Item
5.02
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
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Second
Amended and Restated Employment Agreement with Gavin D. Southwell
On
January 2, 2019, Health Insurance Innovations, Inc. (the “Company”) entered into a Second Amended and Restated Employment
Agreement with Gavin D. Southwell, the Company’s President and Chief Executive Officer (the “Amended Employment Agreement”).
The Amended Employment Agreement amends and restates the First Amended and Restated Employment Agreement, dated November 15, 2016
and amended on June 14, 2017, previously entered into by the Company and Mr. Southwell.
The
Amended Employment Agreement has a term of five years (ending on December 31, 2023), and unless prior written notice of termination
is given by either party prior to the expiration of the then-current term, the term of the agreement will be automatically extended
for successive one-year periods. The Amended Employment Agreement provides that Mr. Southwell will receive a base salary of $750,000
per year and that he is also eligible to participate in any equity incentive or similar plan adopted by the Company and in any
annual bonus and long term incentive programs, in each case as determined by the Board of Directors. Mr. Southwell’s target
bonus under the management bonus plan will be equal to 100% of his salary then in effect. Mr. Southwell is also eligible to receive
all other rights and benefits offered to senior management of the Company including, but not limited to, retirement, retirement
savings, profit-sharing, pension or welfare or benefit plan, life, disability, health, dental, hospitalization and other forms
of insurance and all other fringe benefits, as well as reimbursement for all costs relating to Mr. Southwell’s U.S. visa.
During
the term of the Amended Employment Agreement, following each fiscal year beginning with the 2019 fiscal year, Mr. Southwell will
also be eligible for a restricted stock grant under the Company’s Long Term Incentive Plan (the “LTIP”) having
a value of up to 100% of Mr. Southwell’s salary then in effect based on performance during the immediately preceding fiscal
year. If awarded, these grants will vest 25% on each of the first four anniversaries of the applicable grant date.
Under
the Amended Employment Agreement, Mr. Southwell is subject to non-solicitation and non-competition covenants that expire one year
following termination of employment and to customary confidentiality obligations.
As
provided in the Amended Employment Agreement, in the event that the Company terminates Mr. Southwell’s employment without
cause or Mr. Southwell resigns for good reason at any time, Mr. Southwell will be entitled to wages in an amount equal to his
accrued salary and accrued bonus plus an amount equal to an additional twelve months of his base salary, provided that Mr. Southwell
executes a general release in favor of the Company. “Good reason” includes certain changes in Mr. Southwell’s
responsibilities or duties without his consent, reductions in salary or a material reduction in benefits, a material breach by
the Company of the Amended Employment Agreement that remains uncured following notice of the breach, or relocation of his principal
place of employment without his consent.
The
foregoing does not purport to be a complete description of the Amended Employment Agreement and is qualified in its entirety by
reference to the full text of such agreement, which is attached to this Current Report on Form 8-K as Exhibit 10.1.
Restricted
Stock Award Agreement
In
connection with entering into the Amended Employment Agreement, Mr. Southwell was on January 2, 2019 awarded a new grant of 250,000
restricted shares under the Company’s LTIP. As provided in the applicable Restricted Stock Award Agreement (the “RSA”),
such restricted shares will vest in increments of 20% each year beginning in 2020 on the date that the Company files its Annual
Report on Form 10-K, but only if the Company achieves specified Adjusted EBITDA targets for the preceding fiscal year. The vesting
target for the 2019 fiscal year will be 1.13% of 2018 Adjusted EBITDA (the “Base Adjusted EBITDA”), and the vesting
targets for the ensuing four years will be 1.28%, 1.45%, 1.64%, and 1.86% of the Based Adjusted EBITDA, respectively. The foregoing
targets are subject to increase by the Compensation Committee of the Company’s Board of Directors to reflect the impact
of future acquisitions of businesses, books of business, other operating assets, or other revenue streams based on the pro forma
expected impact to the Company’s Adjusted EBITDA of such events. The restricted shares granted under the RSA will only vest
on the applicable vesting dates if Mr. Southwell is still employed by the Company on the vesting dates and will otherwise be forfeited,
subject to accelerating of vesting upon a change of control of the Company.
The
foregoing does not purport to be a complete description of the RSA and is qualified in its entirety by reference to the full text
of such agreement, which is attached to this Current Report on Form 8-K as Exhibit 10.2.