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Exhibit 10.10
EXECUTIVE EMPLOYMENT AGREEMENT
This Agreement is made as of the 30th day of September, 1996, between FIRST
NEW ENGLAND DENTAL CENTERS, INC., a Delaware corporation (the "Company"), and
Xxxxxx X. Xxxxxxx of Dallas, Texas (the "Executive").
WHEREAS, the Company desires to employ Executive for the period and upon
and subject to the terms herein provided; and
WHEREAS, Executive is willing to agree to be employed by the Company upon
and subject to the terms herein provided;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements hereinafter set forth and for other good and valuable consideration,
the receipt, adequacy and sufficiency of which are hereby acknowledged, the
parties hereto covenant and agree as follows:
[Section]1. TERM OF EMPLOYMENT. The Company agrees to employ Executive as
its Chairman and Chief Executive Officer from October 1, 1996 through September
30, 1999 (the "Termination Date"), or until the earlier termination of this
Agreement pursuant to the terms hereof. This Agreement, and the Termination
Date, will be renewed automatically for successive one-year terms, unless the
Company or the Executive gives written notice to the other of its or his
election not to renew, at least six months prior to the end of the then-current
term.
[Section]2. COMPENSATION. The Company will pay Executive base pay for his
services rendered hereunder at an annual rate of $190,000, subject to upward
adjustment based on reviews by the Company's Board of Directors (the "Board") to
occur not less frequently than annually. Executive's salary shall be paid in
accordance with the Company's regular payroll practices for all senior
executives as determined by the Company, subject only to such payroll and
withholding deductions as are required by law and such other payroll deductions
as are determined by the Company policy or as Executive may approve.
[Section]3. STOCK OPTIONS. Executive shall be entitled to purchase up to
15,385 shares of the Common Stock, par value $0.01 per share, of the Company
("Stock"), at a purchase price of $6.50 per share, at any time prior to April 1,
1997. In addition, the Company shall award Executive options to purchase 300,000
shares of the Stock at the exercise price of $6.50 per share. Such options shall
vest ratably on a quarterly basis over the original term of this Agreement. Such
options shall be issued pursuant to a Stock Option Agreement in substantially
the form of Exhibit A attached hereto.
[Section]4. BONUS. The Board shall establish an annual budget each year,
setting forth projected expenses, revenues and net profits. In the event that
the Company achieves at least 90% of its projected net profit for any fiscal
year during the term of this Agreement, commencing with the fiscal year ending
December 31, 1997, the Company shall pay to Executive a bonus in an amount
determined as follows:
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% of Projected Net Profit Bonus (% of Base Annual Salary)
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90 - 91% 5%
91 - 92% 10%
92 - 93% 15%
93- 94% 20%
94 - 95% 25%
95 - 96% 30%
96 - 97% 35%
97 - 98% 40%
98 - 99% 45%
99% + 50%
In the event that the Company exceeds 100% of its projected net profit in such
year, the Company may pay Executive an additional discretionary performance
bonus, at such times and in such amounts as the Company, in its sole discretion,
may determine. The Board, in reviewing Executive's salary at his first salary
review following the date hereof, shall take into consideration the Company's
financial performance for the period from October 1, 1996 through December 31,
1996.
[Section]5. OFFICE AND DUTIES. During the term of this Agreement, the
Company shall employ Executive to serve as the Company's Chairman and Chief
Executive Officer. The Executive shall perform such executive, administrative
and operational duties customary for executives in such capacity or as may be
assigned to the Executive from time to time by the Board, provided such duties
are customary for the position of chairman and chief executive officer.
Executive agrees to serve the Company faithfully and to the best of
Executive's ability and to devote substantially all of Executive's business
time, attention and efforts to the interests and business of the Company.
Nothing contained herein shall preclude Executive from serving on the boards of
up to three business corporations (other than the Company, and provided that
none of such coporations engages in a business that competes with the business
of the Company) and on boards of not-for-profit organizations and trade groups,
nor from participating in community affairs, provided that such activities do
not materially interfere with the Executive's performance of his duties and
responsibilities as Chairman and Chief Executive Officer of the Company.
Executive agrees at all times to perform all his duties in accordance with
applicable laws, rules and regulations and the policies and procedures of the
Company applicable to senior executives in effect from time to time.
[Section]6. EXPENSES. Executive shall be entitled to reimbursement for
reasonable and necessary business expenses incurred, consistent with Company
policy, in connection with the performance of his duties hereunder upon receipt
of vouchers therefor in accordance with such procedures as the Company has
heretofore or may hereafter establish.
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[Section]7. VACATION DURING EMPLOYMENT. Executive shall be entitled to 20
days' paid vacation during each year of his employment hereunder.
[Section]8. ADDITIONAL BENEFITS. Executive shall be entitled to all paid
holiday, medical and other fringe benefit plans that the Company may now or
hereafter in its discretion make available generally to its senior management.
[Section]9. APARTMENT; RELOCATION EXPENSES. Pending Executive's relocation
from Dallas, Texas to the Boston, Massachusetts area, the Company shall provide
Executive, for a period of time not to exceed one year, with the use of a
Company-leased apartment. The Company shall reimburse Executive for all
reasonable out-of-pocket relocation expenses incurred in connection with his
relocation from Dallas to the Boston area, up to a maximum of $100,000.
[Section]10. TERMINATION OF EMPLOYMENT. Notwithstanding any other provision
of this Agreement, Executive's employment shall terminate on the death of the
Executive and may be terminated by the Board, as follows:
(a) either (i) the Executive is determined to be "permanently
disabled" as defined under the disability insurance policy covering the
Executive, or (ii) if Executive is not covered by any such disability
policy, the Executive is determined to be "totally disabled" by vote of a
majority of the Board (excluding Executive) based upon the advice of a
board-certified physician reasonably satisfactory to Executive, which may
include a determination that the Executive is unable, because of physical
or mental illness or incapacity or otherwise, to fulfill his duties under
this Agreement for 180 consecutive days or appears unable to perform such
duties for an indefinite period of time in excess of 180 days;
(b) termination of Executive by the Company for "Cause" (as
hereinafter defined), provided, however, a termination for Cause shall not
take effect unless the following has occurred:
(i) The Board has given Executive written notice of its intention
to terminate Executive for Cause, specifying with particularity the
grounds on which the proposed termination for Cause is contemplated,
which shall be acts or failures to act on the part of Executive that
occurred no more than six months prior to the Board's having knowledge
of such acts or failures to act;
(ii) the Executive shall have 30 days after such written notice
to cure such conduct;
(iii) if Executive fails to cure such conduct Executive shall
have the right to request by a notice to the Secretary of the Company
given within 10 days after Executive receives notice from the Board
that he has not cured the conduct within the period described in
subsection (ii) above, a hearing before the full Board, with his
counsel;
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(iv) if, within 5 days after Executive's hearing by the Board, he
receives a certified copy of a resolution duly adopted by a majority
of the full Board (exclusive of Executive) confirming that in its
judgment the grounds for termination for "Cause" described in the
initial notice given under subsection (i) above have not been cured,
the Executive's employment shall be terminated.
"Cause" shall mean (x) the willful and continued failure by the Executive
to substantially perform his duties with the Company in accordance with this
Agreement (other than any such failure after the issuance of a notice from the
Executive to the Company because of Constructive Termination Without Cause (as
hereinafter defined)), or (y) the Executive's conviction of fraud, embezzlement,
theft or other criminal conduct involving a felony and such conviction is final
and non-appealable.
[Section]11. TERMINATION WITHOUT CAUSE. In the event that, during the term
of this Agreement, Executive's employment hereunder is terminated by the Company
other than pursuant to [Section]10 hereof or by Executive because of
Constructive Termination Without Cause (as hereinafter defined), the Company
shall pay Executive an amount equal to one year's base annual salary, plus
benefits and bonus compensation, at the rate in effect immediately prior to his
termination, payable in 12 equal montly installments, commencing 30 days from
the effective date of termination, and all stock options granted to Executive
pursuant to [Section]3 hereof shall immediately become vested on the effective
date of termination of employment. Notwithstanding the foregoing, in the event
that such termination of employment occurs within one year following a Change of
Control (as hereinafter defined), the Company shall pay to Executive an amount
equal to the base annual salary, benefits and bonus compensation that would have
been payable hereunder had such termination not occurred for the period from the
date of termination of employment through the later to occur of the Termination
Date and the second anniversary of the effective date of termination, payable in
equal monthly installments commencing 30 days from the effective date of
termination through the Termination Date or, if later, the second anniversary of
the effective date of termination, and all stock options granted to Executive
pursuant to [Section]3 hereof shall immediately become vested on the effective
date of termination of employment.
"Constructive Termination without Cause" shall mean:
(a) a change in reporting structure such that Executive does not
report directly to the Board, or the assignment to Executive of any duties
significantly different than those contemplated by this Agreement or any
limitation on the powers of the Executive not consistent with his position
as Chairman and Chief Executive Officer, whether resulting from a
transaction after the date hereof (including, without limitation, any
merger, reorganization, consolidation or other similar transaction) or
otherwise;
(b) the failure to elect Executive or his removal as a director of the
Company without the Executive's prior written consent;
(c) a reduction in Executive's then current base pay or bonus award
opportunity or other long-term performance incentive or the termination or
failure by the Company to
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continue to provide any employee benefit or perquisite enjoyed by
Executive, or the failure to include Executive in any incentive
compensation plan of Company unless a plan providing substantially the same
opportunity is substituted, or the failure of the Board to review and act
upon Executive's base pay amount prior to October 1 during the term of this
Agreement;
(d) fraudulent conduct by the Company in which Executive is not a
participant;
(e) a material breach of this Agreement by the Company that is not
promptly cured after written notice of such breach is given by Executive to
the Board, including, without limitation, the failure to obtain the
assumption of the Company's obligations under this Agreement by any
successor to the Company's assets or business prior to the transfer of such
assets or business;
(f) any requirement by Company that Executive relocate to a principal
place of business outside of the Boston metropolitan area.
"Change of Control" shall mean, prior to the consummation of an initial public
offering of the Company's common stock, the occurrence of any one of the
following events:
(a) any "person" which is not the "beneficial owner" of more than 35%
of the voting securities of the Company on a fully diluted basis on the
date hereof or an "affiliate" of such party on the date hereof becomes a
"beneficial owner" of more than 35% of the voting securities of the Company
(as such terms are defined in Section 13(d) of the Securities Exchange Act
of 1934 and the regulations promulgated thereunder);
(b) the Board approves a plan to sell or dispose of by merger,
consolidation or other transaction all or substantially all of the
Company's operating assets (on a consolidated basis) or approves a plan of
liquidation; or
(c) the Company combines with another company and is the surviving
corporation but immediately after the combination, the persons who were the
stockholders of the Company immediately prior to the combination own 50% or
less of the voting securities of the combined entity.
"Change of Control" shall mean, after the consummation of an initial public
offering of the Company's common stock, the occurrence of any one of the
following events:
(a) any "person" which is not the "beneficial owner" of more than 20%
of the voting securities of the Company on a fully diluted basis
immediately after the consummation of such public offering or an
"affiliate" of such party on such date hereof becomes a "beneficial owner"
of more than 20% of the voting securities of the Company (as such terms are
defined in Section 13(d) of the Securities Exchange Act of 1934 and the
regulations promulgated thereunder);
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(b) the majority of the Board consists of individuals other than
members of the Board of Directors immediately after the consummation of
such public offering or persons whose nomination or election was approved
by at least two-thirds of the members of the Board immediately preceding
the election of such individuals;
(c) the Board of Directors of the Company approves a plan to sell or
dispose of by merger, consolidation or other transaction all or
substantially all of the Company's operating assets (on a consolidated
basis) or approves a plan of liquidation; or
(d) the Company combines with another company and is the surviving
corporation but immediately after the combination, the persons who were the
stockholders of the Company immediately prior to the combination own 50% or
less of the voting securities of the combined entity.
[Section]12. CONFIDENTIALITY. Executive shall not, either during the period
of his employment with the Company or thereafter, reveal or disclose to any
person outside the Company or use to his own benefit, any proprietary and
confidential marketing technique or cost method, or any patient list of the
Company or any proprietary and confidential mailing or supplier list, whether or
not made, developed and/or conceived by Executive or by others in the employ of
the Company. Upon the termination of Executive's employment in any manner or for
any reason, Executive shall promptly surrender to the Company all copies of any
of the foregoing, together with any other documents, materials, data,
information and equipment belonging to or relating to the Company's business and
in his possession, custody or control, and Executive shall not thereafter retain
or deliver to any other person, any of the foregoing or any summary or
memorandum thereof.
[Section]13. RESTRICTION. Executive agrees that for 12 months from the
termination of employment at the Termination Date, for cause by the Company, or
voluntarily by Executive (other than because of a Constructive Termination
Without Cause):
The Executive will not, directly or indirectly, own, manage, operate,
control, be employed by, participate in, or be connected in any manner with the
ownership, management, operation or control of, any business or enterprise (a
"Restricted Business") that is in the business of operating dental clinics (or
any aspect thereof) within a 10-mile radius of any dental clinic operated by the
Company at the time of termination of Executive's employment. The restrictions
contained in this paragraph will not prevent the Executive, during the 12-month
period following the termination of his employment hereunder, from being
employed by, acting as a consultant to, or serving on the Board of Directors of,
any entity with a large national or regional business that directly or
indirectly engages in the Restricted Business in the territories restricted
hereunder or from owning up to a 1% equity interest in such an entity, but only
if such entity is publicly traded; provided that the Executive does not actively
engage in the direct management of that portion of such entity's business which
is located in the restricted territory.
[Section]14. NO SOLICITATION. Executive will not, for a period of 12 months
after termination of employment for any reason solicit or attempt to induce,
directly or indirectly, any employee of the
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Company to accept employment with a competitor of the Company or with any
business or enterprise intending to compete with the Company.
[Section]15. SEVERABILITY. Executive and the Company are of the belief that
the period of time and the area herein specified in [Sections] 13 and 14 above
are reasonable in view of the nature of the business in which the Company is
engaged, the state of its development and Executive's knowledge of the business.
However, if such period or such area should be adjudged unreasonable in any
judicial proceeding, then the period of time shall be reduced by such number of
months or such area shall be reduced by elimination of such portion of such
area, or both, as are deemed unreasonable, so that this covenant may be enforced
in such area and during such period of time as is adjudged to be reasonable.
[Section]16. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been given when delivered or mailed by
first-class, registered or certified mail, postage prepaid, addressed (a) if to
Executive, at 0000 Xxxxxxxxxx Xxxxx, Xxxxxx, Xxxxx 00000-0000; and (b) if to the
Company, attention of the President at its principal place of business, 00
Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
[Section]17. DISPUTE RESOLUTION. Any disputes arising under or in
connection with this Agreement shall, at the option of Executive, be subject to
mediation in accordance with the Center for Public Resources ("CPR") Model
Procedure for Mediation of Business Disputes with such changes as the parties
may agree. If the parties have not agreed, within 10 days of a request for
mediation, on the selection of a mediator willing to serve, either party may
request the CPR to appoint a member of the CPR Panel of Neutrals as a mediator
and such appointment shall be binding on the parties. Efforts to reach a
settlement will continue until the conclusion of the proceeding which will occur
upon the earlier of (a) a written settlement is entered into between the
parties, (b) the mediator informs the parties in writing that further efforts
would not be useful, or (c) the parties agree in writing that an impasse has
been reached. Neither party may withdraw or commence any action or proceeding
under this Agreement, other than to enforce this provision, until the mediation
proceeding is concluded. Costs of mediation or litigation, including, without
limitation, costs of investigations, fees and expenses of the mediator and
attorneys, shall be borne by the Company, provided that if any court of
competent jurisdiction determines that the claims or defenses of Executive were
without any reasonable basis, each party shall bear his or its own costs, other
than the fees and expenses of the mediator which shall be borne by the Company.
[Section]18. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the Company and the Executive with respect to the subject matter hereof
and there have been no oral or other agreements of any kind whatsoever as a
condition precedent or inducement to the signing of this Agreement or otherwise
concerning this Agreement or the subject matter hereof.
[Section]19. AMENDMENTS. This Agreement may not be amended, nor shall any
waiver, change, modification, consent or discharge be effected except by an
instrument in writing executed by or on behalf of the party against whom
enforcement of any waiver, change, modification, consent or discharge is sought.
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[Section]20. ASSIGNABILITY; BINDING NATURE. This Agreement has been duly
authorized by the Board of Directors of the Company and shall be binding upon
and inure to the benefit of the parties and their respective successors, heirs
(in the case of the Executive) and permitted assigns. No rights or obligations
of the Company under this Agreement may be assigned or transferred by the
Company, except that such rights or obligations may be assigned or transferred
pursuant to a merger or consolidation in which the Company is not the continuing
entity, or the sale or liquidation of all or substantially all of the assets of
the Company, provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or transferee
assumes the liabilities, obligations and duties of the Company, as contained in
this Agreement, either contractually or as a matter of law. The Company further
agrees that, in the event of a sale of assets or liquidation as described in the
preceding sentence, it shall cause such assignee or transferee to expressly
assume the liabilities, obligations and duties of the Company hereunder.
[Section]21. General Provisions.
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(a) Executive further agrees that his obligations hereunder shall be
binding upon him irrespective of the duration of his employment by the
Company, the reasons for any cessation of his employment by the Company, or
the amount of his compensation and shall survive the termination of this
Agreement (whether such termination is by the Company, by the Executive,
upon expiration of this Agreement or otherwise).
(b) Executive represents and warrants to the Company that he is not
now under any obligations to any person, firm or corporation, and has no
other interest which is inconsistent or in conflict with this Agreement, or
which would prevent, limit or impair, in any way, the performance by him of
any of the covenants or his duties in his employment hereunder.
(c) The Company shall reimburse Executive for the reasonable fees and
disbursments of his legal counsel in connection with the negotiation and
preparation of this Agreement, in an amount not to exceed $4,000 in the
aggregate.
[Section]22. The Company shall, to the full extent legally permissible,
indemnify the Executive in the event that he was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, including
a grand jury proceeding, and all appeals (but excluding any such action, suit or
proceeding by or in the right of the Company), by reason of the fact that the
Executive is or was a member of the Board or an executive officer of the
Company, or is or was serving at the request of the Company as a director,
officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including reasonable attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by the Executive in connection with
such action, suit or proceeding if the Executive acted in good faith and in a
manner that the Executive reasonably believed to be in or not opposed to the
best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the conduct in question was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Executive did not act in
good faith and in a manner that the Executive
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reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, that the
Executive had reasonable cause to believe that the conduct in question was
unlawful.
The Company shall, to the full extent legally permissible, indemnify the
Executive in the event that he was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit, including appeals,
by or in the right of the Company to procure a judgment in its favor, by reason
of the fact that the Executive is or was a member of the Board or an executive
officer of the Company, or is or was serving at the request of the Company as a
director, officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including reasonable attorneys' fees) actually and reasonably incurred by the
Executive in connection with the defense or settlement of such action or suit if
the Executive acted in good faith and in a manner that the Executive reasonably
believed to be in or not opposed to the best interests of the corporation,
except that no indemnification shall be made in respect of any claim, issue or
matter as to which the Executive shall have been adjudged to be liable to the
Company unless and only to the extent that the court in which such action or
suit was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, the Executive is
fairly and reasonably entitled to indemnity for such expenses which such court
shall deem proper.
To the extent that the Executive has been successful in whole or in part on
the merits or otherwise, including the dismissal of an action without prejudice,
in defense of any action, suit or proceeding or in defense of any claim, issue
or matter therein, the Executive shall be indemnified against all expenses
incurred in connection therewith.
Expenses incurred by the Executive in any action, suit or proceeding shall
be paid by the Company in advance of the final disposition of thereof, if the
Executive shall undertake to repay such amount in the event that it is
ultimately determined, as provided herein, that the Executive is not entitled to
indemnification.
The indemnification and advancement of expenses provided by this Section
shall not be deemed exclusive of any other rights to which the Executive may be
entitled under any By-law, agreement, vote of stockholders or disinterested
directors, the General Corporation Law of the State of Delaware or otherwise,
both as to action in the Executive's official capacity and as to action in
another capacity while serving as a member of the Board of Directors or as an
executive officer of the Company. All rights to indemnification under this
Section or advancement of expenses shall continue after the Executive has ceased
to be a director or executive officer, and shall inure to the benefit of his
heirs, executors and administrators. The Company shall also indemnify the
Executive for attorneys' fees, costs, and expenses in connection with the
successful enforcement of the Executive's rights under this Section.
[Section]23. GOVERNING LAW. This Agreement shall be governed by, construed
and enforced in accordance with the law (other than the law governing conflict
of law questions) of the Commonwealth of Massachusetts.
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IN WITNESS WHEREOF, the parties have executed or caused to be executed this
Agreement as of the date first above written.
FIRST NEW ENGLAND DENTAL CENTERS, INC.
By: Illegible
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Title:
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
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EXHIBIT A
FIRST NEW ENGLAND DENTAL CENTERS, INC.
STOCK OPTION AGREEMENT
First New England Dental Centers, Inc., a Delaware corporation (the
"Company"), by execution of Schedule I annexed hereto grants, as of the grant
date set forth in Schedule I, to the optionee named in Schedule I (the
"Optionee"), an option to purchase up to the number of shares of its Common
Stock, $0.01 par value ("Stock"), set forth in Schedule I at the exercise price
per share set forth in Schedule I, on the following terms and conditions:
1. GRANT AS NON-QUALIFIED STOCK OPTION; OTHER OPTIONS. This option is not
intended to qualify as an incentive stock option under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). This option is in
addition to any other options heretofore or hereafter granted to the Optionee by
the Company, but a duplicate original of this instrument shall not effect the
grant of another option.
2. EXTENT OF OPTION IF EMPLOYMENT CONTINUES. If the Optionee has continued
to be employed by the Company or by any affiliated corporation in a position in
which the optionee renders services to or for the benefit of the Company (an
"Affiliate"), the Optionee may exercise this option for the number of shares set
forth on Schedule I at any time from the dates such options become exercisable
(each such date being hereinafter referred to as an "Exercise Date") as set
forth on Schedule I up to and including the date that is five years from the
date this option first becomes exercisable with respect to such shares. All of
the foregoing rights are subject to Paragraph 3 if the Optionee ceases to be
employed by the Company.
3. TERMINATION OF EMPLOYMENT; ACCELERATION OF EXERCISE DATES. If the
Optionee ceases to be employed by the Company or an Affiliate, this option shall
terminate after the passage of six months from the date employment ceases, but
in no event later than the scheduled expiration date (subject to waiver by the
Company in its sole discretion). In such a case, the Optionee's only rights
hereunder shall be those that are properly exercised before the termination of
this option. In the event that (a) the Optionee's employment is terminated other
than for cause as set forth in ss.9 of the Executive Employment Agreement, dated
as of the date hereof, between the Company and the Optionee (as amended and in
effect from time to time, the "Employment Agreement"), or (b) there is a "Change
of Control" as defined in the Employment Agreement, all options to purchase
shares hereunder shall become immediately exercisable on the effective date of
termination of employment or the effective date of the Change of Control, as the
case may be.
4. PARTIAL EXERCISE. Exercise of this option may be made in part at any
time and from time to time, except that this option may not be exercised for a
fraction of a share unless such exercise is with respect to the final
installment of stock subject to this option and a fractional share (or cash in
lieu thereof) must be issued to permit the Optionee to exercise completely such
final installment. Any fractional share with respect to which an installment of
this option cannot be exercised because
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of the limitation contained in the preceding sentence shall remain subject to
this option and shall be available for later purchase by the Optionee in
accordance with the terms hereof.
5. PAYMENT OF PRICE. The option price is payable in United States dollars
and may be paid in cash or by check or by cancellation as of the date of
exercise of a portion of this option (calculated at the fair market value of
such cancelled portion at the time of exercise). "Fair market value" of a share
of the Stock shall mean, if shares of the Stock are not publicly traded, the
fair market value of such shares as determined in good faith by the Board and,
if shares of the Stock are publicly traded, the average closing price for a
share of the Stock for the 20 trading days preceding the date of exercise, or if
no closing price is reported for such period, the average of the mean between
the low bid and the high ask prices for a share of the Stock for such 20 trading
days.
6. AGREEMENT TO PURCHASE FOR INVESTMENT. By acceptance of this option, the
Optionee agrees that a purchase of shares under this option will not be made
with a view to their distribution, as that term is used in the Securities Act of
1933, as amended, unless in the opinion of counsel to the Company such
distribution is in compliance with or exempt from the registration and
prospectus requirements of that Act, and the Optionee agrees to sign a
certificate to such effect at the time of exercising this option and agrees that
the certificate for the shares so purchased may be inscribed with a legend to
ensure compliance with the Securities Act of 1933.
7. Registration Rights.
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(a) For purposes of this Section 7, "Registrable Securities" shall mean all
issued and outstanding Stock, including any such common stock issued upon any
stock split, stock dividend, recapitalization or similar event; provided that
any such share shall cease to be a "Registrable Security" when sold pursuant to
a registration statement declared effective under the Securities Act of 1933, as
amended, or sold pursuant to Rule 144 promulgated thereunder.
(b) If the Company shall determine to register any of its securities (other
than a registration relating solely to employee benefit plans or a registration
on any registration form that does not permit secondary sales or does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of Registrable Securities), the
Company will include that portion of the Optionee's Registrable Securities as he
shall elect to sell, provided, that if the managing underwriter(s) shall impose
a limitation on the number of shares of common stock included in any such
registration statement because such limitation is necessary in its judgment to
effect an orderly public distribution, then the Optionee's portion of the shares
available for registration, if any, after application of such limitation shall
be determined pro rata in accordance with his percentage ownership interest in
the Registrable Securities to be included in such offering, and the Company will
pay for the registration expenses (but not the underwriting discounts, selling
commissions and transfer taxes) in connection with the registration of such
shares.
(c) If the Optionee disapproves of the terms of any Company underwriting in
which his shares are to be included under this Section 7, he may elect to
withdraw therefrom by written notice to the Company and to the underwriter,
delivered at least seven days prior to the effective date of the registration
statement therefor.
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8. METHOD OF EXERCISING OPTION. Subject to the terms and conditions of this
Agreement, this option may be exercised by written notice to the Company, at the
principal executive office of the Company, or to such transfer agent as the
Company shall designate. Such notice shall state the election to exercise this
option and the number of shares in respect of which it is being exercised and
shall be signed by the person or persons so exercising this option. Such notice
shall be accompanied by payment of the full purchase price of such shares, and
the Company shall deliver a certificate or certificates representing such shares
as soon as practicable after the notice shall be received. The certificate or
certificates for the shares as to which this option shall have been so exercised
shall be registered in the name of the person or persons so exercising this
option (or, if this option shall be exercised by the Optionee and if the
Optionee shall so request in the notice exercising this option, shall be
registered in the name of the Optionee and another person jointly, with right of
survivorship) and shall be delivered as provided above to or upon the written
order of the person or persons exercising this option. In the event this option
shall be exercised by any person or persons other than the Optionee, such notice
shall be accompanied by appropriate proof of the right of such person or persons
to exercise this option. All shares that shall be purchased upon the exercise of
this option as provided herein shall be fully paid and nonassessable.
9. OPTION NOT TRANSFERABLE. This option is not transferable or assignable
except by will or by the laws of descent and distribution, except that the
Optionee shall be entitled to transfer this option, in whole or in part, to his
spouse, his lineal descendants, or to a trust for the benefit of himself, his
spouse, his lineal descendants, or any combination thereof.
10. NO OBLIGATION TO EXERCISE OPTION. The grant and acceptance of this
option imposes no obligation on the Optionee to exercise it.
11. NO OBLIGATION OF EMPLOYMENT. The Company and any Related Corporations
and Affiliates are not by this option obligated to employ the Optionee or to
continue the Optionee in employment.
12. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The Optionee shall have no
rights as a stockholder with respect to shares subject to this Agreement until a
stock certificate therefor has been issued to the Optionee and is fully paid
for. Except as is expressly provided herein, no adjustment shall be made for
dividends or similar rights for which the record date is prior to the date such
stock certificate is issued.
13. CAPITAL CHANGES AND BUSINESS SUCCESSIONS. It is the purpose of this
option to encourage the Optionee to work for the best interests of the Company
and its stockholders. If, through or as a result of any merger, consolidation,
sale of all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, (i) the outstanding shares of Common Stock
are increased, decreased or exchanged for a different number or kind of shares
or other securities of the Company, or (ii) additional shares or new or
different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Common Stock or other securities, an
appropriate and proportionate adjustment will be made in (x) the number and kind
of shares or other securities subject to this Stock Option Agreement, and (y)
the price for each share subject to this Stock Option
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Agreement, without changing the aggregate purchase price as to which the options
granted hereunder remain exercisable.
14. WITHHOLDING TAXES. If the Company in its discretion determines that it
is obligated to withhold tax with respect to the exercise of this option, the
Optionee hereby agrees that the Company may withhold from any amounts payable by
the Company to the Optionee (including, without limitation, wages) the
appropriate amount of federal, state and local withholding taxes attributable to
such exercise. At the Company's discretion, the amount required to be withheld
may be withheld in cash, or (with respect to compensation income attributable to
the exercise of this option) in kind from the Common Stock otherwise deliverable
to the Optionee on exercise of this Option. The Optionee further agrees that, if
the Company does not withhold an amount from the Optionee's wages sufficient to
satisfy the Company's withholding obligation, the Optionee will reimburse the
Company on demand, in cash, for the amount underwithheld.
15. GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the internal laws of Delaware.
15
FIRST NEW ENGLAND DENTAL CENTERS, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
Schedule I
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Optionee's Name: Xxxxxx X. Xxxxxxx
Option Grant Date: October 1, 1996
Number of Shares Subject to Options: 300,000
Exercise Price per Share: $6.50
Vesting: Options for 25,000 shares each shall vest on the 1st day of each
October, January, April and July, commencing October 1, 1996, through July 1,
1999.
**********
The parties, by execution of this Schedule I, accept and agree to the terms
of the Stock Option Agreement to which this Schedule I is attached.
FIRST NEW ENGLAND DENTAL CENTERS, INC.
By: Illegible
------------------------------------
Title: Director
/s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxx, Optionee
