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EXHIBIT 2.3
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made as of September
11, 1998 (the "Effective Date"), by and between Monarch Dental Corporation, a
Delaware corporation (the "Company") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "Executive").
WHEREAS, reference is made to that certain Agreement and Plan of
Merger dated as of September 1, 1998, pursuant to which MDDS, Inc., a wholly
owned subsidiary of the Company, will merge with and into Valley Forge Dental
Associates, Inc. ("Valley Forge");
WHEREAS, the Executive and Valley Forge wish to terminate the
Executive's current contract for employment dated May 28, 1996 and provide that
such contract be of no further force or effect;
WHEREAS, the Executive and the Company are concurrently entering into
a Non-Competition Agreement (the "Non-Competition Agreement") with respect to
certain matters during and after the Executive's employment with the Company;
and
WHEREAS, the parties hereto desire to assure that the Executive's
knowledge and experience will be available to the Company for the period of
time set forth herein.
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 on the terms and conditions set
forth in this Agreement.
2. Capacity. During the Term (as defined below), the Executive (a)
shall serve as an employee of the Company with the title and position of Chief
Operating Officer, reporting to the Chief Executive Officer of the Company (the
"CEO"), (b) shall have general supervisory responsibility in such capacity for
the dental operations of the Company, as well as such other responsibilities as
may be specified from time to time by the Board of Directors of the Company,
consistent with the Executive's position and general area of experience and
skills, provided that, in all cases the Executive shall be subject to the
oversight and supervision of the CEO of the Company in the performance of his
duties, (c) upon the request of the CEO of the Company, shall serve as an
officer and/or director of any of the Company's subsidiaries, and (d) shall
render all services reasonably incident to the foregoing. The Executive hereby
accepts such employment, agrees to serve the Company in the capacities
indicated, and agrees to use his best efforts in, and shall devote his full
working time, attention, skill and energies to, the advancement of the
interests of the Company and its subsidiaries and the performance of his 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
the Effective Date.
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4. Compensation and Benefits. The regular 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 and Seventy-Five Thousand Dollars ($175,000), subject
to increase from time to time in the discretion of the Compensation Committee of
the Board of Directors (the "Compensation Committee"). 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 Section 4(a), during the Term, the Executive shall be eligible to
receive a bonus of up to 30% of his 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 Section
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.
(c) Stock Options. Contemporaneous with the execution and delivery
of this Agreement, the Company has granted to the Executive options to acquire
50,000 shares of the Company's common stock in accordance with and subject to
option agreements dated as of even date herewith.
(d) 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.
(e) 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. 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.
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(f) 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.
(f) 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.
(g) 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 four
(4) weeks during each 365 days of the Term.
(h) Auto Allowance. During the Term, the Employee shall receive an
automobile allowance of $600 per month.
(i) Special Bonus. The Executive shall be entitled to receive a
one-time bonus of $100,000 if the Executive is employed by the Company on the
first anniversary of the date of this Agreement.
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 a vote of the Board of
Directors and written notice to the Executive. Only the following shall
constitute "cause" for such termination:
(i) dishonest statements or acts of the Executive with respect
to the Company or any affiliate of the Company or acting in a manner
that discredits or is detrimental to the reputation, character or
standing of the Company or any of its affiliates;
(ii) the commission by or indictment of the Executive for
(A) a felony or (B) any misdemeanor involving moral turpitude, deceit,
dishonesty or fraud, including, without limitation, any form of
harassment ("indictment," for these purposes, means an indictment,
probable cause hearing or any other procedure pursuant to which an
initial determination of probable or reasonable cause with respect to
such offense is made);
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(iii) the Executive shall commit a breach of any of the
covenants, terms or provisions hereof, which breach has not been
remedied within thirty (30) days after delivery to the Executive by the
Company of written notice of the facts constituting the breach;
(iv) the Executive shall commit a breach of any of the
covenants, terms or provisions of the Non-Competition Agreement, which
breach has not been remedied within thirty (30) days after delivery to
the Executive by the Board of Directors of the Company of written
notice of the facts constituting such breach;
(v) the Executive shall have failed to comply with written
instructions from the Company, which are reasonable and consistent with
Section 2, or shall have substantially failed to perform the
Executive's duties hereunder for a period of thirty (30) days after
written notice from the Company; or
(vi) gross negligence or willful misconduct of the Executive
with respect to the Company or any affiliate of the Company.
Upon termination for cause as provided in this Section 5(a), the
Company shall have any and all rights and remedies under this Agreement and
applicable law in addition to its rights under Section 5(d).
(b) Termination by the Executive. The Executive's employment under
this Agreement may be terminated by the Executive by written notice to the Board
of Directors at least thirty (30) days prior to such termination.
(c) Termination by the Company Without Cause. Subject to the
payment of Termination Benefits pursuant to Section 5(e), the Executive's
employment under this Agreement may be terminated by the Company without cause
upon written notice to the Executive.
(d) Termination by the Executive With Cause. The Executive shall
have the right to terminate his employment hereunder in the event of a material
default by the Company in the performance of its obligations hereunder after the
Executive has given written notice to the Company specifying such default by the
Company and giving the Company a reasonable time, not less than 60 days, to
conform its performance to its obligations hereunder. The parties agree that a
requirement by the Company that the Executive relocate to the Dallas-Ft. Worth,
Texas, area, the location of the Company's principal executive offices, shall
not constitute a material breach by the Company under this Agreement.
(e) 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
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of the Executive's employment with the Company pursuant to Section 5(c) or 5(d)
above, the Company shall provide to the Executive the following termination
benefits ("Termination Benefits"):
(i) continuation of the Executive's Salary at the rate then in
effect pursuant to Section 4(a); and
(ii) continuation of 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.
The Termination Benefits set forth in (i) and (ii) above shall continue in
effect until the earliest to occur of (i) the last day of the Term; (ii) the
date which is (a) six months after the date of termination if the Executive has
been employed by the Company for less than two years as of the date of
termination (provided, however, that if the Executive has been employed by the
Company for less than one year as of the date of termination, the Company shall
not be required to provide any Termination Benefits to the Executive) or (b)
the first anniversary of the date of termination if the Executive has been
employed by the Company for more than two years as of the date of termination;
and (iii) any breach by the Executive of the Non-Competition Agreement (the
"Termination Benefits Period"). The Company's liability for Salary continuation
pursuant to Section 5(e)(i) shall be reduced by the amount of any severance pay
due or otherwise paid to the Executive pursuant to any (x) severance pay plan
or stay bonus plan of the Company and (y) renumeration due or otherwise paid to
the Executive on account of employment or self-employment for services
performed during the Termination Benefits Period. The Company may, at its
option, elect to pay amounts due under Section 5(e)(i) in a lump-sum.
Notwithstanding the foregoing, nothing in this Section 5(e) shall be construed
to affect the Executive's right to receive COBRA continuation entirely at the
Executive's own cost to the extent that the Executive may continue to be
entitled to COBRA continuation after the Executive's right to cost sharing
under Section 5(e)(ii) ceases. The Executive shall be obligated to give prompt
notice of the date of commencement of any employment or self-employment during
the Termination Benefits Period and shall respond promptly to any reasonable
inquiries concerning any employment or self-employment in which the Executive
engages during the Termination Benefits Period. 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 Section 5(c) or 5(d), and in either case with such amounts to be
contingent upon the Employee's delivery of a general release upon termination
of employment 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.
(f) Death; Disability. Upon the death of the Executive, or upon
the permanent disability (as defined below) of the Executive continuing for a
period in excess of
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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 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 a major part of his duties and responsibilities in connection
with the conduct of the business and affairs of the Company, as determined
reasonably and in good faith by the Company. Nothing in this Section 5(f) shall
be construed to waive the Executive's 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.
(g) Non-Competition Agreement. 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 and in the Executive's Non-Competition Agreement shall survive
any termination of the Executive's employment with the Company at any time and
for any reason as provided therein.
6. Confidential Information and Cooperation.
(a) 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; 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 Section 6(b).
(b) Confidentiality. The Executive understands and agrees that the
Executive's employment creates a relationship of confidence and trust between
the Executive and the Company with respect to all Confidential Information. At
all times, both during the Executive's employment with the Company and after his
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.
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(c) 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
his 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 his
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.
(d) Business Opportunities. The Executive agrees, while he 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 he may discover, find, develop or otherwise have
available to him 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.
(e) 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.
(f) 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
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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.
(g) 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 Section 6(g).
(h) 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 7 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 performance, to restrain any such breach without posting
bond or showing or proving any actual damage to the Company.
(i) Non-Competition Agreement. The Executive acknowledges that the
Non-Competition Agreement executed and delivered concurrently herewith is an
integral part of his employment arrangements with the Company.
7. Dispute Resolution. Except as provided below, any dispute arising
out of or relating to this Agreement or the breach, termination or validity
hereof shall be finally settled by arbitration conducted expeditiously in
accordance with the Center for Public Resources Rules for Nonadministered
Arbitration of Business Disputes (the "CPR Rules"). The Center for Public
Resources shall appoint a neutral advisor from its National CPR Panel. The
arbitration shall be governed by the United States Arbitration Act, 9 U.S.C.
Sections 1-16, and judgment upon the award rendered by the arbitrators may be
entered by any court having jurisdiction thereof. The place of arbitration shall
be Dallas, Texas.
Such proceedings shall be administered by the neutral advisor in
accordance with the CPR Rules as he/she deems appropriate, however, such
proceedings shall be guided by the following agreed upon procedures:
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(a) mandatory exchange of all relevant documents, to be
accomplished within forty-five (45) days of the initiation of the procedure;
(b) no other discovery;
(c) hearings before the neutral advisor which shall consist of a
summary presentation by each side of not more than three (3) hours; such
hearings to take place on one or two days at a maximum; and
(d) decision to be rendered not more than ten (10) days following
such hearings.
Notwithstanding anything to the contrary contained herein, the
provisions of this Section 7 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 for the purpose of enforcing the award or decision in any such
proceeding, (b) hereby waives, and agrees not to assert, by way of motion, as a
defense, or 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 its property is exempt or immune from attachment or execution, that the
suit, action or proceeding is brought in an inconvenient forum, that the venue
of the suit, action or proceeding is improper or that this Agreement or the
subject matter hereof may not be enforced in or by such court, and hereby
waives and agrees not to seek any review by any court of any other jurisdiction
which may be called upon to grant an enforcement of the judgment of any such
court. 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 his submission to jurisdiction and its or his
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 his 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.
8. 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, including, without limitation, the employment
agreement between the Executive and Valley Forge dated May 26, 1996, which
agreement is of no further force or effect.
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9. 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; provided 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.
10. 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.
11. 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.
12. 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 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.
13. 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.
14. 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.
15. 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.
[END OF TEXT]
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IN WITNESS WHEREOF, this 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: /s/ ▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer
EXECUTIVE:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
[EMPLOYMENT AGREEMENT SIGNATURE PAGE]
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