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EXHIBIT 10.4
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇)
This SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement")
is made as of October 27, 2000 (the "Effective Date"), by and between Monarch
Dental Corporation, a Delaware corporation (the "Company"), and ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ (the "Executive").
WHEREAS, 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;
WHEREAS, Company desires to continue Executive's employment and to
obtain the benefit of Executive's contacts and knowledge in the business as well
as her valuable judgment, extensive experience, good counsel and advice;
WHEREAS, to reward Executive for her contributions to the financial
success of the Company, to induce Executive to continue her employment with the
Company, and to encourage Executive to exert her very best efforts towards the
completion of a Transaction (as defined below), the Company has agreed to
provide Executive certain compensation, management arrangements, and incentives
as set forth in this Agreement;
WHEREAS, 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 arising from the possibility of a change in control of the
Company; and
WHEREAS, 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:
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto agree as follows:
1. Employment. The Company agrees to employ the Executive and the
Executive agrees to be employed by the Company for the period and on the terms
and conditions set forth in this Agreement.
2. Capacity. During the Term (as defined below), the Executive shall
serve the Company as Chief Financial Officer, reporting to the Chief Executive
Officer of the Company (the "CEO"), with authority, duties and responsibilities
not less than the Executive has on the date of this Agreement, with her actions
at all times subject to the direction of the CEO or the Board of Directors (but
not any one individual director who is not the CEO). The Executive
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hereby accepts such employment, agrees to serve the Company in the capacities
indicated, and agrees to use her best efforts in, and shall devote her full
working time, attention, skill and energies to, the advancement of the interests
of the Company and its subsidiaries and the performance of her duties and
responsibilities hereunder.
3. Term. Subject to the provisions of Section 5 hereof, the term of
employment pursuant to this Agreement (the "Term") shall be four (4) years from
August 9, 1999, the Effective Date of the 1999 Employment Agreement; provided,
however, that this Agreement shall be extended automatically for successive
one-year periods ending on the relevant anniversary of the Effective Date of the
1999 Employment Agreement, unless either party gives the other notice no later
than 180 days prior to the scheduled termination date (i.e., the fourth
anniversary of the Effective Date of the 1999 Employment Agreement or any later
anniversary) of her or its determination not to extend this Agreement, whereupon
it shall terminate as of such anniversary date.
4. Compensation and Benefits. The compensation and benefits payable to
the Executive under this Agreement shall be as follows:
(a) Salary. For all services rendered by the Executive under
this Agreement, the Company shall pay the Executive a salary (the "Salary") at
the annual rate of One Hundred Eighty-Two Thousand Five Hundred Dollars
($182,500), subject to increase from time to time in the discretion of the
Compensation Committee of the Board of Directors (the "Compensation Committee").
Notwithstanding the foregoing, effective January 1, 2001, the Company shall pay
the Executive a salary at the annual rate of Two Hundred Thousand Seven Hundred
Fifty Dollars ($200,750). The Salary shall be payable in periodic installments
in accordance with the Company's usual practice for its senior executives.
(b) Bonus. In addition to the Salary payable to the Executive
pursuant to subsection 4(a), during the Term, the Executive shall be eligible to
receive a bonus of up to 40% of her annual Salary based upon achievement (i) by
the Company of certain corporate and financial goals (the "Corporate Goals") and
(ii) by the Executive of certain management goals (the "Management Goals"). The
Corporate Goals and Management Goals will be set in the sole discretion of the
Board of Directors of the Company acting in good faith. Nothing in this
subsection 4(b) shall be deemed to create any right of the Executive to receive
any bonus, such decision on the amount of a bonus, if any, to be made in the
sole and absolute discretion of the Board of Directors of the Company or a duly
appointed committee thereof. Notwithstanding any other provision in this
subsection or this Agreement, Executive shall receive a bonus for the Company's
2000 and 2001 fiscal years of not less than 40% of her annual Salary. For the
bonus year of 2000 the Bonus shall be paid on January 2, 2001, and for bonus
years thereafter, the Bonus shall be paid on the earlier to occur of (i) the
Closing Date, (ii) December 31 of the year in which the Bonus is earned, or
(iii) the date upon which Executive's employment with the Company terminates for
any reason other than pursuant to subsection 5(a) (Termination by the Company
for Cause). If the Bonus is paid on the Closing Date or on the date of
Executive's termination of employment, the Bonus shall be prorated based on the
number of full or partial months to the Closing Date or the date of termination,
as the case may be. If the
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Executive continues in employment after the Closing Date, Executive shall
receive an additional pro rata portion of the Bonus, based on the number of full
or partial months after the Closing Date, on a date which conforms to the
Company's usual practice.
(c) Retention Payment. The Executive shall be paid by the Company, on
the dates set forth below, provided Executive is employed by the Company on such
date, a monthly retention payment, as provided below:
Payment Date Amount of Retention Payment
---------------- ---------------------------
October 31, 2000 $ 3,906.25
November 1, 2000 $ 11,406.25
December 1, 2000 $ 11,406.25
January 1, 2001 $ 12,546.88
February 1, 2001 $ 12,546.88
March 1, 2001 $ 12,546.88
(d) Transaction Incentive Fee. Contemporaneously with, as a
part of, and as a condition to, the Transaction and, except as set forth in
subsection 5(h) hereto, provided Executive is employed by the Company on such
date and provided further the Closing Date occurs on or before March 31, 2002,
Executive shall be paid a Transaction incentive fee ("Transaction Fee") in lump
sum, cash, as provided below (with linear interpolation between share points):
Transaction Incentive Fee
Price Per Share (bps below times Total Equity Value)
--------------- ------------------------------------
$ 7.00 24 bps
$ 7.50 26 bps
$ 8.00 28 bps
$ 8.50 30 bps
$ 9.00 32 bps
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
20 basis points multiplied by the Total Equity Value. Notwithstanding the
foregoing, in no event shall the Transaction Fee be less than the amount
determined as follows:
R = (S minus T) minus U, where:
R means the minimum Transaction Fee;
S means $370,000;
T means the aggregate retention payments paid to Executive under
subsection 4(c) hereof; and
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U means the aggregate "spread" on the stock options granted
under subsection 4(e) of the 2000 Employment Agreement,
outstanding as of the date of the Transaction. The aggregate
"spread" shall mean the positive difference between the
exercise price per share and X (as defined in subsection 20(d)
hereof), times the number of options granted pursuant to
subsection 4(e) of the 2000 Employment Agreement that remain
outstanding as of the date of the Transaction.
(e) Special Bonus. In addition to all other compensation and
benefits provided for in this Agreement, the Company agrees to pay the Executive
in cash contemporaneously with the execution of this Agreement a special
one-time bonus in the amount of $60,000 (net of withholding taxes).
(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 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 subsection
4(f), including whether a Gross-up Payment is required and the amount of such
Gross-up Payment, shall be made by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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) either 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, at
the time of filing of the applicable federal income tax return, or as otherwise
provided in this Agreement. 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
(5) 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
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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.
(g) Regular Benefits. During the Term, the Executive shall be
entitled to participate in any employee benefit plans, medical insurance plans,
life insurance plans, disability income plans, retirement plans and
arrangements, vacation plans, expense reimbursement plans and other benefit
plans which the Company may determine from time to time in its sole discretion
to have in effect for all or most of its senior executives. Such participation
shall be subject to the terms of the applicable plan documents, generally
applicable policies of the Company, applicable law and the discretion of the
Board of Directors or any administrative or other committee provided for in or
contemplated by any such plan.
(h) Taxation of Payments and Benefits. The Company shall
undertake to make deductions, withholdings and tax reports with respect to
payments and benefits under this Agreement to the extent that it reasonably and
in good faith believes that it is required to make such deductions, withholdings
and tax reports. Payments under this Agreement shall be in amounts net of any
such deductions or withholdings. Except as set forth in subsection 4(f), nothing
in this Agreement shall be construed to require the Company to make any payments
to compensate the Executive for any adverse tax effect associated with any
payments or benefits or for any deduction or withholding from any payment or
benefit.
(i) Exclusivity of Salary and Benefits. The Executive shall
not be entitled to any payments or benefits other than those provided under this
Agreement. Compliance with the provisions of this Section 4 shall in no way
create or be deemed to create any obligation, express or implied, on the part of
the Company or any of its affiliates with respect to the continuation of any
particular benefit or other plan or arrangement maintained by them or their
subsidiaries as of or prior to the date hereof or the creation and maintenance
of any particular benefit or other plan or arrangement at any time after the
date hereof.
(j) Expenses. The Company shall promptly reimburse the
Executive for all reasonable business expenses incurred by the Executive during
the Term in accordance with the Company's practices for executive officers of
the Company with a similar level of responsibility, as in effect from time to
time.
(k) Vacation. During the Term, the Employee shall receive paid
vacation annually in accordance with the Company's practices for executive
officers, as in effect from time to time, but in any event not less than three
(3) weeks during each 365 days of the Term.
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5. Termination and Termination Benefits. Notwithstanding the provisions
of Section 3, the Executive's employment under this Agreement shall terminate
under the following circumstances set forth in this Section 5.
(a) Termination by the Company for Cause. The Executive's
employment under this Agreement may be terminated for cause without further
liability on the part of the Company effective immediately upon written notice
to the Executive by the Company. Only the following shall constitute "cause" for
such termination:
(i) willful gross misconduct by the Executive 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) the Executive shall commit a material breach of
any of the covenants, terms or provisions hereof, which breach has not
been remedied within sixty (60) days after delivery to the Executive by
the Company of written notice, specifying in reasonable detail the
basis therefor and stating that it is grounds for Cause.
The Executive shall be permitted to respond and to defend herself
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.
Upon termination for Cause as provided in this subsection 5(a), the
Company shall have any and all rights and remedies under this Agreement and
applicable law in addition to its rights under subsection 5(m).
(b) Termination by the Company Without Cause. During the Term,
the Company may terminate the Executive's Employment Without Cause, subject to
the provisions of subsection 5(h) (Certain Termination Benefits). 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.
(c) Termination by the Executive for Good Reason. The
Executive may terminate her 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
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breach is grounds for Good Reason, and unless the Company fails to cure
such breach within sixty (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; provided,
however, that 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 a change in Executive's reporting relationship to
someone other than the CEO or the Board of Directors); or
(iv) any reduction in Executive's Salary or Bonus
compensation or any other failure by the Company to comply with Section
4 hereof that is not consented to or approved by Executive.
(d) Termination by Executive upon a Change in Control. Upon a
Change in Control, the Executive may terminate this Agreement. 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 13d-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 13d-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.
(e) Termination by Executive Without Good Reason. During the
Term, the Executive may terminate her 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.
(f) 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 five (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 With Cause,
Without Cause or for Disability (if the Company has terminated the Agreement) or
for Good Reason, a Change in Control or Without Good Reason (if the Executive
has terminated the Agreement).
(g) Date of Termination. "Date of Termination" shall mean the
date on which Notice of Termination is sent or given under this Agreement.
(h) Certain Termination Benefits. Unless otherwise
specifically provided in this Agreement or otherwise required by law, all
compensation and benefits payable to the Executive under this Agreement shall
terminate on the date of termination of the Executive's employment under this
Agreement. Notwithstanding the foregoing, in the event of termination of the
Executive's employment with the Company (A) pursuant to subsection 5(b)
(Termination by the Company Without Cause) above, (B) pursuant to subsection
5(c) (Termination by the Executive for Good Reason) above, (C) pursuant to
subsection 5(d) (Termination by the Executive upon a Change in Control) above,
or (D) after March 31, 2001 for any reason other than pursuant to subsection
5(a) (Termination by the Company for Cause), then the Company shall, in addition
to any Gross-up Payment under subsection 4(f) (Certain Additional Payments by
the Company), (i) pay to the Executive as severance pay, at Executive's option
in a lump sum or as a continuation of compensation in accordance with this
Agreement, Executive's total
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compensation hereunder for a twelve-month period beginning on the date on which
such termination takes place, including without limitation under subsections
4(a) (Salary) and 4(b) (Bonus) and (ii) continue for the 12-month period
beginning on the date on which such termination takes place, group health plan
benefits to the extent authorized by and consistent with 29 U.S.C. Section 1161
et seq. (commonly known as "COBRA"), with the cost of the regular premium for
such benefits shared in the same relative proportion by the Company and the
Executive as in effect on the date of termination. Notwithstanding the
foregoing, if, at the time of such termination (w) by the Company Without Cause,
(x) by the Executive for Good Reason, (y) by the Executive upon a Change in
Control or (z) after March 31, 2001 for any reason other than pursuant to
subsection 5(a) (Termination by the Company for Cause), the Company is in
discussion with a person or 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 4(d) upon
the closing of the Transaction, provided such consummation of a Transaction, or
execution of a definitive agreement regarding a Transaction, as the case may be,
occurs on or before March 31, 2002.
The parties hereto agree that the Termination Benefits are to be in full
satisfaction, compromise and release of any claims arising out of any
termination of the Employee's employment pursuant to subsections 5(b) or 5(c),
and in either case with such amounts to be contingent upon the Employee's
delivery upon termination of employment of a general release of any and all
claims arising out of facts or circumstances which occurred prior to the date of
such termination in a form reasonably satisfactory to the Company, it being
understood that no Termination Benefits shall be provided unless and until the
Employee determines to execute and deliver such release.
(i) No Mitigation. The Executive shall not be required to
mitigate the amount of payment provided for in subsection 5(h) by seeking other
employment or otherwise.
(j) Reduction in Compensation. If the Executive terminates her
employment for Good Reason based upon a reduction by the Company of the
Executive's Salary or Bonus Compensation, then for purposes of calculating the
Termination Benefits under subsection 5(h), the Executive's Salary as of the
Date of Termination shall be deemed to be the Executive's Salary immediately
prior to the reduction that the Executive claims as grounds for Good Reason or
Change in Control.
(k) Disability. Upon the permanent disability (as defined
below) of the Executive continuing for a period in excess of one hundred eighty
(180) consecutive days, all obligations of the Company under this Agreement
shall immediately terminate other than any obligation of the Company with
respect to earned but unpaid Salary and Regular Benefits contemplated hereby to
the extent accrued or vested through the date of termination. As used herein,
the terms "permanent disability" or "permanently disabled" shall mean the
inability of the Executive, by reason of injury, illness or other similar cause,
to perform essential functions of her position as described in Section 2 above,
as determined reasonably and in good faith by the Company. Nothing in this
subsection 5(k) shall be construed to waive the Executive's
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rights, if any, under existing law including, without limitation, the Family and
Medical Leave Act of 1993, 29 U.S.C. Section 2601 et seq. and the Americans with
Disabilities Act, 42 U.S.C. Section 12101 et seq.
(l) 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 4(a) (Salary) and 4(b) (Bonus), but excluding
compensation under subsections 4(c) (Retention Payment) and 4(d) (Transaction
Incentive Fee), shall terminate as of the end of the month in which the
Executive's death occurs; provided, however, that the Executive's named
beneficiary or beneficiaries shall receive such reimbursement as may have been
due to the Executive pursuant to subsection 4(h) (Expenses) hereof.
Notwithstanding the foregoing, if, at the time of Executive's death, the Company
is in discussion with a person or 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 4(d) upon the closing of the Transaction.
(m) Non-Competition and Related Agreements. Notwithstanding
termination of this Agreement as provided in this Section 5 or any other
termination of the Executive's employment with the Company, the Executive's
obligations under Section 6 hereof shall survive any termination of the
Executive's employment with the Company at any time and for any reason as
provided therein.
(n) Outplacement Services. Upon the termination of the
Executive's employment with the Company for any reason other than pursuant to
subsection 5(a) (Termination by the Company for Cause) or subsection 5(l) (Death
of Executive), the Company shall provide to the Executive outplacement services
at the executive level (not to exceed $20,000 in the aggregate) for twelve (12)
months following such termination of employment.
6. Non-Competition; Non-Disparagement; Confidential Information and
Cooperation.
(a) Non-Competition; Non-Solicitation. Executive recognizes
that if she were to attempt to perform as an employee of a competitor of the
Company, there would be a genuine and inevitable threat that Executive would use
or disclose Confidential Information. Therefore, and in consideration for
Executive's employment by the Company under the terms provided in this Agreement
and as a means to aid in the performance and enforcement of the terms of the
confidentiality provisions of Paragraph 6(c), the Executive hereby agrees that
during the period commencing on the date hereof and ending on the date which is
the first anniversary of the date on which the Executive's employment with the
Company terminates (the "Noncompetition Period"), the Executive will not,
without the express written consent of the Company, directly or indirectly,
anywhere in the United States, engage in any activity
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which is, or participate or invest in, or provide or facilitate the provision of
financing to, or assist (whether as owner, part-owner, shareholder, member,
partner, director, officer, trustee, employee, agent or consultant, or in any
other capacity), any business, organization or person other than the Company (or
any subsidiary or affiliate of the Company), and including any such business,
organization or person involving, or which is, a family member of the Executive,
whose business, activities, products or services are competitive with any of the
business, activities, products or services conducted or offered by the Company
or its subsidiaries or affiliates during any period in which the Executive
serves as an officer or employee of the Company or any of its subsidiaries or
affiliates, which business, activities, products and services shall include in
any event and without limitation consulting services regarding information
systems relating to the management of dental practices. Without implied
limitation, the foregoing covenant shall be deemed to prohibit (a) hiring or
engaging or attempting to hire or engage for or on behalf of the Executive or
any such competitor any officer or employee of the Company or any of its direct
and/or indirect subsidiaries and affiliates, or any former employee of the
Company and any of its direct and/or indirect subsidiaries and affiliates who
was employed during the six (6) month period immediately preceding the date of
such attempt to hire or engage, (b) encouraging for or on behalf of the
Executive or any such competitor any such officer or employee to terminate his
or her relationship or employment with the Company or any of its direct or
indirect subsidiaries and affiliates, (c) soliciting for or on behalf of
Executive or any such competitor any client of the Company or any of its direct
or indirect subsidiaries and affiliates, or any former client of the Company or
any of its direct or indirect subsidiaries and affiliates who was a client
during the six (6) month period immediately preceding the date of such
solicitation and (d) diverting to any person (as hereinafter defined) any client
or business opportunity of the Company or any of its direct or indirect
subsidiaries and affiliates.
Notwithstanding anything herein to the contrary, the Executive may make
passive investments in any enterprise the shares of which are publicly traded if
such investment constitutes less than one percent (1%) of the equity of such
enterprise.
Neither the Executive nor any business entity controlled by the
Executive is a party to any contract, commitment, arrangement or agreement which
could, following the date hereof, restrain or restrict the Company or any
subsidiary or affiliate of the Company from carrying on its business or restrain
or restrict the Executive from performing his employment obligations, and as of
the date of this Agreement the Executive has no business interests whatsoever in
or relating to the industries in which the Company or its subsidiaries or
affiliates currently engage and other than passive investments in the shares of
public companies of less than one percent (1%).
(b) Confidential Information. As used in this Agreement,
"Confidential Information" means information belonging to the Company which is
of value to the Company in the course of conducting its business and the
disclosure of which could result in a competitive or other disadvantage to the
Company. Confidential Information includes, without limitation, financial
information, reports, and forecasts; inventions, improvements and other
intellectual property; trade secrets; know-how; designs, processes or formulae;
software;
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market or sales information or plans; customer lists; and business plans,
prospects and opportunities (such as possible acquisitions or dispositions of
businesses or facilities) which have been discussed or considered by the
management of the Company. Confidential Information includes information
developed by the Executive in the course of the Executive's employment by the
Company, as well as other information to which the Executive may have access in
connection with the Executive's employment. Confidential Information also
includes the confidential information of others with which the Company has a
business relationship. Notwithstanding the foregoing, Confidential Information
does not include information in the public domain, unless due to breach of the
Executive's duties under subsection 6(c).
(c) Confidentiality. The Executive understands and agrees that
her employment creates a relationship of confidence and trust between the
Executive and the Company with respect to all Confidential Information.
Executive acknowledges that in the course of her employment with the Company,
she will be allowed to become acquainted with the Company's Confidential
Information. The Company agrees to provide on an ongoing basis such Confidential
Information as the Company deems necessary or desirable to aid Executive in the
performance of her duties. At all times, both during the Executive's employment
with the Company and after her termination, the Executive will keep in
confidence and trust all such Confidential Information, and will not use or
disclose any such Confidential Information without the written consent of the
Company, except as may be necessary in the ordinary course of performing the
Executive's duties to the Company.
(d) Inventions. The Executive recognizes that the Company and
its affiliates possess a proprietary interest in all of the Confidential
Information and have the exclusive right and privilege to use, protect by
copyright, patent or trademark, or otherwise exploit the processes, ideas and
concepts described therein to the exclusion of the Executive, except as
otherwise agreed between the Company and the Executive in writing. The Executive
expressly agrees that any products, inventions, discoveries or improvements made
by the Executive or her agents or affiliates in the course of the Executive's
employment, including any of the foregoing which is based on or arises out of
the Confidential Information, shall be the property of and inure to the
exclusive benefit of the Company. The Executive further agrees that any and all
products, inventions, discoveries or improvements developed by the Executive
(whether or not able to be protected by copyright, patent or trademark) during
the course of her employment, or involving the use of the time, materials or
other resources of the Company or any of its affiliates, shall be promptly
disclosed to the Company and shall become the exclusive property of the Company,
and the Executive shall execute and deliver any and all documents necessary or
appropriate to implement the foregoing.
(e) Business Opportunities. The Executive agrees, while she is
employed by the Company, to offer or otherwise make known or available to it, as
directed by the Board of Directors of the Company and without additional
compensation or consideration, any business prospects, contracts or other
business opportunities that she may discover, find, develop or otherwise have
available to her in any field in which the Company or its affiliates are engaged
or propose to be engaged, and further agrees that any such prospects, contacts
or other business opportunities shall be the property of the Company.
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(f) Documents, Records, etc. All documents, records, data,
apparatus, equipment and other physical property, whether or not pertaining to
Confidential Information, which are furnished to the Executive by the Company or
are produced by the Executive in connection with the Executive's employment will
be and remain the sole property of the Company. The Executive will return to the
Company all such materials and property as and when requested by the Company. In
any event, the Executive will return all such materials and property immediately
upon termination of the Executive's employment for any reason. The Executive
will not retain with the Executive any such material or property or any copies
thereof after such termination.
(g) Third-Party Agreements and Rights. The Executive hereby
confirms that the Executive is not bound by the terms of any agreement with any
previous company or other party which restricts in any way the Executive's use
or disclosure of information or the Executive's engagement in any business. The
Executive represents to the Company that the Executive's execution of this
Agreement, the Executive's employment with the Company and the performance of
the Executive's proposed duties for the Company will not violate any obligations
the Executive may have to any such previous company or other party. In the
Executive's work for the Company, the Executive will not disclose or make use of
any information in violation of any agreements with or rights of any such
previous company or other party, and the Executive will not bring to the
premises of the Company any copies or other tangible embodiments of non-public
information belonging to or obtained from any such previous employment or other
party.
(h) Litigation and Regulatory Cooperation. During and after
the Executive's employment, the Executive shall cooperate fully with the Company
in the defense or prosecution of any claims or actions now in existence or which
may be brought in the future against or on behalf of the Company which relate to
events or occurrences that transpired while the Executive was employed by the
Company. The Executive's full cooperation in connection with such claims or
actions shall include, but not be limited to, being available to meet with
counsel to prepare for discovery or trial and to act as a witness on behalf of
the Company at mutually convenient times. During and after the Executive's
employment, the Executive also shall cooperate fully with the Company in
connection with any investigation or review of any federal, state or local
regulatory authority as any such investigation or review relates to events or
occurrences that transpired while the Executive was employed by the Company. The
Company shall reimburse the Executive for any reasonable out-of-pocket expenses
incurred in connection with the Executive's performance of obligations pursuant
to this subsection 6(h).
(i) Injunction. The Executive agrees that it would be
difficult to measure any damages caused to the Company which might result from
any breach by the Executive of the promises set forth in this Section 6, and
that in any event money damages would be an inadequate remedy for any such
breach. Accordingly, subject to Section 8 of this Agreement, the Executive
agrees that if the Executive breaches, or proposes to breach, any portion of
this Agreement, the Company shall be entitled, in addition to all other remedies
that it may have, to an injunction or other appropriate equitable relief,
including, without limitation, specific
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performance, to restrain any such breach without posting bond or showing or
proving any actual damage to the Company.
(j) Non-Disparagement and Cooperation. During the Executive's
employment and for a period of one year after termination of the Executive's
employment, the Executive agrees not to make or cause to be made, directly or
indirectly, any statement to any person criticizing or disparaging the Company
or any of its stockholders, directors, officers or employees or commenting
unfavorably or falsely on the character, business judgment, business practices
or business reputation of the Company or any of its stockholders, directors,
officers or employees. During and after the Executive's employment, the
Executive agrees that the Executive will cooperate fully with the Company in
arranging for an orderly and professional transition of her responsibilities.
During and after the Executive's employment, the Executive further agrees that
the Executive will present the circumstances of her termination of employment in
a light that will not reflect unfavorably on the Company. In the event Executive
breaches the covenants set forth in this subsection 6(j), the Executive will be
responsible for repaying to the Company any amounts received by the Executive
pursuant to subsection 5(h) (Certain Termination Benefits) within thirty (30)
days of such breach.
7. Indemnification. The Company and the Executive have executed an
Indemnification Agreement which provides the same terms and conditions as
similar agreements between the Company and its directors. The stated purpose of
the Indemnification Agreement is to provide greater indemnification than that
which is afforded by the Company's charter, by-laws and, to the extent insurance
is available, the coverage of Executive under the Company's directors and
officers liability insurance policies.
8. Dispute Resolution. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof or otherwise arising out of the
Executive's employment or the termination of that employment (including, without
limitation, any claims of unlawful employment discrimination whether based on
age or otherwise) shall, to the fullest extent permitted by law, be settled by
arbitration under the auspices of the American Arbitration Association ("AAA")
in Dallas, Texas in accordance with the Employment Dispute Resolution Rules of
the AAA, including, but not limited to, the rules and procedures applicable to
the selection of arbitrators. The arbitrators shall be governed by the United
States Arbitration Act, 9 U.S.C. Sections 1-16. Judgment upon the award rendered
by the arbitrator may be entered in any court having jurisdiction thereof. This
Section 8 shall be specifically enforceable.
Notwithstanding anything to the contrary contained herein, the
provisions of this Section 8 shall not apply with regard to any equitable
remedies to which any party may be entitled hereunder.
Each of the parties hereto (a) hereby irrevocably submits to the
jurisdiction of the United States District Court for the Northern District of
Texas and the courts of general jurisdiction of the State of Texas in Dallas
county, Texas for all disputes hereunder including for the purposes of enforcing
the award or decision in any arbitration proceeding under this Section 8, (b)
hereby waives, and agrees not to assert, by way of motion, as a defense, or
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otherwise, in any such suit, action or proceeding, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that the suit,
action or proceeding is brought in an inconvenient forum, or that the venue of
the suit, action or proceeding is improper. Each of the parties hereto hereby
consents to service of process by registered mail at the address to which
notices are to be given. Each of the parties hereto agrees that its or her
submission to jurisdiction and its or her consent to service of process by mail
is made for the express benefit of the other parties hereto. Final judgment
against any party hereto in any such action, suit or proceeding may be enforced
in other jurisdictions by suit, action or proceeding on the judgment, or in any
other manner provided by or pursuant to the laws of such other jurisdiction;
provided, however, that any party hereto may at its or her option bring suit or
institute other judicial proceedings, in any state or federal court of the
United States or of any country or place where the other parties or their
assets, may be found.
9. Integration. Except as provided herein, this Agreement constitutes
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all prior agreements between the parties with respect to
any related subject matter.
10. Assignment; Successors and Assigns, etc. Neither the Company nor
the Executive may make any assignment of this Agreement or any interest herein,
by operation of law or otherwise, without the prior written consent of the other
party; that the Company may assign its rights under this Agreement without the
consent of the Executive in the event that the Company shall effect a
reorganization, consolidate with or merge into any other corporation,
partnership, organization or other entity, or transfer all or substantially all
of its properties or assets to any other corporation, partnership, organization
or other entity. This Agreement shall inure to the benefit of and be binding
upon the Company and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns.
11. Enforceability. If any portion or provision of this Agreement
(including, without limitation, any portion or provision of any section of this
Agreement) shall to any extent be declared illegal or unenforceable by a court
of competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not be affected thereby,
and each portion and provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
12. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
13. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by a nationally recognized overnight courier service or by
registered or certified mail, postage prepaid, return receipt requested, to the
Executive at the last address the Executive has filed in
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writing with the Company or, in the case of the Company, at its main offices,
attention of the President and/or Secretary, and shall be effective on the date
received.
14. Amendment. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by a duly authorized
representative of the Company.
15. Governing Law. This contract shall be construed under and be
governed in all respects by the laws of the State of Texas, without giving
effect to the conflict of laws principles thereof.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be taken to be
an original; but such counterparts shall together constitute one and the same
document.
17. 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 (2)
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 filing 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.
18. Legal Fees. If Executive seeks to enforce the provisions of
Sections 4 and 5 of this Agreement , then all of her reasonable legal fees and
expenses 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 (not to exceed $7,000 in the aggregate) and
expenses incurred by Executive in connection with the negotiation and execution
of this Agreement shall be paid or reimbursed to Executive by the Company.
19. 2000 Employment Agreement. This Agreement shall supersede and
replace in all respects the 2000 Employment Agreement, which superseded and
replaced in all respects the 1999 Employment Agreement. Notwithstanding the
foregoing, the Indemnification Agreement referenced in Section 7 of this
Agreement and the Stock Option Agreement dated as of August 9, 1999 and the
Stock Option Agreement dated as of May 8, 2000, shall remain in full force and
effect.
20. Defined Terms. As used herein, the following terms shall have the
following meanings:
(a) "1999 Employment Agreement" shall mean that Employment
Agreement between Monarch Dental Corporation and ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ dated as
of August 9, 1999.
(b) "Transaction" shall mean any transaction described in
subsection 5(d)(i), (ii) or (v).
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(c) "Closing Date" shall mean the date upon which a
Transaction is closed.
(d) "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 subsection 4(f) hereof; and
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.
(e) "2000 Employment Agreement" shall mean that Amended and
Restated Employment Agreement between Monarch Dental Corporation and ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ dated as of May 26, 2000.
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IN WITNESS WHEREOF, this Second Amended and Restated Employment
Agreement has been executed as a sealed instrument by the Company, by its duly
authorized officer, and by the Executive, as of the Effective Date.
COMPANY:
MONARCH DENTAL CORPORATION
By:
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, By Direction of the
Board of Directors
EXECUTIVE:
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▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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