AGENCY AGREEMENT
Exhibit 10.22
EXECUTION COPY
THIS AGENCY AGREEMENT (the “Agreement”) is made and entered into as of this 7th day of May, 2004, by and among Xxxxxxx X. Xxxxxx (“KLM”), Life Quotes Acquisition, Inc., a Delaware corporation (the “LQA”) and Xxxxxxxxxx.xxx Inc., a Delaware corporation (the “Parent”).
W I T N E S S E T H
WHEREAS, Life Quotes, Inc., a Michigan corporation (the “Seller”), LQA, the Parent and the Shareholder have entered into an Asset Purchase Agreement dated as of January 31, 2004 (“APA”), pursuant to which the Seller and KLM have agreed to sell to LQA substantially all of the assets of the Seller;
WHEREAS, pursuant to the terms of the APA, the parties hereto are entering into a Non-Competition Agreement (the “Non-Competition Agreement”) contemporaneously herewith; and
WHEREAS, the APA and the Non-Competition Agreement contemplate that LQA and Parent will enter into one or more agency agreements with KLM and his spouse and children, either individually or as owners of an entity, provided such individuals or entities hold valid insurance agent licenses in good standing all in accordance with the APA, (collectively, “Xxxxxx”), so that Xxxxxx shall only be permitted to sell life insurance products through LQA, the Parent and their respective affiliates (collectively, the “Company”).
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto (intending to be legally bound) hereby agree as follows:
1. Appointment as Agent. LQA and Parent hereby agree to use
commercially reasonable efforts to appoint Xxxxxx as a general agent with each
insurance carrier as Xxxxxx may request and with which the Company has the
ability to appoint agents under the terms of its respective managing general
agent agreement or insurance marketing agreement, to the extent that each such
appointment is acceptable and agreed to by the insurance carrier. Such appointment
will be made promptly upon notice from KLM to the Company.
2. Compensation. As compensation for policies placed in
force as a general agent hereunder, Xxxxxx shall be entitled to receive the
highest commission made available by each insurance carrier to general agents
appointed under the Company for first
year and renewal commission, along with 75% of any production bonus commission
resulting from business placed directly by Xxxxxx based on the production level
that the Company qualifies for, whether such commissions are paid by the
insurance carriers to the Company or directly to Xxxxxx. If commissions are
paid by the Company to Xxxxxx, such payments shall not be made less frequently
than monthly.
3. Direct Contracts. The Company agrees to use commercially
reasonable efforts to enable Xxxxxx to become contracted directly with
insurance carriers as a general agent under the Company’s managing general
agent or marketing organization
agreement so that Xxxxxx may operate directly with such insurance carriers and
be compensated directly by such insurance carriers at the highest commission
available according to each insurance carrier’s business practices as
determined by each such carrier.
4. Non-Competition. Xxxxxx acknowledges and agrees that (1) the business being acquired by LQA from the Seller pursuant to the APA is the “Business” as defined in the APA; (2) the
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Business territory is comprised of all fifty states of the United States of America (the “Territory”); and (3) LQA and the Parent will suffer substantial and irreparable harm in the event Xxxxxx and his affiliates (as defined by the rules and regulations of the United States Securities and Exchange Commission) should enter into competition with LQA or the Parent or disclose any of the affairs of LQA, the Parent, the Seller or of LQA relating to the Business to any third parties. Accordingly, and in order to induce LQA and the Parent to enter into the APA and to consummate the transactions contemplated thereby, Xxxxxx hereby agrees on his own behalf and that of his affiliates that for the Term (defined in Section 8 below) he and his affiliates:
(i) will not, directly or indirectly, whether as an officer, manager, director, consultant (independent or otherwise), agent, employee, partner, shareholder, participant, member, owner or otherwise, engage in nor, participate in, become associated in any manner whatsoever or have any financial interest in or aid or assist in any person or entity in the conduct of, or otherwise engage in any aspect or segment of the Business (except as expressly permitted by the APA or this Agreement) or any other business which competes with the Business in the Territory;
(ii) will not, directly or indirectly, interfere with, disrupt, or attempt to disrupt or induce, persuade or entice, any past, present, or prospective relationship, contractual or otherwise, between LQA or the Parent and any insurance company, insurance agent, insurance provider, landlord, dealer, distributor, agent, principal, customer, supplier or employee of LQA or Parent;
(iii) will not, directly or indirectly, call on, employ, engage or solicit the employment or engagement by others of any employee or former employee of LQA, the Parent or the Business or otherwise encourage any employee or independent contractor of Parent or LQA to terminate his or her employment with Parent or LQA or to enter into employment with any person or entity, as the case may be, unless such employee or former employee has not been employed by LQA, the Parent or the Business, as the case may be, for a period in excess of twelve (12) months; and
(iv) will not, directly or indirectly, slander, libel, disparage or through any other means take any action which is intended to be or might be negative or detrimental to LQA, the Parent, the Business or LQA’s or Parent’s respective assets, business, personnel, prospects or operations, including but not limited to making comments on any internet “Message Board” or website or similar service or means of communication.
(v) Xxxxxx acknowledges that the restricted period of time (Term), geographical area (Territory) and line of business (Business) under this Section hereof are reasonable, in view of the nature of the Business, Xxxxxx’x knowledge of the Business, as well as the fact that Xxxxxx and his affiliates received a substantial portion of the consideration paid under the APA and the Real Estate Agreement. Notwithstanding the foregoing, if any provision, or any part hereof, of this Section 1 is held to be unenforceable because of the duration thereof, the area covered thereby or with respect to any particular activity, the parties agree that the court making the determination shall have the power to reduce the duration or the scope of such provision, or to delete specific words or phrases, and in its reduced or amended form, such provision shall then be enforceable and be enforced.
(vi) Xxxxxx and his affiliates intend to, and do hereby, confer jurisdiction to enforce the covenants contained in this Section 1 upon the courts of (i) any jurisdiction within the State of Illinois or (ii) if Xxxxxx or his affiliates is alleged to be competing with LQA or the Parent or otherwise acting in violation of this Section in any other jurisdiction, then in any other jurisdiction in which such alleged competition or action takes place. If the courts of any one
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or more of such jurisdictions shall hold such covenants wholly unenforceable by reason of the breadth of such scope or otherwise, such determination shall not bar or in any way affect the right of LQA or the Parent to the relief provided above in the courts of any other jurisdiction in which such covenants may be enforced as provided herein, as to breaches of such covenants in such other respective jurisdictions, the above covenants as they relate to each jurisdiction being, for this purpose, severable in diverse and independent covenants.
(vii) Except with the prior written consent of LQA or the Parent in each instance, Xxxxxx shall not disclose, use, publish, or in any other manner reveal, directly or indirectly, at any time during or after the term of this Agreement, any “Confidential Information” relating to (a) the Business or assets acquired by LQA from the Seller or (b) LQA, Parent or any parent, subsidiary or affiliate thereof. Confidential Information shall include, but shall not be limited to, information or data relating to (i) the Business, operations, systems, services, know-how, trade secrets, dealer, potential and actual distributor and customer lists, pricing policies, operational methods, marketing plans, product plans, acquisition plans, design and design projects, technical or non-technical data, formulas, patterns, compilations, programs, inventions and research projects and all other plans of LQA or the Parent or which are embodied in the Assets acquired pursuant to the APA, and (ii) the business, operations, personnel, activities, financial affairs, and other information relating to LQA or the Parent and their respective customers and employees; provided, however, Confidential Information shall not include any information that Xxxxxx can demonstrate: (a) is generally publicly available, (b) is obtained from a source other than LQA, Parent or Seller; or (c) is legally required to be disclosed, after giving prior written notice to LQA and Parent.
(viii) If Xxxxxx or his affiliates commits a breach, or threatens to commit a breach, of any of the provisions of this Section, LQA and the Parent shall have the following rights and remedies, each of which rights and remedies shall be independent of the others, and shall be severally enforceable, and all of which rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available under law or in equity to LQA and the Parent:
(a) the right and remedy to have the provisions of this Section enforced by any court of competent jurisdiction by injunction, restraining order, specific performance or other equitable relief in favor of LQA and the Parent, it being acknowledged and agreed that any breach or threatened breach of Section by Xxxxxx will cause irreparable injury to LQA and the Parent and that money damages will not provide an adequate remedy to LQA or the Parent; and
(b) the right and remedy to require Xxxxxx or his affiliates to account for and pay over to LQA all compensation, profits, monies, accruals, distributions, increments or other benefits (collectively, “Benefits”) derived or received by Xxxxxx or his affiliates as the result of any transaction constituting a breach of any of the provisions of this Section and Xxxxxx or his affiliates hereby agree to account for such Benefits and pay over all such Benefits to LQA.
(viii) During such periods as both this Agreement and the Non-Competition Agreement continue in effect, Xxxxxx’x obligations under this Section 4 are the same as, and not in addition to, Xxxxxx’x obligations under the Non-Competition Agreement.
5. Advertising and Marketing. Xxxxxx shall have the right to operate and advertise using Xxxxxx’x name, at Xxxxxx’x expense. In addition, Xxxxxx shall have the right to use the Company’s name on Xxxxxx’x advertising with the Company’s website and Xxxxxx’x telephone contact, provided that any such advertisement has first been approved by the Company in writing, such approval not to be unreasonably withheld. The Company shall also provide Xxxxxx continuous access (including remote access) to the Company’s quoting, sales, marketing, application
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completion software, systems and programs, provided, however, that Xxxxxx shall reimburse any costs incurred by the Company in connection with providing such access.
6. License and Renewal
Fees. At Xxxxxx’x
request, the Company shall assist Xxxxxx in connection with licensing and
renewal applications at a cost equal to two times the actual license or renewal
fee. As the Company is performing this function at Xxxxxx’x direction and for
his convenience, Xxxxxx shall indemnify and hold harmless the Company and its
affiliates for any errors, omissions, penalties or damages suffered in
assisting Xxxxxx in performing or failing to perform these actions. In no event
shall the Company be responsible for any fees, charges or penalties incurred in
connection with this function.
7. Company Obligations. The Company hereby agrees that for the Term (defined in Section 8 below) it:
(i) will not, directly or indirectly, call on, employ, engage or solicit the employment or engagement by others of any employee or former employee of Xxxxxx (other than former employees of Seller who are hired by LQA as contemplated in the APA) or otherwise encourage any employee or independent contractor of Xxxxxx to terminate his or her employment with Xxxxxx or to enter into employment with any person or entity unless such employee or former employee has not been employed by Xxxxxx for a period in excess of twelve (12) months; and
(ii) will not, directly or indirectly, slander, libel, disparage or through any other means take any action which is intended to be or might be negative or detrimental to Xxxxxx or Xxxxxx’x assets, business, personnel, prospects or operations, including but not limited to making comments on any internet “Message Board” or website or similar service or means of communication.
8. Term, Termination and Limitations. The term of this Agreement shall be for an initial period of three years commensurate with the three-year term provided for in Section 1 of the Non-Competition Agreement, which initial period shall automatically be extended for successive terms of one-year on an “evergreen” basis (meaning it shall therefore renew for successive one-year periods thereafter without any action on either party’s part), provided however, that this Agreement may be terminated (i) at any time by the Company for cause, and (ii) by any party at any time after such initial three-year period on thirty-days prior written notice to the other parties hereto, such termination to be effective as of a date specified in such written notice. No such termination shall affect such rights and obligations of the parties as those shall have accrued prior to the date such termination is effective. Notwithstanding the foregoing and subject to the last two sentences of this Section 8, the term of this Agreement with respect to Section 4 hereof and the rights and obligations of the parties thereunder (the “Term”), shall continue in effect during the effectiveness of this Agreement and for the three-year period beginning on the later to occur of: (a) the end of the three-year term provided for in Section 1 of the Non-Competition Agreement, or (b) termination of this Agreement in accordance with its terms. If this Agreement is terminated by the Company other than for “cause,” the immediately preceding sentence shall not apply and this Agreement shall terminate as of the effective date of such termination. For purposes hereof, termination for “cause” shall be cause as determined by Parent in its reasonable best judgment with prior written notice to Xxxxxx and a reasonable opportunity to cure. Xxxxxx agrees that Xxxxxx shall be permitted to sell life insurance products so long as all such insurance products are placed directly through Parent (or an affiliate or associate of Parent) in their capacity as agents of Parent and such placements under this Agreement and all other similar agency agreements with Xxxxxx shall collectively not exceed $2.0 million in
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annual first year commissionable premium (such threshold annually increased based on the rate of inflation as specified by the Consumer Price Index for all urban consumers).
9. Notices. All notices, requests, instruction,
correspondence, demands and other communications hereunder shall be in writing
and shall be deemed to have been duly given if delivered personally with
receipt acknowledged or sent by registered or certified mail, postage prepaid
and return receipt requested to the address shown below unless changed by
notices given as herein provided:
(a) if to Xxxxxx, to:
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Xxxxxxx X. Xxxxxx |
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Facsimile: |
(000) 000-0000 |
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with a copy to:
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Welborn, Sullivan, Xxxx & Xxxxxx, P.C. |
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Facsimile: |
(000) 000-0000 |
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Attention: |
Xxxx X. Xxxx |
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(b) if to LQA or to Parent, to:
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Xxxxxxxxxx.xxx Inc. |
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Facsimile: |
(000) 000-0000 |
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Attention: |
Xxxxxx X. Xxxxx, Chairman, |
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with a copy to:
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Xxxxx Xxxxxx LLP |
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Facsimile: |
(000) 000-0000 |
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Attention: |
Xxxxx X. Xxxxxxx |
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10. Miscellaneous.
(a) This Agreement, the APA and the Non-Competition Agreement constitute the sole and entire agreement between KLM, LQA and the Parent with respect to the matters referred to herein and shall not be altered, modified or amended except by written instrument signed by the party against whom such alteration, modification or amendment is sought to be enforced.
(b) This Agreement shall inure to the benefit of, and be binding upon (i) the parties hereto, (ii) the heirs, administrators, executors and personal representatives of KLM, and (iii) the respective successors and assigns of LQA and the Parent.
(c) The Section headings appearing in this Agreement are for purposes of easy reference and shall not be considered a part of this Agreement or in any way modify, amend or affect its provisions.
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(d) It is agreed that a waiver by either party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by that same party.
(e) This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois applicable to a contract executed and performed in such State without giving effect to the conflicts of laws principles thereof. If any provisions of this Agreement as applied to any part or to any circumstances shall be adjudged by a court to be invalid or unenforceable, the same shall in no way affect any other provision of this Agreement, the application of such provision in any other circumstances or the validity or enforceability of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
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/s/ XXXXXXX X. XXXXXX |
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Xxxxxxx X. Xxxxxx |
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LIFE QUOTES ACQUISITION, INC. |
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By |
/s/ XXXXXX X. XXXXX |
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Xxxxxx X. Xxxxx, President |
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XXXXXXXXXX.XXX INC. |
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By |
/s/ XXXXXX X. XXXXX |
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Xxxxxx X. Xxxxx, President |
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