SECOND AMENDMENT TO CHANGE IN CONTROL EMPLOYMENT AGREEMENT
Exhibit 10.8
SECOND
AMENDMENT
TO
CHANGE IN CONTROL EMPLOYMENT AGREEMENT
This
Second Amendment to Change in Control Employment Agreement (this “Amendment”)
is made and entered into by and between Healthaxis, Ltd., a Texas limited partnership (“Healthaxis”),
and Xxxxx X. XxXxxx (the “Executive”), to be effective as of the 13th day of
May, 2005.
WHEREAS,
Healthaxis and Executive are parties to that certain Change in Control Employment
Agreement dated as of January 1, 2002 (the “Agreement”), as amended
pursuant to that certain First Amendment to Change in Control Employment Agreement
dated as of January 1, 2003 (the “First Amendment”), which sets forth,
among other things, the terms and conditions pursuant to which Healthaxis or its
successor will continue to employ the Executive and/or the amount of certain payments
that would be made to the Executive upon certain events following a Change in Control;
WHEREAS,
the parties desire to further amend the Agreement as provided herein; and
WHEREAS,
except as otherwise defined herein, all capitalized terms used in this Amendment shall
have the meaning specified in the Agreement.
NOW,
THEREFORE, for and in consideration of the mutual covenants and agreements contained
herein and in the Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, Healthaxis and Executive do
hereby agree as follows:
1.
Change in Control. The parties acknowledge and agree that a “Change in Control” has
occurred under the terms of the Agreement as a result of the consummation of the
transactions contemplated by that certain Stock and Warrant Purchase Agreement dated
February 23, 2005 by and between Healthaxis and Tak Investments, Inc. (the “Purchase
Agreement”). As a result, the “Effective Date” referenced in the
Agreement shall be the date of this Amendment and the “Employment Period” referenced
in the Agreement shall henceforth commence.
2.
Annual Base Salary. Notwithstanding the relevant terms of Section 3(b)(i) of the
Agreement, the parties do hereby agree that from the Effective Date through June 30,
2005 Executive shall receive an Annual Base Salary of $250,000. Further, the parties
agree that commencing July 1, 2005 Executive shall be entitled to receive an Annual
Base Salary of $225,000, until thereafter adjusted in accordance with the terms of the
Agreement or as the parties may otherwise agree. In no event will Executive’s
Annual Base Salary be less than $200,000 while Executive is serving as Chairman and CEO
or as Chairman only, unless a lesser amount is mutually agreed to by Healthaxis and
the Executive. The parties do hereby agree that the amendment to Section 3(b)(i) of
the Agreement contained in the First Amendment is cancelled and the terms contained in
the First Amendment shall be of no further effect.
3.
Location. Notwithstanding the terms of Section 3(a)(i)(B) of the Agreement, it is
understood and agreed that Executive’s services for the benefit of Healthaxis
shall primarily be performed by Executive from his office in Philadelphia,
Pennsylvania, commencing effective May 1, 2005.
4.
Position and Duties. Notwithstanding the terms of Section 3(a)(i)(A) of the
Agreement, the parties agree that at a mutually agreeable time or times during the
Employment Period, Executive’s duties and responsibilities as Chief Executive
Officer of Healthaxis shall decrease and that Executive shall cease to serve as the
Chief Executive Officer of Healthaxis, and at some mutually agreed upon subsequent date,
Executive shall cease to serve as Chairman (which the parties mutually agree shall be
no later than December 31, 2006). The parties acknowledge and agree that upon each
such diminution in the duties and responsibilities of Executive that there shall
be a corresponding and mutually agreeable decrease in the compensation to be paid
to Executive under the Agreement, subject to Section 2 above. Notwithstanding the
terms of Section 2 of the Agreement, upon such date as the Executive is no longer
serving as Chief Executive Officer or Chairman, his “Employment Period” shall
terminate. Notwithstanding anything contained in Section 4(c)(i) of the Agreement,
the parties agree that any such mutually agreed reduction of Executive’s Chief
Executive Officer or Chairman duties or responsibilities shall not constitute a “Good
Reason” for Executive’s termination of employment with Healthaxis. Further,
as a result of the consummation of the transactions contemplated by the Purchase
Agreement, Executive acknowledges that he may be required to travel on Healthaxis
business to India and the Virginia/Washington D.C. area more than has been the case in
the past, and Executive agrees that Healthaxis’ requirement that the Executive
engage in such travel shall not constitute grounds for Executive’s termination of
employment with “Good Reason” under Section 4(c)(iii) of the Agreement.
5.
Elimination of Executive’s Unilateral Termination Period. The Agreement is
hereby amended by deleting the final sentence of Section 4(c) of the Agreement
entitling the Executive to terminate his employment with Healthaxis for any reason
during the 30-day period immediately following the first anniversary of the Effective
Date.
6.
Severance Payments. Section 5(a)(i)(B) of the Agreement is hereby amended to
provide that the Executive shall be entitled thereunder to a lump sum payment equal
to the sum of “(x) 1.5 times the Executive’s Annual Base Salary and (y) the
Executive’s Target Bonus” (rather than the current language in the
Agreement providing that the Executive shall be entitled thereunder to a lump sum
payment of 2 times the Executive’s Annual Base Salary and the Executive’s
Target Bonus).
7.
Cash Payment;Vesting of Options; Additional Grant. In consideration of Executive’s
foregoing agreement to the amendments to the Agreement and the other covenants and
agreements contained herein, Healthaxis does hereby agree (a) to pay Executive a lump
sum payment of $10,000 in cash within five (5) business days of the closing of the
transactions contemplated by the Purchase Agreement (subject to applicable tax
withholding requirements), (b) that all outstanding stock options awarded by
Healthaxis or its affiliates to the Executive prior to the date of this Amendment
shall become 100% vested and the related stock
options
shall become fully exercisable, and (c) simultaneously with the closing of the
transactions contemplated by the Purchase Agreement, the Executive shall be
granted an additional 75,000 stock options under the Healthaxis Inc. 2000 Stock
Option Plan, which additional options shall have an exercise price equal to
the market price of Healthaxis common stock on the date of the grant. Of these
stock options so granted, 25% shall vest on the date of grant, and an additional
25% shall vest on each of the following three anniversary dates of the date
of grant; provided, that such options shall be subject to (A) the otherwise
applicable accelerated vesting and extended exercise provisions of Section 5(a)(ii)
of the Agreement and (B) upon such date as the Executive ceases to serve as
Chairman as mutually agreed pursuant to Section 4 hereto, accelerated 100% vesting
and an extended thirty-six (36) month exercisability period (as measured from
the date of termination of Executive as Chairman of Healthaxis). Healthaxis
and the Executive agree to take such further actions as shall be necessary to
document the foregoing agreement relating to the vesting of stock options and
additional option grant.
Except
as expressly amended as provided herein, the Agreement shall continue in full force and
effect in accordance with its terms.
EXECUTED
by the parties to be effective as of the date set forth hereinabove.
| HEALTHAXIS: | EXECUTIVE: | |
| Healthaxis, Ltd. | ||
| /s/ Xxxxx X. XxXxxx | ||
| |
||
| By: | Healthaxis Managing
Partner, LLC, General Partner |
Xxxxx X. XxXxxx |
| By: | /s/ Xxxx Xxxxxxxxx | |
| |
||
| Xxxx Xxxxxxxxx | ||
| Vice President and Treasurer | ||
