EXHIBIT 10.3
September 11, 2002
Xxx X. Xxxxx III, D.D.S.
x/x Xxxxxxx Xxxxxx Xxxxxxxxxxx
Xxxxxxx Xxxxx II
00000 Xxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Re: Stay Bonus Arrangement
Dear Xx. Xxxxx:
Reference is hereby made to that certain Stay Bonus Agreement by and
between Monarch Dental Corporation (the "Company") and you, dated August 1, 2002
(the "Original Agreement"). As set forth in the Original Agreement, a special
committee of the Board of Directors of the Company has authorized the Company's
management to pursue a sale of the Company. The Company recognizes, however,
that the possibility of a sale of the Company, and the uncertainty and questions
which it may raise among the Company's employees, may result in the departure or
distraction of the Company's employees to the detriment of the Company and its
stockholders. Therefore, the Company has determined that appropriate steps
should be taken to reinforce and encourage your continued attention and
dedication to the Company and your assigned duties without distraction in the
face of a sale of the Company.
As a material inducement for, and in consideration of, your continued
employment, the Company hereby grants to you the right to receive a stay bonus
pursuant to the terms and conditions set forth below:
1. STAY BONUS. In the event a Sale Event (as defined in paragraph 5
below) occurs on or prior to March 31, 2003, the Company shall pay you an amount
equal to $102,500 (the "Stay Bonus") within fourteen (14) days following a Sale
Event, provided you satisfy the employment conditions set forth in paragraph 2
below.
2. EMPLOYMENT CONDITIONS. Your eligibility to receive the Stay Bonus is
subject to your satisfying each of the following conditions:
(a) Your continuing faithfully and to the best of your
ability to perform your duties as an employee of the
Company as may be assigned or delegated to you from
time to time by the management of the Company;
(b) Your remaining an employee through the date of a Sale
Event unless your employment with the Company is
terminated by the Company "without cause" (as defined
below) on or prior to a Sale Event;
(c) Your maintaining the confidentiality of this letter
agreement and the Company's pursuit of a Sale Event
in accordance with paragraph 3 below; and
(d) Your complying with the provisions of paragraph 4
below.
For purposes of this paragraph 2, the term "without cause" shall mean the
termination by the Company of your employment for any reason other than upon (i)
a willful act of dishonesty by you with respect to any matter involving the
Company or any subsidiary or affiliate, (ii) your indictment or conviction of
any crime constituting a felony or a violation of federal or state securities
law or involving moral turpitude, or (iii) your gross neglect of or willful
failure to perform any material duty or responsibility as an employee of the
Company after written notice to you from the Company's Board of Directors, other
than as a result of sickness, accident, disability or similar cause beyond your
control.
3. CONFIDENTIALITY. You hereby agree to keep the existence of this
letter agreement and the terms and conditions hereof and the Company's pursuit
of a Sale Event (provided the Company has not previously made a public
announcement regarding such pursuit) in the strictest confidence. You hereby
agree not to disclose without the prior written consent of the Company to any
other person (including, without limitation, by issuing a press release or
otherwise making any public statement) the fact that this letter agreement has
been entered into or any of the terms and conditions hereof or the Company's
pursuit of a Sale Event (provided the Company has not previously made a public
announcement regarding such pursuit); provided, however, that you may make such
disclosure without the prior written consent of the Company if such disclosure
is required by applicable law and you have previously provided one day's written
notice to the Company's Chief Executive Officer that you intend to make such
disclosure. For purposes of this paragraph 3, all notices shall be deemed given
when actually received.
4. NON-DISPARAGEMENT. During the term of this Agreement, you agree that
you will not make or cause to be made, directly or indirectly, any statement to
any person criticizing or disparaging the Company or any of its affiliates,
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 affiliates, stockholders, directors,
officers or employees.
5. SALE EVENT. For purposes of this letter agreement, a "Sale Event"
shall be deemed to occur upon the closing of any transaction involving (A) any
consolidation or merger of the Company where the stockholders of the Company,
immediately prior to the consolidation or merger, would not, immediately after
the consolidation or merger, beneficially own (as such term is defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended), directly or
indirectly, shares representing in the aggregate fifty percent (50%) or more of
the voting shares of the corporation issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if any), (B) any
sale, lease, exchange or other transfer (in one
2
transaction or a series of transactions contemplated or arranged by any party as
a single plan) of all or substantially all of the assets of the Company or (C)
any plan or proposal for the liquidation or dissolution of the Company.
6. EFFECT ON OTHER EMPLOYMENT TERMS. Nothing in this letter agreement
shall be construed to limit your rights under any of the Company's benefit
plans, programs or policies or under stock option agreements (if any) between
you and the Company.
7. WITHHOLDING. All payments made by the Company under this letter
agreement shall be net of any tax or other amounts required to be withheld by
the Company under applicable law.
8. NO RIGHT OF EMPLOYMENT. Nothing in this letter agreement shall be
construed as creating an express or implied contract of employment and, except
as otherwise agreed in writing between you and the Company, you shall not have
any right to be retained in the employ of the Company.
9. SETTLEMENT AND ARBITRATION OF DISPUTES. Any controversy or claim
arising out of or relating to this letter agreement or the breach thereof shall
be settled exclusively by arbitration in accordance with the laws of the State
of Texas by a single arbitrator appointed by the American Arbitration
Association in Dallas, Texas. Such arbitration shall be conducted in Dallas,
Texas in accordance with the rules of the American Arbitration Association for
commercial arbitrations, except with respect to the selection of arbitrators
which shall be as provided in this paragraph 9. Judgment upon the award rendered
by the arbitrator may be entered in any court having jurisdiction thereof.
10. 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 letter agreement, or
the waiver by any party of any breach of this letter agreement, shall not
prevent any subsequent enforcement of such term or obligation or be deemed a
waiver of any subsequent breach.
11. AMENDMENT. This letter agreement may be amended or modified only by
a written instrument signed by you and by a duly authorized representative of
the Company.
12. GOVERNING LAW. This letter agreement shall be construed under and
be governed in all respects by the laws of the State of Texas, without regard to
its rules of conflict of laws.
13. OBLIGATIONS OF SUCCESSORS. The Company shall require any successor
to all or substantially all of the business or assets of the Company to
expressly assume and agree to perform this letter 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.
14. ENTIRE AGREEMENT. This letter agreement is the entire agreement
between you and the Company, and all previous agreements or promises between you
and the Company relating to the subject matter of this letter agreement,
including, without limitation, the Original Agreement, are superseded, null and
void.
3
If the foregoing arrangement is acceptable to you, please execute, date
and return a copy of this letter agreement to Xxxx Xxxxxxxx at the Company.
MONARCH DENTAL CORPORATION
By:
----------------------------------
Name: X. Xxxxxx Tygart
Title: Chief Executive Officer
AGREED TO AND ACCEPTED BY:
------------------------------- ---------------
Xxx X. Xxxxx III, D.D.S. Date
