Exhibit 10.24
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
the 13th day of July, 1998, by and between COMPDENT CORPORATION, a Delaware
corporation (the "Company") and XXXXX X. XXXXXXXX (the "Employee").
I. Statement of Background Information
The Employee has been an officer and a key employee of the Company and the
parties desire to ensure that the Employee's expertise, knowledge and experience
will continue to be available to the Company in providing full-service dental
benefits and offering network-based dental care, reduced fee-for-service, third
party administration and dental practice management (the "Business").
II. Statement of Agreement
In consideration of the mutual covenants, promises and conditions set forth
in this Agreement, and for other good and valuable consideration, the parties
hereto hereby agree as follows:
1. Employment. The Company hereby employs Employee in the position of Vice
President of Human Resources and Assistant Corporate Counsel of the
Company and/or such other position(s) as determined by the Board of
Directors or its designees and consistent with the Employee's general area
of experience, knowledge and skill, and Employee hereby accepts such
employment upon the terms and conditions set forth in this Agreement. For
purposes of Sections 6, 7 and 8 of this Agreement, "employment" shall mean
any period of time during the term hereof which the Company is paying the
Employee salary or wages. By execution of this Agreement, the parties
hereby: (a) terminate, as of the date hereof, that certain employment
agreement between the Company and Employee dated December 1, 1997 (the
"Prior Employment Agreement") and (b) acknowledge and agree that no
provisions of the Prior Employment Agreement shall survive the execution
and delivery of this Agreement.
2. Duties of Employee. Employee agrees to perform and discharge the duties
which may be assigned to Employee from time to time by the Company's Board
of Directors or its designees and consistent with the Employee's general
area of experience, knowledge and skill. Employee also agrees to materially
comply with all of the Company's material policies, standards and
regulations and to follow the reasonable instructions and directives of
Employee's superiors within the Company, as promulgated by the Board of
Directors or its designees. Employee will devote her full professional and
business related time, skills and commercially reasonable efforts
to the Business and Employee will not, during the term of this Agreement,
be engaged (whether or not during normal business hours) in any other
business or professional activity (excluding reasonable and appropriate
charitable activities), whether or not such activity is pursued for gain,
profit or other pecuniary advantage without the prior written consent of
the Chief Executive Officer of the Company, which consent will not be
unreasonably withheld.
3. Term. The term of this Agreement will be for a period commencing on the
date hereof and expiring on the later of the fifth anniversary of such date
or, if there is a Change in Control (as defined herein) before such fifth
anniversary date, the date which is 25 months following any Change in
Control, subject to earlier termination as provided for in Section 4 below.
4. Termination.
(a) By the Company. Notwithstanding anything contained in Section 3 to
the contrary, the Company may terminate this Agreement and all of its
obligations hereunder immediately if any of the following events (any of
which shall constitute "cause" for purposes of this Agreement) occur:
(i) Employee (A) materially breaches any of the terms or conditions
set forth in Sections 6, 7 or 8 of this Agreement including, without
limitation, the failure to use commercially reasonable efforts in the
performance of duties assigned to the Employee on a full time basis, or (B)
materially breaches any of the other terms and conditions set forth in this
Agreement and fails to cure such breach within twenty days after Employee's
receipt from the Company of written notice of such breach, which notice
shall describe in reasonable detail the basis for the Company's belief that
Employee is in breach hereof;
(ii) Employee commits any act in bad faith materially detrimental to
the business or reputation of the Company;
(iii) Employee is convicted of any crime involving fraud, deceit or
moral turpitude or Employee intentionally engages in dishonest or illegal
activities that have a material adverse effect upon the business or
reputation of the Company; or
(iv) Employee dies or becomes mentally or physically incapacitated or
disabled so as to be unable to perform Employee's duties under this
Agreement. For purposes of this Agreement. Employee shall be deemed to be
mentally or physically incapacitated or disabled so as to be unable to
perform her duties if and to the extent he becomes permanently disabled
under the Company's long-term disability policy then in effect.
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The Company may also terminate the Employee's employment, upon
reasonable written notice to the ' Employee, at any time subject to the
fulfillment of the Company's obligations under this Agreement and such
termination by the Company for any other reason shall be deemed termination
"without cause."
(b) By Employee. The Employee may terminate this Agreement:
(i) if the Company materially breaches any of the terms or conditions
set forth in this Agreement and fails to cure its breach within twenty days
after its receipt from Employee of written notice of such breach, which
notice describes in reasonable detail Employee's belief that the Company is
in breach hereof; or
(ii) for "good reason" (as herein defined) at any time during the
two-year period following a Change in Control upon written notice to the
Company.
The Employee may also resign and terminate her employment on reasonable
written notice at any time and such termination by Employee for any other
reason (other than as provided in Sections 4(b)(i) or (ii)) and in such
event, the Employee shall receive no severance benefits under this
Agreement as a result of such termination.
(c) Certain definitions.
(i) For purposes of this Agreement, "good reason" shall mean the
following:
(A) any material diminution of the Employee's duties or a
reassignment of the Employee to a position not consistent
with the Employee's general area of knowledge, experience
and skills, or the assignment of substantial additional
responsibilities to the Employee;
(B) any material diminution of the Employee's compensation or a
material diminution of the Employee's bonus, long-term
incentives, employee benefits or perquisites as in effect
immediately preceding the Change in Control;
(C) any relocation of Employee's principal place of employment
to more than 35 miles from the principal place of employment
immediately preceding the Change in Control;
(D) any material increase in Employee's travel obligations;
(E) any failure of any successors to the Company to assume this
agreement; or
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(F) any breach of this Agreement by the Company not cured within ten
days after its receipt of notice from Employee of such breach (in
the event of such a breach and a termination of this Agreement by
Employee following a Change in Control, such termination shall be
deemed to have occurred under Section 4(c)(i)(F) and not under
Section 4(b)(i) of this Agreement).
(ii) For purposes of this Agreement, "Change in Control" shall mean any of
the following events:
(A) the direct or indirect beneficial ownership (within the meaning
of Section 13(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and Regulation 13D thereof) of a
majority of the outstanding common stock of the Company is
acquired or becomes held by any person or group of persons
(within the meaning of Section 13(d)(3) of the Exchange Act);
(B) a change of stock ownership of the Company of a nature that would
be required to be reported in response to Item 6(e) of Schedule
14A promulgated under the Exchange Act, and any successor Item of
a similar nature;
(C) the acquisition of beneficial ownership, directly or indirectly,
by any person (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act) of securities of the Company representing 25
percent or more of the voting power of the then outstanding
securities of the Company;
(D) the stockholders of the Company shall approve (provided, however,
if the transaction approved by the stockholders is subsequently
terminated, and the Employee is still employed by the Company at
the termination of the transaction, then no "Change in Control"
shall be deemed to have taken place): (1) any consolidation,
merger, share exchange or other extraordinary transaction related
to the Company where the stockholders of the Company, immediately
prior to the consolidation, merger, share exchange or other
extraordinary transaction, would not immediately after the
consolidation, merger, share exchange or other extraordinary
transaction, beneficially own (as such term is defined in Rule
13d-3 under the Exchange Act), directly or indirectly, shares
representing in the aggregate 50 percent of the
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voting securities of the corporation issuing cash or securities
in the consolidation, merger, share exchange or other
extraordinary transaction (or of its ultimate parent corporation,
if any), (2) any lease, exchange, mortgage or other transfer (in
one transaction or series of transactions contemplated or
arranged by any party as a single plan) of all or substantially
all of the assets of the Company and its subsidiaries (taken as a
whole), or (3) any plan or proposal for the liquidation or
dissolution of the Company; or
(E) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals
who, on the date hereof, constitute the Board of Directors and
any new director (other than a director whose initial assumption
of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company) whose
appointment or election by the Board of Directors or nomination
for election by the Company's stockholders was approved or
recommended by a vote of at least two-thirds of the directors
then still in office who either were directors on the date hereof
or whose appointment, election or nomination for election was
previously so approved or recommended.
(iii) For purposes of this Agreement, "termination of employment,"
"termination of Employee" and "termination of this Agreement" shall have the
same meaning unless otherwise agreed to in writing by the parties hereto.
(d) Severance Payments.
(i) In the event of termination of the Employee by the Company without
cause or termination of this Agreement by Employee pursuant to Section 4(b)(i)
hereof, the Company shall: (A) pay to Employee an amount equal to one times the
Employee's annual salary in effect at the time of termination (not giving effect
to any salary reduction giving rise to such termination) and (B) either continue
the Employee's health (medical and dental) insurance as provided in Section 5(c)
for one year following the date of such termination to the extent permitted
under applicable law and the Company's group health insurance policies or
reimburse the Employee for her cost for comparable coverage to the extent such
coverage cannot be provided under such policies. Such severance pay shall be
payable in equal monthly installments over the one-year period beginning on the
date of termination of this Agreement and shall be subject to tax withholding to
the extent required under applicable law. Notwithstanding anything herein to the
contrary, the Company shall not be required to continue to
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provide Employee with health benefits under this paragraph if Employee becomes
entitled to receive benefits substantially similar to those which Employee
otherwise would have been entitled to receive hereunder. This severance pay and
continuation of health benefits contemplated by this paragraph are agreed by the
parties hereto to be in full satisfaction and compromise of any claim arising
out of any termination of Employee's employment without cause or pursuant to
Section 4(b)(i).
(ii) Notwithstanding anything herein to the contrary, in the event of
termination of the Employee by the Company without cause within the two-year
period following a Change in Control or termination by Employee under Section
4(b)(i) or (ii) of this Agreement, then in lieu of the severance pay and benefit
continuation provided in Section 4(d)(i) above, the Company shall: (A) pay to
Employee an amount equal to one and one-half times the Employee's annual salary
in effect at the time of termination (not giving effect to any salary reduction
giving rise to such termination), and (B) either continue the Employee's health
(medical and dental) insurance as provided in Section 5(c) for one and one-half
years following the date of such termination to the extent permitted under
applicable law and the Company's group health insurance policies or reimburse
the Employee for her cost for comparable coverage to the extent such coverage
cannot be provided under such policies. Such severance pay shall be payable in
equal monthly installments over the one and one-half year period beginning on
the date of termination of this Agreement and shall be subject to tax
withholding to the extent required under applicable law. Notwithstanding
anything herein to the contrary, the Company shall not be required to continue
to provide employee with health benefits under this paragraph if Employee
becomes entitled to receive benefits substantially similar to those which
Employee otherwise would have been entitled to receive hereunder.
Notwithstanding anything herein to the contrary, the Company shall not be
required to pay any amount (the "Excess Amount") that, upon advice of the
Company's independent tax advisor or counsel, would be in excess of 2.99 times
Employee's Base Amount, as defined in Section 280G(b)(3) of the Internal Revenue
Code of 1986, as amended (the "Code"), and, therefore, would trigger the tax
(the "Excise Tax") imposed by Section 4999 of the Code, unless Employee agrees
to be bound by the noncompetition provisions of Section 7 hereof for one
additional year following the termination. Payment of the Excess Amount shall be
consideration for the Employee agreeing to be bound by such noncompetition
provision for such additional year. Election by the Employee to receive the
Excess Amount and to be bound by the noncompetition provision shall be given in
writing to the Company not later than five days after the date on which the
Company notifies Employee in writing that an Excess Amount may be payable absent
such agreement and, upon receipt of such notice, the Company shall be obligated
to pay the Excess Amount to Employee.
(e) Security Obligation. The Company shall establish and fund, not later
than 30 days prior to the consummation of a Change in Control, a grantor trust
in an amount
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sufficient to satisfy the Company's obligations under Section 4(d). If the
Company fails to fund such trust within such thirty day period, the entire
amount of the Company's severance obligations to the Employee will
accelerate and become immediately due and payable.
(f) Outplacement Services. If, pursuant to or within 24 months
following a Change in Control, Employee terminates this Agreement pursuant
to Sections 4(b)(i) or 4(b)(ii) or the Company terminates this Agreement
without cause, the Company shall provide Employee with the services of an
outplacement firm for a period of one year from the date of such
termination.
5. Compensation and Benefits.
(a) Annual Salary. For all services rendered by Employee under this
Agreement, the Company will pay Employee a base salary of at least
ninety-six thousand dollars ($96,000) per annum in equal monthly
installments, or a greater amount as determined by the Board of Directors
of the Company.
(b) Annual Bonus Payment. Upon completion of each fiscal year and as
determined by the Board of Directors of the Company, Employee shall be
eligible to receive a bonus ("Bonus") in accordance with any bonus plan
then in effect for executives of the Company of equivalent position and
title, provided Employee is employed by the Company at the end of such
fiscal year. Notwithstanding anything herein to the contrary, Employee's
bonus for any fiscal year ending after a Change in Control shall not be
less than 30% of her base salary then in effect.
(c) Other Benefits. Employee will be entitled to such fringe benefits
as may be provided from time-to-time by the Company to its employees,
including, but not limited to, group health insurance, disability, dental,
retirement and any other fringe benefits now or hereafter provided by the
Company to its employees, if and when Employee meets the eligibility
requirements for any such benefit. The Company reserves the right to change
or discontinue any employee benefit plans or programs now being offered to
its employees; provided, however, that all benefits provided for employees
of the same position and status as Employee will be provided to Employee on
an equal basis and the aggregate of such benefits shall not be less than
those currently in effect or otherwise be materially less favorable to the
Employee.
(d) Business Expenses. Employee will be reimbursed for all reasonable
expenses incurred in the discharge of Employee's duties under this
Agreement pursuant to the Company's standard reimbursement policies.
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(e) Vacation. Employee shall receive paid vacation annually in
accordance with the Company's practices for employees of the Company of
the same position and status as Employee.
(f) Car Allowance. Employee shall receive a car allowance of $600 per
month during the term of this Agreement. Employee otherwise shall bear all
expenses and liabilities with respect to such car.
(g) Withholding. The Company will deduct and withhold from the
payments made to Employee under this Agreement, state and federal income
taxes, FICA and other amounts normally withheld from compensation due
employees.
6. Non-Disclosure and Use of Confidential Information. Employee recognizes and
acknowledges that the trade secrets and confidential information of the
Company (the "Proprietary Information"), as they may exist from
time-to-time, are valuable, special and unique assets of the Business.
Employee further acknowledges that access to such Proprietary Information
relating to the Business of the Company is essential to the performance of
Employee's duties under this Agreement. Therefore, in order to obtain
access to such Proprietary Information, Employee agrees that Employee will
not, in whole or in part, disclose such Proprietary Information to any
person, firm, corporation, association or any other entity for any reason
or purpose whatsoever, nor will Employee make use of any such information
for Employee's own purposes or for the benefit of any person, firm,
corporation, association or other entity (except the Company). For purposes
of this Agreement, the term "trade secrets" means the whole or any portion
of any scientific or technical or non-technical information, design,
process, procedure, formula, computer software product, documentation or
improvement relating to the Business which: (1) derives economic value,
actual or potential, from not being generally known to other persons who
can obtain economic value from its disclosure or use; and (2) is the
subject of efforts that are reasonable under the circumstances to maintain
its secrecy or confidentiality. The term "confidential information" means
any and all other data and information relating to the Business which: (1)
has value to the Company; (2) is not generally known by its competitors or
the public; and (3) is treated as confidential by me Company. The
provisions of this Section 6 will apply during Employee's employment by the
Company and, with respect to trade secrets, at any and all times thereafter
and, with respect to confidential information, for three years thereafter.
These restrictions will not apply to any Proprietary Information which: (i)
is in the public domain, provided that Employee was not responsible,
directly or indirectly, for such Proprietary Information entering the
public domain without the Company's consent; (ii) becomes known to
Employee, during the term of this Agreement, from a third party not known
to Employee to be under a confidential relationship with the Company; or
(iii) is required by law or governmental tribunal to be disclosed;
provided, however, that if
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Employee is legally compelled to disclose any Proprietary Information,
Employee will provide the Company with prompt written notice of such legal
compulsion so that the Company may seek a protective order or other
available remedy.
7. (a) Non-Competition Covenant. During the term of this Agreement and for a
period of one year following termination of this Agreement for any
reason, Employee will not, directly or indirectly, on Employee's own
behalf or in the service of or on behalf of any other individual or
entity, compete with the Company in the Business within the
Geographical Area (as hereinafter defined). The term "compete" means
to engage, directly or indirectly, on Employee's own behalf or in the
service of or on behalf of any other individual or entity, either as a
proprietor, employee, agent, independent contractor, consultant,
director, officer, partner or stockholder (other than a stockholder of
a corporation listed on a national securities exchange or whose stock
is regularly traded in the over-the-counter market, provided that
Employee at no time owns, directly or indirectly, in excess of five
percent of the outstanding stock of any class of any such corporation)
in providing management, executive, marketing, or other services. For
purposes of this Agreement, the term "Geographical Area" means those
areas in the United States and in foreign countries in which Employee
is or has engaged in providing or marketing Business products or
services as of the date of this Agreement. The Geographical Area
currently includes Alabama, Arkansas, Colorado, Florida, Georgia,
Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Mississippi,
Missouri, New Jersey, North Carolina, Ohio, Oklahoma, Pennsylvania,
South Carolina, Tennessee, Texas, Virginia and West Virginia. The
Company may, from time to time and after giving Employee notice (but
only while the Employee is employed by the Company), amend this
Agreement to expand the Geographical Area to include additional areas
in which the Company may conduct the Business after the date hereof.
(b) Non-interference. During the term of this Agreement and for a period
of one year following termination of this Agreement for any reason,
Employee will not, directly or indirectly, on Employee's own behalf or
in the service of or on behalf of any other individual or entity,
interfere with, disrupt, or attempt to disrupt the past, present or
prospective relationships, contractual or otherwise, between the
Company and any supplier, consultant, or client of the Company with
whom Employee had material business contact during the two-year period
ending on the date of the termination of this Agreement. The term
"prospective relationship" is defined as any relationship where the
Company has actively sought an individual or entity as a prospective
supplier, consultant, or client.
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(c) Construction. The parties hereto agree that any judicial authority
construing all or any portion of this Section 7 or Section 8 below
will be empowered to sever any portion of the Geographical Area,
Business or time period, client base, prospective relationship or
prospect list or any prohibited business activity from the coverage of
such Section and to apply the provisions of such Section to the
remaining portion of the Geographical Area, Business or time period,
the client base or the prospective relationship or prospect list, or
the remaining business activities not so severed by such judicial
authority. In addition, it is the intent of the parties that the
judicial authority replace each such severed provision with a
provision as similar in terms to such severed provision as may be
possible and be legal, valid and enforceable. It is the intent of the
parties that Sections 7 and 8 be enforced to the maximum extent
permitted by law. In the event that any provision of either such
Section is determined not to be specifically enforceable, the Company
shall nevertheless be entitled to bring an action to seek to recover
monetary damages as a result of the breach of such provision by
Employee.
8. Non-Solicitation of Employees Covenant. Employee further agrees and
represents that during Employee's employment by the Company and for a
period of two years following any termination of this Agreement for
whatever reason, Employee will not, directly or indirectly, on Employee's
own behalf or in the service of, or on behalf of any other individual or
entity, divert or solicit, or attempt to divert or solicit, to or for any
individual or entity which is engaged in providing Business services, any
person employed by the Company (a) who was employed by the Company during
the two-year period ending on the date of the termination of this Agreement
and (b) with whom Employee was familiar, whether or not such employee is a
full-time employee or temporary employee of the Company, whether or not
such employee is employed pursuant to a written agreement and whether or
not such employee is employed for a determined period or at-will, except as
agreed to by the Company.
9. Existing Restrictive Covenants. Employee represents and warrants that
Employee's employment with the Company does not and will not breach any
agreement which Employee has with any individual or entity to keep in
confidence confidential information or not to compete with any such
individual or entity. Employee will not disclose to the Company or use on
either of their behalf any confidential information of any other party
required to be kept confidential by Employee.
10. Return of Confidential Information. Employee acknowledges that as a result
of Employee's employment with the Company, Employee may come into the
possession and control of Proprietary Information, such as proprietary
documents, drawings, specifications, manuals, notes, computer programs, or
other proprietary material. Employee acknowledges, warrants and agrees that
Employee will return to the Company all such items and any copies or
excerpts thereof, and any other properties,
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client lists, client contracts, files or documents obtained as a result of
Employee's employment with the Company, immediately upon the termination of
Employee's employment with the Company.
11. Remedies. Employee agrees and acknowledges that the violation of any of the
covenants or agreements contained in Sections 6, 7, 8, 9 and 10 of this
Agreement would cause irreparable injury to the Company, that the remedy at
law for any such violation or threatened violation thereof would be
inadequate, and that the Company will be entitled, in addition to any other
remedy, to temporary and permanent injunctive or other equitable relief
without the necessity of proving actual damages including, without
limitation, the right to terminate all payments under this Agreement.
Sections 4, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15,16, and 17 of this Agreement
shall survive termination of the Employee's employment under this
Agreement.
12. Notices. Any notice or communication under this Agreement will be in
writing and sent by registered or certified mail addressed to the
respective parties as follows:
If to the Company: If to the Employee:
CompDent Corporation Xxxxx X. Xxxxxxxx
000 Xxxxxxx Xxxxx Xxxx, Xxxxx 000 00 Xxxx Xxxxxxx Xx. X.X.
Xxxxxxx, Xxxxxxx 00000 Apartment 329
Attention: Xxxxx X. Xxxxx Xxxxxxx, XX 00000
13. Severability. Subject to the application of Section 7(c) to the
interpretation of Sections 7 and 8, in case one or more of the provisions
contained in this Agreement is for any reason held to be invalid, illegal
or unenforceable in any respect, the same will not affect any other
provision in this Agreement, and this Agreement will be construed as if
such invalid or illegal or unenforceable provision had never been contained
therein. It is the intent of the parties that this Agreement be enforced to
the maximum extent permitted by law.
14. Entire Agreement. This Agreement embodies the entire agreement of the
parties relating to the subject matter hereof and supersedes all prior
agreements, oral or written, regarding such subject matter. Except as
otherwise provided in Section 7(a) of this Agreement, no amendment or
modification of this Agreement will be valid or binding upon the parties
unless made in writing and signed by the parties.
15. Binding Effect. This Agreement will be binding upon the parties and their
respective heirs, representatives, successors, transferees and permitted
assigns, as applicable.
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16. Assignment. This Agreement is one for personal services and is not
assignable by Employee. The Company may assign this Agreement to any of its
affiliates; provided that the Company shall remain liable for the
obligations of its affiliates under this Agreement.
17. Governing Law. This Agreement is entered into and will be interpreted and
enforced pursuant to the laws of the State of Delaware. The parties hereto
hereby agree that the appropriate forum and venue for any disputes between
any of the parties hereto arising out of this Agreement shall be any
federal court in the State of Delaware and each of the parties hereto
hereby submits to the personal jurisdiction of any such court. The
foregoing shall not limit the rights of any party to obtain execution of
judgment in any other jurisdiction. The parties further agree, to the
extent permitted by law, that a final and unappealable judgment against
either of them in any action or proceeding contemplated above shall be
conclusive and may be enforced in any other jurisdiction within or outside
the United States by suit on the judgment, a certified or exemplified copy
of which shall be conclusive evidence of the fact and amount of such
judgment.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
COMPDENT CORPORATION XXXXX X. XXXXXXXX
By: /s/ Xxxxx Xxxxx By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------- ------------------------------------
Title: CEO
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