Exhibit 10.2
EXECUTIVE STOCK AGREEMENT
THIS EXECUTIVE STOCK AGREEMENT (this "Agreement") is made as of
<>, by and between CompBenefits Corporation, a Delaware corporation (the
"Company"), and <> (the "Executive"). Capitalized terms used but not
otherwise defined herein are defined in Section 7 hereof.
WHEREAS, pursuant to the Company's 1999 Securities Purchase Plan (the
"Plan"), the Executive desires to purchase, and the Company desires to issue
<> shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock") on the terms and subject to the conditions contained in this
Agreement. All of such shares of Common Stock are referred to herein as the
"Executive Stock."
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Purchase and Sale of the Executive Stock.
(a) Pursuant to the Plan, upon execution of this Agreement, the
Executive will purchase, and the Company will issue and sell <> shares
of Common Stock, at a price of $<> per share. The Company will
deliver to the Executive copies of the certificates representing the Executive
Stock, and the Executive will deliver to the Company a <>
$<><> <>.
(b) In connection with the purchase and sale of Executive Stock
hereunder, the Executive represents and warrants to the Company that:
(i) The Executive Stock to be acquired by the Executive pursuant
to this Agreement will be acquired for the Executive's own account and not
with a view to, or intention of, distribution thereof in violation of the
Securities Act of 1933, as amended from time to time (the "Securities
Act"), or any applicable state securities laws, and the Executive Stock
will not be disposed of in contravention of the Securities Act or any
applicable state securities laws.
(ii) The Executive is sophisticated in financial matters and is
able to evaluate the risks and benefits of the investment in the Executive
Stock.
(iii) The Executive is able to bear the economic risk of his
investment in the Executive Stock for an indefinite period of time because
the Executive Stock has not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available.
(iv) The Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of the
Executive Stock and has had full access to such other information
concerning the Company as he has requested.
(v) This Agreement constitutes the legal, valid and binding
obligation of the Executive, enforceable in accordance with its terms, and
the execution, delivery and performance of this Agreement by the Executive
does not and will not conflict with, violate or cause a breach of any
agreement, contract or instrument to which the Executive is a party or any
judgment, order or decree to which the Executive is subject.
(c) Within 30 days after the Executive purchases any Executive Stock
from the Company, the Executive will make an effective election with the
Internal Revenue Service under Section 83(b) of the Internal Revenue Code and
the regulations promulgated thereunder in the form of Annex A attached hereto.
(d) Concurrently with the execution of this Agreement, (i) the
Executive will execute in blank stock transfer powers in the form of Annex B
attached hereto (the "Stock Powers") with respect to the Executive Stock and
shall deliver such Stock Powers to the Company. The Stock Powers shall authorize
the Company to assign, transfer and deliver the securities subject to such Stock
Powers to an acquiror in the event the Repurchase Option (as defined below) is
exercised and under no other circumstances, and (ii) the Executive's spouse
shall execute the consent in the form of Annex C attached hereto.
2. Vesting of Executive Stock.
(a) Except as otherwise provided in Sections 2(b), 2(c) and 2(d)
below, the Executive Stock purchased hereunder will become vested in accordance
with the schedule set forth on Annex D attached hereto.
(b) If the Executive ceases to be employed by the Company and its
Subsidiaries on a date other than an anniversary date of the date of this
Agreement prior to the fifth anniversary of the date of this Agreement, the
cumulative percentage of Executive Stock to become vested will be determined on
a pro rata basis according to the number of days elapsed since the prior
anniversary date.
(c) Upon the occurrence of a Sale of the Company, if as of such date
the Executive is still employed by the Company or any of its Subsidiaries, all
shares of Executive Stock which have not yet become vested shall become vested
at the time of such event.
(d) Any shares of Executive Stock which have not been designated as
subject to repurchase pursuant to a Repurchase Notice or Supplemental Repurchase
Notice on the date which is six months and one day following the Termination and
which have not yet become vested shall become vested on such date.
2
Shares of Executive Stock which have become vested pursuant to Sections 2(a),
2(b), 2(c) or 2(d) above are referred to herein as "Vested Shares," and all
other shares of Executive Stock are referred to herein as "Unvested Shares."
3. Repurchase Option.
(a) In the event the Executive ceases to be employed by the Company
and its Subsidiaries for any reason (the "Termination"), the Executive Stock
(whether held by the Executive or one or more of the Executive's transferees,
other than the Company) will be subject to repurchase by the Company and the
Significant Stockholders pursuant to the terms and conditions set forth in this
Section 3 (the "Repurchase Option"); provided that, notwithstanding anything
herein to the contrary, in the event the Termination occurs as a result of (i)
the Company's termination of the Executive's employment with the Company without
Cause, (ii) the Executive's resignation from his employment with the Company for
Good Reason, or (iii) the Executive's death or Disability, then the Repurchase
Option shall only apply with respect to the Unvested Shares and shall not apply
with respect to any Vested Shares.
(b) In the event of Termination, (i) the purchase price for each
Unvested Share will be the Executive's Original Cost for such share, and (ii)
subject to the proviso in Section 3(a) above, the purchase price for each Vested
Share will be the Fair Market Value for such share; provided, however, that if
the Executive's employment is terminated by the Company with Cause, the purchase
price for each Vested Share will be the Executive's Original Cost for such
share.
(c) The Company's board of directors (the "Board") may elect to
purchase all or any portion of any class of the Unvested Shares and the Vested
Shares by delivering written notice (the "Repurchase Notice") to the holder or
holders of the Executive Stock within six months after the Termination. The
Repurchase Notice will set forth the number of Unvested Shares and Vested Shares
to be acquired from each holder, the aggregate consideration to be paid for such
shares and the time and place for the closing of the transaction. If for any
reason the Company does not elect to purchase all of the Executive Stock
pursuant to the Repurchase Option, the Significant Stockholders shall be
entitled to exercise the Repurchase Option for the shares of Executive Stock the
Company has not elected to purchase (the "Available Shares"). As soon as
practicable after the Company has determined that there will be Available
Shares, but in any event within six months after the Termination, the Company
shall give written notice (the "Option Notice") to each Significant Stockholder
setting forth the number of Available Shares and the purchase price for the
Available Shares. Each Significant Stockholder may elect to purchase any or all
of the Available Shares by giving written notice to the Company within 30 days
after the Option Notice has been given to them by the Company. If more than one
Significant Stockholder elects to purchase the Available Shares, the Available
Shares will be allocated among such electing stockholders pro rata according to
the number of Common Stockholder Shares (as defined in the Stockholders
Agreement) owned by each such electing stockholder. As soon as practicable, and
in any event within ten days, after the expiration of the 30-day period set
forth above, the Company shall notify each holder of Executive Stock as to the
number of shares being purchased from such holder by the Significant
Stockholders (the "Supplemental Repurchase Notice"). At the time the Company
delivers the Supplemental Repurchase Notice to the holder(s) of Executive Stock,
the Company shall also deliver written notice to each Significant Stockholder
setting forth the number of shares such Significant Stockholder is
3
entitled to purchase, the aggregate purchase price and the time and place of the
closing of the transaction.
(d) The closing of the purchase of the Executive Stock pursuant to the
Repurchase Option shall take place on the date designated by the Company in the
Repurchase Notice or Supplemental Repurchase Notice, which date shall not be
more than one month nor less than five days after the delivery of the later of
either such notice to be delivered. The Company will pay for the Executive Stock
to be purchased by it pursuant to the Repurchase Option first by offsetting
amounts outstanding under any bona fide debts owed by the Executive to the
Company relating to the purchase of the Executive Stock and second by delivery
of a check or wire transfer of funds in an amount equal to the balance of the
purchase price for such shares; provided that if such payment (or the related
dividend of funds from one or more of the Company's Subsidiaries to the Company,
as the case may be) would (i) cause the Company or such Subsidiary to violate
applicable law, (ii) cause the Company or such Subsidiary to breach any
agreement to which it is a party relating to the indebtedness for borrowed money
or any other material agreement, or (iii) otherwise be imprudent in view of the
financial condition of the Company or such Subsidiary (clauses (i), (ii), and
(iii) are collectively referred to herein as the "Reasons for Deferral"), then
the Company shall have the right to pay such amount as soon as no Reason for
Deferral exists so long as the Company also pays interest at the prime rate (as
published in The Wall Street Journal on the date of Termination) plus 2% for the
deferral period at the time when such payment is made. Each Significant
Stockholder will pay for the Executive Stock to be purchased by it pursuant to
the Repurchase Option by delivery of a check or wire transfer of funds in the
aggregate amount of the purchase price for such shares.] The Company [and the
Significant Stockholders will be entitled to receive customary representations
and warranties from the sellers as to good title and to require all sellers'
signatures be guaranteed.
(e) The right of the Company and the Significant Stockholders to
repurchase Vested Shares pursuant to this Section 3 shall terminate upon the
first to occur of the Sale of the Company or a Qualified Public Offering.
4. Legend. The certificates representing the Executive Stock shall
bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER
AGREEMENTS SET FORTH IN AN EXECUTIVE STOCK AGREEMENT BETWEEN THE
COMPANY AND THE INITIAL HOLDER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE, DATED AS OF <>, AS AMENDED AND MODIFIED FROM
TIME TO TIME. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER
HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE."
4
The Company shall imprint such legend on certificates evidencing Executive Stock
outstanding as of the date hereof. The legend set forth above shall be removed
from the certificates evidencing any shares which cease to be Executive Stock in
accordance with Section 7 below.
5. Non-Disclosure and Use of Proprietary Information. The Executive
recognizes and acknowledges that the Company's Proprietary Information (as
defined below), as they may exist from time-to-time, are valuable, special and
unique assets of the Company. The Executive further acknowledges that access to
such Proprietary Information of the Company is essential to the performance of
the Executive's duties as an employee of the Company. Therefore, in order to
obtain access to such Proprietary Information, the Executive agrees that the
Executive will not, in whole or in part, disclose such Proprietary Information
to any person, firm, corporation, association or any other entity for any reason
or purpose whatsoever, nor will the Executive make use of any such information
for the Executive's own purposes or for the benefit of any person, firm,
corporation, association or other entity (except the Company). For purposes of
this Agreement, the term "Proprietary Information" means information that is not
generally known to the public and that is used, developed or obtained by the
Company in connection with its business, including but not limited to (i)
products or services, (ii) fees, costs and pricing structures, (iii) designs,
(iv) analysis, (v) drawings, photographs and reports, (vi) computer software,
including operating systems, applications and program listings, (vii) flow
charts, manuals and documentation, (viii) data bases, (ix) accounting and
business methods, (x) inventions, devices, new developments, methods and
processes, whether patentable or unpatentable and whether or not reduced to
practice, (xi) customers and clients and customer or client lists, (xii)
copyrightable works, (xiii) all technology and trade secrets, and (xiv) all
similar and related information in whatever form. These restrictions will not
apply to any Proprietary Information which: (A) is in the public domain,
provided that the Executive was not responsible, directly or indirectly, for
such Proprietary Information entering the public domain without the Company's
consent; (B) becomes known to the Executive, during the term of this Agreement,
from a third party not known to the Executive to be under a confidential
relationship with the Company; or (C) is required by law or governmental
tribunal to be disclosed; provided, however, that if the Executive is legally
compelled to disclose any Proprietary Information, the Executive will provide
the Company with prompt written notice of such legal compulsion so that the
Company may seek a protective order or other available remedy.
5
6. Non-Competition Covenant.
(a) Basic Covenant. During the term of this Agreement and continuing
until the first anniversary of the date of termination of the Executive's
employment with the Company for any reason (the "Restricted Period"), the
Executive will not, directly or indirectly, on the Executive's own behalf or in
the service of or on behalf of any other individual or entity, compete with the
Company in the business of providing full-service dental benefits and offering
network-based dental care, reduced fee-for-service, third party administration
and dental practice management (the "Business") within the Geographical Area (as
hereinafter defined). The term "compete" means to engage, directly or
indirectly, on the Executive's own behalf or in the service of or on behalf of
any other individual or entity, either as a proprietor, employee, agent,
independent contractor, consultant, director, officer, partner or stockholder
(other than a stockholder of a corporation listed on a national securities
exchange or whose stock is regularly traded in the over-the-counter market,
provided that the Executive at no time owns, directly or indirectly, in excess
of five percent of the outstanding stock of any class of any such corporation
and does not participate in its management) in providing management, executive,
marketing or other services. For purposes of this Agreement, the term
"Geographical Area" means those areas in the United States and in foreign
countries in which the Executive or the Company is or has engaged in providing
or marketing Business products or services at any time prior to the termination
of employment. The Geographical Area currently includes Alabama, Arizona,
Arkansas, Colorado, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky,
Louisiana, Maryland, Mississippi, Missouri, North Carolina, Ohio, Oklahoma,
Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia.
(b) Non-Interference. During the Restricted Period, the Executive will
not, directly or indirectly, on the Executive's own behalf or in the service of
or on behalf of any other individual or entity, interfere with, disrupt, or
attempt to disrupt the past, present or prospective relationships, contractual
or otherwise, between the Company and any supplier, consultant, or client of the
Company. The term "prospective relationship" is defined as any relationship
where the Company has actively sought an individual or entity as a prospective
supplier, consultant, or client.
(c) Construction. The parties hereto agree that any judicial authority
construing all or any portion of this Section 6 will be empowered to sever any
portion of the Geographical Area, Business or time period, client base,
prospective relationship or prospect list or any prohibited business activity
from the coverage of such Section and to apply the provisions of such Section to
the remaining portion of the Geographical Area, Business or time period, the
client base or the prospective relationship or prospect list, or the remaining
business activities not so severed by such judicial authority. In addition, it
is the intent of the parties that the judicial authority replace each such
severed provision with a provision as similar in terms to such severed provision
as may be possible and be legal, valid and enforceable. It is the intent of the
parties that this Section 6 be enforced to the maximum extent permitted by law.
In the event that any provision of either such Section is determined not to be
specifically enforceable, the Company shall nevertheless be entitled to bring an
action to seek to recover monetary damages as a result of the breach of such
provision by the Executive.
(d) Non-Solicitation of the Executives Covenant. The Executive further
agrees and represents that during the Restricted Period, the Executive will not,
directly or indirectly, on the
6
Executive's own behalf or in the service of, or on behalf of any other
individual or entity, (i) divert or solicit, or attempt to divert or solicit, to
or for any individual or entity which is engaged in providing Business services,
or (ii) otherwise hire or engage, any person employed by the Company who was
employed by the Company at any time during the Restricted Period, whether or not
such employee is a full-time employee or temporary employee of the Company
whether or not such employee is employed pursuant to a written agreement and
whether or not such employee is employed for a determined period or at-will,
unless such person has not been employed by the Company for a period of at least
180 days, and except as otherwise agreed to by the Company.
(e) Return of Confidential Information. The Executive acknowledges
that as a result of the Executive's employment with the Company, the Executive
may come into the possession and control of Proprietary Information, such as
proprietary documents, drawings, specifications, manuals, notes, computer
programs, or other proprietary material. The Executive acknowledges, warrants
and agrees that the Executive will return to the Company all such items and any
copies or excerpts thereof, and any other properties, client lists, client
contracts, files or documents obtained as a result of the Executive's employment
with the Company, immediately upon the termination of the Executive's employment
with the Company.
7. Definitions.
"Cause" means the occurrence of any of the following: (i) the
Executive materially breaches any of the terms or conditions set forth in this
Agreement or any employment agreement with the Company to which the Executive is
a party and fails to cure such breach within twenty (20) days after the
Executive's receipt from the Company of written notice of such breach, which
notice shall describe in reasonable detail the basis for the Company's belief
that the Executive is in such breach; (ii) the Executive commits any act in bad
faith materially detrimental to the business or reputation of the Company; or
(iii) the Executive is convicted of (or admits in writing to the commission of)
any crime involving fraud, deceit or moral turpitude or the Executive
intentionally engages in dishonest or illegal activities that have a material
adverse effect upon the business or reputation of the Company.
"Disability" means the Executive is mentally or physically
incapacitated or disabled so as to be unable to perform his duties to the
Company if and to the extent he becomes permanently disabled under the Company's
long-term disability policy then in effect, as determined by the Board in good
faith.
"Executive Stock" shall continue to be Executive Stock in the hands of
any holder other than the Executive (except for the Company and the Significant
Stockholders and except for transferees in a Public Sale (it being understood
that Unvested Shares cannot be transferred in a Public Sale)), and except as
otherwise provided herein, each such other holder of Executive Stock shall
succeed to all rights and obligations attributable to the Executive as a holder
of Executive Stock hereunder. Executive Stock shall also include shares of the
Company's capital stock issued with respect to Executive Stock by way of a stock
split, stock dividend or other recapitalization.
"Fair Market Value" of any share of Executive Stock means the
composite closing price of the sales of such class of stock on the securities
exchanges on which such stock may at the
7
time be listed (as reported in The Wall Street Journal), or, if there have been
no sales on any such exchange on any day, the average of the highest bid and
lowest asked prices on all such exchanges at the end of such day, or, if such
class of stock is not so listed, the closing price (or last price, if
applicable) of sales of such class of stock on The Nasdaq Stock Market (as
reported in The Wall Street Journal), or, if such class of stock is not quoted
in The Nasdaq Stock Market but is traded over-the-counter, the average of the
highest bid and lowest asked prices on such day in the over-the-counter market
as reported by the National Quotation Bureau Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which the Fair Market Value is being determined and
the 20 consecutive business days before such day. If at any time such class of
Executive Stock is not listed on any securities exchange, quoted in The Nasdaq
Stock Market, or quoted in the over-the-counter market, the "Fair Market Value"
of such class of stock shall mean the fair market value of such class of stock,
as between a willing buyer and a willing seller, taking into account all
relevant factors determinative of value (including the lack of liquidity of such
stock due to the Company's status as a privately held corporation, but without
regard to any discounts for minority interests), using valuation techniques then
prevailing in the securities industry (e.g., discounted cash flows, and/or
comparable companies) and assuming full disclosure of all relevant information
and a reasonable period of time for effectuating such sale, as determined by the
Board in good faith. Regardless of when a transaction based on a Fair Market
Value valuation is executed, Fair Market Value shall be determined as of the
date of the Termination of the Executive's employment.
"Good Reason" means the occurrence of any of the following: (i) the
Company materially breaches any of the terms or conditions set forth in this
Agreement or any employment agreement with the Company to which the Executive is
a party and fails to cure its breach within twenty (20) days after its receipt
from the Executive of written notice of such breach, which notice describes in
reasonable detail the Executive's belief that the Company is in such breach;
(ii) the Company materially diminishes the Executive's duties or reassigns the
Executive to a position not consistent with the Executive's general area of
knowledge, experience and skills, or assigns substantial additional
responsibilities to the Executive; (iii) the Company reduces the Executive's
base salary; (iv) the Company relocates the Executive's principal place of
employment to more than 35 miles from the Executive's then current principal
place of employment; or (v) the Company materially increases the Executive's
travel obligations.
"Original Cost" of each share of Common Stock purchased hereunder
shall be equal to $<> (as proportionately adjusted for all
subsequent stock splits, stock dividends and other recapitalizations).
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Qualified Public Offering" means the sale, in an underwritten public
offering registered under the Securities Act, of shares of the Company's Common
Stock having an offering price to the public of not less than $25.0 million.
8
"Sale of the Company" means (i) any sale, transfer or issuance or
series of sales, transfers and/or issuances of capital stock of the Company by
the Company or any holders thereof which results in any Person or group of
Persons (as the term "group" is used under the Securities Exchange Act of 1934,
as amended), other than Persons who are stockholders of the Company as of
immediately after the Merger, owning capital stock of the Company possessing the
voting power (under ordinary circumstances) to elect a majority of the Board,
and (ii) any sale or transfer of all or substantially all of the assets of the
Company and its Subsidiaries.
"Significant Stockholders" has the meaning accorded to such term in
the Stockholders Agreement.
"Stockholders Agreement" means the Stockholders Agreement, dated as of
June 17, 1999, by and among the Company, Golder, Thoma, Xxxxxxx, Xxxxxx Fund V,
L.P., GTCR Associates V, TA/Advent VIII L.P., Advent Atlantic and Pacific III,
TA Executives Fund LLC, TA Investors LLC, Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxx, and
others, as amended, modified and supplemented from time to time.
"Subsidiary" or "Subsidiaries" means, with respect to any Person, any
corporation, limited liability company, partnership, association, or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers, or trustees thereof
is at the time owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of such Person or a combination thereof,
or (ii) if a limited liability company, partnership, association, or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of such Person or entity or a combination
thereof. For purposes hereof, a Person or Persons shall be deemed to have a
majority ownership interest in a limited liability company, partnership,
association, or other business entity if such Person or Persons shall be
allocated a majority of limited liability company, partnership, association, or
other business entity gains or losses or shall be or control any managing
director or general partner of such limited liability company, partnership,
association, or other business entity.
8. General Provisions.
(a) Transfers in Violation of Agreement. Any transfer or attempted
transfer of any Executive Stock in violation of any provision of this Agreement
shall be void, and the Company shall not record such transfer on its books or
treat any purported transferee of such Executive Stock as the owner of such
stock for any purpose.
(b) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company, the
Executive and the Significant Stockholders.
(c) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law
9
or rule in any jurisdiction, such invalidity, illegality or unenforceability
will not affect any other provision or any other jurisdiction, but this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been contained
herein.
(d) Entire Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
(e) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Executive, the Company, the Significant Stockholders and their respective
successors and assigns (including subsequent holders of Executive Stock);
provided that the rights and obligations of the Executive under this Agreement
shall not be assignable except in connection with a permitted transfer of the
Executive Stock hereunder.
(f) Third-Party Beneficiaries. Certain provisions of this Agreement
are entered into for the benefit of and shall be enforceable by the Significant
Stockholders as provided herein.
(g) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(h) Remedies. Each of the parties to this Agreement (and the
Significant Stockholders) will be entitled to enforce its rights under this
Agreement specifically, to recover damages and costs (including attorney's fees)
caused by any breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction (without posting any
bond or deposit) for specific performance and/or other injunctive relief in
order to enforce or prevent any violations of the provisions of this Agreement.
(i) Notices. Any notice provided for in this Agreement shall be in
writing and shall be either (i) personally delivered, (ii) sent by registered or
certified mail (return receipt requested and postage prepaid), (iii) sent by
reputable overnight courier service (charges prepaid), or (iv) sent by
facsimile, in each case, to the recipient at the address set forth below. Any
Person may change its address for purposes of this Agreement by providing prior
notice of such change to the other parties hereto in accordance with this
Section. Notices will be deemed to have been given hereunder (i) when delivered
personally, (ii) three days after being mailed, (iii) one day after deposit with
a reputable overnight courier service, or (iv) in the cases of notices sent by
facsimile, when receipt is electronically acknowledged.
10
If to the Company:
CompBenefits Corporation
000 Xxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
with copies to:
Golder, Thoma, Cressey, Rauner, Inc.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
TA Associates, Inc.
Xxxx Xxxxxx Xxxxx, Xxxxx 0000
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Perl
Facsimile: (000) 000-0000
If to the Executive:
<>
<>
<>
(j) Governing Law. All questions concerning the construction, validity
and interpretation of this Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware, without giving
effect to any choice of law or other conflict of law provision or rule (whether
of the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
(k) No Strict Construction. The language used in this Agreement shall
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party.
11
(l) Business Days. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or legal holiday
in the state in which the Company's chief executive office is located, the time
period shall automatically be extended to the business day immediately following
such Saturday, Sunday or legal holiday.
(m) Construction. Whenever the context requires, each term stated in
either the singular or the plural shall include the singular and the plural, and
pronouns stated in either the masculine, the feminine or the neuter gender shall
include the masculine, feminine and neuter. All references to Sections and
Paragraphs refer to sections and paragraphs of this Agreement. The use of the
word "including" in this Agreement shall be by way of example rather than
limitation.
(n) Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
(o) Stock Issued in Accordance with the Plan. The issuance of
Executive Stock under this Agreement is pursuant to and subject to all of the
terms and conditions of the Plan.
* * * * *
12
IN WITNESS WHEREOF, the parties hereto have executed this Executive Stock
Agreement on the date first written above.
COMPBENEFITS CORPORATION
By:
------------------------------------
Its:
-----------------------------------
----------------------------------------
<>
13
ANNEX A
<>
ELECTION TO INCLUDE STOCK IN GROSS
INCOME PURSUANT TO SECTION 83(B) OF THE
INTERNAL REVENUE CODE
The undersigned purchased shares of Common Stock, par value $.01 per
share (the "Shares"), of CompBenefits Corporation, Inc., a Delaware corporation
(the "COMPANY") on <>.
Under certain circumstances, the Company has the right to repurchase
certain of the Shares at cost from the undersigned (or from the holder of the
Shares, if different from the undersigned) should the undersigned cease to be
employed by the Company and its subsidiaries or upon certain other events.
Hence, the Shares are subject to a substantial risk of forfeiture and are
non-transferable. The undersigned desires to make an election to have the Shares
taxed under the provision of Code ??83(b) at the time he purchased the Shares.
Therefore, pursuant to Code ??83(b) and Treasury Regulation ??1.83-2
promulgated thereunder, the undersigned hereby makes an election, with respect
to the Shares (described below), to report as taxable income for calendar year
<> the excess (if any) of the Shares' fair market value on <> over
purchase price thereof.
The following information is supplied in accordance with Treasury
Regulation ??1.83-2(e):
1. The name, address and social security number of the undersigned:
<>
<>
<>
Social Security Number: <>
2. A description of the property with respect to which the election is
being made: <> shares of Common Stock, par value $.01 per share, of the
Company.
3. The date on which the property was transferred: <>. The
taxable year for which such election is made: calendar <>.
4. The restrictions to which the property is subject: If during the
first five years after the closing the undersigned ceases to be employed by the
Company or any of its subsidiaries for any reason, the unvested portion of the
Shares will be subject to repurchase by the Company at cost. The Shares will
become vested on a daily basis over the five year period following the closing;
provided that all of the Shares will become vested upon a sale of the Company.
5. The fair market value on <> of the property with respect to
which the election is being made, determined without regard to any lapse
restrictions: $<> per share of Common Stock.
6. The amount paid for such property: $<> per share of
Common Stock.
A copy of this election has been furnished to the Secretary of the
Company pursuant to Treasury Regulations ??1.83-2(e)(7).
Dated: <> ----------------------------------------
<>
ANNEX B
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, <> does hereby sell, assign and transfer
unto ________________________, _______________ shares of the Common Stock, par
value $.01 per share, of CompBenefits Corporation, a Delaware corporation (the
"Corporation"), standing in the undersigned's name on the books of the
Corporation represented by Certificate Nos. ________ herewith and does hereby
irrevocably constitute and appoint each officer of each of the Corporation,
Golder, Thoma, Cressey, Rauner, Inc. and TA Associates, Inc. (acting alone or
with one or more other such officers) as attorney to transfer the said stock on
the books of the Corporation with full power of substitution in the premises.
Dated
------------------------------- ----------------------------------------
<>
ANNEX C
SPOUSAL CONSENT
The undersigned spouse of the Executive hereby acknowledges that I
have read the foregoing Executive Stock Agreement and that certain Pledge
Agreement and Stockholders Agreement referred to therein, each executed by the
Executive and dated as of the date hereof, and that I understand their contents.
I am aware that the foregoing Executive Stock Agreement, Pledge Agreement and
Stockholders Agreement provide for the repurchase of my spouse's securities
under certain circumstances and impose other restrictions on the transfer of
such securities. I agree that my spouse's interest in these securities is
subject to these agreements and any interest I may have in such securities shall
be irrevocably bound by these agreements and further that my community property
interest, if any, shall be similarly bound by these agreements.
----------------------------------------
Spouse
----------------------------------------
Witness
ANNEX D
VESTING SCHEDULE
Reference is made to the Executive Stock Agreement (the "Agreement"),
dated as of <>, by and between CompBenefits Corporation, a Delaware
corporation and <>. Capitalized terms used in this Annex shall have the
meanings accorded to such terms in the Agreement.
Executive Stock purchased by the Executive pursuant to the Agreement
will become vested in accordance with the following schedule but only for so
long as the Executive is still employed by the Company or any of its
Subsidiaries:
Cumulative Percentage of
Date Common Stock to be Vested
---- -------------------------
First Anniversary of the date of the Agreement 20%
Second Anniversary of the date of the Agreement 40%
Third Anniversary of the date of the Agreement 60%
Fourth Anniversary of the date of the Agreement 80%
Fifth Anniversary of the date of the Agreement 100%
On any date prior to the Termination, the cumulative percentage of Executive
Stock which is vested as of such date shall be determined on a pro rata basis
according to the number of days elapsed since the prior anniversary date.
Accepted and Agreed:
COMPBENEFITS CORPORATION
By:
------------------------------------
Its:
-----------------------------------
----------------------------------------
<>
EXHIBIT A
PROMISSORY NOTE
$<> <>
For value received, <> (the "Executive") promises to pay to the
order of CompBenefits Corporation, a Delaware corporation (the "Company") at its
corporate headquarters, or such other place as designated in writing by the
holder hereof, the aggregate principal sum of $<>. This Note is a
full recourse note and was issued pursuant to and is subject to the terms of the
Executive Stock Agreement, dated as of <>, by and between the Company and
the Executive. The amounts due under this Note are secured by a pledge of all
securities of the Company and CompBenefits issued to the Executive.
1. Calculation of Interest. Interest shall accrue hereunder on a daily
basis at a rate equal to the lesser of (i) 8.25% per annum or (ii) the highest
rate permitted by applicable law, on the sum of (a) the unpaid principal amount
of this Note then outstanding and (b) all interest which was accrued and unpaid
as of the immediately preceding anniversary of this Note. Any accrued interest
which for any reason has not theretofore been paid shall be paid in full on the
date on which the final principal payment on this Note is made.
2. Payment of Principal and Interest.
(a) Demand Payments. The Executive shall pay all or any portion of the
outstanding principal amount of, and accrued interest on, this Note within six
months following demand by the holder hereof.
(b) Optional Prepayments. The Executive may, at any time and from time
to time without premium or penalty, prepay all or any portion of the outstanding
principal amount of, and accrued interest on, this Note.
(c) Mandatory Prepayments. The Executive shall prepay a portion of
this Note equal to the amount of all cash proceeds the Executive receives in
connection with his ownership, disposition, transfer or sale of his securities
of the Company including, without limitation, distributions and sale proceeds,
as and when the Executive receives such cash proceeds.
(c) Application of Payments. Payments under this Note shall be applied
(i) first to the payment of accrued interest hereunder until all such interest
is paid and (ii) second, to the repayment of the principal outstanding
hereunder.
3. Collection Costs. In the event the Executive fails to pay any
amounts due hereunder when due, the Executive shall pay to the holder hereof, in
addition to such amounts due, all costs of collection, including reasonable
attorneys fees.
4. Waiver. The Executive, or his successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and nonpayment of this Note, and expressly agrees that this Note, or
any payment hereunder, may be extended from time to time and that the holder
hereof may accept security for this Note or release security for this Note, all
without in any way affecting the liability of the Executive hereunder.
5. Governing Law. This Note shall be governed by the internal laws,
not the laws of conflicts, of the State of Delaware.
IN WITNESS WHEREOF, this Promissory Note has been executed as of the
date first above written.
----------------------------------------
<>
EXHIBIT B
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT is made as of <>, by and between <>
("Pledgor"), and CompBenefits Corporation, a Delaware corporation (the
"Company").
WHEREAS, the Company and Pledgor are parties to an Executive Stock
Agreement, dated as of the date hereof (the "Purchase Agreement"), pursuant to
which Pledgor purchased <> shares of the Company's Common Stock, $.01
par value for an aggregate purchase price of $<><>.
WHEREAS, the Company has allowed Pledgor to purchase a portion of the
Pledged Securities by delivery to the Company of a promissory note (the "Note")
in the aggregate principal amount of $<>.
WHEREAS, this Pledge Agreement provides the terms and conditions upon
which the Note is secured by a pledge to the Company of the Executive Stock (as
defined in the Purchase Agreement and hereinafter referred to as the "Pledged
Securities").
NOW, THEREFORE, in consideration of the premises contained herein and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Company to accept the Note as
partial payment for the Pledged Securities, Pledgor and the Company hereby agree
as follows:
1. Pledge. Pledgor hereby pledges to the Company, and grants to the
Company a security interest in, the Pledged Securities as security for the
prompt and complete payment when due of the unpaid principal of and interest on
the Note and full payment and performance of the obligations and liabilities of
Pledgor hereunder.
2. Delivery of Pledged Securities. Upon the execution of this Pledge
Agreement, Pledgor shall deliver to the Company the certificate(s) representing
the Pledged Securities, together with duly executed forms of assignment
sufficient to transfer title thereto to the Company.
3. Voting Rights; Cash Dividends and Interest. Notwithstanding
anything to the contrary contained herein, during the term of this Pledge
Agreement until such time as there exists a default in the payment of principal
or interest on the Note or any other default under the Note or hereunder,
Pledgor shall be entitled to all voting rights with respect to the Pledged
Securities and, subject to the Note, shall be entitled to receive all cash
dividends and cash interest paid in respect of the Pledged Securities. Upon the
occurrence of and during the continuance of any such default, Pledgor shall no
longer be able to vote the Pledged Securities and the Company shall retain all
such cash dividends and cash interest payable on the Pledged Securities as
additional security hereunder.
4. Stock Dividends; Distributions, etc. If, while this Pledge
Agreement is in effect, Pledgor becomes entitled to receive or receives any
securities or other property in addition to, in substitution of, or in exchange
for any of the Pledged Securities (whether as a distribution in connection with
any recapitalization, reorganization or reclassification, a stock dividend or
otherwise), Pledgor shall accept such securities or other property on behalf of
and for the benefit of the Company as additional security for Pledgor's
obligations under the Note and shall promptly deliver such additional security
to the Company together with duly executed forms of assignment, and such
additional security shall be deemed to be part of the Pledged Securities
hereunder.
5. Default. If Pledgor defaults in the payment of the principal or
interest under the Note when it becomes due (whether upon demand, acceleration
or otherwise) or any other event of default under the Note or this Pledge
Agreement occurs (including the bankruptcy or insolvency of Pledgor), the
Company may exercise any and all the rights, powers and remedies of any owner of
the Pledged Securities (including the right to vote the shares and receive
dividends and distributions with respect to such shares) and shall have and may
exercise without demand any and all the rights and remedies granted to a secured
party upon default under the Uniform Commercial Code or otherwise available to
the Company under applicable law. Without limiting the foregoing, the Company is
authorized to sell, assign and deliver at its discretion, from time to time, all
or any part of the Pledged Securities at any private sale or public auction, on
not less than ten days written notice to Pledgor, at such price or prices and
upon such terms as the Company may deem advisable. Pledgor shall have no right
to redeem the Pledged Securities after any such sale or assignment. At any such
sale or auction, the Company may bid for, and become the purchaser of, the whole
or any part of the Pledged Securities offered for sale. In case of any such
sale, after deducting the costs, attorneys' fees and other expenses of sale and
delivery, the remaining proceeds of such sale shall be applied to the principal
of and accrued interest on the Note; provided that after payment in full of the
indebtedness evidenced by the Note, the balance of the proceeds of sale then
remaining shall be paid to Pledgor and Pledgor shall be entitled to the return
of any of the Pledged Securities remaining in the hands of the Company.
6. Costs and Attorneys' Fees. All costs and expenses (including
reasonable attorneys' fees) incurred in exercising any right, power or remedy
conferred by this Pledge Agreement or in the enforcement thereof, shall become
part of the indebtedness secured hereunder and shall be paid by Pledgor or
repaid from the proceeds of the sale of the Pledged Securities hereunder.
7. Payment of Indebtedness and Release of Pledged Securities. Upon
payment in full of the indebtedness evidenced by the Note, the Company shall
surrender the Pledged Securities to Pledgor together with all forms of
assignment.
8. No Other Liens; No Sales or Transfers. Pledgor hereby represents
and warrants that he has good and valid title to all of the Pledge Shares, free
and clear of all liens, security interests and other encumbrances, and Pledgor
hereby covenants that, until such time as all of the outstanding principal of
and interest on the Note has been repaid, Pledgor shall not (i) create, incur,
assume or suffer to exist any pledge, security interest, encumbrance, lien or
charge of any kind
-2-
against the Pledged Securities or Pledgor's rights or a holder thereof, other
than pursuant to this Agreement and the Stockholders Agreement, or (ii) sell or
otherwise transfer any Pledged Securities or any interest therein.
9. Further Assurances. Pledgor agrees that at any time and from time
to time upon the written request of the Company, Pledgor shall execute and
deliver such further documents (including UCC financing statements) and do such
further acts and things as the Company may reasonably request in order to effect
the purposes of this Pledge Agreement.
10. Severability. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11. No Waiver; Cumulative Remedies. The Company shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
the Company, and then only to the extent therein set forth. A waiver by the
Company of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Company would otherwise have
on any future occasion. No failure to exercise nor any delay in exercising on
the part of the Company, any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights or
remedies provided by law.
12. Waivers, Amendments; Applicable Law. None of the terms or
provisions of this Pledge Agreement may be waived, altered, modified or amended
except by an instrument in writing, duly executed by the parties hereto. This
Agreement and all obligations of the Pledgor hereunder shall together with the
rights and remedies of the Company hereunder, inure to the benefit of the
Company and its successors and assigns. This Pledge Agreement shall be governed
by, and be construed and interpreted in accordance with, the laws of the State
of Delaware, without giving effect to any choice of law or conflict of law rules
or provisions that would cause the application of the laws of any jurisdiction
other than the State of Delaware.
* * * * *
-3-
IN WITNESS WHEREOF, this Pledge Agreement has been executed as of the
date first above written.
COMPBENEFITS CORPORATION
By:
------------------------------------
Its:
-----------------------------------
----------------------------------------
<>
