EMPLOYMENT AGREEMENT
THIS AGREEMENT ["Agreement"] is
made and entered into this 1ST day of APRIL, 1997, by and between
AMVESTORS FINANCIAL CORPORATION [hereinafter referred to as
"AmVestors"], AMERICAN INVESTORS LIFE INSURANCE COMPANY, INC.
[hereinafter referred to as "American"], AMVESTORS INVESTMENT GROUP,
INC. and AMERICAN INVESTORS SALES GROUP, INC., all Kansas corporations
[the latter three hereinafter collective referred to as "Affiliates"],
parties of the first part [hereinafter referred to as "Companies"],
and MARK V. HEITZ [hereinafter referred to as "Mr. Heitz"], an
individual, party of the second part.
WITNESSETH:
WHEREAS, Mr. Heitz has been
employed for many years by AmVestors and its affiliates and has been
employed since 1986 as President and General Counsel of the Board of
AmVestors and as Chairman and General Counsel of American since 1988;
and
WHEREAS, Mr. Heitz has also
been employed by, associated with or has acted as a consultant to, and
may in the future, at the request of AmVestors, be employed by,
associated with or act as a consultant to, the affiliates of
AmVestors; and
WHEREAS, AmVestors desires to
continue to have the benefit of Mr. Heitz's knowledge and experience
and considers such a vital element in protecting and enhancing the
best interests of AmVestors and its shareholders and in providing
management for AmVestors.
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NOW, THEREFORE, in
consideration of the mutual agreements and conditions contained
herein, the parties hereto agree as follows:
1. FULL-TIME EMPLOYMENT OF
EXECUTIVE.
a. DUTIES AND STATUS.
(1) AmVestors hereby employs
Mr. Heitz as its President and General Counsel and American hereby
employs Mr. Heitz as its Chairman and General Counsel to provide
certain services set forth herein and to provide certain other
employment services to affiliates for the employment period as defined
in paragraph 3(a), and Mr. Heitz accepts such employment, on the terms
and conditions set forth in this Agreement. During the employment
period, Mr. Heitz shall perform such managerial duties and
responsibilities for AmVestors and affiliates as may be assigned to
him in accordance with the bylaws, which duties and responsibilities
shall be substantially the same character as or equivalent character
to those required by his assigned offices and functions during 1996.
(2) During the employment
period, Mr. Heitz shall devote his full time and efforts to the
business of AmVestors and its affiliates and shall not engage in
consulting work or any trade or business for his own account or for
or on behalf of any other person, firm or corporation which
competes, conflicts or interferes with the performance of his
duties hereunder in any way. Mr. Heitz shall be entitled to
reasonable vacations and to such personal and sick leave as may be
established by AmVestors' and affiliates corporate policies. Mr.
Heitz shall perform his
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duties while employed in good faith and shall observe
faithfully the covenants and agreements made by him herein.
b. COMPENSATION AND GENERAL
BENEFITS.
(1) During the employment
period, AmVestors shall pay Mr. Heitz a base salary to be established
annually by the Boards of Directors, payable in twice monthly
installments (or on such other basis as may be mutually agreed upon).
The salary shall be reviewed annually by the respective Board of
Directors and may be increased, but not diminished, during the
employment period.
(2) In addition to the salary
provided by subparagraph (1) of this paragraph 1(b), AmVestors and
affiliates shall provide benefits and other perquisites reasonably
comparable to, and no less favorable than, those provided by AmVestors
and its affiliates to Mr. Heitz during 1996, including, but not
limited to, an automobile suitable for the business and personal use
of Mr. Heitz.
2. COMPETITION; CONFIDENTIAL
INFORMATION.
The parties recognize that, due
to the nature of Mr. Heitz's prior association with the Companies and
of his engagement hereunder, and as a consequence of his relationship
to Companies, both in the past and in the future , Mr. Heitz has had
access to and has acquired, and has assisted in and may assist in
developing confidential and proprietary information relating to the
business
and operations of the
Companies. Mr. Heitz recognizes
that such information has been
and will continue
to be of central importance to
the business of
the Companies and that
disclosure of such
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information to others or its use by others could cause
substantial irreparable loss to the Companies. Mr. Heitz and Companies
also recognize that an important part of Mr. Heitz's duties will be to
develop good will for the Companies through his personal contact with
others having business relationships with Companies and within the
insurance industry, and that there is a danger that this good will, a
proprietary asset of the Companies, may follow him if and when his
relationship with the Companies is terminated. Mr. Heitz accordingly
agrees as follows:
a. NON-COMPETITION DURING
EMPLOYMENT PERIOD. During the employment period he will not directly
or indirectly, either individually or as owner, partner, agent,
employee, consultant or otherwise, except for the account of and on
behalf of Companies, engage in any activity competitive with the
business of Companies, nor will he be in competition with Companies,
solicit or otherwise attempt to establish any business relationships
with any person, firm or corporation which was, at any time during the
employment period, a customer or supplier of Companies. However,
nothing in this Section 2 shall be construed to prevent him from
owning, as an investment, up to one percent (1%) of a class of equity
securities issued by any competitor of Companies.
b. NON-COMPETITION AFTER PERIOD
OF EMPLOYMENT.
Mr. Heitz agrees that during
the term of this Agreement,
and as long as required
payments are being made under
the provisions of paragraphs
3(c) and (f) (24 months),
he will not, without the
Companies prior written
permission, attempt to entice
away from
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the Companies or affiliates or subsidiaries on behalf of any
party whatsoever, or employ or otherwise engage, contract with or
retain directly or indirectly, any employee then employed by the
Companies, affiliates or subsidiaries or employed by them at any time
during the previous two (2) years. Mr. Heitz further agrees that
during such period he will not do anything to impair the Companies or
their affiliates or subsidiaries' prospects of sales or business
retention, and shall not solicit for any reason any of the Companies
or its employees, agency personnel, insureds or applicants, nor
knowingly accept commissions directly or indirectly on any policy
written in replacement of any policy produced or written by the
Companies or any of their affiliates or subsidiaries nor shall Mr.
Heitz in any way derogate the Companies, its products or personnel.
c. CONFIDENTIAL INFORMATION.
Mr. Heitz will not disclose any confidential information of Companies
which is now known to him or which hereafter may become known to him
as a result of his employment or association with Companies and shall
not at any time directly or indirectly disclose any such information
to any person, firm or corporation, or use the same in any way other
than in connection with the business of Companies and at all times
after the expiration of the employment period.
d. COMPANIES' REMEDIES FOR
BREACH. It is
recognized that damages in the
event of breach of
this Section 2 by Mr. Heitz
would be difficult, if
not impossible, to ascertain
and it is, therefore,
agreed that Companies, in
addition to and without
limiting any other remedy or
right it may have, shall have
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the right to an injunction or other equitable relief in any
court of competent jurisdiction, enjoining any such breach, and Mr.
Heitz hereby waives any and all defenses he may have on the ground of
lack of jurisdiction or competence of the court to grant such an
injunction or other equitable relief. The existence of this right
shall not preclude Companies from pursuing any other rights and
remedies at law or in equity which Companies may have.
3. EMPLOYMENT PERIOD.
a. DURATION. The employment
period shall commence on April 1, 1997 and shall be automatically
renewed for successive two (2) year periods unless otherwise
terminated as provided in this Agreement or unless notice of
non-renewal is provided Mr. Heitz sixty days (60) prior to the
expiration of any contract period.
b. PERFORMANCE AND TERMINATION.
Subject to the performance of the covenants and agreements made by
Companies herein, Mr. Heitz shall perform his duties during the
employment period in good faith and will observe faithfully the
covenants and agreements made by him herein. Mr. Heitz shall not be
discharged during the employment period except for cause involving
dishonesty, moral turpitude, or material breach of any express or
implied condition under this Agreement. The discharge of Mr. Heitz for
reasons other than those specified in the preceding sentence shall be
deemed to be a discharge without cause.
c. MR. HEITZ'S REMEDIES. If the
Companies
shall take any action with
respect to Mr. Heitz's
employment as set forth in
paragraph 3(d) and
(e) thereby entitling him to
terminate
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his employment as provided in paragraphs 3(d) and (e), or
discharges him without cause then Mr. Heitz shall be entitled to be
paid a sum equal to two (2) years salary based on the salary level in
effect on the date of termination or discharge. Payments shall be made
bimonthly in 48 equal installments and shall commence on the effective
date of discharge or termination. The parties agree that, the payments
provided hereunder shall be deemed to constitute payment for the
non-compete provisions contained in paragraph 2(b) and not a penalty
for breach by Companies and Companies agree that Mr. Heitz shall not
be required to mitigate his damages. This paragraph shall constitute
Mr. Heitz's sole remedy for compensation upon the cessation of his
employment and/or breach of this Agreement.
In the event Mr. Heitz
materially violates the non-compete provisions of paragraph 2(b) after
his employment has ceased then Companies shall have the right to cease
all payments required under the provisions of paragraph 3(c) and (f).
d. TERMINATION FOR GOOD REASON.
Mr. Heitz shall be entitled to terminate his employment for good
reason. Any termination of employment under the following
circumstances shall be for good reason and shall be deemed to be a
breach of this Agreement by the Companies:
(1) Without the express written
consent of Mr.
Heitz, he is assigned any
duties inconsistent with his positions, duties, responsibilities
and status with
the Companies since March 1997,
or his reporting responsibilities, titles or offices as in effect
during the period of this
Agreement are changed or he is
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removed from or not reelected to any of such positions,
except in connection with the termination of his employment for cause,
or as a result of his substantial disability or death;
(2) The annual base salary of
Mr. Heitz as in effect on the date of this Agreement, as the same
hereafter may be increased from time to time, is reduced;
(3) Companies' principal
executive offices are moved to a location outside Topeka, Kansas or
any of the Companies require Mr. Heitz without his agreement to be
based anywhere other than the principle executive offices except for
required travel on Companies' business to an extent substantially
consistent with his business travel obligations in effect immediately
prior to the date of this Agreement; or
e. CHANGE IN CONTROL.
Notwithstanding Mr. Heitz's right to terminate for good reason in
paragraph 3(d), Mr. Heitz shall also be entitled to terminate his
employment within 13 months following any "change in control" (as
hereafter defined below) of AmVestors for any reason by providing
notice in writing to AmVestors of his intent to terminate his
employment effective as of a date not earlier than thirty (30) days
from the date of notice. In such event Mr. Heitz shall be fully
entitled to two years of salary payments set forth in paragraph 3(c)
as consideration for the non-compete provision contained in paragraph
2(b).
The term "change in control" as
used herein shall
mean a change in control of a
nature that would be
required to be reported in
response to Item 5(f) of
Schedule 14A of Regulation 14A
promulgated under
the Securities Exchange Act of
1934 (the
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"Exchange Act") as in effect on the date of this Agreement
or, if Item 5(f) is no longer in effect, any regulations issued by the
Securities and Exchange Commission pursuant to the Exchange Act which
serve similar purposes; provided that, without limitation, such a
"change in control" shall be deemed to have occurred if and when (A)
any "person" (as such term is used in Sections 3(a)(9), 13(d)(3) and
14(d)(2) of the Exchange Act) is or becomes a beneficial owner,
directly or indirectly, of securities of AmVestors representing 25
percent (25%) or more of the combined voting power of the then
outstanding securities of AmVestors or American, (B) a tender offer or
exchange offer is made whereby the effect of such offer is to take
over and control AmVestors or American and such offer is consummated
for the ownership of securities of AmVestors or American representing
25 percent (25%) or more of the combined voting power of the then
outstanding voting securities of AmVestors or American, (C) AmVestors
or American is merged or consolidated with another corporation or as a
result of such merger or consolidation less than 75 percent (75%) of
the then outstanding voting securities of the surviving or resulting
corporation shall then be owned in the aggregate by the former
stockholders of AmVestors or American, other than affiliates within
the meaning of the Exchange Act or any party to such merger or
consolidation, (D) individuals who were members of the Board of
Directors of AmVestors or American immediately prior to a meeting of
the shareholders of AmVestors or American involving a contest
for the election of directors shall not constitute a
majority of such Board of Directors following such
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election, or (E) AmVestors transfers substantially all of
its assets to another corporation which is not a wholly owned
subsidiary of AmVestors or American.
f. SALARY CONTINUATION IN THE
EVENT OF NON-RENEWAL. In the event of non-renewal of this Employment
Agreement by AmVestors and/or its affiliates and in consideration of
Mr. Heitz's service to Companies and in consideration of the
non-compete provisions of this Agreement, Mr. Heitz shall be entitled
to be paid a sum equal to two (2) years of continuance salary based on
the same salary level he was receiving on the date of notice of
non-renewal. Payments shall be made bimonthly in 48 equal installments
and shall commence thirty (30) days following the expiration of the
employment period. Mr. Heitz agrees that he will faithfully observe
the continuing covenants of this Agreement for a period in which
payments under this paragraph are being made and will comply with the
provisions of paragraph 2(b).
4. DEATH OR DISABILITY.
a. In the event Mr. Heitz shall
become so disabled during the term of this Agreement that he is unable
to reasonably perform his duties for a period of ninety (90) days,
either Mr. Heitz or AmVestors and its Affiliates shall have the right
to terminate this Agreement upon written notice given at the end of
such ninety (90) days period; provided that, at the time of delivery
of such notice, such disability shall be continuing. In the event of a
disagreement between Companies and/or Mr. Heitz
regarding the question of
whether Mr. Heitz is
disabled as defined herein, the
question shall
be referred to the Companies
physician
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whose decision will be conclusive and binding. In the event
of termination for disability, Mr. Heitz shall be entitled to receive
as a settlement of this contract, an annual sum equal to the annual
base salary as such may be increased from time to time wh
ich shall be payable semimonthly, for a period of three (3) years from the
date of termination. If Mr. Heitz dies during the term of this
Agreement, and his employment has been terminated as a result of
disability his estate or beneficiary shall receive the remaining
payments under this paragraph payable semimonthly. There shall be no
further obligations on the part of the Companies under this Agreement.
5. GOVERNING LAW. This
Agreement shall be governed by the laws of the State of Kansas.
6. BINDING EFFECT. This
Agreement shall be binding upon the parties hereto, their successors,
assigns, heirs, legatees and personal representatives.
7. ASSIGNABILITY. This
Agreement shall not be assignable by the Companies, nor may his
duties hereunder be delegated by Mr. Heitz.
8. NOTICES. Any notice required
or desired to be given under this Agreement shall be sent by certified
mail to Mr. Heitz's residence in Topeka, Kansas and to AmVestors or
its affiliates at their principal place of business in Topeka, Kansas.
9. ENTIRE AGREEMENT. This
Agreement constitutes the entire agreement of the parties hereto
with respect
to the subject matter hereof,
and supersedes
all prior agreements, proposals
and
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other communications, oral or written, between the parties
hereto relating to such subject matter.
10. SEVERABILITY. If any term
or provision of this Agreement or the application thereof to any
circumstances shall, in any jurisdiction and to any extent, be invalid
or unenforceable, such term of provision shall be ineffective as to
such jurisdiction to the extent of such invalidity or unenforceability
without invalidating or rendering unenforceable any remaining terms or
provisions of this Agreement or the application of such term or
provision to circumstances other than those as to which it is invalid
or unenforceable. To the extent permitted by applicable law, the
parties hereto hereby waive any provision of law that renders any term
or provision of this Agreement invalid or unenforceable in any
respect.
11. INTENT OF AGREEMENT. The
Companies intend by this Agreement to provide for the employment of
Mr. Heitz. While this Agreement provides for Mr. Heitz's employment,
this Agreement shall in no manner ever be deemed or construed as
limiting the power of stockholders to elect Mr. Heitz as a director of
Companies or limiting the power of the Companies to elect its Chairman
or officer(s). In like manner, if stockholders or some future Board of
Directors of the Companies shall not reelect Mr. Heitz, such failure
to so elect Mr. Heitz shall not be deemed or considered as a condition
precedent to the continued obligation of the Companies to pay Mr.
Heitz the compensation as provided for in this Agreement.
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12. RECOVERY OF LEGAL FEES,
COSTS AND EXPENSES. In the event that Mr. Heitz is terminated by the
Companies and Mr. Heitz retains legal counsel or commences legal
action, the costs and expenses, including legal fees shall be paid by
the Companies or their affiliates in the event Mr. Heitz prevails in
such action either by verdict or judgment. In the event Mr. Heitz
prevails as defined above, the Companies or their affiliate shall pay
the reasonable attorney fees, costs and expenses within thirty (30)
days after the conclusion of the litigation.
IN WITNESS WHEREOF, the parties
hereto have signed this
Employment Agreement the day
and year first above written.
PARTY OF THE FIRST PART:
AMVESTORS FINANCIAL CORPORATION
By: /s/ Ralph W. Laster, Jr.
Ralph W. Laster Jr.
Chief Executive Officer and
Chairman of the Board
ATTEST:
/s/ Lynn F. Hammes
CORPORATE SECRETARY
AMERICAN INVESTORS LIFE INSURANCE
COMPANY, INC.
By: /s/ Ralph W. Laster, Jr.
Ralph W. Laster Jr., President
and Chief Executive Officer
ATTEST:
/s/ Lynn F. Hammes
CORPORATE SECRETARY
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AMVESTORS INVESTMENT GROUP, INC.
AMERICAN INVESTORS SALES GROUP INC.
By: /s/ Ralph W. Laster, Jr.
Ralph W. Laster Jr., Chief
Executive Officer
COMPENSATION COMMITTEE--
AMVESTORS FINANCIAL CORPORATION and
AMERICAN INVESTORS LIFE INSURANCE
COMPANY, INC.
By: /s/ R. Rex Lee
R. Rex Lee, Chairman
PARTY OF THE SECOND PART:
/s/ Mark V. Heitz
MARK V. HEITZ
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