EXHIBIT 10(i)
-------------
AMENDED AND RESTATED
--------------------
EMPLOYMENT AND NONCOMPETITION AGREEMENT
---------------------------------------
This agreement is made effective May 15, 2001 (the "Commencement Date"),
between PDHC, Ltd., a Minnesota corporation (the "Company"), and Xxxxxxx X.
Xxxxxxx, D.D.S. (the "Employee").
Background Information
----------------------
A. On November 12, 1996, the Company and the Employee entered into an
Employment and Non-Competition Agreement (the "1996 Agreement") for a term of
five years. The Company and the Employee now desire to amend and restate the
1996 Agreement as more fully described below.
Statement of Agreement
----------------------
The Company and the Employee (the "Parties") acknowledge the accuracy of
the foregoing Background Information and hereby agree as follows:
(S)1. Employment. Upon the terms and subject to the conditions described in
this agreement, the Company hereby employs the Employee and the Employee hereby
accepts employment by the Company.
(S)2. Term. Employee's employment with the Company pursuant to this
agreement shall be for a five-year term beginning on the Commencement Date and
ending on the fifth anniversary of the Commencement Date (the "Initial Term"),
unless or until sooner terminated pursuant to (S)7 of this agreement. This
agreement may be extended or renewed after the expiration of the Initial Term,
but only by mutual written agreement of the Parties. When permitted by the
context, any reference in this agreement to the "term of this agreement" shall
include the Initial Term and the period of any such extensions or renewals.
(S)3. Services. The Employee shall serve as the President of the Company,
devoting such time, attention, energy, loyalty, and skill to the Company's
business as is necessary and appropriate to perform his tasks for and fulfill
his responsibilities to the Company. The Employee shall perform such related or
other executive and administrative tasks as may be reasonably assigned to him
from time to time by the board of directors of the Company (the "Board") or the
Chairman of the Board of the Company.
The Employee shall not be required to relocate his home from the Twin
Cities Metropolitan Area during the term of this agreement.
The Parties hereby acknowledge that the Employee is being employed
concurrently by PDG, P.A., a Minnesota professional corporation (the "PA"). It
is the intent of the Parties that the Employee divide his full business and
professional time, energy, attention, and skill between the Company and the PA.
The Company agrees that any conflicts of interest that may arise as a result of
the Employee's concurrent employment by the Company and the PA shall not be a
basis for the Company's termination of the Employee's employment under this
agreement.
(S)4. Compensation. As compensation for his services under this agreement,
the Company shall pay the Employee a base salary at the annual rate of $226,000
(the "Base Salary"), payable in accordance with the Company's general policies
and procedures for payment of salaries to its executive personnel. Effective as
of January 1 of each year during the term of this agreement, the Base Salary
shall be increased by an amount no less than 3% of the Base Salary in effect for
the immediately preceding calendar year. In addition, the Company shall pay the
Employee an annual bonus in an amount of up to 20% of the Base Salary (as in
effect from time to time) for each calendar year during the term of this
agreement, prorated on a daily basis for any partial calendar year, which bonus
shall be based upon and tied to the achievement of the earnings from operations
budget for the Company and shall be paid no later than 100 days following the
end of any such calendar year or partial calendar year. Notwithstanding anything
to the contrary contained in the foregoing, Employee shall be paid a bonus not
less than $40,000 for the year ended December 31, 2001, payable in accordance
with the Company's normal procedures for payment of bonuses. If the Parties
mutually agree to extend or renew the Initial Term pursuant to (S)2 of this
agreement, and if the Employee will be performing (and does perform)
substantially similar services for the
1
Company during such extension or renewal period, the Company agrees that the
compensation applicable to such extension or renewal period shall be at a rate
not less than the Base Salary in effect during the final year of the Initial
Term.
(S)5. Fringe Benefits and Perquisites. During the term of this agreement,
the Employee shall be entitled to the following fringe benefits and perquisites:
(a) Group health and welfare benefits comparable to those offered
generally to the Company's executive personnel from time to time;
(b) Six weeks paid vacation during each year of the agreement;
(c) An annual automobile allowance in an amount equal to $750,
payable in accordance with the Company's general policies and procedures
for payment of such allowances to its executive personnel established or
approved from time to time by the Board;
(d) Reimbursement for all reasonable expenses incurred by the
Employee in connection with the performance of his services under this
agreement (including without limitation reasonable gasoline expenditures),
subject to such recordkeeping, reporting, and other reasonable requirements
of the Company as may be in effect from time to time; and
(e) Such other benefits and perquisites as may be offered generally
to the Company's executive personnel from time to time pursuant to such
terms, conditions, and policies as may be approved by the Board, including
without limitation participation in the Company's 1997 Employee Stock
Purchase Plan, Amended and Restated 1996 Stock Option Purchase Plan, and
executive bonus program (any such bonus to be based on annual performance
objectives to be approved by the Board ), each as in effect from time to
time.
(S)6. Confidentiality; Noncompetition. The Employee shall not, directly or
indirectly, at any time (whether during the term of this agreement or
thereafter), disclose any Confidential Information (defined below) to any
person, association, or other entity (other than the Affiliated Companies, as
defined below) or use, or permit or assist any person, association, or other
entity (other than the Affiliated Companies) to use, any Confidential
Information, excepting only Confidential Information which (i) is then generally
available to or obtainable by the public and which did not become so available
or obtainable through the breach of any provision of this agreement by the
Employee, or (ii) is obtained by the Employee on a non-confidential basis from a
source other than an Affiliated Company or any agent or other representative of
an Affiliated Company and such source had the right to disclose such
Confidential Information to the Employee without violating any legal,
contractual, fiduciary, or other obligation.
Upon termination of his employment by the Company (for any reason), the
Employee shall immediately deliver to the Company all documents and other
materials containing any Confidential Information which are in his possession or
under his control.
During the term of the Employee's employment with the Company or any
Affiliated Company (whether pursuant to this agreement or otherwise) and during
the Restricted Period (defined below), the Employee shall not, other than on
behalf of the Company, directly or indirectly (whether individually or as a
shareholder or other owner, partner, member, director, officer, employee,
consultant, creditor, or agent of any person, association, or other entity):
(a) Enter into, engage in, or promote or assist (financially or
otherwise), whether directly or indirectly, any business which competes
with the business of any Affiliated Company (the "Business"); provided that
the foregoing shall not prohibit the Employee from (i) being employed by
the PA during or following the Employee's employment with the Company, (ii)
owning not more than 1% of the outstanding capital stock of any corporation
whose shares are publicly traded on a national securities exchange or
system, or (iii) becoming an employee of, or otherwise performing services
for, after the termination of the Employee's employment with the Company
and any Affiliated Companies, a professional corporation or association or
other person or entity which provides professional dental care services to
the public (a "Dental Care Provider"), so long as such Dental Care Provider
is not an ADP Provider (as defined below)
2
and was not an ADP Provider at any time during the one-year period
immediately preceding such Dental Care Provider's employment or other
engagement of the Employee;
(b) Solicit or attempt to solicit business from any Dental Care
Provider to which any Affiliated Company provides management, consulting,
or other services (an "ADP Provider"), or interfere or attempt to interfere
with any relationship of any Affiliated Company with any ADP Provider;
(c) Induce or encourage any employee, officer, director, agent,
supplier, or independent contractor of any Affiliated Company to terminate
its relationship with such Affiliated Company, or otherwise interfere or
attempt to interfere in any way with any Affiliated Company's relationships
with its employees, officers, directors, agents, suppliers, independent
contractors, or others;
(d) Employ or engage any person who, at any time within the one-year
period immediately preceding such employment or engagement, was an
employee, officer, or director of any Affiliated Company; or
(e) Make any statement (oral or written) or take any other action
which would tend to disparage or diminish the reputation of any Affiliated
Company.
For purposes of this agreement: (i) "Affiliated Companies" shall include
the Company and all subsidiaries or affiliates of the Company other than Summit
Ventures IV, L.P. and any of its affiliates which is not engaged in a business
similar to that of the Company or its subsidiaries, (ii) "Confidential
Information" shall mean all trade secrets, proprietary data, and other
confidential information of any Affiliated Company, including without limitation
financial information, information relating to business operations, services,
promotional practices, and relationships with ADP Providers, suppliers,
employees, independent contractors, or other parties and any information which
any Affiliated Company is obligated to treat as confidential pursuant to any
course of dealing or any agreement to which it is a party or otherwise bound;
and (iii) the "Restricted Period" shall mean the two-year period following the
date of termination (for any reason) of Employee's employment with the Company
and any Affiliated Companies (whether pursuant to this agreement or otherwise).
The Employee acknowledges that (A) the provisions of this section are
fundamental and essential for the protection of the Company's legitimate
business and proprietary interests, (B) such provisions are reasonable and
appropriate in all respects, and (C) in the event of any violation by the
Employee of any of such provisions, the Company would suffer irreparable harm
and its remedies at law would be inadequate. In the event of any violation or
attempted violation of such provisions by the Employee, the Company shall be
entitled to a temporary restraining order, temporary and permanent injunctions,
specific performance, and other equitable relief, without any showing of
irreparable harm or damage or the posting of any bond, in addition to any other
rights or remedies which may then be available to the Company.
(S)7. Termination. The Employee's employment with the Company shall
terminate automatically upon the death of the Employee and may be terminated by
the Employee upon 12 months' prior written notice to the Company. The
Employee's employment may be terminated by the Company, without any further
obligation on the part of the Company (except as provided in clause (c), below),
immediately upon notice to the Employee under any of the following
circumstances:
(a) At any time for Cause (defined below);
(b) At any time if the Employee is under a Long-Term Disability
(defined below); or
(c) At any time without Cause; provided that if the Company
terminates the Employee's employment effective prior to the end of the
Initial Term pursuant to this clause (c), and no other basis for
termination exists under this agreement, then the Employee shall be
entitled to: (i) Base Salary accrued through the date of such termination;
(ii) Base Salary for the remainder of the Initial Term at the level in
effect at the effective date of such termination (the "Termination
Payment"), which shall be payable in consecutive equal monthly installments
on the first business day of each month throughout the remainder of the
Initial Term, commencing on the first such day of the month immediately
following the month in which such termination occurs; (iii) reimbursement
under (S)5(d) for expenses incurred through the date of termination; (iv)
during the 12-month period following such termination , at the Company's
expense, group
3
health and welfare benefits of the type required under (S)5(a), above; (v)
to the extent required under applicable law, continued participation, at
the Employee's expense, in the group health and welfare benefit programs of
the Company after the 12-month continuation period described in clause (iv)
of this (S)7(c); and (vi) his pro rata share of any bonus which otherwise
would have been payable under (S)4 with respect to the year in which such
termination occurs. Notwithstanding any other provisions of this agreement
to the contrary, such severance payments and other severance benefits shall
be payable and provided only so long as the Employee is in full compliance
with the provisions of (S)6 of this agreement.
For purposes of this agreement:
(i) "Cause" shall mean:
(A) any act constituting (1) a felony under the federal laws of
the United States, the laws of any state, or any other applicable law,
(2) fraud, embezzlement, misappropriation of assets, willful
misfeasance, or dishonesty, or (3) other criminal conduct which in any
way materially and adversely affects the reputation, goodwill, or
business position of the Company;
(B) the failure of the Employee to perform and observe all
obligations and conditions to be performed and observed by the
Employee under this agreement, or to perform his duties in accordance
with the policies, programs, budgets, procedures, and directions
established from time to time by the Board (any such failure, a
"Performance Failure"), and to correct such Performance Failure
promptly following notice from the Company to do so; or
(C) having corrected (or the Company having waived the
correction of) two Performance Failures, the occurrence of any
subsequent Performance Failure; and
(ii) "Long-Term Disability" shall mean that, because of physical or
mental incapacity, it is more likely than not that the Employee will be
unable, within 180 days after such incapacity commenced, to perform the
essential functions of his position with the Company, with or without
reasonable accommodation. In the event of any disagreement about whether or
when the Employee is under a Long-Term Disability, the question shall be
determined: (A) by a physician selected by agreement between the Employee
and the Company if such a physician is selected within 10 days after either
of them requests the other so to agree; or, if not, (B) by two physicians,
the first of whom shall be selected by the Employee and the second of whom
shall be selected by the Company or, if the Employee fails to make a
selection within 10 days after being requested to do so by the Company, the
second physician shall be selected by the first physician; or, if the two
physicians fail to agree, (C) by a third physician selected by the first
two physicians. The Employee shall submit to all reasonable examinations
requested by any such physicians.
(S)8. Capacity. The Employee represents and warrants to the Company that he
has the capacity and right to enter into this agreement and perform all of his
obligations under this agreement without any restriction.
(S)9. Remedies. All rights and remedies of either Party under this agreement
are cumulative and in addition to all other rights and remedies which may be
available to that Party from time to time, whether under any other agreement, at
law, or in equity.
(S)10. Survival. The termination of the Employee's employment with the
Company (for any reason) shall not relieve either Party of any of that Party's
obligations under this agreement existing at, arising as a result of, or
relating to acts or omissions occurring prior to such termination. Without
limiting the generality of the preceding sentence, in no event shall the
termination of such employment modify or affect any obligations of the Employee
or rights of the Company under (S)6 of this agreement or the Company's
obligations, if any, under (S)7(c) of this agreement, all of which shall survive
the termination of such employment.
(S)11. Notices. All notices and other communications under this agreement to
any Party shall be in writing and shall be deemed given when delivered
personally, telecopied (which is confirmed) to that Party at the telecopy number
for that Party set forth below, mailed by certified mail (return receipt
requested) to that Party at the address for that Party (or at such other address
for such Party as such Party shall have specified in notice to the other Party)
or delivered to Federal Express, UPS, or any similar express delivery service
for delivery to that Party at that address:
4
(a) If to the Company:
PDHC, Inc.
c/o American Dental Partners, Inc.
000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
with a copy to
Xxxxx & Xxxxxxxxx
00 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
(b) If to the Employee:
Xxxxxxx X. Xxxxxxx, D.D.S.
0 Xxxxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Telecopy No.:(000) 000-0000
(S)12. Severability. The intention of the Parties is to comply fully with all
rules, laws, and public policies to the extent possible. If and to the extent
that any court of competent jurisdiction is unable so to construe any provision
of this agreement and holds that provision to be invalid, such invalidity shall
not affect the remaining provisions of this agreement, which shall remain in
full force and effect. With respect to any provision in this agreement finally
determined by such a court to be invalid or unenforceable, such court shall have
jurisdiction to reform this agreement to the extent necessary to make such
provision valid and enforceable, and, as reformed, such provision shall be
binding on the Parties.
(S)13. Non-Waiver. No failure by either Party to insist upon strict
compliance with any term of this agreement, to exercise any option, to enforce
any right, or to seek any remedy upon any default of the other Party shall
affect, or constitute a waiver of, the other Party's right to insist upon such
strict compliance, exercise that option, enforce that right, or seek that remedy
with respect to that default or any prior, contemporaneous, or subsequent
default. No custom or practice of the Parties at variance with any provision of
this agreement shall affect, or constitute a waiver of, either Party's right to
demand strict compliance with all provisions of this agreement.
(S)14. Complete Agreement. This agreement and all documents referred to in
this agreement, all of which are hereby incorporated herein by reference,
contain the entire agreement between the Parties and supersede all other
agreements and understandings between the Parties with respect to the subject
matter of this agreement. No alterations, additions, or other changes to this
agreement shall be made or be binding unless made in writing and signed by both
Parties.
(S)15. Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota without regard to principles
of conflicts of law.
(S)16. Captions. The captions of the various sections of this agreement are
not part of the context of this agreement, are only guides to assist in locating
those sections, and shall be ignored in construing this agreement.
(S)17. Genders and Numbers. Where permitted by the context, each pronoun
used in this agreement includes the same pronoun in other genders and numbers,
and each noun used in this agreement includes the same noun in other numbers.
(S)18. Successors. This agreement shall be personal to the Employee and no
rights or obligations of the Employee under this agreement may be assigned by
the Employee to any third party. Any assignment or attempted
5
assignment by the Employee in violation of the preceding sentence shall be null
and void. Subject to the foregoing, this agreement shall be binding upon, inure
to the benefit of, and be enforceable by and against the successors and assigns
of each Party.
(S)19. Interpretation. This agreement supersedes the 1996 Agreement in its
entirety from and after the date of this agreement; provided that this agreement
shall not modify or otherwise affect any rights or obligations of the Parties
under the 1996 Agreement that are based on acts or omissions prior to the date
of this agreement, which rights and obligations shall survive the execution of
this agreement.
PDHC, LTD.
By /s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------- -----------------------
Xxxxxxx X. Xxxxxx, Chairman of the Board XXXXXXX X. XXXXXXX, DDS
6
