EXHIBIT 10(cc)
EMPLOYMENT AND NONCOMPETITION AGREEMENT
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This agreement is made effective November 12, 1996, (the "Commencement
Date"), between American Dental Partners, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx X. Xxxxx (the "Employee").
Background Information
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Concurrently with the execution of this agreement the Company is acquiring
PDHC, Ltd., a Minnesota corporation ("PDHC"), pursuant to an Acquisition and
Exchange Agreement dated November 11, 1996 (the "Acquisition Agreement"). The
execution of this agreement is a condition to the Company's obligations to
complete the transactions contemplated by the Acquisition Agreement.
Statement of Agreement
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The Company and the Employee (the "Parties") hereby acknowledge the
accuracy of the above Background Information and 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 be for a three-year term beginning on the Commencement Date and
ending 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 Vice President-Business
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Development of the Company and shall devote his full business and professional
time, attention, energy, loyalty, and skill to the Company's business. The
Employee shall: (a) be generally responsible for (i) the Company's activities
relating to acquisitions of dental practices by the Company and managed care
agreements relating to such acquisitions and (ii) the Company's relationships
with dental benefit providers, subject in all cases to the business policies and
operating programs, budgets procedures, and directions established from time to
time by the board of directors of the Company (the "Board"); and (b) perform
such related or other executive and administrative tasks as may be reasonably
assigned to him from time to time by the Chief Executive Offer of the Company
(the "CEO") or the Board.
The Employee shall not be required to relocate his home from the Twin
Cities Metropolitan Area during the term of this agreement. However, the
Employee acknowledges that he may be required to travel extensively to perform
his services for the Company.
(S)4. Compensation. As compensation for his services under this
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agreement, the Company shall pay the Employee a base salary at the annual rate
of $130,000 (the "Base Salary"), payable in accordance with the Company's
general policies and procedures for payment of salaries to its executive
personnel. The Employee's performance shall be reviewed annually for the
purpose of considering potential increases in the Base Salary. In addition, the
Employee may earn an annual bonus for each calendar year during the term of this
agreement in an amount up to (a) $26,250 multiplied by a fraction having as its
numerator the number of days in calendar year 1996 remaining after the date of
this agreement and having 365 as its denominator, (b) $26,250 for calendar year
1997, and (c) 25% of the Base Salary (as in effect from time to time) for each
calendar year during the term of this agreement thereafter, prorated on a daily
basis for any partial calendar year, which bonus shall be based upon and tied to
the achievement of various objectives proposed annually by the CEO and approved
by the Board.
(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;
(c) Participation in such stock option plans as may be designated
from time to time by the Board (or a duly authorized committee of the
Board), in its discretion, subject to all terms and conditions of such
plans; and
(d) 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.
(S)6. Stock Option. As additional consideration for the Employee's
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covenants contained in this agreement, concurrently with the execution of this
agreement, the Company shall grant to the Employee, as of the Commencement Date,
options (the "Options") to purchase up to 6,000 shares of common stock, par
value $.01, of the Company (the "Shares"), consisting of an Option to purchase
up to
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4,400 Shares pursuant to the Company's 1996 Stock Option Plan and an Option to
purchase up to 1,600 Shares pursuant to the Company's 1996 Time Accelerated
Restricted Stock Option Plan. The Options shall be evidenced by separate
agreements containing terms consistent with such stock option plans and which
the Board deems necessary or appropriate, in its discretion, including without
limitation an exercise price of $50 per Share and, with respect to the Option
granted under the Company's 1996 Stock Option Plan, a vesting schedule under
which, on the Commencement Date and each of the first four anniversaries of the
Commencement Date, such Option will vest with respect to 20% of the Shares
subject to such Option.
(S)7. Confidentiality; Noncompetition. The Employee shall not, directly
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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) 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 (ii)
becoming an employee of, or otherwise performing services for, after the
termination of the Employee's employment with the Company and
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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) 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., Noro-Xxxxxxx Partners, and any of their respective affiliates
which are not engaged in a business similar to 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).
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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 shall
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terminate automatically upon the death of the Employee and 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 pursuant to this clause (c), and no other basis for
termination exists under this agreement, then: (i) if such termination occurs on
or before the first anniversary of the Commencement Date, the Employee shall be
entitled to severance payments in an aggregate amount equal to the Base Salary
for the period of two years following the date of such termination, (ii) if such
termination occurs after the first anniversary of the Commencement Date and on
or before the second anniversary of the Commencement Date, the Employee shall be
entitled to severance payments in an aggregate amount equal to the Base Salary
for the period of one year following the date of such termination, and (iii) if
such termination occurs after the second anniversary of the Commencement Date
and before the third anniversary of the Commencement Date, the Employee shall be
entitled to severance payments in an amount equal to the Base Salary for the
remainder of the Initial Term. Any such severance payments shall be payable
periodically in the same manner as the Base Salary is payable under (S)4 of this
agreement, and, notwithstanding any other provisions of this agreement to the
contrary, such severance payments shall be payable only so long as the Employee
is in full compliance with the provisions of (S)7 of this agreement.
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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 CEO or 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)9. 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)10. Remedies. All rights and remedies of either Party under this
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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.
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(S)11. Survival. The termination of the Employee's employment with the
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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)7 of this agreement or the Company's
obligations, if any, under (S)8(c) of this agreement, all of which shall survive
the termination of such employment.
(S)12. Notices. All notices and other communications under this agreement
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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:
Xxxxxxx X. Xxxxx
0000 Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxxxx 00000
Telecopy No.: (000) 000-0000
(S)13. 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 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
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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)14. 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)15. 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)16. Governing Law; Venue. This agreement shall be governed by and
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construed in accordance with the laws of the State of Minnesota without regard
to principles of conflicts of law.
(S)17. Captions. The captions of the various sections of this agreement
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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)18. Genders and Numbers. Where permitted by the context, each pronoun
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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)19. 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 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.
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(S)20. Termination of Prior Agreements. The Employee hereby releases the
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Affiliated Companies and all of their respective affiliates, predecessors,
successors, and assigns from all obligations and liabilities under all
employment agreements and understandings, deferred compensation arrangements,
employee benefit obligations, and other employment or compensation arrangements,
whether oral or written, between PDHC or any of its affiliates and the Employee,
excepting only the obligations and liabilities of the Company under this
agreement.
AMERICAN DENTAL PARTNERS, INC.
By /s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxxx, President XXXXXXX X. XXXXX
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