EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") dated as of December 13, 2002
("Agreement Date") by and between Financial Industries Corporation, a Texas
company ("Company"), and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Executive"), a resident of Texas.
Executive is currently serving as Vice President, General Counsel and Secretary
of the Company. The parties desire to enter into this Agreement, which is
intended to more fully embody the agreement among the parties as to Executive's
employment. In consideration of the mutual agreements contained herein, the
Company and Executive agree as follows:
ARTICLE I.
DEFINITIONS
The terms set forth below have the following meanings (such meanings to be
applicable to both the singular and plural forms, except where otherwise
expressly indicated):
1.1 "Accrued Annual Bonus" means the amount of any Annual Bonus earned but not
yet paid with respect to any Fiscal Year ended prior to the Date of Termination.
1.2 "Accrued Base Salary" means the amount of Executive's Base Salary which is
accrued but not yet paid as of the Date of Termination.
1.3 "Affiliate" means any Person that directly or indirectly controls, is
controlled by, is under common control with, a Company. For the purposes of this
definition, the term "control" when used with respect to any Person means (a)
the power to direct or cause the direction of management or policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, or (b) for purposes of Section 1.11 and
Article VII, the power substantially to influence the direction of strategic
management policies of such Person, and provided a Company has a direct or
indirect commercial relationship with such Person, all as determined by the
Compensation Committee of the Board or its successor.
1.4 "Agreement" -- as defined in the introductory paragraph of this Agreement.
1.5 "Agreement Date" -- as defined in the introductory paragraph of this
Agreement.
1.6 "Anniversary Date" means any annual anniversary of the Agreement Date.
1.7 "Annual Bonus" -- as described in Section 4.2.
1.8 "Base Salary" -- as described in Section 4.1.
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1.9 "Beneficiary" -- as defined in Section 8.36.
1.10 "Board" means the Board of Directors of Company unless the context
indicates otherwise.
1.11 "Cause" means any of the following:
(a) Executive's conviction of, plea of guilty to, or plea of nolo
contendere to a felony or misdemeanor (other than a traffic-related
felony or misdemeanor) that involves fraud, dishonesty or moral
turpitude,
(b) any willful action by Executive resulting in criminal, civil or
internal Company conviction, sanction or judgment under Federal or
State workplace harassment or discrimination laws or internal Company
workplace harassment, discrimination or other workplace policy under
which such action could be and could reasonably be expected to be
grounds for immediate termination of a member of Senior Management
(other than mere failure to meet performance goals, objectives, or
measures),
(c) Executive's willful and intentional material breach of this Agreement,
(d) Executive's habitual neglect of duties, (other than resulting from
Executive's incapacity due to physical or mental illness) which
results in substantial financial detriment to the Company or any
Affiliate,
(e) Executive's personally engaging in such conduct as results or is
likely to result in (i) substantial damage to the reputation of the
Company or any Affiliate, as a respectable business, and (ii)
substantial financial detriment (whether immediately or over time) to
the Company or any Affiliate,
(f) Executive's willful and intentional material misconduct in the
performance or gross negligence of his duties under this Agreement
that results in substantial financial detriment to the Company or any
Affiliate,
(g) Executive's intentional failure (including a failure caused by gross
negligence) to cause the Company or any Affiliate to comply with
applicable law and regulations material to the business of the Company
which results in substantial financial detriment to the Company or any
Affiliate, or
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(h) Executive's willful or intentional failure to comply in all material
respects with a specific written direction of the Chief Executive
Officer of the Company that is consistent with normal business
practice and not inconsistent with this Agreement and Executive's
responsibilities hereunder.
For purposes of clauses (c), (d), (e), (f) and (g) of the preceding sentence,
Cause shall not mean the mere existence or occurrence of any one or more of the
following, and for purposes of clause (h) of the preceding sentence, Cause shall
not mean the mere existence or occurrence of item (iv) below:
(i) bad judgment,
(ii) negligence, other than Executive's habitual neglect of
duties or gross negligence;
(iii)any act or omission that Executive believed in good faith
to have been in the interest of the Company (without intent
of Executive to gain therefrom, directly or indirectly, a
profit to which he was not legally entitled), or
(iv) failure to meet performance goals, objectives or measures;
provided, that for purposes of clauses (c), (d), (e), (f), (g) and (h), any act
or omission that is curable shall not constitute Cause unless the Company gives
Executive written notice of such act or omission that specifically refers to
this Section and, within 10 days after such notice is received by Executive,
Executive fails to cure such act or omission.
1.12 "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
1.13 "Company" - as defined in the introductory paragraph to this Agreement.
1.14 "Competitive Business" means as of any date any corporation or other Person
(and any branch, office or operation thereof) that engages in, or proposes to
engage in:
(a) the underwriting, reinsurance, marketing or sale of (i) any form of
insurance of any kind that any of the Companies as of such date does,
or has under active consideration a proposal to, underwrite, reinsure,
market or sell (any such form of insurance, a "Company Insurance
Product") or (ii) any other form of insurance that is marketed or sold
in competition with any Company Insurance Product, or
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(b) any other business that as of such date is a direct and material
competitor of a Company and its Affiliates to the extent that prior to
the Date of Termination any of the Companies or its Affiliates engaged
at any time within 12 months in or had under active consideration a
proposal to engage in such competitive business;
and that is located anywhere in the United States where such Company or its
Affiliates is then engaged in, or has under active consideration a proposal to
engage in, any of such activities.
1.15 "Current CEO" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, the Chairman, President and Chief
Executive Officer of the Company as of the Agreement Date.
1.16 "Date of Termination" means the date of the receipt of the Notice of
Termination by Executive (if such Notice is given by or on behalf of Company) or
by Company (if such Notice is given by Executive), or any later date, not more
than 15 days after the giving of such Notice, specified in such notice, as of
which Executive's employment with the Companies shall be terminated; provided,
however, that:
(i) if Executive's employment is terminated by reason of death, the
Date of Termination shall be the date of Executive's death; and
(ii) if Executive's employment is terminated by reason of Disability,
the Date of Termination shall be the 30th day after Executive's
receipt of the physician's certification of Disability, unless,
before such date, Executive shall have resumed the full-time
performance of Executive's duties; and
(iii)if Executive terminates his employment without Good Reason, the
Date of Termination shall be the 30th day after the giving of
such Notice; and
(iv) if no Notice of Termination is given, the Date of Termination
shall be the last date on which Executive is employed by the
Company
1.17 "Disability" means a mental or physical condition which renders Executive
unable or incompetent to carry out the material job responsibilities which such
Executive held or the material duties to which Executive was assigned at the
time the disability was incurred, which has existed for at least six months.
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1.18 "Employment Period" -- as defined in Section 3.1.
1.19 "Executive" -- as defined in the introductory paragraph of this Agreement.
1.20 "Fiscal Year" means the calendar year, which is the period used in
connection with the preparation of the consolidated financial statements of
Company.
1.21 "Good Reason" means the occurrence of any one of the following events
unless Executive specifically agrees in writing that such event shall not be
Good Reason:
(a) any material breach of the Agreement by the Company, including
any of the following, each of which shall be deemed material:
(i) any adverse change in the title, status, responsibilities,
authorities or perquisites of Executive which is initiated
by any person other than the Current CEO;
(ii) causing or requiring Executive to report to anyone other
than the Chief Executive Officer of the Company;
(iii)assignment to Executive of duties materially inconsistent
with his position and duties described in this Agreement,
including status, offices, or responsibilities as
contemplated under Section 2.1or any other action by the
Company or any of the Life Company Subsidiaries which
results in an adverse change in such position, status,
offices, titles or responsibilities;
(iv) any reduction or failure to pay Executive's Base Salary in
violation of Section 4.1 or his Annual Bonus in violation of
Section 4.2;
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(v) any reduction in bonus or incentive opportunity; provided
that no such reduction shall be deemed to occur merely
because the Company revises or modifies the structure of or
performance factors taken into account (or the degree to
which any such performance factors are taken into account)
under any bonus or incentive plan or arrangement; provided
further that the Executive shall not be treated less
favorably than the other members of Senior Management;
provided, that no act or omission described in clauses (i) through (v) of this
Section shall constitute Good Reason unless Executive gives Company written
notice of such act or omission and the Company fails to cure such act or
omission within 30-days after delivery of such notice (except that Executive
shall not be required to provide such notice in case of intentional acts or
omissions by a Company or more than once in cases of repeated acts or
omissions); or
(b) relocation of the Company's executive offices or Executive's own
office location to a location that is outside the Austin, Texas
metropolitan area;
In the event of an occurrence or omission constituting Good Reason, Executive
shall not be entitled to terminate his employment for Good Reason unless within
3 months after Executive first obtains actual knowledge of such an event
constituting Good Reason, he notifies Company of the events constituting such
Good Reason and of his intention to terminate employment for Good Reason by a
Notice of Termination.
1.22 "including" means including without limitation.
1.23 "Life Company Subsidiaries" means Investors Life Insurance Company of North
America and Family Life Insurance Company, which companies are indirect, wholly
owned subsidiaries of the Company as of the date of this Agreement. The term
also includes any life insurance company which becomes an Affiliate of the
Company on or after the date of this Agreement.
1.24 "Notice of Termination" means a written notice of termination of
Executive's employment given in accordance with Section 6.1 by Company on behalf
of the Companies, or by Executive, as the case may be, which sets forth (a) the
specific termination provision in this Agreement relied upon by the party giving
such notice, (b) in reasonable detail the specific facts and circumstances
claimed to provide a basis for such Termination of Employment, and (c) if the
Date of Termination is other than the date of receipt of such Notice of
Termination, the Date of Termination.
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1.25 "Person" means any individual, sole proprietorship, partnership, joint
venture, limited liability company, trust, unincorporated organization,
corporation, institution, public benefit corporation, entity or government
instrumentality, division, agency, body or department.
1.26 "Prorata Annual Bonus" means the product of (i) the Target Annual Bonus
(provided that no effect shall be given to any reduction in such Target Annual
Bonus that would qualify as Good Reason if Executive were to terminate his
employment on account thereof) multiplied by (ii) a fraction of which the
numerator is the number of days which have elapsed in such Fiscal Year through
the Date of Termination and the denominator of which is 365.
1.27 "Retirement" means any Termination of Employment after Executive reaches
age 65, other than for Cause and other than for Good Reason.
1.28 "Senior Management" means Vice Presidents and the General Counsel of the
Company.
1.29 "Target Annual Bonus" -- as described in 4.2.
1.30 "Target Annual Goals" - as described in Section 4.2.
1.31 "Taxes" means the incremental federal, state, and local income taxes
payable by Executive with respect to any applicable item of income.
1.32 "Termination For Good Reason" means a Termination of Employment by
Executive for a Good Reason.
1.33 "Termination of Employment" means a termination by the Company or Executive
of Executive's employment with the Company and its Affiliates.
1.34 "Termination Without Cause" means a Termination of Employment by the
Company for any reason other than Cause or Executive's death or Disability.
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ARTICLE II.
DUTIES
2.1 Duties. Company shall employ Executive during the Employment Period as one
of the Vice Presidents of the Company reporting directly to the CEO. Unless
Executive is assigned by the Current CEO to other duties of similar importance,
the Company shall employ Executive as the General Counsel, and Executive shall
have the authority, duties, and responsibilities as are commensurate and
consistent with such position and title, and as provided in, Company's by-laws.
During the Employment Period, Executive shall follow the lawful directives of
the CEO which are consistent with stated Board policy. During the Employment
Period, Executive shall perform the duties assigned to him, and shall devote his
full business time, attention and effort, excluding any periods of disability,
vacation, or sick leave to which Executive is entitled, to the affairs of the
Company and shall use his best efforts to promote the interests of the Company.
The Executive shall not engage in any other business or commercial activity for
profit, including service on the board of directors of any corporation other
than the Company, without the prior written consent of the CEO. The preceding
sentence is not intended to prevent Executive from acting as a passive investor
in any business which does not involve the personal efforts of Executive. The
Executive acknowledges that his business time is not limited to a fixed number
of hours per week.
ARTICLE III.
EMPLOYMENT PERIOD
3.1 Employment Period. Subject to the termination provisions hereinafter
provided, the term of Executive's employment under this Agreement (the
"Employment Period") shall begin on the Agreement Date and end on the
Anniversary Date which is three years after such date or, if later, such later
date to which the Employment Period is extended pursuant to the following
sentence. On the third anniversary of the Agreement Date, and each Anniversary
Date thereafter, the Employment Period shall be automatically extended for an
additional one-year term until, at any time at least 90 days prior to the third
Anniversary Date of the initial term, or at least 90 days prior to the end of
each one-year extension of this Agreement, Company delivers written notice (an
"Expiration Notice") to Executive or Executive delivers an Expiration Notice to
Company, in either case, to the effect that the Agreement shall not be renewed
for an additional one-year term (the "Expiration Date"). The employment of
Executive by Company shall not be terminated other than in accordance with
Article VI.
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ARTICLE IV.
COMPENSATION
4.1 Salary. Executive shall be paid in accordance with normal payroll practices
(but not less frequently than monthly) an annual salary at a rate of $190,000.00
per year ("Base Salary"). During the Employment Period, the Base Salary shall be
reviewed periodically and may be increased from time to time as shall be
determined by the Chief Executive Officer and subsequently ratified by the
Board. After any such increase, the term "Base Salary" shall thereafter refer to
the increased amount. Any increase in Base Salary shall not limit or reduce any
other obligation of the Company to Executive under this Agreement. Base Salary
shall not be reduced at any time without the express written consent of
Executive.
4.2 Annual Bonus.
(a) Executive shall be paid an annual bonus ("Annual Bonus") in accordance
with the terms hereof for each Fiscal Year which begins or ends during
the Employment Period. Executive shall be eligible for an Annual Bonus
based upon target performance goals (the "Target Annual Goals"), as
determined by the Chief Executive Officer on an annual basis, after
consultation with Executive and in accordance with normal Company
administrative practices for Senior Management, which provides for a
payment opportunity of at least the highest target level generally
available to Senior Management under any Company annual bonus plan
("Target Annual Bonus") upon the Executive's achievement of the Target
Annual Goals. Each such Annual Bonus is intended to comply with the
provisions of section 162(m) of the Code.
(b) The entire Annual Bonus that is payable to Executive with respect to
the Fiscal Year shall be paid in cash as soon as practicable after the
Chief Executive Officer has determined whether and the degree to which
Target Annual Goals have been achieved following the close of such
Fiscal Year.
(c) The overall plan for the Company's Target Annual Goals for Senior
Management is determined by the Chief Executive Officer.
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4.3 Savings and Retirement Plans. Executive shall be eligible to participate
during the Employment Period in any Company's savings and retirement plans,
practices, policies and programs, in accordance with the terms thereof, at the
highest available level, if any, applicable from time to time to members of
Senior Management, including any supplemental executive retirement plan.
ARTICLE V.
OTHER BENEFITS
5.1 Welfare Benefits. During the Employment Period, Executive and his family
shall be eligible to participate in at the highest level, and shall receive all
benefits under, any Company's welfare benefit plans, practices, policies and
programs provided or made generally available by the Company to Senior
Management (including medical, dental, disability, salary continuance, employee
life, group life, dependent life, accidental death and travel accident insurance
plans and programs), in accordance with their terms as in effect from time to
time.
5.2 Fringe Benefits. During the Employment Period, Executive shall be entitled
to fringe benefits generally applicable to Senior Management in accordance with
their terms as in effect from time to time.
5.3 Vacation. During the Employment Period, Executive shall be entitled to paid
vacation time under the plans, practices, policies, and programs generally
applicable to members of Senior Management in accordance with their terms as in
effect from time to time.
5.4 Expenses. Executive shall be promptly reimbursed for all actual and
reasonable employment-related business expenses he incurs during the Employment
Period in accordance with any Company's practices, policies, and procedures
generally applicable to members of Senior Management in accordance with their
terms as in effect from time to time, including the timely submission of
required receipts and accountings. Notwithstanding the foregoing, no expense
shall be reimbursed more than once.
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ARTICLE VI.
TERMINATION BENEFITS
6.1 Termination for Cause or Other than for Good Reason, etc.
(a) If Company terminates Executive's employment with the Companies for
Cause or Executive terminates his employment other than for Good
Reason, death or Disability, the Executive shall be entitled to
receive immediately after the Date of Termination a lump sum amount
equal to the sum of Executive's Accrued Base Salary and Accrued Annual
Bonus, and Executive shall not be entitled to receive any severance or
other payment, other than compensation and benefits which relate to or
derive from Executive's employment with the Company on or prior to the
Date of Termination and which are otherwise payable in case of
termination for Cause or other than for Good Reason, death or
Disability, as applicable.
(b) Executive's employment may be terminated for Cause only if (i) Company
provides Executive (before the Date of Termination) with at least
twenty days advance written notice and specifies in detail in writing
the basis of a claim of Cause and provides Executive, with or without
counsel, at Executive's election, an opportunity to be heard and
present arguments and evidence on Executive's behalf , (ii) the Chief
Executive Officer of the Company determines that the acts or omissions
constitute Cause which Executive failed to cure after being given an
opportunity to cure if required by Section 1.11, and to the effect
that Executive's employment should be terminated for Cause and (iii)
Company thereafter provides Executive a Notice of Termination which
specifies in detail the basis of such Termination of Employment for
Cause.
6.2 Termination for Death or Disability. If, before the end of the Employment
Period, Executive's employment terminates due to his death or Disability,
Executive or his Beneficiaries, as the case may be, shall be entitled to receive
immediately after the Date of Termination, a lump sum amount which is equal to
the sum of Executive's Accrued Base Salary, Accrued Annual Bonus, and Prorata
Annual Bonus.
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6.3 Termination Without Cause or for Good Reason. In the event of a Termination
Without Cause or a Termination for Good Reason (in either case occurring during
the Employment Period), Executive shall be entitled to receive the following:
(a) promptly after the Date of Termination, (but in no event later than
ten business days after the Date of Termination) a lump sum amount
equal to the sum of Executive's Accrued Base Salary, Accrued Annual
Bonus and Prorata Annual Bonus;
(b) promptly after the Date of Termination, (but in no event later than
ten business days after the Date of Termination), a lump sum amount
equal to the product of (i) the sum of Base Salary plus Target Annual
Bonus for the Fiscal Year during which the Date of Termination occurs
(provided that no effect shall be given to any reduction in Target
Annual Bonus that would qualify as Good Reason if Executive were to
terminate his employment on account thereof), and multiplied by (ii)
two;
(c) the benefits specified in Section 5.1 and Section 5.2 to which
Executive is entitled as of the Date of Termination, for the greater
of (i) the number of months remaining in the initial three-year term
of this Agreement or (ii) twenty-four months following his Date of
Termination, subject to the terms of applicable plans, programs or
policies; provided that the Executive shall pay the same amount for
such benefits as covered members of Senior Management who are actively
employed would pay; provided further that any coverage required to be
offered by the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended, shall begin after such benefits otherwise cease hereunder;
Notwithstanding anything herein to the contrary, the benefits provided in
Section 6.3 shall be provided only upon Executive's execution of a release and
waiver as described in Section 6.5.
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6.4 Other Rights. This Agreement shall not prevent or limit Executive's
continuing or future participation in any benefit, bonus, incentive or other
plan, program or policy provided by the Company and for which Executive may
qualify, and shall not impair the Company's rights to amend or terminate any
benefit, bonus, incentive or other plan program or policy; provided however that
no such amendment or termination shall treat Executive less favorably than other
Senior Management and Executive's benefits, bonus and incentives in the
aggregate shall not be reduced. Amounts which are vested benefits or which
Executive is otherwise entitled to receive under any plan, program or policy and
any other payment or benefit required by law at or after the Date of Termination
shall be payable in accordance with such plan, program or policy or applicable
law except as expressly modified by this Agreement.
6.5 Waiver and Release. Notwithstanding anything herein to the contrary, upon
any Termination of Employment (other than due to death)
(a) the Executive shall execute a release and waiver in form mutually
agreed by Executive and the Company (which agreement neither party
shall unreasonably withhold) which releases, waives, and forever
discharges the Company, its Affiliates, and their respective
subsidiaries, affiliates, employees, officers, shareholders, members,
partners, directors, agents, attorneys, predecessors, successors and
assigns, from and against any and all claims, liabilities, demands,
causes of action, costs, expenses, attorneys' fees, damages and
obligations of every kind and nature in law, equity, or otherwise,
known and unknown, suspected and unsuspected, disclosed and
undisclosed, including but not limited to any and all such claims and
demands directly or indirectly arising out of or in any way connected
with the Executive's employment with and services as a director of the
Company and its Affiliates; claims or demands related to compensation
or other amounts under any compensatory arrangement, stock, stock
options, or any other ownership interests in the Company or any
Affiliate, vacation pay, fringe benefits, expense reimbursements,
severance benefits, or any other form of compensation or equity;
claims pursuant to any federal, state, local law, statute of cause of
action including, but not limited to, the federal Civil Rights Act of
1964, as amended; the federal Age Discrimination in Employment Act of
1967, as amended; the federal Americans with Disabilities Act of 1990;
tort law, contract law; wrongful discharge, discrimination;
defamation; harassment; or emotional distress; provided that
Executive's waiver and release shall not relieve the Companies from
any of the following obligations, to the extent they are to be
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performed after the date of the release and waiver: (i) payment of
amounts due under Sections 6.1, 6.2 or 6.3, as applicable, (ii) any
obligations under the. second sentence of Section 6.4, and (iii)
payment of any gross-up amount due under Article VIII; and provided
further that (x) neither party shall release the other from his or its
obligations under Article IX of this agreement, to the extent such
obligations are to be performed after the Date of Termination, and (y)
Executive shall not be precluded from defending against Cause Claims
(as defined in Section 6.5(b)); and
(b) the Company shall execute a release and waiver in form mutually agreed
by Executive and the Company (which agreement neither party shall
unreasonably withhold) which releases, waives, and forever discharges
the Executive and his executors, administrators, successors and
assigns, from and against any and all claims, liabilities, demands,
causes of action, costs, expenses, attorneys' fees, damages and
obligations of every kind and nature in law, equity, or otherwise,
known and unknown, suspected and unsuspected, disclosed and
undisclosed, including but not limited to any and all such claims and
demands directly or indirectly arising out of or in any way connected
with the Executive's employment with or service as a director of the
Company and its Affiliates, but excluding any such claims liabilities,
demands, causes of action, costs, expenses, attorneys' fees, damages
or obligations arising out of or in any way connected with events,
acts or conduct giving rise to or in any way connected with
Executive's Termination of Employment for Cause ("Cause Claims"),
provided, however, that (i) neither party shall release the other from
his or its obligations under Article IX of this agreement, to the
extent such obligations are to be performed after the Date of
Termination, and (ii) Executive shall not be precluded from defending
against Cause Claims.
(c) Executive hereby agrees that the execution of this Agreement is
adequate consideration for the execution of such a release, and hereby
acknowledges that the Company would not have executed this Agreement
had Executive not agreed to execute such a release.
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ARTICLE VII.
RESTRICTIVE COVENANTS
7.1 Non-Competition. Executive shall not at any time during the period beginning
on the Agreement Date and ending on the second anniversary of the Date of
Termination (whether or not during the Term), directly or indirectly, in any
capacity:
(a) engage or participate in, become employed by, serve as a director of,
or render advisory or consulting or other services in connection with,
any Competitive Business; provided, however, that after the Date of
Termination this Section 7.1(a) shall not preclude Executive from
being an employee of, or consultant to, any business unit of a
Competitive Business if (i) such business unit does not qualify as a
Competitive Business in its own right and (ii) Executive does not have
any direct or indirect involvement in, or responsibility for, any
operations of such Competitive Business that cause it to qualify as a
Competitive Business; or
(b) make or retain any financial investment, whether in the form of equity
or debt, or own any interest, in any Competitive Business; provided,
however, that nothing in this subsection shall restrict Executive from
making an investment in any Competitive Business if such investment
(i) represents no more than 1% of the aggregate market value of the
outstanding capital stock or debt (as applicable) of such Competitive
Business, (ii) does not give Executive any right or ability, directly
or indirectly, to control or influence the policy decisions or
management of such Competitive Business, and (iii) does not create a
conflict of interest between Executive's duties under this Agreement
and his interest in such investment.
7.2 Non-Solicitation. Executive shall not at any time during the period
beginning on the Agreement Date and ending on the second anniversary of the Date
of Termination (whether or not during the Term), directly or indirectly:
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(a) other than in connection with the good-faith performance of his duties
as an officer of any of the Companies, encourage any employee or agent
of the Company or any Affiliate to terminate his relationship with the
Company or any Affiliate;
(b) solicit the employment of or the engagement as a consultant or advisor
of, any employee or agent of the Company or any Affiliate (other than
by the Company or an Affiliate), or cause or encourage any Person to
do any of the foregoing;
(c) establish (or take preliminary steps to establish) a business with, or
encourage others to establish (or take preliminary steps to establish)
a business with, any employee or agent of the Company or any
Affiliate; or
(d) interfere with the relationship of any of the Companies with, or
endeavor to entice away from any of the Companies, any Person who or
which at any time during the period commencing one year prior to the
Agreement Date was or is a material client or material supplier of, or
maintained a material business relationship with, the Company or an
Affiliate.
7.3 Confidentiality. The Executive acknowledges that in the course of performing
services for the Companies and Affiliates, he may create, develop, learn of,
receive or contribute non-public information, ideas, processes, methods,
designs, devices, inventions, data, models and other information relating to the
Companies and their Affiliates or their products, services, businesses,
operations, employees or customers, whether in tangible or intangible form, and
that the Company or its Affiliates desire to protect and keep secret and
confidential, including trade secrets and information from third parties that
the Companies or their Affiliates are obligated to keep confidential
("Confidential Information"). Confidential Information shall not include: (i)
information that is or becomes generally known through no fault of Executive;
(ii) information received from a third party outside of the Company that was
disclosed without a breach of any confidentiality obligation; or (iii)
information approved for release by written authorization of the Company. The
Executive recognizes that all such Confidential Information is the sole and
exclusive property of the Company and its Affiliates, and that disclosure of
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Confidential Information would cause damage to the Companies and their
Affiliates. The Executive agrees that, except as required by the duties of his
employment with any of the Companies or any of their and/or its Affiliates and
except in connection with enforcing the Executive's rights under this Agreement
or if compelled by a court or governmental agency, in each case provided that
prior written notice is given to Company, he will not, without the consent of
Company, willfully disseminate or otherwise disclose, directly or indirectly,
any Confidential Information obtained during his employment with the Company or
its Affiliates, and will take all necessary precautions to prevent disclosure,
to any unauthorized individual or entity inside or outside the Company, and will
not use the Confidential Information or permit its use for the benefit of
Executive or any other person or entity other than the Company or the
Affiliates. These obligations shall continue during and after the termination of
Executive's employment (whether or not during the Employment Period).
7.4 Reasonableness of Restrictive Covenants.
(a) Executive acknowledges that the covenants contained in Sections 7.1,
7.2 and7.3 are reasonable in the scope of the activities restricted,
the geographic area covered by the restrictions, and the duration of
the restrictions, and that such covenants are reasonably necessary to
protect the Company's relationships with its employees, clients and
suppliers. Executive further acknowledges such covenants are essential
elements of this Agreement and that, but for such covenants, the
Company would not have entered into this Agreement.
(b) The Company and Executive have each consulted with their respective
legal counsel and have been advised concerning the reasonableness and
propriety of such covenants. Executive acknowledges that his
observance of the covenants contained in Sections 7.1, 7.2 and 7.3
will not deprive him of the ability to earn a livelihood or to support
his dependents.
7.5 Right to Injunction; Survival of Undertakings.
(a) In recognition of the necessity of the limited restrictions imposed by
Sections 7.1, 7.2 and 7.3, the parties agree that it would be
impossible to measure solely in money the damages that any of the
Companies would suffer if Executive were to breach any of his
obligations under such Sections. Executive acknowledges that any
breach of any provision of such Sections would irreparably injure the
Company. Accordingly, Executive agrees that the Company shall be
entitled, in addition to any other remedies to which Company may be
entitled under this Agreement or otherwise, to an injunction to be
issued by a court of competent jurisdiction, to restrain any actual
breach, or threatened breach, of such provisions, and Executive hereby
waives any right to assert any defense that any of the Company has to
adequate remedy at law for any such breach.
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(b) If a court determines that any of the covenants included in this
Article VII are unenforceable in whole or in part because of such
covenant's duration or geographical or other scope, such court may
modify the duration or scope of such provision, as the case may be, so
as to cause such covenant as so modified to be enforceable.
(c) All of the provisions of this Article VII shall survive any
Termination of Employment without regard to (i) the reasons for such
termination or (ii) the expiration of the Employment Period.
(d) Company shall have any further obligation to pay or provide severance
or benefits under Section 6.3 if a court determines that the Executive
has breached any covenant in this Article VII.
ARTICLE VIII.
MISCELLANEOUS
8.1 Approvals. The Company represents and warrants to Executive it has taken all
corporate action necessary to authorize this Agreement.
8.2 No Mitigation. In no event shall Executive be obligated to seek other
employment or take any other action to mitigate the amounts payable to Executive
under any of the provisions of this Agreement, nor shall the amount of any
payment hereunder be reduced by any compensation earned as a result of
Executive's employment by another employer, except that any continued welfare
benefits provided for by Section 6.3(d) shall not duplicate any benefits that
are provided to Executive and his family by such other employer and shall be
secondary to any coverage provided by such other employer.
The Company's obligation to make the payments provided for in this Agreement and
otherwise perform the obligations hereunder shall not (unless Executive is
terminated for Cause) be affected by any circumstances, including set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against Executive.
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8.3 Beneficiary. If Executive dies prior to receiving all of the amounts payable
to him in accordance with the terms and conditions of this Agreement, such
amounts shall be paid to the beneficiary ("Beneficiary") designated by Executive
in writing to the Company during his lifetime, or if no such Beneficiary is
designated, to Executive's estate. Such payments shall be made in a lump sum to
the extent so payable and, to the extent not payable in a lump sum, in
accordance with the terms of this Agreement. Such payments shall not be less
than the amount payable to Executive as if Executive had lived to the date of
payment and were the payee. Executive, without the consent of any prior
Beneficiary, may change his designation of Beneficiary or Beneficiaries at any
time or from time to time by submitting to the Company a new designation in
writing.
8.4 Assignment; Successors. This Agreement is personal to Executive and he may
not assign his duties or obligations under it. Company may not assign its
respective rights and obligations under this Agreement without the prior written
consent of Executive, except to a successor to the Company's business which
expressly assumes the Company's obligations hereunder in writing. This Agreement
shall be binding upon and inure to the benefit of Executive, his estate and
Beneficiaries, the Company and its successors and permitted assigns. Company
shall require any successor to all or substantially all of the business and/or
assets of such Company, whether direct or indirect, by purchase, merger,
consolidation, acquisition of stock, or otherwise, expressly to assume and agree
to perform this Agreement in the same manner and to the same extent as such
Company would be required to perform if no such succession had taken place.
8.5 Non-alienation. Except as is otherwise expressly provided herein, benefits
payable under this Agreement shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, charge,
garnishment, execution or levy of any kind, either voluntary or involuntary,
prior to actually being received by Executive, and any such attempt to dispose
of any right to benefits payable hereunder shall be void.
8.6 Severability. If all or any part of this Agreement is declared to be
unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any portion of this Agreement not declared to be unlawful or invalid.
Any provision so declared to be unlawful or invalid shall, if possible, be
construed in a manner which will give effect to the terms of such provision to
the fullest extent possible while remaining lawful and valid.
8.6 Amendment; Waiver. This Agreement shall not be amended or modified except by
written instrument executed by Company and Executive. A waiver of any term,
covenant or condition contained in this Agreement shall not be deemed a waiver
of any other term, covenant or condition, and any waiver of any default in any
such term, covenant or condition shall not be deemed a waiver of any later
default thereof or of any other term, covenant or condition.
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8.7 Arbitration, Any dispute, controversy or claim arising out of or in
connection with or relating to this Agreement or any breach or alleged breach
thereof shall be submitted to and settled by binding arbitration in Austin,
Texas, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (or at any other place or under any other form of
arbitration mutually acceptable to the parties so involved). Any dispute,
controversy or claim submitted for resolution shall be submitted to three (3)
arbitrators, each of whom is a nationally recognized executive compensation
specialist. The Company shall select one arbitrator, the Executive shall select
one arbitrator and the third arbitrator shall be selected by the first two
arbitrators. Any award rendered shall be final and conclusive upon the parties
and a judgment thereon may be entered in the highest court of a forum, state or
federal, having jurisdiction. The expenses of the arbitration shall be borne
equally by the parties, except that in the discretion of the arbitrators any
award may include the fees and costs of a party's attorneys if the arbitrator
expressly determines that the party against whom such award is entered has
caused the dispute, controversy or claim to be submitted to arbitration in bad
faith or as a dilatory tactic. No arbitration shall be commenced after the date
when institution of legal or equitable proceedings based upon such subject
matter would be barred by the applicable statute of limitations. Notwithstanding
anything to the contrary contained in this Section 8.7 or elsewhere in this
Agreement, either party may bring an action in the ▇▇▇▇▇▇ County, Texas District
Court, in order to maintain the status quo ante of the parties. The "status quo
ante" is defined as the last peaceable, uncontested status between the parties.
However, neither the party bringing the action nor the party defending the
action thereby waives its right to arbitration of any dispute, controversy or
claim arising out of or in connection or relating to this Agreement.
Notwithstanding anything to the contrary contained in this Section 8.7 or
elsewhere in this Agreement, either party may seek relief in the form of
specific performance, injunctive or other equitable relief in order to enforce
the decision of the arbitrator. The parties agree that in any arbitration
commenced pursuant to this Agreement, the parties shall be entitled to such
discovery (including depositions, requests for the production of documents and
interrogatories) as would be available in a federal district court pursuant to
Rules 26 through 37 of the Federal Rules of Civil Procedure. In the event that
either party fails to comply with its discovery obligations hereunder, the
arbitrator(s) shall have full power and authority to compel disclosure or impose
sanctions to the full extent of Rule 37, Federal Rules of Civil Procedure.
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8.8 Notices. All notices hereunder shall be in writing and delivered by hand, by
nationally-recognized delivery service that guarantees overnight delivery, or by
first-class, registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to Company, to: Financial Industries Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Chairman, President and Chief Executive Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Executive, to: At his most recent home address or facsimile
number on file with the Company)
Either party may from time to time designate a new address by notice given in
accordance with this Section. Notice shall be effective when actually received
by the addressee.
8.9 Counterparts. This Agreement may be executed in multiple counterparts, each
of which shall be deemed to be an original, but all of which together will
constitute one and the same instrument.
8.10 Captions. The captions of this Agreement are not a part of the provisions
hereof and shall have no force or effect.
8.11 Entire Agreement. This Agreement forms the entire agreement between the
parties hereto with respect to the subject matter contained in the Agreement and
shall supersede all prior agreements, promises and representations regarding
employment, compensation, severance or other payments contingent upon
termination of employment, whether in writing or otherwise.
8.12 Applicable Law, This Agreement shall be interpreted and construed in
accordance with the laws of the State of Texas, without regard to its choice of
law principles.
8.13 Survival of Executive's Rights. All of Executive's rights hereunder,
including his rights to compensation and benefits, and his obligations under
Article VIII hereof, shall survive the termination of Executive's employment or
the termination of this Agreement.
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8.14 Joint and Several Liability. The obligations of the Company to Executive
under this Agreement shall be joint and several.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
Financial Industries Corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
___________________________________
Title: Chairman, President and CEO
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________________
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