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EXHIBIT 10.3
INDEMNIFICATION AGREEMENT
(Xxxx X. Xxxxxxxx)
This Agreement made and entered into as of May 8, 2000 ("Agreement"),
by and between Monarch Dental Corporation (the "Company," which term shall
include any Entity (as hereinafter defined), directly or indirectly, controlled
by or affiliated with the Company) and Xxxx X. Xxxxxxxx ("Indemnitee"):
WHEREAS, it is essential to the Company that it be able to retain and
attract as directors and officers the most capable persons available;
WHEREAS, increased corporate litigation has subjected directors and
officers to litigation risks and expenses, and the limitations on the
availability of directors and officers liability insurance have made it
increasingly difficult for the Company to attract and retain such persons;
WHEREAS, its by-laws require the Company to indemnify their directors
and officers to the fullest extent permitted by law and permit it to make other
indemnification arrangements and agreements;
WHEREAS, the Company desires to provide Indemnitee with specific
contractual assurance of Indemnitee's rights to full indemnification against
litigation risks and expenses (regardless, among other things, of any amendment
to or revocation of such by-laws or any change in the ownership of the Company
or the composition of its Boards of Directors), which indemnification is
intended to be greater than that which is afforded by the Company's charter,
by-laws and, to the extent insurance is available, the coverage of Indemnitee
under the Company's directors and officers liability insurance policies; and
WHEREAS, Indemnitee is relying upon the rights afforded under this
Agreement in entering and continuing in Indemnitee's position as an officer of
the Company.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
1. DEFINITIONS.
(a) "Corporate Status" describes the status of a person
who is serving or has served (i) as a director
and/or officer of the Company, any Subsidiary of the
Company, (ii) in any capacity with respect to any
employee benefit plan of the Company or any
Subsidiary of the Company, or (iii) as a director,
partner, trustee, officer, employee, agent or owner
of any other Entity at the request of the Company.
(b) "Entity" shall mean any corporation, partnership,
professional corporation, joint venture, trust,
foundation, association, organization or
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other legal entity or any group or division of the
Company or any of its Subsidiaries.
(c) "Expenses" shall mean all reasonable fees, costs and
expenses incurred in connection with any Proceeding
(as defined below), including, without limitation,
attorneys' fees, disbursements and retainers
(including, without limitation, any such fees,
disbursements and retainers incurred by Indemnitee
pursuant to Section 10 of this Agreement), fees and
disbursements of expert witnesses, private
investigators and professional advisors (including,
without limitation, accountants and investment
bankers), court costs, transcript costs, fees of
experts, travel expenses, duplicating, printing and
binding costs, telephone and fax transmission
charges, postage, delivery services, secretarial
services, and other disbursements and expenses.
(d) "Indemnifiable Expenses," "Indemnifiable
Liabilities" and "Indemnifiable Amounts" shall have
the meanings ascribed to those terms in Section 3(a)
below.
(e) "Liabilities" shall mean judgments, damages,
liabilities, losses, penalties, excise taxes, fines
and amounts paid in settlement.
(f) "Proceeding" shall mean any threatened, pending or
completed claim, action, suit, arbitration,
alternate dispute resolution process, investigation,
administrative hearing, appeal, or any other
proceeding, whether civil, criminal, administrative
or investigative, whether formal or informal,
including a proceeding initiated by Indemnitee
pursuant to Section 10 of this Agreement to enforce
Indemnitee's rights hereunder.
(g) "Subsidiary" shall mean (i) any Entity that is
directly or indirectly wholly-owned or controlled by
the Company and (ii) any Entity that is a
professional corporation that provides dental
services to the Company or any of its Subsidiaries
described in clause (i) hereof.
2. SERVICES OF INDEMNITEE. In consideration of the Company's covenants
and commitments hereunder, Indemnitee agrees to serve or continue to serve as a
director and officer of the Company. However, this Agreement shall not impose
any obligation on Indemnitee or the Company to continue Indemnitee's service to
the Company or any other Entity beyond any period otherwise required by law or
by other agreements or commitments of the parties, if any, and subject to the
foregoing, Indemnitee shall be free to resign from any position he holds at any
time.
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3. AGREEMENT TO INDEMNIFY. The Company agrees to indemnify Indemnitee
as follows:
(a) Subject to the exceptions contained in Section 4(a)
below, if Indemnitee was or is a party or is
threatened to be made a party to any Proceeding
(other than an action by or in the right of the
Company) by reason of Indemnitee's Corporate Status,
Indemnitee shall be indemnified by the Company
against all Expenses and Liabilities incurred or
paid by Indemnitee in connection with such
Proceeding (referred to herein as "Indemnifiable
Expenses" and "Indemnifiable Liabilities,"
respectively, and collectively as "Indemnifiable
Amounts").
(b) Subject to the exceptions contained in Section 4(b)
below, if Indemnitee was or is a party or is
threatened to be made a party to any Proceeding by
or in the right of the Company to procure a judgment
in its favor by reason of Indemnitee's Corporate
Status, Indemnitee shall be indemnified by the
Company against all Indemnifiable Expenses.
4. EXCEPTIONS TO INDEMNIFICATION. Indemnitee shall be entitled to
indemnification under Sections 3(a) and 3(b) above in all circumstances other
than the following:
(a) If indemnification is requested under Section 3(a)
and it has been adjudicated finally by a court of
competent jurisdiction that, in connection with the
subject of the Proceeding out of which the claim for
indemnification has arisen, Indemnitee failed to act
in good faith and in a manner Indemnitee reasonably
believed to be in or not opposed to the best
interests of the Company or the relevant Entity, or,
with respect to any criminal action or proceeding,
Indemnitee had reasonable cause to believe that
Indemnitee's conduct was unlawful, Indemnitee shall
not be entitled to payment of Indemnifiable Amounts
hereunder.
(b) If indemnification is requested under Section 3(b)
and
(i) it has been adjudicated finally by a court
of competent jurisdiction that, in
connection with the subject of the
Proceeding out of which the claim for
indemnification has arisen, Indemnitee
failed to act in good faith and in a manner
Indemnitee reasonably believed to be in or
not opposed to the best interests of the
Company or the relevant Entity, Indemnitee
shall not be entitled to payment of
Indemnifiable Expenses hereunder; or
(ii) it has been adjudicated finally by a court
of competent jurisdiction that Indemnitee
is liable to the Company or the relevant
Entity with respect to any claim, issue or
matter involved in the
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Proceeding out of which the claim for
indemnification has arisen, including,
without limitation, a claim that Indemnitee
received an improper personal benefit, no
Indemnifiable Expenses shall be paid with
respect to such claim, issue or matter
unless the Court of Chancery or another
court in which such Proceeding was brought
shall determine upon application that,
despite the adjudication of liability, but
in view of all the circumstances of the
case, Indemnitee is fairly and reasonably
entitled to indemnity for such
Indemnifiable Expenses which such court
shall deem proper.
(c) If indemnification is requested under Section 3(a)
or 3(b) and the Indemnitee (or any Entity, directly
or indirectly, majority-owned or controlled by the
Indemnitee):
(i) is required to indemnify the Company (or
any Subsidiary) with respect to the subject
of the Proceeding out of which the claim
for indemnification has arisen pursuant to
the terms of any agreement entered into by
the Indemnitee (or any Entity, directly or
indirectly, majority-owned or controlled by
the Indemnitee at the time it enters into
any such agreement); or
(ii) has on or prior to the date hereof executed
a release with respect to the subject of
the Proceeding out of which the claim for
indemnification has arisen.
5. PROCEDURE FOR PAYMENT OF INDEMNIFIABLE AMOUNTS. Indemnitee shall
submit to the Company a written request specifying the Indemnifiable Amounts
for which Indemnitee seeks payment under Section 3 of this Agreement and the
basis for the claim. The Company shall pay such Indemnifiable Amounts to
Indemnitee within twenty (20) calendar days of receipt of the request. At the
request of the Company, Indemnitee shall furnish such documentation and
information as are reasonably available to Indemnitee and necessary to
establish that Indemnitee is entitled to indemnification hereunder.
6. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY
SUCCESSFUL. Notwithstanding any other provision of this Agreement, and without
limiting any such provision, to the extent that Indemnitee is, by reason of
Indemnitee's Corporate Status, a party to and is successful, on the merits or
otherwise, in any Proceeding, Indemnitee shall be indemnified against all
Expenses reasonably incurred by Indemnitee or on Indemnitee's behalf in
connection therewith. If Indemnitee is not wholly successful in such Proceeding
but is successful, on the merits or otherwise, as to one or more but less than
all claims, issues or matters in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses reasonably incurred by Indemnitee or on
Indemnitee's behalf in connection with each successfully resolved claim, issue
or matter. For purposes of this Agreement, the termination
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of any claim, issue or matter in such a Proceeding by dismissal, with or
without prejudice, shall be deemed to be a successful result as to such claim,
issue or matter.
7. EFFECT OF CERTAIN RESOLUTIONS. Neither the settlement or
termination of any Proceeding nor the failure of the Company to award
indemnification or to determine that indemnification is payable shall create an
adverse presumption that Indemnitee is not entitled to indemnification
hereunder. In addition, the termination of any proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent
shall not create a presumption that Indemnitee did not act in good faith and in
a manner which Indemnitee reasonably believed to be in or not opposed to the
best interests of the Company or, with respect to any criminal action or
proceeding, had reasonable cause to believe that Indemnitee's action was
unlawful.
8. AGREEMENT TO ADVANCE INTERIM EXPENSES; CONDITIONS. Except with
respect to any claim for indemnification made solely by the Company against the
Indemnitee with respect to any matter described in Section 4(c) hereof, the
Company shall advance to Indemnitee all Indemnifiable Expenses incurred by
Indemnitee in connection with any Proceeding, including a Proceeding by or in
the right of the Company, in advance of the final disposition of such
Proceeding, if Indemnitee furnishes the Company with a written undertaking to
repay the amount of such Indemnifiable Expenses advanced to Indemnitee if it is
finally determined by a court of competent jurisdiction that Indemnitee is not
entitled under this Agreement to indemnification with respect to such Expenses.
Such undertaking shall be an unlimited general obligation of Indemnitee, shall
be accepted by the Company without regard to the financial ability of
Indemnitee to make repayment, and in no event shall be required to be secured.
9. PROCEDURE FOR PAYMENT OF INTERIM EXPENSES. Indemnitee shall submit
to the Company a written request specifying the Indemnifiable Expenses for
which Indemnitee seeks an advancement under Section 8 of this Agreement,
together with documentation evidencing that Indemnitee has incurred such
Indemnifiable Expenses. Payment of Indemnifiable Expenses under Section 8 shall
be made no later than twenty (20) calendar days after the Company's receipt of
such request and the undertaking required by Section 8.
10. REMEDIES OF INDEMNITEE.
(a) Right to Petition Court. In the event that
Indemnitee makes a request for payment of
Indemnifiable Amounts under Sections 3 and 5 above
or a request for an advancement of Indemnifiable
Expenses under Sections 8 and 9 above and the
Company fails to make such payment or advancement in
a timely manner pursuant to the terms of this
Agreement, Indemnitee may petition the Court of
Chancery to enforce the Company's obligations under
this Agreement.
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(b) Burden of Proof. In any judicial proceeding brought
under Section 10(a) above, the Company shall have
the burden of proving that Indemnitee is not
entitled to payment of Indemnifiable Amounts
hereunder.
(c) Expenses. The Company agrees to reimburse Indemnitee
in full for any Expenses incurred by Indemnitee in
connection with investigating, preparing for,
litigating, defending or settling any action brought
by Indemnitee under Section 10(a) above, or in
connection with any claim or counterclaim brought by
the Company in connection therewith, but only if and
to the extent Indemnitee prevails therein. If it
shall be determined in such action that Indemnitee
is entitled to receive part but not all of the
advancement or indemnification sought, the expenses
incurred by Indemnitee in connection with such
action shall be appropriately prorated.
(d) Validity of Agreement. The Company shall be
precluded from asserting in any Proceeding,
including, without limitation, an action under
Section 10(a) above, that the provisions of this
Agreement are not valid, binding and enforceable,
that there is insufficient consideration for this
Agreement or that this Agreement and the actions of
the Company's board of directors in approving this
Agreement constituted a breach of their fiduciary
obligations and shall stipulate in court that the
Company is bound by all the provisions of this
Agreement.
(e) Failure to Act Not a Defense. The failure of the
Company (including its Board of Directors or any
committee thereof, independent legal counsel, or
shareholders) to make a determination concerning the
permissibility of the payment of Indemnifiable
Amounts or the advancement of Indemnifiable Expenses
under this Agreement shall not be a defense in any
action brought under Section 10(a) above, and shall
not create a presumption that such payment or
advancement is not permissible.
11. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Indemnitee as follows:
(a) Authority. The Company has all necessary power and
authority to enter into, and be bound by the terms
of, this Agreement, and the execution, delivery and
performance of the undertakings contemplated by this
Agreement have been duly authorized by the Company.
(b) Enforceability. This Agreement, when executed and
delivered by the Company in accordance with the
provisions hereof, shall be a legal, valid and
binding obligation of the Company, enforceable
against the Company in accordance with its terms,
except as such enforceability may
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be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting
the enforcement of creditors' rights generally.
12. INSURANCE. The Company will use its commercially reasonable
efforts to obtain and maintain a policy or policies of insurance with a
reputable insurance company or companies providing the Indemnitee with coverage
for losses from wrongful acts, and to ensure the Company's performance of its
indemnification obligations under this Agreement. In all policies of director
and officer liability insurance, Indemnitee shall be named as an insured in
such a manner as to provide Indemnitee at least the same rights and benefits as
are accorded to the most favorably insured of the Company's officers and
directors. Notwithstanding the foregoing, if the Company, after employing
commercially reasonable efforts as provided in the immediately preceding
sentence, determines in good faith that such insurance is not available, if the
premium costs for such insurance are disproportionate to the amount of coverage
provided, or if the coverage provided by such insurance is limited by
exclusions so as to provide an insufficient benefit, the Company shall use its
commercially reasonable efforts to obtain and maintain a policy or policies of
insurance with coverage having features as similar as practicable to those
described above.
13. CONTRACT RIGHTS NOT EXCLUSIVE. The rights to payment of
Indemnifiable Amounts and advancement of Indemnifiable Expenses provided by
this Agreement shall be in addition to, but not exclusive of, any other rights
which Indemnitee may have at any time under applicable law, the Company's
by-laws or charter, or any other agreement, vote of shareholders or directors,
or otherwise, both as to action in Indemnitee's official capacity and as to
action in any other capacity as a result of Indemnitee's serving as a director
or officer of the Company.
14. SUCCESSORS. This Agreement shall be (a) binding upon all
successors and assigns of the Company (including any transferee of all or a
substantial portion of the business, stock and/or assets of the Company and any
direct or indirect successor by merger or consolidation or otherwise by
operation of law) and (b) binding on and shall inure to the benefit of the
heirs, personal representatives, executors and administrators of Indemnitee.
This Agreement shall continue for the benefit of Indemnitee and such heirs,
personal representatives, executors and administrators after Indemnitee has
ceased to have Corporate Status.
15. SUBROGATION. In the event of any payment of Indemnifiable Amounts
under this Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of contribution or recovery of Indemnitee against
other persons, and Indemnitee shall take, at the request of the Company, all
reasonable action necessary to secure such rights, including the execution of
such documents as are necessary to enable the Company to bring suit to enforce
such rights.
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16. CHANGE IN LAW. To the extent that a change in applicable law
(whether by statute or judicial decision) shall permit broader indemnification
than is provided under the terms of the by-laws of the Company and this
Agreement, Indemnitee shall be entitled to such broader indemnification and
this Agreement shall be deemed to be amended to such extent.
17. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement, or any clause thereof,
shall be determined by a court of competent jurisdiction to be illegal, invalid
or unenforceable, in whole or in part, such provision or clause shall be
limited or modified in its application to the minimum extent necessary to make
such provision or clause valid, legal and enforceable, and the remaining
provisions and clauses of this Agreement shall remain fully enforceable and
binding on the parties.
18. INDEMNITEE AS PLAINTIFF. Except as provided in Section 10(c) of
this Agreement and in the next sentence or in connection with any
indemnification claim under any acquisition or investment agreement of even
date, Indemnitee shall not be entitled to payment of Indemnifiable Amounts or
advancement of Indemnifiable Expenses with respect to any Proceeding brought by
Indemnitee against the Company, any Subsidiary or any Entity which the Company
directly or indirectly controls or is affiliated with, any director or officer
thereof, or any third party, unless the Company has consented to the initiation
of such Proceeding. This Section shall not apply to counterclaims or
affirmative defenses asserted by Indemnitee in an action brought against
Indemnitee.
19. MODIFICATIONS AND WAIVER. Except as provided in Section 16 above
with respect to changes in applicable law which broaden the right of Indemnitee
to be indemnified by the Company, no supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by each of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions of this Agreement
(whether or not similar), nor shall such waiver constitute a continuing waiver.
20. GENERAL NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given (a) when delivered by hand, (b) when transmitted by facsimile and
receipt is acknowledged, or (c) if mailed by certified or registered mail with
postage prepaid, on the third business day after the date on which it is so
mailed:
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(i) If to Indemnitee, to:
Xxxx X. Xxxxxxxx
c/o Monarch Dental Corporation
0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Fax: (000) 000-0000
(ii) If to the Company, to:
Monarch Dental Corporation
0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Fax: (000) 000-0000
or to such other address or telefax number as may have been furnished in the
same manner by any party to the others.
21. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced under the laws of the jurisdiction in which Monarch Dental
Corporation or its successor is incorporated from time to time (the
"Jurisdiction") without giving effect to the provisions thereof relating to
conflicts of law.
22. CONSENT TO JURISDICTION. The Company hereby irrevocably and
unconditionally consents to the jurisdiction of the courts of the Jurisdiction
and the United States District Court in the Jurisdiction. The Company hereby
irrevocably and unconditionally waives any objection to the laying of venue of
any Proceeding arising out of or relating to this Agreement in the courts of
the Jurisdiction or the United States District Court for the District of the
Jurisdiction, and hereby irrevocably and unconditionally waives and agrees not
to plead or claim that any such Proceeding brought in any such court has been
brought in an inconvenient forum.
23. AGREEMENT GOVERNS. This Agreement is to be deemed consistent
wherever possible with relevant provisions of the Company's by-laws and
charter; however, in the event of a conflict between this Agreement and such
provisions, the provisions of this Agreement shall control.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
MONARCH DENTAL CORPORATION
By: /s/ XXXX X. XXXX
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Name: Xxxx X. Xxxx
Title: Chief Executive Officer
INDEMNITEE
/s/ XXXX X. XXXXXXXX
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Xxxx X. Xxxxxxxx
