SOUTHWESTERN LIFE HOLDINGS, INC.
EXECUTIVE STOCK AND EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of June 13, 2000, between Southwestern Life
HOLDINGS, INC., A DELAWARE CORPORATION (THE "COMPANY"), AND ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
("EXECUTIVE").
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:
▇. ▇▇▇▇▇ OF OPTIONS.
A. THE COMPANY HEREBY GRANTS TO EXECUTIVE AN OPTION (THE "OPTION") to
purchase 225,000 SHARES OF COMMON STOCK AT A PURCHASE PRICE OF $12.50 PER SHARE
(THE "EXERCISE PRICE") (as such number of shares and Exercise Price are
equitably adjusted for any stock splits, stock dividends, combinations,
recapitalizations, reorganizations, or other like change affecting the Common
Stock). Any shares of Common Stock or other securities issued or issuable upon
exercise of the Option (and any securities issued with respect to any such
Common Stock or other securities by way of a stock split, stock dividend,
recapitalization or any other RECLASSIFICATION OR REORGANIZATION) ARE REFERRED
TO HEREIN AS "OPTION STOCK."
B. Executive may exercise all or any portion of the Options at any time and
from time to time prior to their expiration as provided herein, by delivering to
the Company written NOTICE OF SUCH EXERCISE (AN "EXERCISE NOTICE") accompanied
by the aggregate Exercise Price for the Options being exercised payable in cash
or by check. The Exercise Notice shall set forth the number of Options to be
exercised and will contain a written acknowledgment that Executive has read and
has been afforded an opportunity to ask questions of the Company's management
regarding all financial and other information provided to Executive regarding
the Company. As a condition to the exercise of the Options, Executive shall
permit the Company to deliver to Executive all financial and other information
regarding the Company it believes necessary to enable Executive to make an
informed investment decision, and Executive shall make all customary investment
representations (including, without limitation, regarding securities compliance)
which the Company shall require. All Options shall expire upon the tenth
anniversary of the date of this Agreement. The Options shall be assignable and
transferable by Executive to any person.
C. In connection with the grant of Options hereunder, Executive represents
and warrants to the Company that:
1. The Options to be acquired by Executive pursuant to this Agreement shall
be acquired for his own account and not with a view to, or intention of,
distribution thereof in violation of the 1933 Act, or any applicable state
securities laws, and the Options shall not be disposed of in contravention of
the 1933 Act or any applicable state securities laws.
2. Executive is an executive employee of the Company. Executive is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Options.
3. Executive is able to bear the economic risk of its investment in the
Options for an indefinite period of time because the Options have not been
registered under the 1933 Act and, therefore, cannot be sold unless subsequently
registered under the 1933 Act or an exemption from such registration is
available.
4. Executive has had an opportunity to ask questions and receive answers
concerning the terms and conditions of the offering of the Options and has had
full access to such other information concerning the Company as he or it has
requested. Executive has reviewed, or has had an opportunity to review, the
following documents: (A) the Company's Certificate of Incorporation, as amended,
and Bylaws; (B) the loan agreements, notes and related documents with the
Company's senior lenders; and (C) such other documents, reports, and other
information (financial or otherwise) concerning the Company as Executive has
requested.
5. This Agreement constitutes the legal, valid and binding obligation of
Executive, enforceable in accordance with its terms, and the execution, delivery
and performance of this Agreement by Executive do not and shall not conflict
with, violate or cause a breach of any agreement, contract or instrument to
which Executive is a party or any judgment, order or decree to which Executive
is subject.
II. EMPLOYMENT. The Company shall employ Executive, and Executive hereby
accepts employment with the Company, upon the terms and conditions set forth in
this AGREEMENT FOR THE PERIOD BEGINNING ON THE DATE HEREOF AND ENDING AS
PROVIDED IN SECTION 6 HEREOF (THE "EMPLOYMENT PERIOD").
III. POSITION AND DUTIES.
A. During the Employment Period, Executive shall serve as the Chairman and
Chief Executive Officer of the Company and shall have the normal duties,
responsibilities and authority of the Chairman and Chief Executive Officer,
subject to the power of the Board to expand or limit such duties,
responsibilities and authority and to override actions of the Chairman and Chief
Executive Officer.
B. Executive shall report to the Board, and Executive shall devote his best
efforts and his full business time and attention (except for permitted vacation
periods and reasonable periods of illness or other incapacity) to the business
and affairs of the Company and
its Subsidiaries. Executive shall perform his duties and responsibilities to the
best of his abilities in a diligent, trustworthy, businesslike and efficient
manner.
1. FOR PURPOSES OF THIS AGREEMENT, "SUBSIDIARIES" shall mean any
corporation of which the securities having a majority of the voting power in
electing directors are, at the time of determination, owned by the Company,
directly or through one of more Subsidiaries.
IV. BASE SALARY AND BENEFITS.
A. During the Employment Period, Executive's base salary shall be $200,000
PER ANNUM OR SUCH HIGHER RATE AS THE BOARD MAY DESIGNATE FROM TIME TO TIME (THE
"BASE SALARY"), which salary shall be payable in regular installments in
accordance with the Company's general payroll practices and shall be subject to
customary withholding. In addition, during the Employment Period, Executive
shall be entitled to participate in all of the Company's employee benefit
programs for which senior executive employees of the Company and its
Subsidiaries are generally eligible.
B. The Company shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing his duties under this Agreement
which are consistent with the Company's policies in effect from time to time
with respect to travel, entertainment and other business expenses, subject to
the Company's requirements with respect to reporting and documentation of such
expenses.
C. In addition to the Base Salary, the Board may, in its sole discretion,
award a bonus to Executive following the end of each fiscal year during the
Employment Period based upon Executive's performance and the Company's operating
results during such year.
D. The Company shall reimburse Executive for the costs and expenses of
maintaining an office in Waco, Texas, including, without limitation, costs and
expenses related to rent, secretarial support, a personal driver and utilities,
which reimbursement shall in no event exceed $150,000 per annum. The Company
acknowledges that a portion of the work hours of Executive's driver and
secretarial support may be devoted to matters that are not related to
Executive's performance of this Agreement.
V. TERMINATION.
A. The Employment Period shall continue (i) until Executive's resignation,
death or disability or other incapacity (as determined by the Board in its good
faith judgment) or (ii) until the Board determines to terminate Executive for
any reason or no reason.
B. If the Employment Period is terminated by the Company without Cause then
during the sixth-month period commencing on the date of termination the Company
shall pay to Executive an aggregate amount equal to one-half of Executive's Base
Salary, payable in equal installments on the Company's regular salary payment
dates.
C. If the Employment Period is terminated by the Company for Cause or is
TERMINATED PURSUANT TO CLAUSE (A)(I) above, Executive shall be entitled to
receive his Base Salary through the date of termination.
1. All of Executive's rights to fringe benefits and bonuses hereunder (if
any) which accrue after the termination of the Employment Period shall cease
upon such termination, INCLUDING, WITHOUT LIMITATION, THE BENEFITS SET FORTH IN
SECTION 4(D).
D. FOR PURPOSES OF THIS AGREEMENT, "CAUSE" shall mean (i) the commission of
a felony or a crime involving moral turpitude or the commission of any other act
or omission involving dishonesty, disloyalty or fraud with respect to the
Company or any of its Subsidiaries, (ii) intentional conduct tending to bring
the Company or any of its Subsidiaries into substantial public disgrace or
disrepute, (iii) substantial and repeated failure to perform duties as
reasonably directed by the Board, (iv) gross negligence or willful misconduct
with respect to the Company or any of its Subsidiaries or (v) any other material
breach of this Agreement.
VI. CONFIDENTIAL INFORMATION. Executive acknowledges that the information,
observations and data obtained by him while employed by the Company and its
Subsidiaries CONCERNING THE BUSINESS OR AFFAIRS OF THE COMPANY, OR ANY OF ITS
SUBSIDIARIES ("CONFIDENTIAL INFORMATION") are the property of the Company or
such Subsidiary. Therefore, Executive agrees that he shall not disclose to any
unauthorized person or use for his own purposes any Confiden tial Information
without the prior written consent of the Board, unless and to the extent that
the aforementioned matters become generally known to and available for use by
the public other than as a result of Executive's acts or omissions. Executive
shall deliver to the Company at the termination of the Employment Period, or at
any other time the Company may request, all memoranda, notes, plans, records,
reports, computer tapes, printouts and software and other documents and data
(and copies thereof) relating to the Confidential Information, Work Product (as
defined below) or the business of the Company or any Subsidiary which he may
then possess or have under his control.
VII. INVENTIONS AND PATENTS. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable) which
relate to the Company's or any of its Subsidiaries' actual or anticipated
business, research and development or existing or future products or services
and which are conceived, developed or made by Executive while employed BY THE
COMPANY AND ITS SUBSIDIARIES ("WORK PRODUCT") belong to the Company or such
Subsidiary. Executive shall promptly disclose such Work Product to the Board and
perform all actions reasonably requested by the Board (whether during or after
the Employment Period) to establish and confirm such ownership (including,
without limitation, assignments, consents, powers of attorney and other
instruments).
VIII. NON-COMPETE, NON-SOLICITATION. In further consideration of the
compensation to be paid to Executive hereunder, Executive acknowledges that in
the course of
his employment with the Company he shall become familiar with the Company's
trade secrets and with other Confidential Information concerning the Company and
its Subsidiaries and that his services shall be of special, unique and
extraordinary value to the Company and its Subsidiaries. Therefore, Executive
agrees that:
1. NON COMPETE. During the Employment Period and for a period of six MONTHS
THEREAFTER (THE "NONCOMPETE PERIOD"), he shall not directly or indirectly own
any interest in, manage, control, participate in, consult with, render services
for, or in any manner engage in any business competing with the businesses of
the Company or its Subsidiaries, as such businesses exist or are in process on
the date of the termination of Executive's employment, within any geographical
area in which the Company or its Subsidiaries engage or plan to engage in such
businesses. Nothing herein shall prohibit Executive from being a passive owner
of not more than 2% of the outstanding stock of any class of a corporation which
is publicly traded, so long as Executive has no active participation in the
business of such corporation.
A. NON-SOLICITATION. During the Noncompete Period, Executive shall not
directly or indirectly through another entity (i) induce or attempt to induce
any employee of the Company or any Subsidiary to leave the employ of the Company
or such Subsidiary, or in any way interfere with the relationship between the
Company or any Subsidiary and any employee thereof, (ii) hire any person who was
an employee of the Company or any Subsidiary at any time during the Employment
Period or (iii) induce or attempt to induce any customer, supplier, licensee,
licensor, franchisee or other business relation of the Company or any Subsidiary
to cease doing business with the Company or such Subsidiary, or in any way
interfere with the relationship between any such customer, supplier, licensee or
business relation and the Company or any Subsidiary (including, without
limitation, making any negative statements or communications about the Company
or its Subsidiaries).
B. ENFORCEMENT. IF, AT THE TIME OF ENFORCEMENT OF THIS SECTION 8, a court
holds that the restrictions stated herein are unreasonable under circumstances
then existing, the parties hereto agree that the maximum period, scope or
geographical area reasonable under such circumstances shall be substituted for
the stated period, scope or area. Because Executive's services are unique and
because Executive has access to Confidential Information and Work Product, the
parties hereto agree that money damages would not be an adequate remedy for any
breach of this Agreement. Therefore, in the event a breach or threatened breach
of this Agreement, the Company or its successors or assigns may, in addition to
other rights and remedies existing in their favor, apply to any court of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce, or prevent any violations of, the provisions hereof
(without posting a bond or other security).
IX. EXECUTIVE'S REPRESENTATIONS. Executive hereby represents and warrants
to the Company that (i) the execution, delivery and performance of this
Agreement by Executive do not and shall not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity which would prohibit
his performance under this Agreement and (iii) upon the execution and delivery
of this Agreement by the Company, this Agreement shall be the valid and binding
obligation of Executive, enforceable in accordance with its terms. Executive
hereby acknowledges and represents that he has consulted with independent legal
counsel regarding his rights and obligations under this Agreement and that he
fully understands the terms and conditions contained herein.
X. INDEMNIFICATION.
A. RIGHT TO INDEMNIFICATION. If Executive is made a party or is threatened
to be made a party to or is otherwise involved (including involvement as a
witness) in any action, SUIT OR PROCEEDING, WHETHER CIVIL, CRIMINAL,
ADMINISTRATIVE OR INVESTIGATIVE (A "PROCEEDING"), by reason of the fact that he
is or was a director or officer of the Company or, while a director or officer
of the Company, is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to an
employee benefit plan, whether the basis of such proceeding is alleged action in
an official capacity as a director or officer or in any other capacity while
serving as a director or officer, the Company shall indemnify and hold harmless
Executive to the fullest extent authorized by the Delaware General Corporation
Law, as the same exists or may hereafter be amended (but, in the case of any
such amendment that requires the Company to provide narrower indemnification
rights than permitted prior thereto, such amendment shall not ELIMINATE OR
REDUCE THE EFFECT OF THIS SECTION 10(A) in respect of any matter occurring, or
any cause of action, suit or claim that would accrue or arise prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, excise exercise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by Executive in connection therewith
and such indemnification shall continue after Executive has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
Executive's heirs, EXECUTORS AND ADMINISTRATORS; PROVIDED, HOWEVER, THAT, EXCEPT
AS PROVIDED IN SECTION 10(B) hereof with respect to proceedings to enforce
rights to indemnification, the Company shall indemnify Executive in connection
with a proceeding (or part thereof) initiated by Executive only if such
proceeding (or part thereof) was authorized by the Board of Directors of the
Company. In addition, to the fullest extent permitted by the Delaware General
Corporation Law as it now exists or may hereafter be amended (but, in the case
of any such amendment that requires the Company to provide narrower
indemnification rights than permitted prior thereto, such AMENDMENT SHALL NOT
ELIMINATE OR REDUCE THE EFFECT OF THIS SECTION 10(A) in respect of any matter
occurring, or any cause of action, suit or claim that would accrue or arise
prior to such amendment), the Company shall pay the expenses incurred in
defending any such proceeding in ADVANCE OF ITS FINAL DISPOSITION (AN "ADVANCE
OF EXPENSES"); PROVIDED, HOWEVER, that, if and to the extent that the Delaware
General Corporation Law requires, an advance of expenses incurred by Executive
in his capacity as a director or officer (and not in any other capacity in which
service was or is rendered by Executive, including, without limitation, service
to an employee benefit PLAN) SHALL BE MADE ONLY UPON DELIVERY TO THE COMPANY OF
AN UNDERTAKING (AN "UNDERTAKING"), by or on behalf of Executive, to repay all
amounts so advanced if it shall ultimately be determined BY FINAL JUDICIAL
DECISION FROM WHICH THERE IS NO FURTHER RIGHT TO APPEAL (A "FINAL ADJUDICATION")
THAT EXECUTIVE IS NOT ENTITLED TO BE INDEMNIFIED FOR SUCH EXPENSES UNDER THIS
SECTION 10(A) or otherwise.
B. PROCEDURE FOR INDEMNIFICATION. Any indemnification of Executive or
ADVANCE OF EXPENSES UNDER SECTION 10(A)(1) shall be made promptly, and in any
event within forty-five days (or, in the case of an advance of expenses, twenty
days), upon the written request of Executive. If a determination by the Company
that Executive is entitled to indemnification PURSUANT TO THIS SECTION 10 is
required, and the Company fails to respond within sixty days to a written
request for indemnity, the Company shall be deemed to have approved the request.
If the Company denies a written request for indemnification or advance of
expenses, in whole or in part, or if payment in full pursuant to such request is
not made within forty-five days (or, in the case of an advance of expenses,
twenty days), the right to indemnification or advances as granted BY THIS
SECTION 10 shall be enforceable by Executive in any court of competent
jurisdiction. Executive's costs and expenses incurred in connection with
successfully establishing his or her right to indemnification, in whole or in
part, in any such action shall also be indemnified by the Company. It shall be a
defense to any such action (other than an action brought to enforce a CLAIM FOR
THE ADVANCE OF EXPENSES WHERE THE UNDERTAKING REQUIRED PURSUANT TO SECTION
10(A), if any, has been tendered to the Company) that Executive has not met the
standards of conduct which make it permissible under the Delaware General
Corporation Law for the Company to indemnify Executive for the amount claimed,
but the burden of such defense shall be on the Company. Neither the failure of
the Company (including its Board of Directors, independent legal counsel or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of Executive is proper in the circumstances because
he has met the applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the Company (including its Board
of Directors, independent legal counsel or its stockholders) that Executive has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that Executive has not met the applicable standard of
conduct.
C. The Company shall purchase and keep in force for the benefit of all
officers and directors of the Company (including Executive) directors and
officers insurance coverage of not less than $____________ in face amount.
XI. SURVIVAL. SECTIONS 6, 7 AND 8 AND SECTIONS 11 THROUGH 19 shall survive
and continue in full force in accordance with their terms notwithstanding any
termination of the Employment Period.
XII. NOTICES. Any notice provided for in this Agreement shall be in writing
and shall be either personally delivered, or mailed by first class mail, return
receipt requested, to the recipient at the address below indicated:
NOTICES TO EXECUTIVE:
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NOTICES TO THE COMPANY:
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Southwestern Life Holdings, Inc.
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Attention: Board of Directors
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or mailed.
XIII. SEVERABILITY. Whenever possible, each provision of this Agreement
shall 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 shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
XIV. COMPLETE AGREEMENT. This Agreement, those documents expressly referred
to herein 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.
XV. 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.
XVI. 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.
XVII. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and assigns, except that Executive may not assign
his rights or delegate his obligations hereunder without the prior written
consent of the Company.
XVIII. CHOICE OF LAW. THE CORPORATE LAW OF DELAWARE SHALL GOVERN ALL ISSUES
CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS. ALL OTHER
ISSUES AND
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION
OF THIS AGREEMENT AND THE EXHIBITS AND SCHEDULES HERETO SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF
THE STATE OF TEXAS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION
OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF TEXAS.
XIX. AMENDMENT AND WAIVER. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company and Executive, and
no course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
SOUTHWESTERN LIFE HOLDINGS, INC.
By: /s/▇▇▇▇▇ ▇▇▇▇▇▇▇
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Its: President & COO
/s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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