<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of
the Commission Only (as
permitted by Rule 14a-6
(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
American Dental Partners, Inc.
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
Not Applicable
(2) Form, Schedule or Registration Statement No.:
Not Applicable
(3) Filing Party:
Not Applicable
(4) Date Filed:
Not Applicable
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 12, 2000
To the Shareholders of
American Dental Partners, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of
American Dental Partners, Inc. (the "Company") will be held at the offices of
Summit Partners located at 600 Atlantic Avenue, Suite 2800, Boston,
Massachusetts 02210, on Friday, May 12, 2000 at 10:00 a.m., local time, for the
following purposes:
1. To elect two Class III directors;
2. To vote on a proposal to amend the Company's 1997
Employee Stock Purchase Plan as described in the
attached Proxy Statement; and
3. To transact such other business as may properly come
before the meeting or any adjournment thereof.
The close of business on March 17, 2000 has been fixed as the record
date for the determination of shareholders entitled to notice of and to vote at
the meeting and any adjournment thereof. Only holders of Common Stock of record
at the close of business on that date will be entitled to notice of, and to vote
at, the Annual Meeting and any adjournments or postponements thereof.
In order that your shares may be represented at this meeting and to
assure a quorum, please sign and return the enclosed proxy card promptly. A
return addressed envelope, which requires no postage, is enclosed. In the event
you are able to attend and wish to vote in person, at your request, we will
cancel your proxy.
By Order of the Board of Directors
/s/ Gregory A. Serrao
Gregory A. Serrao
Chairman, President and Chief
Executive Officer
Wakefield, Massachusetts
Dated: April 5, 2000
Whether or not you plan to attend the annual meeting in person, you are
requested to complete, date, sign and return the enclosed proxy card in the
enclosed envelope which requires no postage if mailed in the United States. If
you attend the annual meeting, you may vote in person if you wish, even if you
have previously returned your proxy card.
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
PROXY STATEMENT
GENERAL
This Proxy Statement is being furnished to the holders of common stock,
$.01 par value, of American Dental Partners, Inc., a Delaware corporation (the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company to be used at the Company's Annual Meeting of
Shareholders (the "Annual Meeting") to be held at the office of Summit Partners
located at 600 Atlantic Avenue, Suite 2800, Boston, Massachusetts 02210, on
Friday, May 12, 2000, at 10:00 a.m., local time, for the purposes set forth on
the accompanying Notice of Annual Meeting. This Proxy Statement and the form of
proxy together with the 1999 Annual Report to Shareholders are first being sent
to shareholders on or about April 5, 2000.
All shares represented by properly executed proxies will be voted at the
Annual Meeting in accordance with the choices indicated on the proxy. If no
choices are indicated, the shares will be voted to elect the director nominees
set forth under "Election of Directors" and in favor of Proposal 1. Any proxy
may be revoked at any time prior to its exercise by delivery to the Company of a
later dated proxy or by giving notice of revocation to the Company in writing. A
shareholder's presence at the Annual Meeting does not by itself revoke the
proxy.
The close of business on March 17, 2000, has been fixed as the record
date for the determination of shareholders entitled to notice of and to vote at
the Annual Meeting and any adjournment thereof. On the record date, there were
7,139,084 shares of the Company's Common Stock outstanding and entitled to vote
and approximately 64 shareholders of record. Each share of Common Stock is
entitled to one vote. Only holders of Common Stock of record at the close of
business on the record date will be entitled to notice of, and to vote at, the
Annual Meeting.
ELECTION OF DIRECTORS
The number of directors currently is fixed at five. The Board of
Directors is divided into three classes, Class I, Class II, and Class III, with
one Class I director and two directors in each of Class II and Class III. The
directors in each class are elected to three-year terms. The terms of office of
one class of directors expire each year at the annual meeting of shareholders
and at such time as their successors are duly elected and qualified. The term of
office of the Class III directors expires concurrently with the holding of the
Annual Meeting, and the two incumbent directors of Class III have been nominated
for re-election. There is no cumulative voting in the election of directors, and
nominees receiving the highest number of votes will be elected. Abstentions and
broker non-votes will not be counted in favor of or against any nominee.
At the Annual Meeting, Common Stock represented by proxies, unless
otherwise specified, will be voted to elect the nominees named below as Class
III directors for a three-year term expiring in 2003. In the event that any
nominee named below as a Class III director is unable to serve (which is not
expected), the persons named in the proxy may vote for another nominee using
their judgment.
<PAGE>
Class III Directors
(Nominees for Election)
<TABLE>
<CAPTION>
Expiration of
Name of A Director of the Term for which
Director Age Principal Occupation Company Since Proposed
-------- --- -------------------- ------------- --------
<S> <C> <C> <C> <C>
Derril W. Reeves 56 Founder, Vice Chairman of the Board February 1997 2003
of Directors and Chief Development
Officer of PhyCor, Inc. where he
has been employed since 1988.
Gregory A. Serrao 37 Founder, President, Chief Executive December 1995 2003
Officer and Director of the Company
since December 1995. Chairman since
October 1997. From 1992 through
December 1995, Mr. Serrao served as
the President of National Specialty
Services, Inc., a subsidiary of
Cardinal Health, Inc.
</TABLE>
Set forth below is information relating to directors whose terms will continue
after the Annual Meeting:
Class II Directors
(Term Expiring in 2002)
<TABLE>
<CAPTION>
Name of Principal Occupation A Director of the
Nominee Age and Business Experience Company Since
------- --- ----------------------- -------------
<S> <C> <C> <C>
James T. Kelly 53 Chairman of the Board of Lincare February 1997
Holdings Inc., a provider of home
respiratory therapy services, since
April 1994.
Martin J. Mannion 40 General Partner of Summit Partners, January 1996
a private equity capital firm,
where he has been employed since
1985.
</TABLE>
2
<PAGE>
Class I Director
(Term Expiring in 2001)
<TABLE>
<CAPTION>
A Director of
Name of the
Director Age Principal Occupation Company Since
-------- --- -------------------- -------------
<S> <C> <C> <C>
Gregory T. Swenson, D.D.S. 65 President of PDHC, Ltd. and Park November 1996
Dental since November 1996.
Chairman and Chief Executive
Officer of Park Dental from 1983
until November 1996.
</TABLE>
Board of Directors Committees and Meetings
The Board of Directors has established a Compensation Committee and an
Audit Committee. The Board of Directors does not have a standing nominating
committee or a committee performing similar functions.
The members of the Compensation Committee are Martin J. Mannion and
Derril W. Reeves. The Compensation Committee, which is responsible for making
recommendations to the Board of Directors with respect to the compensation of
executive officers of the Company, held three meetings during 1999 and took
action once by written consent.
The members of the Audit Committee are Martin J. Mannion, James T. Kelly
and Derril W. Reeves. The Audit Committee, which is responsible for the
appointment of the independent auditors, supervision of the annual audit of the
Company's consolidated financial statements by the independent auditors and
related matters, held two meetings during 1999.
The Directors Stock Option Plan Committee is responsible for
administering the Amended and Restated 1996 Directors Stock Option Plan. Gregory
Serrao is the only member of the Directors Stock Option Plan Committee. The
Committee took action once by written consent in 1999.
The Board of Directors held six meetings and took action once by written
consent during 1999. Each director attended at least 75% of the meetings held by
the Board of Directors and the committees on which he served during 1999.
Compensation of Directors
Directors who are also employees of the Company or one of its
subsidiaries do not receive additional compensation for serving as directors.
Each director who is not an employee of the Company or one of its subsidiaries
receives a fee of $1,000 for attending each Board of Directors' meeting and $500
for attending each committee meeting. In addition, such directors are eligible
to receive options under the Company's 1996 Amended and Restated Directors Stock
Option Plan. These options are issued at such times and in such amounts as may
be determined by the Directors Stock Option Plan Committee. Directors are also
reimbursed for out-of-pocket expenses incurred in attending meetings of the
Board of Directors or committees thereof.
3
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of Common Stock as of March 31, 2000, by: (i) each person who is known
to the Company to own beneficially more than 5% of the outstanding shares of
Common Stock; (ii) each director; (iii) the Company's Chief Executive Officer
and the four other most highly compensated executive officers named in the
Summary Compensation Table; and (iv) the Company's directors and executive
officers as a group. Under the rules of the Securities and Exchange Commission,
a person is deemed to be a "beneficial owner" of a security if he or she has or
shares the power to vote or direct the voting of such security, has or shares
the power to dispose of or direct the disposition of such security, or has the
right to acquire the security within 60 days. Accordingly, more than one person
may be deemed to be the beneficial owner of the same security. All persons
listed have sole voting and investment power with respect to their shares unless
otherwise indicated.
<TABLE>
<CAPTION>
Shares Beneficially Owned(1)
----------------------------
Number Percentage
------ ----------
<S> <C> <C>
Summit Ventures(2)(3)........................................................... 2,377,162 33.5%
Martin J. Mannion(2)(3)......................................................... 2,377,162 33.5%
Gregory A. Serrao(3)(4)......................................................... 716,924 9.6%
Capital Research and Management Company(5)...................................... 443,000 6.2%
Wanger Asset Management, L.P.(6)................................................ 369,000 5.2%
Gregory T. Swenson, D.D.S.(3)(7)................................................ 345,585 4.9%
Ronald M. Levenson(3)(8)........................................................ 207,332 2.9%
Jesley C. Ruff, D.D.S.(3)....................................................... 43,515 *
Joseph V. Errante, D.D.S.(3)(9)................................................. 30,179 *
William H. Bottlinger(3)........................................................ 17,303 *
Derril W. Reeves(3)............................................................. 11,925 *
James T. Kelly(3)............................................................... 8,925 *
All executive officers and directors as a group (14 persons)(10)................ 3,800,136 49.2%
</TABLE>
- -------------------
* less than 1%
(1) This table includes for each person or group of persons shares of Common
Stock that may be purchased by such person or group pursuant to options
which are currently exercisable or exercisable within 60 days of March 31,
2000. As of such date, a total of 7,099,084 shares of Common Stock were
issued and outstanding and options for 894,329 shares were exercisable.
(2) Represents 2,285,869 and 90,293 shares of Common Stock owned by Summit
Ventures IV, L.P. and Summit Investors II, L.P., respectively. Summit
Partners is affiliated with both limited partnerships. Mr. Mannion, a
Director of the Company, is a general partner of Summit Partners. The
address of Summit Partners and Mr. Mannion is 600 Atlantic Avenue, Suite
2800, Boston, Massachusetts 02110.
(3) Includes options for 1,000 shares for Mr. Mannion, 384,924 shares for Mr.
Serrao, 15,750 shares for Dr. Swenson, 161,704 shares for Mr. Levenson,
2,950 shares for Dr. Ruff, 4,500 shares for Dr. Errante, 14,257 shares for
Mr. Bottlinger, 8,925 shares for Mr. Reeves and 8,925 shares for Mr. Kelly,
respectively, which are currently exercisable or exercisable within 60 days
of March 31, 2000.
(4) Includes 26,170 shares owned by a family trust, of which Mr. Serrao is the
grantor and trustee, 5,000 shares held by Mr. Serrao's minor children and
5,000 shares held by Mr. Serrao's wife. The address for Mr. Serrao is
American Dental Partners, Inc., 301 Edgewater Place, Suite 320, Wakefield,
Massachusetts 01880.
(5) The address for Capital Research and Management Company is 333 South Hope
Street, Los Angeles, California 90071.
(6) The address for Wanger Asset Management, L.P. is 227 West Monroe
Street-3000, Chicago, Illinois 60606-5016.
(7) Includes 96,000 shares owned by a family trust, of which Dr. Swenson is the
grantor.
(8) Includes 950 shares held by Mr. Levenson's minor children.
(9) Includes 932 shares owned by a family trust, of which Dr. Errante is the
grantor, and 1,390 shares owned by a family trust, of which Dr. Errante is
the trustee.
(10) Includes options for 622,765 shares for all executive officers and
directors as a group which are currently exercisable or exercisable within
60 days of March 31, 2000.
4
<PAGE>
EXECUTIVE COMPENSATION
Set forth below is summary information regarding the annual and
long-term compensation of the Company's chief executive officer and the four
most highly compensated executive officers of the Company whose annual
compensation exceeded $100,000 during 1999:
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Awards
------------------------------------------------- ----------------------
Other Securities
Annual Underlying All Other
Year Salary ($) Bonus ($) Compensation(1) Options (#) Compensation (2)
---- ---------- --------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Gregory A. Serrao......... 1999 $185,000 $111,000 $ - 25,000 $2,447
Chairman, President 1998 $170,000 $102,000 $ - 12,000 $2,259
and Chief Executive 1997 $153,000 $123,600 $ - 189,600 $1,946
Officer
Ronald M. Levenson...... 1999 $177,500 $ 71,000 $ - 20,000 $4,614
Senior Vice President, 1998 $165,000 $ 66,000 $ - 12,000 $2,200
Chief Financial Officer 1997 $153,000 $ 82,400 $ - 126,000 $1,946
and Treasurer
William H. Bottlinger..... 1999 $159,000 $ 63,600 $ - 8,225 $2,202
Senior Vice President- 1998 $152,880 $ 65,800 $ - 4,523 $ -
Regional Operations 1997 $143,000(3) $ 58,800 $ 57,900(4) 15,000 $ -
and Chief Information
Officer
Joseph V. Errante, DDS... 1999 $140,000 $ 44,100 $ - 6,000 $2,100
Senior Vice President- 1998 $120,000 $ 717 $ - 11,000 $4,943
Regional Operations and 1997 $ - $ - $ - - $ -
Business Development
Jesley C. Ruff, DDS... 1999 $140,000 $ 35,000 $ - 1,000 $2,000
Vice President-Chief 1998 $ - $ - $ - - $ -
Professional Officer 1997 $ - $ - $ - - $ -
</TABLE>
- ------------------
(1) Except as specifically noted, no Other Annual Compensation for any
Named Executive Officer exceeded $50,000 or 10% of the total salary and
bonus for such officer.
(2) Represents matching contributions under the Company's 401(k) plan.
(3) Represents less than one full year's compensation.
(4) Consists of moving and relocation expenses.
5
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth all grants of stock options to the
executive officers named in the Summary Compensation Table during 1999:
<TABLE>
<CAPTION>
Potential Realizable
Individual Grants Value at Assumed
---------------------------------------------------------- Annual Rates of Stock
Number of Price Appreciation
Securities % of Total Exercise for Option Term
Underlying Options Options Granted Price Expiration ------------------------
Granted (#)(1) in Fiscal Year ($/Share) Date 5% ($) 10% ($)
---------------- -------------- ------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Gregory A. Serrao ..................... 25,000 14% $ 7.25 2/26/09 $113,987 $288,866
Ronald M. Levenson .................... 20,000 11% $ 7.25 2/26/09 $ 91,190 $231,093
William H. Bottlinger ................. 8,225 5% $ 7.25 2/26/09 $ 37,502 $ 95,037
Joseph V. Errante, D.D.S .............. 6,000 3% $ 7.25 2/26/09 $ 27,357 $ 69,328
Jesley C. Ruff, D.D.S ................. 1,000 1% $ 7.25 2/26/09 $ 4,559 $ 11,555
</TABLE>
- --------
(1) All option grants were issued under the Amended and Restated 1996 Stock
Option Plan, as amended. The exercise price of such options is no less than
the fair market value of the Company's Common Stock on the date of grant.
Options become exercisable in equal annual installments over a four-year
period.
Aggregated Option Exercises in Last Fiscal Year and Year End Option Values
The following table sets forth the number of securities underlying
unexercised options and the value of in-the-money stock options held by the
executive officers named in the Summary Compensation Table as of December 31,
1999 (1):
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options
December 31, 1999 (#) at December 31, 1999 ($)
----------------------------------- ----------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------------- ---------------- ------------- --------------
<S> <C> <C> <C> <C>
Gregory A. Serrao .................. 373,274 123,596 $1,802,701 $ -
Ronald M. Levenson ................. 137,204 101,796 $ 440,220 $100,050
William H. Bottlinger .............. 9,607 18,141 $ - $ -
Joseph V. Errante, D.D.S ........... 2,750 14,250 $ - $ -
Jesley C. Ruff, D.D.S .............. 2,700 3,100 $ - $ -
</TABLE>
- -------------
(1) There were no stock options exercised by executive officers named in the
Summary Compensation Table during 1999.
6
<PAGE>
Employment Agreements
The Company has a five-year employment agreement with Mr. Serrao which
terminates in January 2001. Under his employment agreement, Mr. Serrao receives
an annual base salary, which was $185,000 in 1999 (subject to potential annual
salary increases), and a bonus in an amount up to 60% of his then current base
salary. Mr. Serrao is also subject to non-competition and confidentiality
provisions in the employment agreement. If Mr. Serrao's employment is terminated
prior to the end of the five-year term by the Company without cause or by Mr.
Serrao for "good reason" (as defined in the employment agreement), he is
entitled to receive severance benefits which include severance payments in an
amount equal to his then current annual base salary and health care benefits for
one year after termination.
The Company has a four-year employment agreement with Dr. Errante which
terminates in January 2003. Under his employment agreement, Dr. Errante receives
an annual base salary, which was $140,000 in 1999 (subject to potential annual
salary increases), and a bonus in an amount up to 35% of his then current base
salary. Dr. Errante is also subject to non-competition and confidentiality
provisions in the employment agreement. If Dr. Errante's employment is
terminated prior to the end of the four-year term by the Company for any reason
other than for cause, he is entitled to receive severance benefits which include
severance payments in an amount equal to the lesser of the remainder of the term
or one year of his then current base salary.
Compensation Committee Interlocks
Messrs. Mannion and Reeves serve as the current members of the Company's
Compensation Committee. There are no interlocking relationships between any
executive officers of the Company and any entity whose directors or executive
officers serve on the Company's Board of Directors or Compensation Committee.
CERTAIN TRANSACTIONS
The Company acquired PDHC, Ltd. ("Park") pursuant to an Acquisition and
Exchange Agreement effective November 12, 1996 (the "Acquisition Agreement"),
among the Company, Park and all of the shareholders of Park, including Dr.
Swenson. Under the Acquisition Agreement, the shareholders of Park received an
aggregate of $3.3 million in cash, $1.5 million principal amount of Subordinated
Notes of the Company and 1,260,000 shares of Common Stock in consideration for
the exchange of all of their Park shares. Dr. Swenson received $74,848 in
principal and interest payments under the Subordinated Notes in 1999. The
Company expects to continue to make payments under the Subordinated Notes in
2000. The terms and conditions of the acquisition of Park, including the
consideration received for the exchange of the Park shares, were based upon
arms-length negotiations between representatives of the Company and Park,
including Dr. Swenson.
The Company acquired Smileage Dental Care, Inc. pursuant to an Agreement
and Plan of Merger and Reorganization effective December 23,1996 (the "Merger
Agreement"), among the Company, American Dental Partners of Wisconsin, Inc.
("American"), Smileage Dental Care, Inc. ("Smileage") and the shareholders of
Smileage, including Jesley C. Ruff., D.D.S., who became Vice President - Chief
Professional Officer on January 1, 1999. Under the Merger Agreement, the
shareholders of Smileage received an aggregate of $546,250 in cash, $247,500
principal amount of Subordinated Notes of the Company and 304,200 shares of
Common Stock in consideration of the merger of Smileage with American. Dr. Ruff
received $3,955 in principal and interest payments under the Subordinated Notes
in 1999. The Company expects to continue to make payments under the Subordinated
Notes in 2000. The terms and conditions of the acquisition of Smileage,
including the consideration received for the exchange of the Smileage shares,
were based upon arms-length negotiations between representatives of the Company
and Smileage, including Dr. Ruff.
7
<PAGE>
The Company acquired Innovative Practice Concepts, Inc. pursuant to a
Stock Purchase Agreement dated December 22, 1997 (the "Purchase Agreement")
among the Company, Associated Dental Care Providers, P.C. ("Associated"),
Innovative Practice Concepts, Inc. ("IPC") and the shareholders of IPC. The
transaction was effective January 1, 1998. Under the Purchase Agreement, the
shareholders of IPC received an aggregate of $2,910,000 in cash less certain
amounts applied to pay off indebtedness of IPC to Joseph V. Errante, D.D.S. and
his sister Margaret E. Errante, D.D.S., $500,000 principal amount of
Subordinated Notes of the Company and 34,800 shares of Common Stock in
consideration for the exchange of all of their IPC shares. All of the stock of
IPC was owned by Dr. Joseph Errante, Dr. Margaret Errante and trusts for the
benefit of certain members of their families. The terms and conditions of the
acquisition of IPC, including the consideration received for the exchange of the
IPC shares, were based upon arms-length negotiations between representatives of
the Company and representatives of IPC, including Dr. Joseph Errante, who became
Vice President - Regional Operations in November 1998 and is currently Senior
Vice President - Regional Operations and Business Development. Dr. Joseph
Errante received $51,428 in principal and interest payments under the
Subordinated Notes in 1999. The Company expects to continue to make payments
under the Subordinated Notes in 2000.
The Company entered into registration rights agreements with the former
shareholders of each of Park and Smileage. These registration rights agreements
contain provisions which grant the former shareholders of Park and Smileage
piggy back registration rights in the event the Company registers any of its
securities for either itself or for security holders exercising their
registration rights. In addition, the former Park shareholders may require
registration of their shares of Common Stock (subject to the other general
applicable limitations on the Company's registration obligations) on one
occasion if and to the extent that they have not otherwise had the opportunity
to register their shares during the three-year period following the completion
of the IPO.
In connection with the Park, Smileage and IPC transactions, the Company
entered into service agreements with the professional corporations owned in part
by Drs. Swenson, Ruff and Errante, respectively. These professional corporations
are PDG, P.A. ("PDG"), Wisconsin Dental Group, S.C. ("WDG") and Associated
Dental Care Providers, P.C. ("Associated"). These service agreements are on
substantially the same terms and conditions as all of the Company's other
service agreements. The amounts received by subsidiaries of the Company under
the service agreements with PDG, WDG and Associated in 1999 were approximately
$39,977,000, $11,819,000 and $10,638,000, respectively, of which $31,205,000,
$8,285,000 and $8,550,000, respectively, were reimbursements for expenses
incurred in connection with the operation and administration of the related
dental facilities. Dr. Swenson owns approximately 6% of the issued and
outstanding capital stock of PDG, Dr. Ruff owns approximately 12% of the issued
and outstanding capital stock of WDG and Dr. Errante owns approximately 18% of
the issued and outstanding capital stock of Associated.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors regularly reviews
executive compensation policies and levels and evaluates the performance of
management in the context of the Company's performance. The Compensation
Committee is composed entirely of independent outside directors.
The Compensation Committee's primary objective with respect to executive
compensation is to establish programs which attract and retain key managers and
align their compensation with the Company's overall business strategies, values
and performance. To this end, the Compensation Committee has established an
executive compensation philosophy which includes the following considerations:
8
<PAGE>
. An emphasis on performance based compensation that
differentiates compensation results based upon corporate,
operating unit, and individual performance;
. Recognition of both quantitative and qualitative performance
objectives in light of an executive officer's responsibilities;
. A mix of short-term cash and long-term stock based compensation
which aligns the interests of the Company's executive officers
with the interests of the Company's shareholders.
In light of these considerations, the primary focus of the Compensation
Committee has been on the competitiveness of each of the key elements of
executive compensation (base salary, bonus and stock option grants) and the
compensation package as a whole. Certain of the executive officers have
employment agreements that specify certain minimum compensation for such
officers. Base salaries for executive officers are determined on the basis of
individual performance, level of responsibility and market competitive
considerations. The Company's executive officers are eligible to receive annual
cash bonuses in amounts varying as a percentage of base salary depending upon
each executive's level of responsibility and function. Performance objectives
are established for each executive officer, including specific quantitative
objectives related to improving the Company's financial performance and other
more qualitative and developmental criteria. For executive officers with primary
operating unit responsibilities, annual cash bonuses are based primarily on the
achievement of specific quantitative objectives related to the financial
performance of the operating unit. For executive officers with primary staff or
corporate responsibilities, the annual cash bonuses are based on achievement of
specific corporate performance objectives as well as individual qualitative
criteria. The Company's executive officers are also eligible to receive grants
of stock options under the Company's Amended and Restated 1996 Stock Option
Plan, as amended. Grants under this Plan are designed to align a significant
portion of the executive compensation package with the long-term interests of
the Company's shareholders by providing an incentive that focuses attention on
managing the Company from the perspective of an owner with an equity stake in
the business.
In determining Mr. Serrao's compensation for 1999, the Compensation
Committee reviewed information regarding the compensation paid to the Chief
Executive Officers of comparable companies, and evaluated achievement of
corporate, individual and organizational objectives for the year. Mr. Serrao's
base salary for 1999 was $185,000. Like other executive officers, Mr. Serrao
also received an incentive bonus determined on the basis of individual and
Company performance, including specific quantitative objectives and more
qualitative criteria. Mr. Serrao was awarded an incentive bonus of $111,000 for
1999. In addition, Mr. Serrao was awarded options to purchase 25,000 shares of
the Company's Common Stock at an exercise price of $7.25 per share in order to
provide him with a long-term incentive tied to the Company's performance.
COMPENSATION COMMITTEE
Martin J. Mannion
Derril W. Reeves
9
<PAGE>
Performance Graph
Set forth below is a line graph comparing the cumulative total return of
a hypothetical investment in the Company's Common Stock with the cumulative
total return of a hypothetical investment in each of the Russell 2000 Index and
an index of companies that provide business services to dentists based on the
respective market price of each such investment at April 16, 1998 (the date of
the Company's IPO), June 30, 1998, September 30, 1998, December 31, 1998, March
31, 1999, June 30, 1999, September 30, 1999 and December 31, 1999, assuming in
each case an initial investment of $100 on April 16, 1998 and the reinvestment
of dividends.
[GRAPH]
<TABLE>
<CAPTION>
Cumulative Total Return
--------------------------------------------------------------
04/16/98 6/98 9/98 12/98 3/99 6/99 9/99 12/99
-------- ---- ---- ----- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AMERICAN DENTAL PARTNERS, INC. 100.00 93.33 57.50 77.08 52.50 74.17 80.83 46.67
PEER GROUP (1) 100.00 84.91 63.30 66.18 53.05 49.42 55.42 40.81
RUSSELL 2000 100.00 96.39 79.16 86.34 77.97 90.88 83.77 85.05
</TABLE>
The foregoing graph is not, nor is it intended to be, indicative of
future performance of the Company's common shares.
- -----------------------
(1) The peer group of companies that provide business services to dentists
includes Apple Orthodontix, Inc., Birner Dental Management Services, Inc.,
Castle Dental Centers, Inc., Coast Dental Services, Inc., Interdent, Inc.,
Monarch Dental Corporation, Orthodontic Centers of America, Inc.,
OrthAlliance, Inc., and Pentegra Dental Group, Inc.
10
<PAGE>
PROPOSAL 1 - AMENDMENT OF THE COMPANY'S 1997 EMPLOYEE STOCK PURCHASE PLAN
The Company's Board of Directors originally adopted the 1997 Employee
Stock Purchase Plan (the "Stock Purchase Plan") in October 1997, effective
December 1, 1997, and it was approved by the Company's shareholders on October
29, 1997. The Board of Directors has approved an amendment to the Stock Purchase
Plan to increase by 200,000 shares the total number of shares of Common Stock
subject to the Plan and directed that such amendment be submitted to the
Company's shareholders for approval. The amendment will not be effective absent
shareholder approval.
Description of the Plan
The purpose of the Stock Purchase Plan is to provide employees of the
Company and its subsidiaries with the opportunity to participate in the growth
and success of the Company by purchasing shares of the Company's Common Stock,
par value $0.01 (the "Shares") through payroll deductions. The Plan is intended
to meet the requirements of (S)423 of the Internal Revenue Code, as amended
which provides special tax treatment with respect to participation in qualified
employee stock purchase plans.
Under the Stock Purchase Plan, subject to the requirements of (S)423 of
the Internal Revenue Code, as amended, any employee of the Company or any of its
subsidiaries who, as of the beginning of an Option Period (defined below), has
been continuously employed by the Company or any of its subsidiaries (or any
combination thereof) for at least six months and who works at least 20 hours per
week may purchase Shares under the Plan. The Plan operates over the course of
successive "Option Periods" - January 1 through June 30 and July 1 through
December 31 of each year. Each eligible employee who has enrolled in the Plan
for that Option Period contributes a portion of the compensation paid to him or
her during the Option Period toward the purchase of Shares. At the end of each
Option Period, the amount contributed by the Participant during the Option
Period will be applied to the purchase of Shares at the discounted price equal
to the lesser of 85% of the fair market value of the Shares at the beginning of
the Option Period or 85% of the fair market value of the Shares at the end of
the Option Period.
Description of the Amendment
The Stock Purchase Plan was originally adopted in October 1997,
effective December 1, 1997, and prior to the Board of Directors' approval of the
additional 200,000 shares on February 25, 2000, the total number of Shares
subject to the Stock Purchase Plan was 200,000, of which 82,450 were issued and
outstanding as of March 31, 2000. As proposed to be amended, the total number of
Shares available for issuance would be increased by 200,000 shares, which would
mean that a total of 400,000 Shares would be authorized under the Plan, of which
82,450 Shares were outstanding at March 31, 2000.
As the Company continues to grow and add employees, it anticipates an
increase in the number of Shares purchased under the Stock Purchase Plan.
Without authorizing additional Shares available for purchases under the Stock
Purchase Plan, the Company would be unable to continue the Stock Purchase Plan
and could be disadvantaged in attracting and retaining employees.
The affirmative vote of the holders of a majority of the shares of
Common Stock entitled to vote and present or represented by proxy at the Annual
Meeting will be required for approval of this proposal. Broker non-votes and
abstentions will have the same effect as votes against the proposal.
The Board of Directors recommends a vote FOR Proposal 1.
11
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP has been selected by the Board of Directors as the independent
public accountants for the Company for its fiscal year ending December 31, 2000.
It is expected that a representative of KPMG LLP will be present at the
Annual Meeting and will be given an opportunity to make a statement if desired
and to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented pursuant to Rule
14a-8 under the Securities Exchange Act of 1934 (the "Exchange Act") at the 2001
annual meeting of shareholders must be received by the Company on or before
December 7, 2000 for inclusion in the proxy statement and form of proxy relating
to the 2000 annual meeting of shareholders. In order for a shareholder proposal
outside of Rule 14a-8 under the Exchange Act to be considered timely within the
meaning of Rule 14a-4(c) of the Exchange Act, such proposal must be received by
the Company no later than February 22, 2001.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than 10% shareholders are required by the
Securities and Exchange Commission's regulations to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on a review of the
copies of such forms furnished to the Company, the Company believes that during
1999 all Section 16(a) filing requirements applicable to its officers, directors
and greater than 10% shareholders were complied with by such persons with the
exception of one delinquent filing. Gregory A. Serrao, Chairman, President and
CEO of the Company, inadvertently filed a Form 4 one day late.
OTHER MATTERS
Management does not know of any other matters which may come before the
Annual Meeting. However, if any other matters properly come before the Annual
Meeting, it is the intention of the persons named in the accompanying form of
proxy to vote the proxy in accordance with their judgment on such matters.
The Company will bear the cost of solicitation of proxies. In addition
to the use of the mails, proxies may be solicited by officers, directors, and
regular employees, personally or by telephone or telegraph. If there are
follow-up requests for proxies, the Company may employ other persons for such
purpose.
12
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
(S)1. Purpose.
-------
The purpose of the 1997 Employee Stock Purchase Plan (the "Plan") of
American Dental Partners, Inc., a Delaware corporation (the "Company"), is to
provide Eligible Employees (as defined in (S)4, below) with an opportunity to
participate in the growth and success of the Company by acquiring or increasing
a proprietary interest in the Company through the application of payroll
deductions to the purchase of shares of the Company's common stock, par value
$0.01 (the "Shares"). The Plan is intended to meet the requirements of (S)423 of
the Internal Revenue Code of 1986, as amended (the "Code"), and to be a "Stock
Purchase Plan" under Rules 16b-3(b)(5) and 16b-3(c) promulgated under the
Securities Exchange Act of 1934, as amended (the "1934 Act").
(S)2. Administration.
--------------
The Plan shall be administered by the Company's board of directors (the
"Board"). The Board shall have the power and authority to adopt, alter, and
repeal such administrative rules, guidelines, and practices governing the Plan
as it shall, from time to time, deem advisable, interpret the terms and
provisions of the Plan and any Option granted and any agreements relating
thereto, and take any other actions the Board considers appropriate in
connection with, and otherwise supervise the administration of, the Plan, all in
a manner consistent with the other provisions of the Plan. All decisions made by
the Board pursuant to the provisions hereof shall be made in the Board's sole
discretion and shall be final and binding on all persons.
The Board may, in its discretion at any time or from time to time,
appoint a committee (the "Committee") of not less than one director to
administer the Plan, in which event the Committee shall have such of the powers
and duties of the Board under the Plan as the Board shall delegate to the
Committee. The member or members of the Committee shall serve at the pleasure of
the Board, which may remove members from the Committee or appoint new members to
the Committee from time to time, and members of the Committee may resign by
written notice to the Chairman of the Board or the Secretary of the Company.
(S)3. Shares Subject to the Plan.
--------------------------
The maximum aggregate number of Shares reserved and available for
purchase under the Plan shall be 200,000 Shares, which may be authorized but
unissued Shares or issued Shares reacquired by the Company and held as treasury
Shares. Such aggregate number of Shares shall be subject to adjustment under
(S)17, below.
(S)4. Eligibility.
-----------
Except as provided in this (S)4, any employee of the Company or of any
Subsidiary (as defined below) who, as of the first day of the Option Period (as
defined in (S)5, below), has been continuously employed by the Company, any
Subsidiary, or any combination thereof for at least six months and who works at
least 20 hours per week for the Company, any Subsidiary, or any combination
thereof shall be eligible to participate in the Plan (each such employee, an
"Eligible Employee"). For purposes of this (S)4, "Subsidiary" or "subsidiary
corporation" shall have the definition set forth in (S)424(f) of the Code and
<PAGE>
rules and regulations thereunder. Notwithstanding any other provision of this
Plan to the contrary, no person who is otherwise an Eligible Employee shall be
granted an Option (as defined in (S)7, below) if:
(a) Such person, immediately after the grant of the Option,
would own stock possessing five percent or more of the total
combined voting power or value of all classes of stock of the
Company or its parent or any of its subsidiary corporations. For
purposes of this (S)4(a), such person's stock ownership shall be
determined by applying the rules of (S)424(d) of the Code and
shall include stock which would be owned if all of such person's
outstanding Options to purchase stock were exercised; or
(b) The grant of the Option would permit such person's rights to
purchase stock under all "employee stock purchase plans" (as
defined in (S)423 of the Code) of the Company and its parent and
subsidiary corporations to accrue at a rate which exceeds
$25,000 of fair market value of such stock (determined at the
time such Option is granted) for each calendar year in which
such Option is outstanding at any time. For purposes of this
(S)4(b): (i) the right to purchase stock under an Option accrues
when the right (or any portion thereof) first becomes
exercisable during the calendar year; (ii) the right to purchase
stock under an Option accrues at the rate provided in the
Option, but in no case may such rate exceed $25,000 of fair
market value of such stock (determined at the time such Option
is granted) for any one calendar year; and (iii) the right to
purchase stock which has accrued under one Option granted
pursuant to the Plan may not be carried over to any other
Option.
(S)5. Participation.
-------------
Each person who will be an Eligible Employee on the first day of an
Option Period (as defined below) may elect to participate in the Plan by
executing and delivering, at least 15 days prior to such day, a payroll
deduction authorization in accordance with (S)6, below (a "Deduction
Authorization"). Such person will thereby become a participant in the Plan (a
"Participant") as of the first day of such Option Period and will remain a
Participant until his or her participation is terminated as provided under the
Plan. An "Option Period" under the Plan shall be (a) the period beginning on the
closing date of an initial public offering of Shares pursuant to a registration
statement filed under the Securities Act of 1933, as amended, and ending on the
earlier of the June 30 or December 31 which next follows such closing date (the
"Initial Option Period"), and (b) following the Initial Option Period, each
successive six-month period of January 1 through June 30 and July 1 through
December 31 during which the Plan remains in effect.
(S)6. Payroll Deductions.
------------------
Each Participant shall, on his or her Deduction Authorization, request
withholding at a rate (in whole percentages) of not less than 2% nor more than
10% of his or her Compensation (as defined below), such withholding to be spread
substantially equally over the Option Period, provided that no more than $10,000
shall be withheld from any Participant's Compensation for any one Option Period.
For purposes of the Plan, "Compensation" shall mean all compensation paid to the
Participant by the Company or any Subsidiary and currently includible in his or
her income, including without limitation bonuses, commissions and other amounts
includible in the definition of compensation provided in the Treasury
Regulations promulgated under (S)415 of the Code, plus any amount that would be
so included but for the fact that it was contributed to a qualified plan
pursuant to an elective deferral under (S)401(k) of the Code, but not including
payments under stock option plans and other employee benefit plans or any other
amounts excluded from the definition of compensation provided in the Treasury
Regulations under (S)415 of the Code. A Participant may reduce the withholding
rate of his or her Deduction Authorization
<PAGE>
by one or more whole percentage points (but not to below 2%) at any time during
an Option Period by delivering written notice to the Company, such reduction to
take effect prospectively as soon as practicable following receipt of such
notice by the Company. A Participant may increase or reduce the withholding rate
of his or her Deduction Authorization for a future Option Period by written
notice delivered to the Company at least 15 days prior to the first day of the
Option Period with respect to which the change is to be effective. All amounts
withheld in accordance with a Participant's Deduction Authorization shall be
credited to a withholding account for such Participant.
(S)7. Grant of Options.
----------------
Each person who is a Participant on the first day of an Option Period
shall, as of such day, be granted an option to purchase Shares under the Plan
(an "Option") for such Option Period. Such Option shall be for the number of
whole Shares (not in excess of the Share Maximum (as defined below)) which shall
be determined by dividing (i) the balance in the Participant's withholding
account on the last day of the Option Period by (ii) the purchase price per
Share determined under (S)8, below. For purposes of the preceding sentence, the
Share Maximum with respect to any Option for any Option Period shall be the
largest number of Shares which, when multiplied by the Fair Market Value of a
Share at the beginning of the Option Period, produces the highest dollar amount
not exceeding $12,500. The number of Shares receivable by each Participant upon
exercise of his or her Option for an Option Period shall be reduced, on a
substantially proportionate basis, in the event that the number of Shares then
available under the Plan is otherwise insufficient.
(S)8. Purchase Price.
--------------
The purchase price of Shares subject to an Option shall be 85% of the
lesser of the Fair Market Value (as defined below) at the beginning of the
Option Period or the Fair Market Value at the end of the Option Period. For
purposes of the Plan, the first day of the Option Period shall be deemed to be
the date an Option is granted, and the last day of the Option Period shall be
deemed to be the date an Option is exercised.
The Fair Market Value of the Shares as of any given date shall be the
(i) last reported sale price on the New York Stock Exchange on the most recent
previous trading day, (ii) last reported sale price on the NASDAQ National
Market System on the most recent previous trading day, (iii) mean between the
high and low bid and ask prices, as reported by the National Association of
Securities Dealers, Inc. on the most recent previous trading day, or (iv) last
reported sale price on any other stock exchange on which the Shares are listed
on the most recent previous trading day, whichever is applicable.
(S)9. Exercise of Options.
-------------------
Each Employee who is a Participant in the Plan on the last day of an
Option Period shall be deemed to have exercised on the last day of the Option
Period the Option granted to him or her for that Option Period. Upon such
exercise, the balance of the Participant's withholding account shall be applied
to the purchase of the number of whole Shares determined under (S)7, above, and
as soon as practicable thereafter, at the Company's option, either (a)
certificates for such Shares shall be issued and delivered to the Participant,
or (b) a brokerage or other account maintained in such Participant's name under
the Plan shall be updated to reflect the issuance of such Shares to the
Participant. In the event that the balance in the Participant's withholding
account at the end of an Option Period is in excess of the total purchase price
of the Shares so issued, such balance shall be returned to the Participant;
provided that if such balance consists solely of an amount equal to the value of
a fractional Share, such balance shall be retained in the withholding account
and carried over to the next Option Period. The entire balance of the
<PAGE>
Participant's withholding account following the final Option Period shall be
returned to the Participant. No fractional Shares shall be issued hereunder.
(S)10. Interest.
--------
No interest shall be payable on withholding accounts.
(S)11. Cancellation and Withdrawal.
---------------------------
A Participant who holds an Option under the Plan may, by written notice
delivered to the Company at any time prior to exercise thereof under (S)9,
above, cancel such Option as to all (but not less than all) the Shares subject
or to be subject to such Option. Upon such cancellation, the balance in such
Participant's withholding account shall be returned to him or her.
A Participant may terminate his or her Deduction Authorization as of any
date by written notice delivered to the Company and shall thereby cease to be a
Participant as of such date. Any Participant who voluntarily terminates his or
her Deduction Authorization prior to the last business day of any Option Period
shall be deemed to have cancelled his or her Option.
Any Participant who cancels an Option or terminates his or her Deduction
Authorization may at any time thereafter again become a Participant in
accordance with (S)5, above.
(S)12. Termination of Employment.
-------------------------
Subject to (S)13, below, upon the termination of a Participant's service
with the Company and its Subsidiaries for any reason: (a) he shall cease to be a
Participant; (b) any Option held by such Participant under the Plan shall be
deemed cancelled; (c) the balance of his or her withholding account shall be
returned to him or her; and (d) he shall have no further rights under the Plan.
(S)13. Death of Participant.
--------------------
A participant may file a written designation of beneficiary (a
"Beneficiary Designation") specifying who is to receive any Shares and cash
credited to the Participant under the Plan in the event of the Participant's
death. In the Beneficiary Designation, the Participant shall elect either: (a)
to cancel his or her Option upon his or her death, as provided in (S)11, above,
or (b) to apply the balance of the Participant's withholding account at the time
of death to the exercise of his or her Option on the last day of the Option
Period, as provided in (S)9, above. In the absence of a valid election
otherwise, the death of a Participant shall be deemed to effect a cancellation
of his or her Option. A Beneficiary Designation and election may be changed by
the Participant at any time upon written notice received by the Company. In the
event of the death of a Participant and receipt by the Company of proof of the
identity and existence at the time of the Participant's death of a beneficiary
validly designated by him or her under the Plan, the Company shall deliver to
such beneficiary such Shares and cash to which the beneficiary is entitled under
the Plan. In the event of the death of a Participant and in the absence of a
beneficiary validly designated under the Plan who is living at the time of such
Participant's death, the Company shall deliver such Shares and cash to the
executor or administrator of the estate of the Participant, if the Company is
able to identify such executor or administrator. If the Company is unable to
identify such administrator or executor, the Company, in its sole discretion,
may deliver such Shares and cash to the spouse or to any one or more dependents
of the deceased Participant. No beneficiary shall, prior to the death of the
Participant by whom he has been designated, acquire any interest in any Shares
or cash credited to the Participant under the Plan.
<PAGE>
(S)14. Rights as Stockholder.
---------------------
No Participant, his or her validly designated beneficiary, or his or her
executor or administrator shall have any rights of a stockholder in the Company
with respect to the Shares subject to an Option unless and until, pursuant to
(S)9, above, either a certificate representing such Shares has been duly issued
and delivered to him or her or the brokerage or other account maintained in his
or her name under the Plan has been updated to reflect the issuance of such
Shares to him or her.
(S)15. Term and Termination of Plan.
----------------------------
The Plan shall terminate automatically following the end of the Option
Period ending December 31, 2007; provided that the Board may, in its discretion,
extend the Plan for one or more additional Option Periods. The Plan may be
earlier suspended or terminated by the Board, but no such suspension or
termination shall adversely affect the rights and privileges of holders of
outstanding Options. The Plan shall terminate in any case when all the Shares
reserved for issuance under the Plan have been purchased.
(S)16. Amendment of Plan.
-----------------
The Board may at any time, or from time to time, amend the Plan in any
respect; provided that without the approval of holders of stock entitled to
exercise a majority of the voting power of the Company no amendment may be made
(a) changing the aggregate number of Shares reserved for issuance under the Plan
or (b) changing the designation of employees eligible to participate in the
Plan. Any amendment requiring stockholder approval under this (S)16 shall be
submitted to the stockholders of the Company for approval as soon as practicable
after adoption of the amendment by the Board but in any event not later than 12
months after the adoption of the amendment. If such amendment is not approved by
the stockholders of the Company within 12 months before or after the adoption of
the amendment by the Board, such amendment shall become null and void and have
no further force or effect.
(S)17. Changes in Capital Structure.
----------------------------
In the event the Company changes its outstanding Shares after the
effective date of this Plan by reason of stock splits, stock dividends, or any
other increase or reduction of the number of outstanding Shares without
receiving consideration in the form of money, services, or property deemed
appropriate by the Board, in its sole discretion, the aggregate number of Shares
subject to the Plan shall be proportionately adjusted and the number of Shares
and the exercise price for each Share subject to any then-outstanding Option
shall be proportionately adjusted with the objective that the Participant's
proportionate interest in the Company shall remain the same as before the change
without any change in the total exercise price applicable to any
then-outstanding Options, as determined by the Committee in its sole discretion.
In the event of any other recapitalization or any merger, consolidation,
or other reorganization of the Company, the Board shall make such adjustment, if
any, as it may deem appropriate to accurately reflect the number and kind of
shares deliverable, and the exercise prices payable, upon subsequent exercise of
any then-outstanding Options, all as determined by the Board in its sole
discretion.
The Board's determination of the adjustments appropriate to be made
under this (S)17 shall be conclusive upon all Participants under the Plan.
(S)18. Application of Funds.
--------------------
<PAGE>
All funds received or held by the Company under the Plan may be used
for any corporate purpose until applied to the purchase of Shares or refunded to
Participants or both. At the Company's option, withholding accounts for
individual Participants shall not be segregated.
(S)19. Options Not Transferable.
------------------------
Options under the Plan shall not be transferable by a Participant other
than by will or the laws of descent and distribution and shall be exercisable
during the Participant's lifetime only by the Participant. Any payment of cash
or issuance of Shares under the Plan may be made only to the Participant or, in
the event of the Participant's death, to the Participant's estate or beneficiary
validly designated under (S)13, above.
(S)20. Governmental Regulations; Securities Law Restrictions.
-----------------------------------------------------
The Company's obligation to issue, sell, and deliver Shares under the
Plan shall be subject to the approval of any governmental authority required in
connection with the authorization, issuance, or sale of such Shares, including
without limitation any applicable tax withholding requirements.
No Option shall be exercisable and no Shares shall be delivered under
the Plan except in compliance with all applicable federal and state securities
laws and regulations. The Company may require each person acquiring Shares
pursuant to the exercise of an Option to represent and warrant to and agree with
the Company in writing that the person is acquiring the Shares without a view to
distribution thereof and to make such additional representations, warranties and
agreements as the Company may reasonably request.
All certificates for Shares or other securities delivered under the Plan
shall be subject to such stop-transfer orders and other restrictions as the
Company may deem advisable under the rules, regulations, and other requirements
of the Securities and Exchange Commission, any stock exchange upon which the
Shares are then listed, and any applicable federal or state securities laws, and
the Company may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions or applicable restrictions under
the Plan.
(S)21. Genders and Numbers.
--------------------
When permitted by the context, each pronoun used in this document
includes the same pronoun in other genders and numbers, and each noun used in
this document includes the same noun in other genders.
(S)22. Effective Date.
--------------
The Plan shall be effective December 1, 1997. The Plan shall be
submitted to the stockholders of the Company for approval as soon as practicable
after its adoption by the Board but in any event not later than 12 months after
its adoption by the Board. Notwithstanding anything to the contrary contained
herein, no rights to purchase Shares under the Plan shall be exercisable prior
to such approval. If the Plan is not approved by the stockholders of the Company
within 12 months before or after the adoption of the Plan by the Board, the Plan
and all Options granted under the Plan shall become null and void and have no
further force or effect.
(S)23. Savings Clause.
--------------
<PAGE>
In case any one or more of the provisions of this Plan shall be held
invalid, illegal, or unenforceable in any respect, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby, and the invalid, illegal, or unenforceable provision shall be
deemed null and void; however, to the extent permissible by law, any provision
which could be deemed null and void shall first be construed, interpreted, or
revised retroactively to permit this Plan to be construed so as to foster the
intent of this Plan. This Plan is intended to comply in all respects with
applicable law and regulation, including (S)423 of the Code and, with respect to
persons subject to (S)16 of the 1934 Act ("Reporting Persons"), Rule 16b-3 under
the 1934 Act. In case any one or more of the provisions of this Plan shall be
held to violate or be unenforceable in any respect under (S)423 or Rule 16b-3,
then, to the extent permissible by law, any provision which could be deemed to
violate or be unenforceable under (S)423 or Rule 16b-3 shall first be construed,
interpreted, or revised retroactively to permit the Plan to be in compliance
with (S)423 and Rule 16b-3.
<PAGE>
AMENDMENT NO. 1
TO
AMERICAN DENTAL PARTNERS, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
---------------------------------
The American Dental Partners, Inc. 1997 Employee Stock Purchase Plan
(the "Plan") is hereby amended pursuant to the following provisions:
1. Definitions
-----------
All capitalized terms used in this amendment which are not otherwise
defined herein shall have the respective meanings given such terms in the Plan.
2. Option Period
-------------
The third sentence of (S)5 of the Plan is hereby deleted in its entirety
and replaced with the following:
An "Option Period" under the Plan shall be (a) the period beginning on
the closing date of an initial public offering of Shares pursuant to a
registration statement filed under the Securities Act of 1933, as
amended, and ending on either the June 30 or December 31 which next
follows such closing date and which is not less than six calendar months
after such closing date (the "Initial Option Period"), and (b) following
the Initial Option Period, each successive six-month period of January 1
through June 30 and July 1 through December 31 during which the Plan
remains in effect.
3. Effective Date; Construction
----------------------------
The effective date of this amendment is February 27, 1998, and this
amendment shall be deemed to be a part of the Plan as of such date. In the event
of any inconsistencies between the provisions of the Plan and this amendment,
the provisions of this amendment shall control. Except as modified by this
amendment, the Plan shall continue in full force and effect without change.
<PAGE>
AMENDMENT NO. 2
TO
AMERICAN DENTAL PARTNERS, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
The American Dental Partners, Inc. 1997 Employee Stock Purchase Plan, as
previously amended by Amendment No. 1 dated February 27, 1998 (collectively, the
"Plan"), is hereby amended pursuant to the following provisions:
1. Definitions
-----------
All capitalized terms used in this amendment which are not otherwise
defined herein shall have the respective meanings given such terms in the Plan.
2. Shares Subject To Plan
----------------------
The maximum aggregate number of shares reserved and available for issuance
under the Plan, as provided in (S)3 of the Plan, is increased by 200,000 Shares
to a total of 400,000 Shares.
3. Effective Date; Construction
----------------------------
The effective date of this amendment is February 25, 2000, and this
amendment shall be deemed to be a part of the Plan as of such date. In the event
of any inconsistencies between the provisions of the Plan and this amendment,
the provisions of this amendment shall control. Except as modified by this
amendment, the Plan shall continue in full force and effect without change.
This amendment shall be submitted to the stockholders of the Company for
approval as soon as reasonably practicable, but in any event not later than 12
months after the date of this amendment. Notwithstanding the preceding paragraph
or any other provisions of this amendment to the contrary, if this amendment is
not approved by the stockholders of the Company within such 12-month period,
this amendment shall automatically become null and void and have no further
force or effect.
<PAGE>
ADP49 8
DETACH HERE
PROXY
AMERICAN DENTAL PARTNERS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints Ron Levenson and Lee Feldman, and each of
them, attorneys and proxies of the undersigned, with full power of substitution,
to attend the annual meeting of shareholders of American Dental Partners, Inc.
to be held at the offices of Summit Partners located at 600 Atlantic Avenue,
Suite 2800, Boston, Massachusetts 02210, on Friday, May 12, 2000, at 10:00 a.m.,
local time, or any adjournment thereof, and to vote the number of shares of the
Company which the undersigned would be entitled to vote, and with all the power
the undersigned would possess if personally present.
- ----------- -----------
SEE REVERSE SEE REVERSE
SIDE SIDE
- ----------- CONTINUED AND TO BE SIGNED ON REVERSE SIDE -----------
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
c/o EquiServe
P.O. Box 9398
Boston, MA 02205-9398
ADP49 A
DETACH HERE
- --- Please mark
X votes as in
- --- this example.
The Proxies will vote as specified below, or if a choice is not specified, they
will vote FOR the nominees listed in Item 1 and FOR Item 2.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
------- ------- -------
<S> <C> <C> <C> <C>
1. Election of Class III Directors, each 2. Proposal to amend the American
to serve a term of three years expiring Dental Partners, Inc. 1997 Employee ------- ------- -------
in 2003 and until his successor has Stock Purchase Plan to increase by
been duly elected and qualified. 200,000 shares the total number of
shares of common stock available
Nominees: (01) Derril W. Reeves and for issuance thereunder.
(02) Gregory A. Serrao
3. On such other business as may properly
-------- --------- come before the meeting.
FOR WITHHELD
-------- -------- ------
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
- ------- ------
- ------- ---------------------------- (Please sign exactly as your name or names
For both nominees except as appear hereon, indicating where proper, official
noted above position or representative capacity.)
Signature: Date: Signature: Date:
----------------- ------ ----------------- ------
</TABLE>
