Exhibit 10.9
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT (this "Agreement") is made as of
August 4, 2006, by and between CompBenefits Corporation, a Delaware corporation
(together with its successors, the "Company"), and <> (the "Executive").
Capitalized terms used but not otherwise defined herein are defined in Section 8
hereof.
WHEREAS, pursuant to the Company's Amended and Restated Stock Option
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 (or, in the event the outstanding Common Stock is hereafter changed
into or exchanged for different stock or securities of the Company, such other
securities) (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 "Restricted 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 Restricted 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 $0.01 per share. The
Company will deliver to the Executive copies of the certificates representing
the Restricted Stock, and the Executive will deliver to the Company
<>.
(b) In connection with the purchase and sale of Restricted Stock
hereunder, the Executive represents and warrants to the Company that:
(i) The Restricted 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 Restricted 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 Restricted
Stock.
(iii) The Executive is able to bear the economic risk of his
investment in the Restricted Stock for an indefinite period of time because
the Restricted 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
Restricted 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 Restricted 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, the Executive
will execute in blank stock transfer powers in the form of Annex B attached
hereto (the "Stock Powers") with respect to the Restricted 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.
2. Vesting of Restricted Stock.
(a) Except as otherwise provided in Sections 2(b), 2(c), 2(d) and 2(e)
below, the Restricted Stock purchased hereunder will become vested in accordance
with the schedule set forth on Annex C attached hereto.
(b) If the Executive ceases to be employed by the Company and its
Subsidiaries on a date other than a vesting date prior to the final vesting
date, the cumulative percentage of Restricted Stock to become vested will be
determined on a pro rata basis according to the number of days elapsed since the
prior vesting 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 Restricted Stock which have not yet become vested shall become vested
at the time of such event.
(d) Upon the occurrence of the Company's first Qualified Public
Offering, if as of such date the Executive is still employed by the Company or
any of its Subsidiaries, fifty percent (50%) of all shares of Restricted Stock
which have not yet become vested shall become vested at the time of such event.
Such 50% vesting shall be applied on a tranche-by-tranche basis, with the
remaining 50% of each unvested tranche remaining subject to the vesting
provisions of this Section 2.
(e) Any shares of Restricted Stock which have not been designated as
subject to repurchase pursuant to a Repurchase Notice or Supplemental Repurchase
Notice on the date which
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is six months and one day following the Termination and which have not yet
become vested shall become vested on such date.
Shares of Restricted Stock which have become vested pursuant to Sections 2(a),
2(b), 2(c), 2(d) or 2(e) above are referred to herein as "Vested Shares," and
all other shares of Restricted 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 Restricted 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 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 Restricted 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 Restricted Stock
pursuant to the Repurchase Option, the Significant Stockholders shall be
entitled to exercise the Repurchase Option for the shares of Restricted 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 Restricted Stock as to the
number of shares being purchased from such holder by the Significant
Stockholders
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(the "Supplemental Repurchase Notice"). At the time the Company delivers the
Supplemental Repurchase Notice to the holder(s) of Restricted Stock, the Company
shall also deliver written notice to each Significant Stockholder setting forth
the number of shares such Significant Stockholder is 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 Restricted 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 Restricted
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 Restricted 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 Restricted 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 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 in
accordance with Section 9(a).
4. Restrictions on Transfer of Shares. None of the Shares now owned or
hereafter acquired shall be sold, assigned, transferred, pledged, hypothecated,
given away or in any other manner disposed of or encumbered, whether voluntarily
or by operation of law, unless such transfer is in compliance with all
applicable securities laws (including, without limitation, the Act), and such
disposition is in accordance with the terms and conditions of this Section 4 and
such disposition does not cause the Company to become subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended. In connection
with any transfer of Shares, the Company may require the transferor to provide
at the Executive's own expense an opinion of counsel to the transferor,
satisfactory to the Company, that such transfer is in compliance with all
foreign, federal and state securities laws (including, without limitation, the
Act). Any attempted disposition of Shares not in accordance with the terms and
conditions of this Section 4 shall be null and void, and the Company shall not
reflect on its records any change in record ownership of any Shares as a result
of any such disposition, shall otherwise refuse to recognize any such
disposition and shall not in any way give effect to any such disposition of any
Shares. Subject to the foregoing
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general provisions, Shares may be transferred only pursuant to the following
specific terms and conditions:
(a) The Executive (but not any transferee thereof) may sell, assign,
transfer or give away any or all of the Shares to Permitted Transferees;
provided, however, that such Permitted Transferee(s) shall, as a condition to
any such transfer, agree to be subject to the provisions of this Agreement
(including, without limitation, the provisions of Section 3 and this Section 4)
and shall have delivered a written acknowledgment to that effect to the Company.
(b) Upon the death of the Executive, all Unvested Shares shall be
subject to the Repurchase Option and all Vested Shares shall be and remain
subject to Section 4(c), if applicable, and the Executive's estate, executors,
administrators, personal representatives, heirs, legatees and distributees shall
be obligated to convey such Shares to the Company or its assigns under the terms
contemplated hereby.
(c) In the event that the Executive at any time after but not prior to
a Termination desires to sell or otherwise transfer all or any part of the
Vested Shares (but in no event the Unvested Shares, which shall not be sold or
transferred except as contemplated by Section 3(a) or 3(c)), the Executive first
shall give written notice to the Company of the Executive's intention to make
such transfer. Such notice shall state the number of Vested Shares which the
Executive proposes to sell (the "Offered Shares"), the price and the terms at
which the proposed sale is to be made and the name and address of the proposed
transferee. At any time within 10 days after the receipt of such notice by the
Company, the Company may elect to purchase all or any portion of the Offered
Shares at the price and on the terms offered by the proposed transferee and
specified in the notice. The Company shall exercise this right by mailing or
delivering written notice to the Executive within the foregoing 10-day period.
If the Company elect to exercise its purchase rights under this Section 3(c),
the closing for such purchase shall, in any event, take place within 45 days
after the receipt by the Company of the initial notice from the Executive. In
the event that the Company do not elect to exercise such purchase right, or in
the event that the Company do not pay the full purchase price within such 45-day
period, the Executive may, within 60 days thereafter, sell the Offered Shares to
the proposed transferee and at the same price and on the same terms as specified
in the Executive's notice. Any Shares purchased by such proposed transferee
shall no longer be subject to the terms of this Agreement. Any Shares not sold
to the proposed transferee shall remain subject to this Agreement.
Notwithstanding the foregoing, the restrictions under this Section 4(c) shall
terminate in accordance with Section 9(a).
(d) Prior to Termination and prior to the expiration of the Repurchase
Option, the Executive may not sell, assign, transfer or give away any or all of
the Shares (except as provided in Sections 4(a) and 4(c) above). Following
Termination and the expiration of the Repurchase Option, the Executive may sell,
assign, transfer or give away any or all of the Vested Shares, subject to
compliance with Section 4(c), if applicable.
5. Legend. The certificates representing the Restricted Stock shall
bear the following legend:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER
AGREEMENTS SET FORTH IN AN RESTRICTED STOCK AGREEMENT BETWEEN THE
COMPANY AND THE INITIAL HOLDER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE, DATED AS OF AUGUST 4, 2006, 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."
The Company shall imprint such legend on certificates evidencing Restricted
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 Restricted
Stock in accordance with Section 8 below.
6. 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.
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7. 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 dental and/or vision health care services
and any and all activities related thereto including, without limitation,
network-based dental and/or vision care, reduced fee-for-service, PPO and/or
indemnity dental and/or vision plans and/or third party administration (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, District of Columbia, Florida, Georgia,
Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Mississippi,
Missouri, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio,
Oklahoma, Oregon, South Carolina, Tennessee, Texas, Utah, Virginia, Washington,
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 7 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 7 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.
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(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 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.
8. 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. Notwithstanding
the foregoing, if at the time of termination of employment the Executive is
party to an employment or similar agreement with the Company that defines
"cause," then "Cause" shall have the meaning set forth in such other agreement.
"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.
"Fair Market Value" of any share of Restricted 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 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
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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 Restricted 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 and, to the extent the Board deems appropriate, consistent with
past practice. 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. Notwithstanding the foregoing, if at the time of termination
of employment the Executive is party to an employment or similar agreement with
the Company that defines "good reason," then "Good Reason" shall have the
meaning set forth in such other agreement.
"Original Cost" of each share of Common Stock purchased hereunder
shall be equal to $0.01 (as proportionately adjusted for all subsequent stock
splits, stock dividends and other recapitalizations).
"Permitted Transferees" shall mean any of the following to whom the
Executive may transfer Shares hereunder (as set forth in Section 4): the
Executive's spouse, children (natural or adopted), stepchildren or a trust for
their sole benefit of which the Executive is the settlor; provided, however,
that any such trust does not require or permit distribution of any Shares during
the term of this Agreement unless subject to its terms. Upon the death of the
Executive (or a Permitted Transferee to whom shares have been transferred
hereunder), the term Permitted Transferees shall also include such deceased
Executive's (or such deceased Permitted Transferee's) estate, executions,
administrations, personal representations, heirs, legatees and distributees, as
the case may be.
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"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 initial
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.
"Restricted Stock" shall continue to be Restricted Stock in the hands
of any holder other than the Executive (except for the Company 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 Restricted Stock shall succeed to all rights and
obligations attributable to the Executive as a holder of Restricted Stock
hereunder. Restricted Stock shall also include shares of the Company's capital
stock issued with respect to Restricted Stock by way of a stock split, stock
dividend or other recapitalization.
"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 Amended and Restated Stockholders
Agreement, dated as of July 12, 2000, by and among the Company 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.
10
9. General Provisions.
(a) Termination. The Company's Repurchase right with respect to Vested
Shares under Section 3 and the restrictions on transfer of Vested Shares under
Sections 4(c) and 4(d) shall terminate upon the closing of the Company's
Qualified Public Offering or upon consummation of a Sale of the Company, in
either case as a result of which shares of the Company (or successor entity) of
the same class as the Shares are registered under Section 12 of the Exchange Act
of 1934 and publicly traded on NASDAQ/NMS or any national security exchange;
provided, however, that all other provisions shall remain in effect following
the same until all of the Shares have become Vested Shares.
(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 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 (including without limitation the Stockholders Agreement) 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 Restricted 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
Restricted 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
11
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.
If to the Company:
CompBenefits Corporation
000 Xxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
with copies to:
GTCR Xxxxxx Xxxxxx, LLC
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxx
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
Xxxxxxx Procter LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. XxXxxxxx
Facsimile: (000) 000-0000
12
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.
(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
Restricted Stock under this Agreement is pursuant to and subject to all of the
terms and conditions of the Plan.
(p) Escrow. In order to carry out the provisions of Section 3 and 7 of
this Agreement more effectively, the Company shall hold the Shares in escrow
together with separate stock powers executed by the Executive in blank for
transfer. The Company shall not dispose of the Shares except as otherwise
provided in this Agreement. In the event of any repurchase by the Company (or
any of its assigns), the Company is hereby authorized by the Executive, as the
Executive's attorney-in-fact, to date and complete the stock powers necessary
for the transfer of the Shares being purchased and to transfer such Shares in
accordance with the terms hereof. At such time as any Shares are no longer
subject to the Company's repurchase rights, the Company shall, at the written
request of the Executive, deliver to the Executive a certificate representing
such Shares with the balance of the Shares (if any) to be held in escrow
pursuant to this Section 9(p).
(q) Drag Along Right. In the event the holders of a majority of the
Company's equity securities then outstanding (the "Majority Shareholders")
determine to sell or otherwise
13
dispose of all or substantially all of the assets of the Company or all or fifty
percent (50%) or more of the capital stock of the Company in each case in a
transaction constituting a change in control of the Company, to any
non-affiliate(s) of the Company or any of the Majority Shareholders, or to cause
the Company to merge with or into or consolidate with any non-affiliate(s) of
the Company or any of the Majority Shareholders (in each case, the "Buyer") in a
bona fide negotiated transaction (a "Sale"), the Executive, including any of his
or her successors as contemplated herein, shall be obligated to and shall upon
the written request of a Majority Shareholders: (a) sell, transfer and deliver,
or cause to be sold, transferred and delivered, to the Buyer, his or her Shares
on substantially the same terms applicable to the Majority Shareholders (with
appropriate adjustments to reflect the conversion of convertible securities, the
redemption of redeemable securities and the exercise of exercisable securities
as well as the relative preferences and priorities of preferred stock); and (b)
execute and deliver such instruments of conveyance and transfer and take such
other action, including voting such Shares in favor of any Sale proposed by the
Majority Shareholders and executing any purchase agreements, merger agreements,
indemnity agreements, escrow agreements or related documents, as the Majority
Shareholders or the Buyer may reasonably require in order to carry out the terms
and provisions of this Section 8(q).
(r) Dispute Resolution. Except as provided below, any dispute arising
out of or relating to this Agreement or the breach, termination or validity
hereof shall be finally settled by binding arbitration conducted expeditiously
in accordance with the J.A.M.S./Endispute Comprehensive Arbitration Rules and
Procedures (the "J.A.M.S. Rules"). The arbitration shall be governed by the
United States Arbitration Act, 9 U.S.C. Sections 1-16, and judgment upon the
award rendered by the arbitrators may be entered by any court having
jurisdiction thereof. The place of arbitration shall be Boston, Massachusetts.
The parties covenant and agree that the arbitration shall commence
within 60 days of the date on which a written demand for arbitration is filed by
any party hereto. In connection with the arbitration proceeding, the arbitrator
shall have the power to order the production of documents by each party and any
third-party witnesses. In addition, each party may take up to three depositions
as of right, and the arbitrator may in his or her discretion allow additional
depositions upon good cause shown by the moving party. However, the arbitrator
shall not have the power to order the answering of interrogatories or the
response to requests for admission. In connection with any arbitration, each
party shall provide to the other, no later than seven business days before the
date of the arbitration, the identity of all persons that may testify at the
arbitration and a copy of all documents that may be introduced at the
arbitration or considered or used by a party's witness or expert. The
arbitrator's decision and award shall be made and delivered within six months of
the selection of the arbitrator. The arbitrator's decision shall set forth a
reasoned basis for any award of damages or finding of liability. The arbitrator
shall not have power to award damages in excess of actual compensatory damages
and shall not multiply actual damages or award punitive damages or any other
damages that are specifically excluded under this Agreement, and each party
hereby irrevocably waives any claim to such damages.
The parties covenant and agree that they will participate in the
arbitration in good faith. This Section 8(r) applies equally to requests for
temporary, preliminary or permanent injunctive relief, except that in the case
of temporary or preliminary injunctive relief any party may proceed in court
without prior arbitration for the limited purpose of avoiding immediate and
irreparable harm.
14
Each of the parties hereto (i) hereby irrevocably submits to the
jurisdiction of any United States District Court of competent jurisdiction for
the purpose of enforcing the award or decision in any such proceeding, (ii)
hereby waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution (except as protected
by applicable law), that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is improper
or that this Agreement or the subject matter hereof may not be enforced in or by
such court, and hereby waives and agrees not to seek any review by any court of
any other jurisdiction which may be called upon to grant an enforcement of the
judgment of any such court. Each of the parties hereto hereby consents to
service of process by registered mail at the address to which notices are to be
given. Each of the parties hereto agrees that its, his or her submission to
jurisdiction and its, his or her consent to service of process by mail is made
for the express benefit of the other parties hereto. Final judgment against any
party hereto in any such action, suit or proceeding may be enforced in other
jurisdictions by suit, action or proceeding on the judgment, or in any other
manner provided by or pursuant to the laws of such other jurisdiction.
* * * * *
15
IN WITNESS WHEREOF, the parties hereto have executed this Restricted Stock
Agreement on the date first written above.
COMPBENEFITS CORPORATION
By:
------------------------------------
Its:
-----------------------------------
----------------------------------------
<>
16
ANNEX A
August ___, 2006
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 August 4, 2006.
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 Section 83(b) at the time he purchased the
Shares.
Therefore, pursuant to Code Section 83(b) and Treasury Regulation
Section 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 2006 the excess (if any) of the Shares' fair market value on
August 4, 2006 over purchase price thereof.
The following information is supplied in accordance with Treasury
Regulation Section 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: August 4, 2006. The
taxable year for which such election is made: calendar 2006.
4. The restrictions to which the property is subject: If during the
first three years after the date of grant 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 pro rata basis over the three-year period following the
date of grant; provided that all of the Shares will become vested upon a sale of
the Company.
5. The fair market value on August 4, 2006 of the property with
respect to which the election is being made, determined without regard to any
lapse restrictions: $0.42 per share of Common Stock.
6. The amount paid for such property: $0.01 per share of Common Stock.
A copy of this election has been furnished to the Secretary of the
Company pursuant to Treasury Regulations Section 1.83-2(e)(7).
Dated: August __, 2006 ----------------------------------------
<>
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, GTCR
Xxxxxx Xxxxxx, LLC 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
VESTING SCHEDULE
Reference is made to the Restricted Stock Agreement (the "Agreement"),
dated as of August 4, 2006, 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.
Restricted 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
---- -------------------------
Grant Date 20%
August __, 2006 40%
August __, 2007 60%
August __, 2008 80%
August __, 2009 100%
On any date prior to the Termination, the cumulative percentage of Restricted
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 vesting date.
Accepted and Agreed:
COMPBENEFITS CORPORATION
By:
------------------------------------
Its:
-----------------------------------
----------------------------------------
<>
