y) a corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same
proportions as their ownership of voting securities of the
Company.
(vi) subject to applicable law, in a Chapter 11
bankruptcy proceeding, the appointment of a trustee or the
conversion of a case involving the Company to a case under
Chapter 7.
(f) Without Good Reason. During the Term, the Executive may
terminate his employment Without Good Reason. Termination "Without
Good Reason" shall mean, termination of the Executive's employment by
the Executive other than termination for Good Reason.
(g) Explanation of Termination of Employment. Any party
terminating this Agreement shall give prompt written notice ("Notice
of Termination") to the other party hereto advising such other party
of the termination of this Agreement. Within 5 days after notification
that the Agreement has been terminated, the terminating party shall
deliver to the other party hereto a written explanation (the
"Explanation of Termination of Employment"), which shall state in
reasonable detail the basis for such termination and shall indicate
whether termination is being made for Cause, Without Cause or for
Disability (if the Company has terminated the Agreement) or for Good
Reason, upon a Change in Control, or Without Good Reason (if the
Executive has terminated the Agreement).
(h) Date of Termination. "Date of Termination" shall mean the
date on which Notice of Termination is sent or given under this
Agreement.
1.7 Compensation During Disability or Upon Termination.
(a) During Disability. During any period that the Executive
fails to perform his duties hereunder because of ill health, physical
or mental disability, or any other reason beyond his control, he shall
continue to receive his full compensation and benefits pursuant to
Sections 1.4 (Compensation) and 1.5 (Employment Benefits) until the
Date of Termination.
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(b) Termination for Disability. If the Company shall
terminate the Executive's employment for Disability, the Company's
obligation to pay compensation and benefits pursuant to Sections 1.4
(Compensation) and 1.5 (Employment Benefits) shall terminate, except
that the Company shall pay the Executive (i) accrued but unpaid
compensation and benefits pursuant to Sections 1.4 (Compensation) and
1.5 (Employment Benefits) through the Date of Termination, and (ii)
the benefits set forth in subsection 1.7(f) (Employee Benefits).
(c) Termination for Cause or Without Good Reason. If the
Company shall terminate the Executive's employment for Cause or if the
Executive shall terminate his employment Without Good Reason, then the
Company's obligation to pay compensation and benefits pursuant to
Sections 1.4 (Compensation) and 1.5 (Employment Benefits) shall
terminate, except that the Company shall pay the Executive his accrued
but unpaid compensation and benefits pursuant to Sections 1.4
(Compensation) and 1.5 Employment Benefits) through the Date of
Termination.
(d) Termination Without Cause or for Good Reason. If the
Company shall terminate the Executive's employment Without Cause or if
the Executive shall terminate his employment for Good Reason, then the
Company shall pay to the Executive as severance pay in a lump sum
within 15 days following the Date of Termination, in cash, an amount
equal to the greater of: (i) the Executive's total Compensation
hereunder for the remainder of the Initial Term or Renewal Term then
in effect beginning on the date upon which such termination takes
place including without limitation under subsections 1.4(a) (Base
Salary) and, 1.4(b) (Bonus Compensation), but excluding compensation
under subsections 1.4(c) (Retention Payment) and 1.4(d) (Transaction
Incentive Fee); or (ii) 2 years average total compensation including
without limitation under subsections 1.4(a) (Base Salary) and 1.4(b)
(Bonus Compensation), but excluding compensation under subsections
1.4(c) (Retention Payment) and 1.4(d) (Transaction Incentive Fee),
paid to Executive by the Company over the 3 most recently completed
years. Notwithstanding the foregoing, if, at the time of such
termination by the Company Without Cause or termination by the
Executive for Good Reason, the Company is in discussion with a person
or an entity regarding a Transaction, and such discussion results in
the consummation of a Transaction, or execution of a definitive
agreement regarding a Transaction within 15 months of such
termination, then the Executive shall also receive the Transaction Fee
under subsection 1.4(d) upon the closing of the Transaction.
(e) Termination Upon a Change in Control. If, within twelve
(12) months of a Change of Control pursuant to subsection 1.6(e)
(Change in Control), either (i) the Executive's employment is
terminated by the Company Without Cause, or (ii) if the Executive
terminates his employment for Good Reason, then the Company shall pay
to the Executive as severance pay either in accordance with the
provisions of Section 1.4 (Compensation) or in a lump sum within 15
days following the Date of Termination (at the Company's option), in
cash, an amount equal to the greater of:
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(i) the Executive's total compensation including
without limitation under subsections 1.4(a) (Base Salary) and
1.4(b) (Bonus Compensation) (for this purpose, the Bonus
Compensation shall be deemed to be the avenge Bonus
Compensation paid to Executive by the Company over the 3 most
recently completed years beginning with fiscal 1996 (or such
shorter period as may be applicable)) but excluding
compensation under subsections 1.4(c) and 1.4(d) for the
balance of the Term up to a maximum of 3 years; or
(ii) 2 years average total compensation including
without limitation under subsections 1.4(a) (Base Salary) and
1.4(b) (Bonus Compensation) but excluding compensation under
subsections 1.4(c) and 1.4(d) paid to Executive by the
Company over the 3 most recently completed years beginning
with fiscal 1996 (or such shorter period as may be
applicable).
(f) Employee Benefits. Unless the Company terminates the
Executive's employment for Cause or the Executive terminates his
employment Without Good Reason, the Company shall maintain in full
force and effect (to the extent consistent with past practice), for
the continued benefit of the Executive and, if applicable, his wife
and children, the employee benefits set forth in subsections 1.5(a)
(Health and Dental Insurance), and 1.5(d) (Fringe Benefits and
Perquisites) above that he was entitled to receive immediately prior
to the Date of Termination (subject to the general terms and
conditions of the plans and programs under which he receives such
benefits) for the balance of the applicable period set forth in
subsections 1.7(d) (Termination Without Cause or for Good Reason) or
1.7(e) (Termination Upon a Change in Control), as applicable, or for
the period provided for under the terms and conditions of such plans
and programs, whichever is longer, provided that his continued
participation or, if applicable, the participation of his wife and
children, is possible under the general terms and conditions of such
plans and programs.
(g) No Mitigation. The Executive shall not be required to
mitigate the amount of any payment provided for in this Section 1.7
(Compensation During Disability or Upon Termination) by seeking other
employment or otherwise.
(h) Reduction in Compensation. If the Executive terminates
his employment for Good Reason or upon a Change in Control based upon
a reduction by the Company of the Executive's Base Salary, then for
purposes of subsections 1.7(d) (Termination Without Cause or for Good
Reason) and 1.7(e) (Termination Upon a Change in Control), the
Executive's Base Salary as of the Date of Termination shall be deemed
to be the Executive's Base Salary immediately prior to the reduction
that the Executive claims as grounds for Good Reason.
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1.8 Death of Executive. If the Executive dies prior to the expiration
of this Agreement, the Executive's employment and other obligations under this
Agreement shall automatically terminate and all compensation to which the
Executive is or would have been entitled hereunder including without limitation
under subsections 1.4(a) (Base Salary) and 1.4(b) (Bonus Compensation), but
excluding compensation under subsections 1.4(c) (Retention Payment) and 1.4(d)
(Transaction Incentive Fee), shall terminate as of the end of the month in
which the Executive's death occurs; provided, however, that (i) for the balance
of the Initial Term or Renewal Term then in effect, the Executive's wife shall
be entitled to receive benefits under Section 1.5(a) (Health and Dental
Insurance), and (ii) the Executive's named beneficiary or beneficiaries shall
receive such reimbursement as may have been due to the Executive pursuant to
subsection 1.5(e) (Payment and Reimbursement of Expenses) hereof.
Notwithstanding the foregoing, if, at the time of Executive's death, the
Company is in discussion with a person or an entity regarding a Transaction,
and such discussion results in the consummation of a Transaction, or execution
of a definitive agreement regarding a Transaction within 15 months after the
Executive's death, then the Executive shall also receive the Transaction Fee
under subsection 1.4(d) upon the closing of the Transaction.
ARTICLE 2
NON-COMPETITION AND CONFIDENTIALITY
2.1 Non-Competition Agreement. The Company and the Executive
acknowledge that they have entered into that certain Non-Competition Agreement
dated July 1, 1997, and they hereby reaffirm and readopt all the terms and
conditions of that Non-Competition Agreement as if it was completely restated
herein.
2.2 Confidentiality. Executive shall not, directly or indirectly, at
any time following termination of his employment with the Company, reveal,
divulge or make known to any person or entity, or use for Executive's personal
benefit (including without limitation for the purpose of soliciting business,
whether or not competitive with any business of the Company or any of its
subsidiaries), any information acquired during the course of employment
hereunder with regard to the financial. business or other affairs of the
Company or any of its subsidiaries (including without limitation any list or
record of persons or entities with which the Company or any of its subsidiaries
has any dealings), other than (1) material already in the public domain, (2)
information of a type not considered confidential by persons engaged in the
same business or a business similar to that conducted by the Company, or (3)
material that Executive is required to disclose under the following
circumstances: (A) at the express direction of any authorized governmental
entity; (B) pursuant to a subpoena or other court process; (C) as otherwise
required by law or the rules, regulations, or orders of any applicable
regulatory body; or (D) as otherwise necessary, in the opinion of counsel for
Executive, to be disclosed by Executive in connection with the prosecution of
any legal action or proceeding initiated by Executive against the Company or
any of its subsidiaries or the defense of any legal action or proceeding
initiated against Executive in his capacity as an employee or director of the
Company of any of its subsidiaries. Executive shall, at any time requested by
the Company (either during or after his
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employment with the Company), promptly deliver to the Company all memoranda,
notes, reports, lists and other documents (and all copies thereof) relating to
the business of the Company or any of its subsidiaries that he may then possess
or have under his control.
ARTICLE 3
INDEMNIFICATION
3.1 Indemnification Arrangement. The Company and the Executive
acknowledge that they have entered into that certain Indemnification Agreement
dated as of March 11, 1996, and they hereby reaffirm and readopt all the terms
and conditions of that Indemnification Agreement as if it was completely
restated herein.
ARTICLE 4
MISCELLANEOUS
4.1 Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or on behalf of the Company or any
affiliate of the Company against the Executive, the Executive's spouse, heirs,
executors or personal or legal representatives after the expiration of two
years from the date of accrual of such cause of action, and any claim or cause
of action of the Company or any affiliate shall be extinguished and deemed
released unless asserted by the timely filling of a legal action within such
two-year period; provided, however, that if any shorter period of limitations
is otherwise applicable to any such cause of action such shorter period shall
govern.
4.2 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
4.3 Indulgences, Etc. Neither the failure nor any delay on the part of
either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any right, remedy, power or privilege, nor shall any
waiver of any right, remedy, power, or privilege with respect to any occurrence
be construed as a waiver of such right, remedy, power or privilege with respect
to any other occurrence.
4.4 Notices. All notices, requests, demands and other communications
required or permitted under this Agreement and the transactions contemplated
herein shall be in writing and shall be deemed to have been duly given, made
and received when sent by telecopy (with a copy sent by mail) or when
personally delivered or one business day after it is sent by overnight service,
addressed as set forth below:
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If to the Executive:
Gary W. Cage
17671 Addison Road, #2902
Dallas, TX 75287
With a copy to:
Steven K. Cochran
Thompson & Knight L.L.P.
1700 Pacific Avenue, Suite 3300
Dallas, TX 75201
If to the Company:
Monarch Dental Corporation
4201 Spring Valley, Suite 320
Dallas, Texas 75244
Attn: President
With a copy to:
John R. LeClaire, P.C.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Any party may alter the address to which communications or copies are to be
sent by giving notice of such change of address in conformity with the
provisions of this subsection for the giving of notice. which shall be
effective only upon receipt.
4.5 Provisions Separable. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be
affected or rendered invalid or unenforceable by virtue of the fact that for
any reason any other or others of them may be invalid or unenforceable in whole
or in part.
4.6 Entire Agreement. This Agreement contains the entire understanding
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior and contemporaneous agreements and understandings,
inducements or conditions. express or implied, oral or written, except as
herein contained, which shall be deemed terminated effective immediately. The
express terms hereof control and supersede any course of performance and/or
usage of the trade inconsistent with any of the terms hereof. This Agreement
may not be modified or amended other than by an agreement in writing.
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4.7 Headings; Index. The headings of paragraphs are included solely
for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
4.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas, without giving effect to
principles of conflict of laws; provided, however, that questions regarding the
Company's ability to indemnify and advance expenses pursuant to Article, 3
(Indemnification) shall be governed by the Delaware General Corporation Law.
4.9 Dispute Resolution. Any dispute, controversy or claim arising out
of or in relation to or connection to this Agreement, including without
limitation any dispute as to the construction, validity, interpretation,
enforceability or breach of this Agreement, shall be exclusively and finally
settled by arbitration, and any party may submit such dispute, controversy or
claim to arbitration (Dispute Resolution).
(a) Arbitrators. The arbitration shall be heard and
determined by one arbitrator, who shall be impartial and who shall be
selected by mutual agreement of the parties; provided, however, that
if the dispute involves more than $2,000,000, then the arbitration
shall be heard and determined by three (3) arbitrators. If three (3)
arbitrators are necessary as provided above, then (i) each side shall
appoint an arbitrator of its choice within thirty (30) days of the
submission of a notice of arbitration and (ii) the party-appointed
arbitrators shall in turn appoint a presiding arbitrator of the
tribunal within thirty (30) days following the appointment of the last
party-appointed arbitrator. If (x) the parties cannot agree on the
sole arbitrator, (y) one party refuses to appoint its party-appointed
arbitrator within said thirty (30) day period or (z) the
party-appointed arbitrators cannot reach agreement on a presiding
arbitrator of the tribunal, then the appointing authority for the
implementation of such procedure shall be the Senior United States
District Judge for the Northern District of Texas, who shall appoint
an independent arbitrator who does not have any financial interest in
the dispute, controversy or claim. If the Senior United States
District Judge for the Northern District of Texas refuses or fails to
act as the appointing authority within ninety (90) days after being
requested to do so, then the appointing authority shall be the Chief
Executive Officer of the American Arbitration Association, who shall
appoint an independent arbitrator who does not have any financial
interest in the dispute, controversy or claim. All decisions and
awards by the arbitration tribunal shall be made by majority vote.
(b) Proceedings. Unless otherwise expressly agreed in writing
by the parties to the, arbitration proceedings:
(i) The arbitration proceedings shall be hold in
Dallas, Texas, at a site chosen by mutual agreement of the
parties, or if the parties can-not reach
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agreement on a location within thirty (30) days of the
appointment of the last arbitrator, then at a site chosen by
the arbitrators;
(ii) The arbitrators shall be and remain at all
times wholly independent and impartial;
(iii) The arbitration proceedings shall be conducted
in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, as amended from time to
time;
(iv) Any procedural issues not determined under the
arbitral rules selected pursuant to item (iii) above shall be
determined by the law of the place of arbitration, other than
those laws which would refer the matter to another
jurisdiction;
(v) The costs of the arbitration proceedings
(including attorneys' fees and costs) shall be borne in the
manner determined by the arbitrators;
(vi) The decision of the arbitrators shall be
reduced to writing; final and binding without the right of
appeal; the able and exclusive remedy regarding any claims,
counterclaims, issues or accounting presented to the
arbitrators; made and promptly paid in United States dollars
free of any deduction or offset; and any costs or fees
incident to enforcing the award shall, to the maximum extent
permitted by law, be charged against the party resisting such
enforcement;
(vii) The award shall include interest from the date
of any breach or violation of this Agreement, as determined
by the arbitral award, and from the date of the award until
paid in full, at 7% per annum; and
(viii) Judgment upon the award may be entered in any
court having jurisdiction ever the person or the assets of
the party owing the judgment or application nay be made to
such court for a judicial acceptance of the award and an
order of enforcement, as the case may be.
4.10 Survival. The covenants and agreements of the parties set forth
in Article 4 (Miscellaneous) are of a continuing nature and shall survive the
expiration, termination or cancellation of this Agreement, regardless of the
reason therefor.
4.11 Binding Effect, Etc. This Agreement shall be binding upon and
inure to the benefit of, and be enforceable by the parties hereto and their
respective successors, assigns, including any direct or indirect successor by
purchase, merger, consolidation or otherwise to all or substantially all of the
business or assets of the Company, spouses, heirs, and personal and legal
representatives. The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, consolidation or otherwise) to all,
substantially all, or a substantial
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part, of the business or assets of the Company, by written agreement in form
and substance satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place.
4.12 Legal Fees. If Executive in good faith seeks to enforce the
provisions of subsections 1.4, 1.5 or 1.7 hereof, then all of his reasonable
legal fees and expense shall be paid and indemnified by the Company to
Executive as they come due upon presentation thereof (with supporting detail)
by Executive to the Company. All reasonable legal fees and expense incurred by
Executive in connection with this Agreement shall be paid or reimbursed to
Executive by the Company.
4.13 1997 Employment Agreement. This Agreement shall supercede and
replace in all respects the 1997 Employment Agreement.
4.14 Notice, participation, and Accessability. Executive shall be
given notice of each potential Transaction that the Company may have under
consideration and shall be kept apprised of all aspects of such proposed
Transaction as it proceeds. Executive shall be provided a copy of each
Transaction document relating to such proposed Transaction and shall
participate in negotiations and decisions relating thereto, as requested.
ARTICLE 5
DEFINED TERMS
5.1 Defined Terms. As used herein, the following terms shall have the
following meanings.
"1997 Employment Agreement" shall mean that Employment Agreement
between Monarch Dental Corporation and Gary W. Cage dated as of July 1, 1997.
"Closing Date" shall mean the date upon which a Transaction is closed.
"Total Equity Value", for purposes of calculating the Transaction Fee
with respect to a Transaction, shall mean:
V = W times X, where:
V means the Total Equity Value;
W means total number of shares of the Company's equity
securities outstanding at the time of the
Transaction on a fully diluted basis to be
determined by the Accounting Firm in accordance with
Generally Accepted Accounting Principles under the
terms of the second sentence of Section 1.4(f)
hereof; and
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X means the per share value received by any holder of
the Company's equity securities who sells,
exchanges, converts, or otherwise disposes of shares
held thereby under and/or pursuant to the
Transaction.
"Transaction" shall mean any transaction described in Subsection
1.6(e)(i), (ii) or (v).
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its officer thereunto duly authorized, and Executive has signed
this Agreement, all as of the day and year first above written.
MONARCH DENTAL CORPORATION
By. /s/ GLENN HEMMERLE
-------------------------------------
Glenn Hemmerle, By Direction of the
Special Committee of the Board of
Directors
/s/ GARY W. CAGE
-----------------------------------------
Gary W. Cage
