SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No 1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission File
Number 0-4690
FINANCIAL INDUSTRIES CORPORATION
(Exact name of registrant as specified in its charter)
TEXAS 74-2126975
State of Incorporation (I.R.S. Employer Identification number)
6500 River Place Boulevard, Building One, Austin, Texas 78730
(Address of Principal Executive Offices) (Zip Code)
(512) 404-5050 (Registrant's Telephone Number)
Securities Registered pursuant to Section 12(b) of the Act: None
Securities Registered pursuant to Section 12(g) of the Act:
Common Stock, $.20 par value
(Title of Class)
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Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. YES X NO
The aggregate market value of the voting stock held by non-affiliates of the
Registrant on March 6, 2001, based on the closing sales price in The Nasdaq
Small-Cap Market ($9.75 per share), was 44,406,968.
The number of shares outstanding of Registrant's common stock on March 6, 2001
was 5,054,661.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
DOCUMENTS INCORPORATED BY REFERENCE:
A. Reports on Form 10-K of InterContinental Life Corporation for the fiscal
years ended December 31, 2000, 1999 and 1998 are hereby incorporated by
reference.
Forward-Looking Statements
Except for historical factual information set forth in this Form 10-K, the
statements, analyses, and other information contained in this report relating to
trends in the Company's operations and financial results, the markets for the
Company's products, the future development of the Company's business, and the
contingencies and uncertainties to which the Company may be subject, as well as
other statements including words such as "anticipate," "believe," "path,"
"estimate," "expect," "intend" and other similar expressions constitute
forward-looking statements under the Private Securities Litigation Reform Act of
1995. Such statements are made based upon management's current expectations and
beliefs concerning the financial results, economic conditions and are subject to
known and unknown risks, uncertainties and other factors contemplated by the
forward-looking statements. Such factors include, among other things: (1)
general economic conditions and other factors, including prevailing interest
rate levels and stock market performance, which may effect the ability of FIC to
sell its products, the market value of FIC's investments and the lapse rate and
profitability of policies; (2) FIC's ability to achieve anticipated levels of
operational efficiencies and cost-saving initiatives; (3) customer response to
new products, distribution channels and marketing initiatives; (4) mortality,
morbidity and other factors which may affect the profitability of FIC's
insurance products; (5) changes in the Federal income tax laws and regulations
which may affect the relative tax advantages of some of FIC's products; (6)
increasing competition in the sale of insurance and annuities; (7) regulatory
changes or actions, including those relating to regulation of insurance products
and insurance companies; (8) ratings assigned to FIC's insurance subsidiaries by
independent rating organizations such as A.M. Best Company, which FIC believes
are particularly important to the sale of annuity and other accumulation
products; and (9) unanticipated litigation. There can be no assurance that other
factors not currently anticipated by management will not also materially and
adversely affect FIC.
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This Amendment No. 1 to Form 10-K for the fiscal year ended December 31, 2000 is
being filed for the purpose of amending Note 1 to the Summary Compensation Table
which appear on page 48 of the Form 10-K which was filed by the Registrant on
April 2, 2001. Note 1 is hereby revised in its entirety to read as follows:
(1) The salaries and bonuses set forth in the table were paid by ILCO,
except that FIC and/or Family Life authorized payment of a portion of Mr.
Mitte's salary in each of 1998, 1999 and 2000. The executive officers of
FIC have also been executive officers of Family Life, the insurance
subsidiary of FIC, and ILCO and its insurance subsidiaries. FIC and/or
Family Life reimbursed ILCO (or, in the case of Mr. Mitte, authorized
payment of) the following amounts as FIC's or Family Life's share of the
executive officers' cash compensation and bonus for 1998,1999 and 2000 (i)
Mr. Mitte: $1,111,821, $1,111,821 and $1,111,821, respectively; (ii) Mr.
Grace: $64,152, $62,694 and $64,152, respectively; (iii) Mr. Schmitt:
$39,888, respectively; and (iv) Mr. Demgen: $72,173, $76,500 and $81,000,
respectively.
Mr. Mitte and FIC are parties to an employment agreement, providing for the
employment of Mr. Mitte as Chairman, President and Chief Executive Officer
of the Company. The agreement, which was initially effective February 25,
1982, provides for five-year terms and for automatic renewals for
successive five-year periods, unless otherwise terminated in accordance
with the terms of the agreement. The original agreement provided that the
level of compensation will be fixed each year by agreement, but not less
than $120,000 per year. In addition, the agreement provides that Mr. Mitte
is entitled to reimbursement for reasonable business expenses and to
participate in all fringe benefit plans and arrangements available
generally to employees of the Company. On March, 24, 2001, the Compensation
Committee of the Board of Directors recommended a modification to the
employment agreement, effective as of the date of the closing of the
proposed merger between the Company and FIC. The Compensation Committee
recommended that the minimum level of compensation be increased to
$503,500. In addition, the amendment would provide that Mr. Mitte is
entitled to receive an annual bonus in an amount to be determined by the
Compensation Committee of the Board of Directors. Upon the occurrence of a
change in control (as defined in the amendment), the amendment would
provide that the amount of the bonus is to be fixed at the rate of $2.5
million per year. The amendment would further provide that (i) in the event
of the death of Mr. Mitte, the rate of compensation which was being paid to
him at that time will continue to be paid for a period of twelve months
following the date of death and (ii) if the employment of Mr. Mitte is
terminated during the term of the agreement, he is entitled to receive the
payments otherwise due for the remainder of the then current term.
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The Board of Directors of the Company approved the recommendation of the
Compensation Committee at its meeting on March 24, 2001. Subsequently, Mr.
Mitte requested a modification of the proposed amendment whereby the period
for which payments would be made in the event of his death would be for the
remainder of the term of his employment then in effect and that the amount
of such payments be based on both that monthly base salary then in effect
and the bonus amount paid to him by FIC and ILCO for the year 2001. The
Compensation Committee considered the request and recommended that the
modification be approved by the Board of Directors. On April 4, 2001, the
Board of Directors approved the recommendation of the Compensation
Committee. Thereafter, the amendment to the employment agreement was
executed by the parties.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Financial Industries Corporation
(Registrant)
By:/s/ Roy F. Mitte By:/s/ James M. Grace
Roy F. Mitte, Chairman of James M. Grace, Treasurer,
the Board, President and Principal Accounting and
Chief Executive Officer Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
amendment to the Registrant's report on Form 10-K for the fiscal year ended
December 31, 2000 has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated on April 4, 2001.
/s/ Roy F. Mitte /s/ James M. Grace
Roy F. Mitte, Director James M. Grace, Director
/s/ Jeffrey H. Demgen, Director /s/ Steven P. Schmitt
Jeffrey H. Demgen, Director Steven P. Schmitt, Director
/s/ Joseph F. Crowe /s/ Thomas C. Richmond
Joseph F. Crowe, Director Thomas C. Richmond, Director
/s/ Theodore A. Fleron /s/ M. Scott Mitte
Theodore A. Fleron, Director M. Scott Mitte, Director
John D. Barnett, Director
Jerome H. Supple, Director
Frank Parker, Director
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EXHIBIT INDEX
Exhibit
No. Page No. Description of Exhibit
10.24 Ex-2 Amendment dated as of April 4, 2001
to Employment Agreement between
the Registrant and Roy F. Mitte.
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Ex-1
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment"), dated as
of April 4, 2001, to be effective upon the consummation of the merger of ILCO
Acquisition Company with and into InterContinental Life Corporation ("ILCO"), is
between Financial Industries Corporation, a Texas corporation ("FIC"), and Roy
F. Mitte ("Mitte").
WHEREAS, the parties have entered into an employment agreement, dated as of
February 25, 1982 (the "Employment Agreement"), which is currently in effect on
the date hereof; and
WHEREAS, FIC and Mitte desire to amend the terms of the Employment
Agreement pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, FIC and Mitte hereby agree as follows:
1. Amendments.
(a) Section 4 of the Agreement is hereby deleted and replaced in its
entirety as follows:
4. Compensation.
(a) Base Salary. During the employment period, FIC shall pay to Mitte
as salary, the amount of $503,500 per year; provided, however,
that within 30 days prior to the end of each year, FIC and Mitte
shall mutually agree in writing as to the salary to be paid to
Mitte for the next succeeding year, but in no event shall such
salary be less than $503,500 per year.
(b) Bonus. During the employment period, Mitte shall be entitled to
receive an annual bonus in an amount to be determined by the
compensation committee of the Board of Directors of FIC;
provided, however, that upon the occurrence of a Change of
Control (as hereinafter defined) of FIC, the aggregate amount of
any bonus paid or owed to Mitte by FIC and ILCO for the calendar
year 2001 shall become due and payable to Mitte each year for the
remainder of the employment period in addition to the amounts due
to Mitte under Section 4(a) of this Agreement. For purposes of
this Agreement, a "Change of Control" shall mean, (i) the
acquisition by any person or "group" (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended) of 50% or
more of the outstanding voting securities of FIC (other than by
Mitte or his affiliates); (ii) the consummation of a merger or
consolidation of FIC with or into another entity or any other
corporate reorganization, the effect of which is that persons who
were not shareholders of FIC immediately prior to such merger,
consolidation or other reorganization own, immediately after such
merger, consolidation or other reorganization, 50% or more of the
voting power of the outstanding securities of the continuing or
surviving entity that ordinarily vote in the election of
directors or like governing body; or (iii) the sale, transfer or
other disposition of all or substantially all of FIC's assets;
provided further, that the acquisition of ILCO by FIC shall not
be deemed a Change of Control for purposes of this Agreement.
Ex-2
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(c) Expenses and Fringe Benefits. In addition to the salary provided
for herein, Mitte shall be entitled to (i) reimbursement of
reasonable and necessary out-of-pocket expenses incurred in
performing services hereunder and (ii) participation in all
fringe benefit plans and arrangements made available by FIC to
its management personnel generally.
(b) Section 1 of the Agreement shall be amended by deleting the
following sentence beginning on the 14th line of Section 1:
"However, for a six (6) month period of time after the date of
death, the beneficiary of Mitte will be paid, on a monthly basis
at the rate of pay that Mitte was receiving at the date of
death."
(c) Section 4A shall be added to the Agreement in its entirety as
follows after Section 4 of the Agreement:
4A. Termination.
(a) Death. In the event Mitte's employment is terminated by
reason of his death during an employment period, FIC
shall, on a bi-weekly basis, pay to his legal
representatives or beneficiaries, for the remainder of
the term of this Agreement in effect immediately
preceding the date of Mitte's death, an amount equal to
the sum of (i) his bi-weekly base salary currently in
effect on the date of death and (ii) $96,153.85 (such
amount being 1/26th of $2,500,000, which is the amount
of the bonus received by Mitte from FIC and its
affiliate, InterContinental Life Corporation, for the
year 2001).
(b) Change of Control. In the event that Mitte is
terminated for any reason following the occurrence of a
Change of Control of FIC, or in the event that,
following any such Change of Control, Mitte shall be
relieved of the titles and/or duties set forth in
Section 3 of this Agreement, Mitte shall be entitled to
receive any and all amounts due to Mitte under Sections
4(a) or (b) of this Agreement for the remainder of the
term of this Agreement. Such amount shall be paid in
accordance with FIC's regular payroll practices.
(c) Other. In the event that Mitte is terminated for any
reason other than as provided in this Section 4A, Mitte
shall be entitled to receive any and all amounts due to
Mitte under Sections 4(a) or (b) of this Agreement for
the remainder of the term of this Agreement. Such
amount shall be paid in accordance with FIC's regular
payroll practices.
Ex-3
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2. Confirmation. Except as amended by this Amendment, the
Employment Agreement shall remain in full force and
effect.
3. Instruments to be Read Together. This Amendment shall
form a part of the Employment Agreement for all
purposes and the Employment Agreement and this
Amendment shall henceforth be read together.
4. Counterparts. This Amendment may be executed in one or
more counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute
one and the same instrument.
5. Governing Law. This Amendment shall be governed by and
construed and enforced in accordance with the laws of
the State of Texas.
IN WITNESS WHEREOF, the parties have executed this First Amendment to
Employment Agreement on the date and year first above written.
FINANCIAL INDUSTRIES
CORPORATION
By: /s/ Steven P. Schmitt
Name: Steven P. Schmitt
Title: Vice President and Secretary
/s/ Roy F. Mitte
Roy F. Mitte
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