AMENDMENT No. 1 TO EMPLOYMENT AGREEMENT
Exhibit
99.1
AMENDMENT
No. 1
TO
This
Amendment No. 1 (the “Amendment”) to the
Employment Agreement is made and entered into as of this 12th day of April,
2010, by and between Life Quotes, Inc. (the “Company”) and Xxxxxx X.
Xxxxx.
RECITALS
WHEREAS,
the Company and Xx. Xxxxx (the “Parties”) entered
into an Employment Agreement dated July 7, 1999 (the “Agreement”);
and
WHEREAS,
the Parties wish to amend certain provisions of the Agreement.
NOW
THEREFORE, in consideration of the premises contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto agree as follows:
FIRST. Section
1 Definitions “Change in Control”, “Disabled” or “Disability” and “Good Reason”
are hereby replaced in their entirety with the following:
“Change
in Control” means the occurrence of subparagraph (a), (b), or (c) below or any
combination of said event(s). Notwithstanding the foregoing, the term
“Change of Control” shall also have such additional meanings as are permitted or
required under Section 409A:
(a) Change
of Ownership of the Company. A change of ownership of the Company
occurs on the date that any one person or persons acting as a Group (as that
term is defined in Subparagraph (2) below) acquires ownership of the stock of
the Company, that, together with stock held by such person or Group, constitutes
more than fifty percent (50%) of the total fair market value or total voting
power of the stock of the Company or of any corporation that owns at least fifty
percent (50%) of the total fair market value and total voting power of
Company.
(1) However,
if any person or Group is considered to own more than fifty percent (50%) of the
total fair market value or total voting power of the stock of the Company, the
acquisition of additional stock by the same person or Group of persons is not
considered to cause a Change of Control. In addition, the term Change
of Control shall apply if there is an increase in the percentage of stock owned
by any one person or persons, acting as a Group, as a result of a transaction in
which the Company acquires its stock in exchange for property. The
rule set forth in the immediately preceding sentence applies only when there is
a transfer of stock of Company (or issuance of stock of Company) and the stock
of Company remains outstanding after the transaction.
(2) Persons
will not be considered to be acting as a Group solely because they purchase or
own stock of the Company at the same time, or as a result of the same public
offering. However, persons will be considered to be acting as a Group
if they are shareholders of Company and it, or its parent, enters into a merger,
consolidation, purchase or acquisition of stock or similar business transaction
with another corporation. If a person owns stock in Company and
another corporation is involved in a business transaction, then the shareholder
of Company is deemed to be acting as a Group with other shareholders in the
Company prior to the transaction. Notwithstanding anything to the
contrary, for purposes of the definition of “Change of Control” the term Persons
or Group shall not include Xxxxxx X. Xxxxx.
(b) Effective
Change of Control. If the Company does not qualify under Subparagraph
(a), above, then it may still meet the definition of Change of Control, on
either of the following dates:
(1) The
date any one person, or more than one person, acting as a Group acquires (or has
acquired during the twelve (12) month period ending on the date of the most
recent acquisition by such person or persons) ownership of stock of Company
possessing thirty percent (30%) or more of the total voting power of the stock
of Company; or
(2) The
date a majority of the numbers of the Company’s Board of Directors are replaced
during any 12-month period by directors whose appointment or election is not
endorsed by a majority of the members of the Company’s Board of Directors before
the date of the appointment or election.
(c) Change
in Ownership of Company’s Assets. A change in the ownership of a
substantial portion of Company’s assets occurs on the date that any person, or
more than one person acting as a Group, acquires or has acquired during the
12-month period ending on the date of the most recent acquisition by such person
or persons) assets from the Company that have a total fair market value equal to
more than forty percent (40%) of the total gross fair market value of all of the
assets of the Company immediately before such acquisition or
acquisitions. For this purpose, gross fair market value means the
value of the assets of the Company, or the value of the assets being disposed
of, determined without regard to any liabilities associated with such
assets.
(1) There
will be no Change in Control under this Subparagraph (c) when there is a
transfer to an entity that is controlled by the shareholders of the Company
immediately after the transfer. A transfer of assets by Company is
not treated as a change in ownership of such assets if the assets are
transferred to:
(I) A
shareholder of Company (immediately before the asset transfer) in exchange for
or with respect to its stock;
(II) An
entity, fifty percent (50%) or more of the total value or voting power of which
is owned directly or indirectly, by the Company;
(III) A
person, or more than one person, acting as a Group, that owns, directly or
indirectly, fifty percent (50%) or more of the total value or voting power of
all the outstanding stock of the Company; or
(IV) An
entity, at least fifty percent (50%) of the total value or voting power of which
is owned, directly or indirectly, by a person described in Subparagraph c.,
above.
“Disabled”
or “Disability” means a determination, made at the request of the Executive or
upon the reasonable request of the Company set forth in a Notice to Executive,
by a physician selected by the Company and Executive, that Executive is unable
to perform his duties as specified in this Agreement and in all reasonable
medical likelihood such will continue for period in excess of 12
months.
“Good
Reason” shall occur when the Executive separates from service
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(i)
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Within
a twenty four month period following the initial existence of one or more
of the following conditions arising without the consent of the
Executive:
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(a)
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A
material diminution in the Executive’s Base
Salary;
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(b)
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A
material diminution in the Executive’s authority, duties or
responsibilities;
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(c)
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A
material diminution in the Authority, duties, or responsibilities of the
supervisor to whom the Executive is required to report, including a
requirement that the Executive report to a corporate officer or employee
instead of reporting directly to the board of directors of the Company (or
similar governing body);
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(d)
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A
material diminution in the budget over which the Executive retains
authority;
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(e)
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A
material change in the Executive’s geographic location including the
relocation of the Executive’s office more than 40 miles from the Company’s
present executive offices without the Executive’s consent;
or
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(f)
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Any
other action or inaction that constitutes a material breach by the Company
of the Agreement in which the Executive provides written notice to the
Company within 60 days of the material breach and Company fails to remedy
within 60 days from the date of written notice of such noncompliance given
by the Executive to the Company.
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SECOND: Section
5(3) of the Agreement is hereby replaced in its entirety with the
following:
THIRD: Section
6(1) of the Agreement is hereby replaced in its entirety with the
following:
“Termination Without Cause or
With Good Reason. In the event the Executive’s employment with
the Company is terminated at any time during the Employment Period by the
Company other than for Cause, Death or Disability, or the Executive’s voluntary
separation from service for Good Reason or within three months preceding or
twenty four months following a Change in Control, then Executive shall be
entitled to a severance payment equal to the product of Executive’s Base Salary
in effect on the Termination Date, multiplied by two, payable in cash in a lump
sum on or before the fifteenth day following the Date of Termination (or if he
shall have died after termination but prior to payment, his surviving spouse,
his personal representative, as successor in interest). A “Separation
from Service” shall mean the Executive’s termination of employment with the
Company beginning on his Date of Termination.”
FOURTH. A
new sentence shall be added to the end of Section 6(5)(3) to read as
follows:
“Notwithstanding
any provision in the Agreement to the contrary, the Gross-Up Payment shall be
paid no later than the end of the year in which the Company remits the related
taxes.”
FIFTH. Section
6(4) shall be amended to read as follows:
“
6(4) Additional
Separation Benefits. In the event the Executive’s employment with the
Company is terminated at any time during the Employment Period by the Company
other than for Cause, Death or Disability, or the Executive’s voluntary
separation from service for Good Reason or within three months preceding or
twenty four months following a Change in Control, the Company shall permit for a
period of three years following the Date of Termination, at the Company’s
expense, the Executive, his spouse and dependents, as applicable (the “Benefit
Participants”), to participate in all group medical health insurance plans and
employee benefit plans, programs and arrangements now or hereafter made
available to the senior executive employees of the Company (the “Plans”)
(including but not limited to such Plans in which Executive was entitled to
participate immediately prior to the Date of Termination), in the same manner
provided to its other senior executive employees; provided, however, that this
paragraph 6(4) shall not apply in the event that (i) the Company shall hereafter
terminate the applicable Plan, or (ii) the participation of the Benefit
Participants in such Plan is prohibited by law or, if applicable, would
disqualify such Plan as a tax qualified plan pursuant to the Code, or (iii) the
participation of the Benefit Participants violates the general terms and
provisions of such applicable Plan. In the event that any of the
Benefit Participants’ participation in such Plans is prohibited by law or, if
applicable, would disqualify the Plan as a tax qualified plan, or the
participation of the Benefit Participants violates the general terms and
provisions of such applicable Plan, the Company shall permit the Benefit
Participants to acquire substantially comparable coverage or benefits, at the
Company’s expense, from a source of Executive’s or his spouse’s choosing,
provided, however, that if provision of such coverage or benefit would result in
a cost of excess of 130% of the cost to the Company if provided under a Company
Plan, the Company may satisfy its obligations under this paragraph 6(4) by
contributing to the Benefit Participants 130% of the cost to the Company under
the Company Plans. Notwithstanding the foregoing, in no event will
the Benefit Participants receive from the Company the coverage and benefits
contemplated by this paragraph 6(4) if the Benefit Participants receive such
coverage and benefits from any other source.”
SIXTH A
new Section shall be added to the end of the Agreement to read as
follows:
“25. Code Section 409A
Compliance. It is intended that this Agreement be drafted and
administered in compliance with Code Section 409A including, but not limited to,
any future amendments to Code Section 409A, and any other Internal Revenue
Service or other governmental rulings or interpretations (“IRS Guidance”) issued
pursuant to Section 409A so as to not subject the Executive to payment of
interest or additional tax under Code Section 409A. In furtherance
thereof, if payment or provision of any amount or benefit thereunder that is
subject to Code Section 409A at the time specified herein would subject such
amount or benefit to any additional tax under Code Section 409A, the payment or
provision of such amount or benefit shall be postponed to the earliest
commencement date on which the payment or provision of such amount or benefit
could be made without incurring such additional tax. In addition, to
the extent that any IRS guidance issued under Code Section 409A would result in
the Employee being subject to the payment of interest or any additional tax
under Code Section 409A, the parties agree to the extent reasonably possible, to
amend this Agreement in order to avoid the imposition of any such interest or
additional tax under Code Section 409A, which amendment shall have the minimum
economic effect necessary and be reasonable determined in good faith by the
Company and the Employee.”
SEVENTH: Effect in the
Agreement. Except as specifically amended herein, the
Agreement is and shall continue to be in full force and effect and is hereby in
all respects ratified and confirmed.
EIGHTH: Governing
Law. This Amendment shall be governed by and construed in
accordance with the internal laws of the State of Illinois, without giving
effect to the principles of conflicts of laws.
IN
WITNESS WHEREOF, the Parties have caused this Amendment No. 1 to be executed as
of the date first above written.
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By:
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/s/ Xxxxxx X. Xxxxx | |
| Xxxxxx X. Xxxxx |
| Life Quotes, Inc. | |||
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By:
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/s/ Xxxxxxx X. Xxxxxxx | |
| A duly authorized signatory | |||
