EMPLOYMENT AGREEMENT
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This agreement is made effective April 22, 1996, between American Dental
Partners, Inc., a Delaware corporation (the "Company"), and Xxxxxx X. Xxxxxxxx
(the "Employee"), who hereby agree as follows:
(S)1. Employment. Upon the terms and subject to the conditions described
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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
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agreement shall begin on April 22, 1996 (the "Commencement Date") and shall end
on the third anniversary of the Commencement Date (the "Initial Term"), unless
or until sooner terminated pursuant to (S)8 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 Senior Vice President-
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Finance, Chief Financial Officer, and Treasurer of the Company and shall devote
his full business and professional time, attention, energy, loyalty, and skill
to the business affairs of the Company, performing such executive and
administrative tasks and having such responsibilities consistent with his
offices held with the Company as set forth above as may be assigned to him from
time to time by the President and Chief Executive Officer of the Company (the
"CEO") or the board of directors of the Company (the "Board").
(S)4. Compensation. As compensation for his services under this agreement,
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the Company shall pay the Employee a base salary at the annual rate of $150,000
(the "Base Salary"), payable in biweekly installments, in arrears, and in
accordance with the Company's general policies and procedures for payment of
salaries to its executive personnel. The Employee's Base Salary shall be
reviewed by the Company not less often than once annually for possible
increases, but the Company shall not be obligated to make any such increases.
In addition, each year during the term of his employment with the Company,
the Employee will be eligible to earn a bonus in an amount up to 40% of the
Employee's base salary for that year, which will be based upon and tied to the
achievement of various objectives to be prepared annually by the CEO and
submitted to the Board for approval; provided that with respect to the fiscal
year of the Company ending December 31, 1996, the potential amount of such bonus
shall be pro rated over the period beginning on the date of this agreement and
ending on the last day of such fiscal year.
(S)5. Fringe Benefits and Perquisites. During the term of this agreement,
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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) Three weeks paid vacation during each year of the agreement,
provided that for the fiscal year ending December 31, 1996, the Employee
shall be entitled to only two weeks of paid vacation which may be taken
during such year any time after September 30, 1996;
(c) 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.
The parties acknowledge that the Company has yet to complete the
implementation of its group health benefit plan. Accordingly, the Company shall
reimburse the Employee for all costs (not to exceed $450 per month) incurred by
the Employee related to the maintenance of health insurance coverage for the
Employee and his immediate family with respect to the period beginning on the
date of this agreement and ending on the date upon which the Employee becomes
eligible under such plan. Such reimbursable costs shall include without
limitation any expenses incurred by the Employee for health insurance coverage
purchased pursuant to the Consolidated Omnibus Budget Reconciliation Act of
1986.
(S)6. Stock Option. As additional consideration for the Employee's
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covenants contained in this agreement, the Company will grant to the Employee,
effective the Commencement Date, options (the "Options") to purchase a total of
up to 13,500 shares of common stock, par value $.01 a share, of the Company (the
"Shares"), consisting of an Option to purchase up to 10,000 Shares pursuant to
the Company's 1996 Stock Option Plan and an Option to purchase up to 3,500
Shares pursuant to the Company's 1996 Time Accelerated Restricted Stock Option
Plan. The Options shall be evidenced by separate agreements, the form of which
are attached hereto as Exhibits A and B.
(S)7. Confidentiality; Noncompetition. The Employee shall not,
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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 assist any person or entity (other than the
Affiliated Companies) to use, any Confidential Information, excepting only (1)
Confidential Information which 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 and (2) disclosures
required by applicable law.
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Upon termination of his employment with the Company (for any reason) (the
"Termination Date"), 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 Restricted Period (defined below), the Employee shall not
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") anywhere in
the Restricted Territory (defined below), provided that the foregoing shall
not preclude the Employee from owning less than 1% of the outstanding
capital stock of any corporation whose shares are publicly traded on a
national securities exchange or system;
(b) Solicit or attempt to solicit business which is competitive with
the Business from any provider of dental services to which any Affiliated
Company provides management, consulting, or other services (a "Provider"),
or interfere or attempt to interfere with any relationship of any
Affiliated Company with any Provider anywhere in the Restricted Territory;
(c) Induce or encourage any employee, officer, director, agent,
supplier, or independent contractor of any Affiliated Company or Provider
to terminate its relationship with such Affiliated Company or Provider, or
otherwise interfere or attempt to interfere in any way with any Affiliated
Company or Provider'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 Provider; 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 mean the
Company, all subsidiaries of the Company (the "Subsidiaries"), and all other
affiliates of the Company other than Summit Ventures IV, L.P., and its
affiliates, and any other shareholder of the Company, which is not engaged in a
business
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similar to the business of the Company, any Subsidiary, or any Provider; (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 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;
(iii) the "Restricted Period" shall mean the period of the Employee's employment
with the Company (whether pursuant to this agreement or otherwise) and (A) if
the Employee's employment with the Company terminates after the expiration of
the Initial Term, the one-year period following the date of such termination, or
(B) if the Employee's employment with the Company terminates during the Initial
Term, the two-year period following the date of such termination; and (iv) the
"Restricted Territory" shall mean all cities and metropolitan statistical areas
in which any Affiliated Company has owned, leased, or operated an office or
other facility at any time during the 12-month period immediately preceding the
Termination Date. Notwithstanding the foregoing, if the Employee's employment
with the Company is terminated by the Employee for Good Reason or by the Company
without Cause (both as defined in (S)8, below), whether before or after the
Initial Term, then the Restricted Period shall end on the date of such
termination.
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)8. Termination. The Employee's employment with the Company (a)
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shall terminate automatically upon the death of the Employee, (b) may be
terminated by the Employee immediately upon notice to the Company for Good
Reason (defined below), and (c) may be terminated by the Company, without any
further obligation on the part of the Company (except as otherwise provided in
this section), immediately upon notice to the Employee under any of the
following circumstances:
(i) At any time for Cause (defined below);
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(ii) At any time if the Employee is under a Long-Term Disability (defined
below); or
(iii) At any time without Cause.
If, during the Initial Term, the Company terminates the Employee's
employment solely pursuant to clause (c)(iii), above, or the Employee terminates
his employment pursuant to (S)8(b), above, then the Employee shall be entitled
to the Severance Benefits (defined below) for the one-year period following the
date of such termination, so long as the Employee is in full compliance with the
provisions of (S)7 of this agreement. If, during the Initial Term, the Company
terminates the Employee's employment solely pursuant to clause (c)(ii), above,
then the Employee shall be entitled to the Severance Benefits for the shorter of
180 days or until any disability benefit plan under which the Employee is
afforded coverage begins paying disability benefits to the Employee.
For purposes of this agreement:
(A) "Good Reason" shall mean the occurrence of any one or more of the
following:
(1) any substantial diminution by action of the Company in the
nature and scope of the Employee's responsibilities, duties, or
authority and the continuation of such circumstance for 30 days after
the Employee gives the Company reasonably detailed notice of such
diminution;
(2) removal by the Company of the Employee as the Chief Financial
Officer of the Company;
(3) any material failure of the Company to provide to the
Employee the salary and benefits required under this agreement and the
failure of the Company to cure such default within 30 days after
receiving reasonably detailed notice of same from the Employee;
(4) relocation by the Company of its principal corporate offices
outside of the Boston metropolitan statistical area; and
(5) a Change of Control. A "Change of Control" shall be deemed
to have occurred if: (A) any person (defined below) becomes a
beneficial owner (within the meaning of Rule 13d-3 as promulgated
under the Securities Exchange Acts of 1934, as then in effect),
directly or indirectly, of securities representing more than 50% of
the total number of votes then outstanding that may be cast for the
election of directors of the Company without the obligation to vote
such shares in an election for
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directors of the Company in the manner designated by Summit (defined
below) or any current shareholder of the Company at the time the
Employee signs this agreement; or (B) any merger or consolidation
involving the Company or any sale of all or substantially all of the
assets of the Company has occurred and, as a result, individuals who
immediately prior to such transaction constituted the Board of
Directors of the Company cease to constitute at least 50% of the Board
of Directors of the Company immediately following such transaction.
For purposes of this (S)8(A)(5) only, the term "person" shall mean (1)
any person or entity other than Summit Ventures IV, L.P., Summit
Investors III, L.P., and their respective affiliates (collectively,
"Summit"), the Employee, and any other person or entity which is a
shareholder of the Company at the time the Employee signs this
agreement, and (2) any group within the meaning of (S)13(d)(3) or
(S)14(d)(2) of the Securities Exchange Act of 1934, as then in effect,
provided that for purposes of calculating the ownership interests of
any such group, the ownership interests of the persons or entities
identified in the preceding clause (1) shall be ignored.
(B) "Cause" shall mean any one or more of the following:
(1) any act constituting (a) a felony under the laws of the
Commonwealth of Massachusetts, the federal laws of the United States,
or any other applicable law, (b) fraud, embezzlement, misappropriation
of assets, willful misfeasance, or dishonesty, or (c) other criminal
conduct which in any way materially and adversely affects the
reputation, goodwill, or business position of the Company,
(2) the failure of the Employee to perform and observe all
material obligations and conditions to be performed and observed by
the Employee under this agreement, or to perform his material duties
in accordance with the policies, programs, budgets, procedures, and
directions established from time to time by the CEO or the Board (any
such event, a "Performance Failure"), and to correct such Performance
Failure promptly following notice from the Company to do so, or
(3) having corrected a Performance Failure, the occurrence of any
subsequent Performance Failure; and
(C) "Severance Benefits" with respect to a period shall mean payments
during such period at a rate equal to the rate at which the Base Salary
then in effect (payable periodically in the same manner as the base salary)
together with such group health and welfare benefits during such period as
are
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then being provided to the Employee pursuant to (S)5, above;
(D) "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 his disability commenced, to engage actively
in business and financial activities. In the event of any disagreement
about whether or when the Employee is under a Long-Term Disability, the
question shall be determined: (1) by a physician selected by agreement
between the Employee and the Company if such a physician is selected within
the 10 days after either of them requests the other to so agree, or, if
not, (2) 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, and (3) if the two physicians fail to agree, by a third
physician selected by the first two physicians. The Employee shall submit
to all reasonable examinations requested by any such physicians.
If the Company elects to terminate the Employee's employment with the
Company for Cause, then such action must be approved or ratified by the
affirmative vote of not less than a majority of the Board.
(S)9. Relocation Expenses. The Company shall reimburse the Employee,
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in accordance with and subject to the Company's policy concerning reimbursement
of employee expenses, for all reasonable costs and expenses incurred by the
Employee in connection with his relocation from Colorado to Massachusetts.
(S)10. Professional Fees. The Company shall reimburse the Employee, in
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accordance with and subject to the Company's policy concerning reimbursement of
employee expenses, for all reasonable costs and expenses incurred by the
Employee in connection with the maintenance of the Employee's status as a
Certified Public Accountant, including without limitation reasonable costs and
expenses incurred for continuing education and maintaining memberships in
appropriate professional organizations.
(S)11. Capacity. The Employee represents and warrants to the Company
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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)12. Remedies. All rights and remedies of the Company under this
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agreement are cumulative and in addition to all other rights and remedies which
may be available to the Company from time to time, whether under any other
agreement, at law, or in equity.
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(S)13. Survival. The termination of the Employee's employment by the
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Company (for any reason) shall not relieve the Employee of any of his
obligations to the Company 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)7 of this agreement, all of which shall survive the termination
of such employment.
(S)14. Notices. All notices and other communications under this
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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:
(a) If to the Company:
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:
Xxxxxx X. Xxxxxxxx
000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxxxxx 00000-0000
Telecopy No.: (000) 000-0000
(S)15. Severability. The intention of the Parties is to comply fully
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with all rules, laws, and public policies to the extent possible. If and to the
extent that any court of competent jurisdiction is unable to so 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
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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)16. Non-Waiver. No failure by either Party to insist upon strict
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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)17. Complete Agreement. This agreement and all documents referred to
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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)18. Governing Law. This agreement shall be governed by and construed
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in accordance with the laws of the State of Massachusetts without regard to
principles of conflicts of law.
(S)19. Captions. The captions of the various sections of this
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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)20. Genders and Numbers. Where permitted by the context, each
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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)21. Successors. This agreement shall be personal to the Employee and
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no rights or obligations of the Employee under this agreement may be assigned by
the Employee to any third party. Any assignment or attempted assignment by the
Employee in violation of the preceding sentence shall be null and void. Subject
to the
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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.
AMERICAN DENTAL PARTNERS, INC.
By /s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxx, President XXXXXX X. XXXXXXXX
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