AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") is entered into effective
as of December 31, 2002 between InterDent Service Corporation, a Washington
corporation, (the "Company") and Xxxx X. Xxxxxx ("Executive").
RECITALS
The Company and Executive are parties to an Employment Agreement dated
October 8, 2001 (the "Agreement") pursuant to which Executive has served as
Special Assistant to the CEO of the Company. The parties desire to amend this
agreement to reflect certain changes set forth below in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and in the Agreement, the parties agree as follows:
1. Extension of Employment Term of Agreement. Section 2 of the Agreement is
hereby amended to extend the Employment Term of the Agreement up through
March 31, 2004.
2. Change in position. Section 1 of the Agreement is herby amended to change
the reference to Executive's position with the Company from "Special
Assistant to the Chief Executive Officer" to "Interim Chief Operating
Officer," effective January 1, 2003.
3. Change in base compensation. Section 3 of the Agreement is hereby amended
to change Executive's Salary to Two Hundred and Eighty Thousand Dollars
($280,000) per annum, retroactive to December 1, 2002, with increases, if
any, as may be approved in writing by the Compensation Committee of the
Company's Board of Directors.
4. Retention bonuses. As approved by the Compensation Committee of the
Company's Board of Directors, (a) if Executive is employed by the Company
on March 31, 2003, or if Executive's employment with the Company is
terminated prior to March 31, 2003, and provided such termination was
either by the Company without Cause or by the Executive for Good Reason (as
defined in the Agreement), then the Company shall pay Executive a cash
bonus equal to Seventy Five Thousand Dollars ($75,000), subject to
applicable withholding taxes, on such date of termination; and (b) if
Executive is employed by the Company on March 31, 2004, or if Executive's
employment with the Company is terminated prior to March 31, 2004, and
provided such termination was either by the Company without Cause or by the
Executive for Good Reason (as defined in the Agreement), then the Company
shall pay Executive a second cash bonus equal to Seventy Five Thousand
Dollars ($75,000), subject to applicable withholding taxes, on such date of
termination.
5. Severance payments. The defined term "Severance Term" in Section 6(e)(i) of
the Agreement shall be redefined to mean "the period between the date of
termination of Executive's employment with the Company and the end of the
twelfth (12th) month following the date of such termination," with this
redefined Severance Term to be used to calculate all severance payments due
to Executive under the Agreement or this Amendment. In addition, the
language in Section 6(e)(iii) of the Agreement regarding the vesting of
Executive's options shall be interpreted to apply to all stock options
granted to Executive by the Company, as modified by Section 6 of --- this
Amendment.
6. Stock option grants.
a. Replacement Option Grant. To replace options previously surrendered by
Executive, the Company's Compensation Committee authorized the Company to
grant to Executive the following:
i. A stock option (" Replacement Option") granted on January 10, 2003 to
purchase Ninety Thousand (90,000) shares of the Company's common stock.
This Replacement Option has an exercise price of $0.19 per share, the
closing price of the Company's common stock on January 10, 2003. This
Replacement Option shall be 100% vested and fully exercisable at date of
grant. All other terms of this Replacement Option are set forth in the
applicable stock option plan.
ii. A second stock option ("Replacement Success Option") granted on January 10,
2003 to purchase Sixty Thousand (60,000) shares of the Company's common
stock. This Replacement Success Option has an exercise price of $0.19 per
share, the closing price of the Company's common stock on January 10, 2003.
This Replacement Success Option shall vest on the earlier to occur of (i)
October 8, 2008, or (ii) the date, on or before April 8, 2005, on which the
trading price of the Company's Common Stock reaches $5.00 or more per
share; provided, however, that if Executive's employment with the Company
is terminated, and the trading price of the Company's Common Stock does not
reach $5.00 or more per share on or before April 8, 2005, the Replacement
Success Option shall immediately terminate on the later of (i) April 8,
2005, or (ii) the date of Executive's termination of the employment with
the Company. All other terms of these Options are set forth in the
applicable stock option plan.
b. New Option Grant. The Company's Compensation Committee authorized the
Company to grant to Executive on January 10, 2003, a stock option
("Option") to purchase Seventy Five Thousand (75,000) shares of the
Company's common stock. These Options have an exercise price of $0.19 per
share, the closing price of the Company's common stock on January 10, 2003.
The Options shall be 100% vested and become fully exercisable on the
one-year anniversary of the date of grant of the Options, unless vested
earlier per Sections 3(d), 3(e), 6(e) or 7 of the Agreement. All other
terms of these Options are set forth in the applicable stock option plan.
7. Equivalent ownership for options. During the Employment Term, should any
Restructuring Event (defined below in Section 8. Definitions) occur, all
stock options ("Original Options") granted to Executive prior to the date
of such a Restructuring Event, shall be converted into new stock options
("New Options") to purchase shares of the Company's common stock, such
that: (i) the percentage of the total New Options divided by the Company's
total common stock calculated on a Fully Diluted Basis (as defined below in
Section 8) immediately following such a Restructuring Event shall be equal
to the percentage of the total equity ownership rights of the Original
Options divided by the Company's total common stock, calculated on a Fully
Diluted Basis, immediately preceding the Restructuring Event; and (ii) the
Exercise Price of each option within the New Options multiplied by the
total number of shares of the Company's common stock that are purchasable
under each of these option rights (the sum of which equals the "Total
Exercise Cost"), shall be equivalent to the Total Exercise Cost of each
respective option as granted for the Original Options.
8. Definitions.
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"Restructuring Event" is defined as an event pursuant to which
the Company consummates a material restructuring of its
current debt and/or equity capital structure that is approved
by the Company's Board of Directors, including, but not
limited to a merger (or a takeover in which the holders of the
Company's common stock immediately prior to such a merger do
not continue to own equity securities in the Company after the
merger), a sale of capital stock, a sale of the assets of the
Company, any debt financing, or the restructuring of any
current equity ownership or debt financing, or any similar
transaction, or any combination of the foregoing, immediately
following such a Restructuring Event.
"Fully Diluted Basis," with reference to outstanding equity
securities of the Company (or any successor to the Company),
is defined as the shares of common stock of such entity that
would be outstanding assuming that all outstanding options,
warrants and other rights to acquire common stock in such
entity have been exercised and all securities convertible into
common stock of such entity have been converted, regardless of
whether such options, warrants or other rights are then
exercisable or whether such securities are then convertible.
9. No Further Changes. Except as expressly provided in this Amendment, the
Agreement is not otherwise modified and remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first written above.
INTERDENT SERVICE CORPORATION
/s/ H. XXXXX XXXXX
H. Xxxxx Xxxxx
Chief Executive Officer
EXECUTIVE
/s/ XXXX X. CHINNA
Xxxx X. Xxxxxx
