SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported): October 9, 2003
FINANCIAL INDUSTRIES CORPORATION
(Exact name of Registrant as specified in charter)
Texas 0-4690 74-2126975
(State or other jurisdiction (Commission file number) (I.R.S. employer
of incorporation) identification no.)
6500 River Place Blvd., Building One
Austin, Texas 78730
(Address of principal executive offices)
Registrant's telephone number, including area code: (512) 404-5000
_______________________________
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Item 5. Other Events
(1) The Company is reviewing its investment activities during the past
year, including mark- ups and commissions paid during that time. The
Company is also investigating, among other things, relationships
between a broker-dealer used by the Company and William P. Tedrow. Mr.
Tedrow is the president of the Company's FIC Financial Services, Inc.
subsidiary and a Vice President of the Company. In his capacity at the
Company, Mr. Tedrow has participated during the current year in the
general supervision of investment activities.
The Company's investigation of these matters is in the preliminary
stages. Mr. Tedrow has been placed on administrative leave pending the
results of this investigation. The Company has not reached any
conclusion with regard to Mr. Tedrow's role, if any, in the activities
under review.
(2) In connection with the resignation of Eugene E. Payne as Chairman of
the Company, Dr. Payne and the Company entered into an amendment to
his employment agreement. Under the terms of the amendment, Dr. Payne
agreed to continue as President and CEO for a period ending on
February 20, 2004, subject to the right of the Company to terminate
the employment period at an earlier date. At the end of the employment
period, the amendment provides that Dr. Payne is to receive a
severance payment in the amount of $360,000, net of applicable taxes.
The amendment to the employment agreement of Eugene E. Payne is filed
as Exhibit 10.1 to this 8-K.
(3) The life insurance subsidiaries of the Company (Investors Life
Insurance Company of North America and Family Life Insurance Company)
have entered into investment management agreements with Conning Asset
Management Company ("Conning"). Under these agreements, Conning will
manage the investment security portfolios of the Company's life
insurance subsidiaries in accordance with investment policies set by
the Company's Board of Directors. In addition, Conning will provide
such other investment advisory and investment accounting and reporting
services to the Company's life insurance subsidiaries as may be
reasonably requested and agreed to by Conning.
Item 7. Financial Statement and Exhibits:
(c) Exhibits
The following exhibit is included with this Report:
Exhibit 10.1 Amendment No. 1 to Employment Agreement of Eugene E. Payne,
dated as of October 9,2003.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FINANCIAL INDUSTRIES CORPORATION
Date: October 29, 2003 By: /s/ Eugene E. Payne
____________________________________
Eugene E. Payne
Chief Executive Officer
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Exhibit 10.1
Amendment No. 1
to
Employment Agreement
This Amendment No. 1 to the Employment Agreement (the "Agreement") dated as of
November 4, 2002 ("Agreement Date") by and between Financial Industries
Corporation, a Texas company ("Company"), and Eugene E. Payne ("Executive"), a
resident of Texas. The parties desire to enter into this Amendment, which is
intended to modify certain terms and conditions of the Agreement. In
consideration of the mutual agreements contained herein, the Company and
Executive agree as follows:
1. Section 2.1 of the Agreement is hereby amended to delete all references
to the position of Chairman. Executive agrees that the deletion of the title and
responsibilities of Chairman is the result of mutual agreement between Executive
and the Company. Accordingly, Executive agrees that said deletion does not
constitute "Good Reason", within the meaning of Section 1.22 of the Agreement;
2. Section 1.22 of the Agreement is hereby amended by the addition of the
following at the end of sub-paragraph (a) of said section:
and provided, further, that :
(i) the failure of Executive to continue to serve on the Board of
Directors of the Company as a result of the final disposition of
the litigation entitled Otter Creek Partnership I, L.P. v.
Financial Industries Corporation, Cause No. GN 302072, 261st
Judicial District Court of Travis County, Texas (the "Lawsuit"),
whether by settlement between the parties or a final court
ruling, shall not constitute Good Reason for purposes of this
Agreement. Executive and Company acknowledge that, at the 2003
Annual Meeting of Shareholders of the Company, the proxies for
the nominees of Financial Industries Corporation for the
alternative potential outcomes of the Lawsuit were voted in a
manner whereby Executive would not be elected to the Board of
Directors of the Company, in the event that all or part of the
proxies granted to the Company by the Roy F. and Joann Cole Mitte
Foundation were to be set aside or reallocated;
(ii) the failure of Executive to be nominated, appointed or elected
and to continue to be nominated, re-elected or re-appointed as a
member of the Board of Directors or as the Chairman, President
and Chief Executive Officer of each of the Life Company
Subsidiaries shall not constitute Good Reason for purposes of
this Agreement; and
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(iii)the close supervision and direction of Executive and of the
business of the Company by the Board of Directors of the Company
through the end of the Employment Period shall not constitute
Good Reason for purposes of this Agreement.
2. Section 3.1 of the Agreement is hereby amended in its entirety to read
as follows:
3.1 Employment Period. The term of Executive's employment under this
Agreement (the "Employment Period") shall begin on the Agreement Date
and end on February 20, 2004. The Company reserves the right, at its
sole option, to establish an earlier date between August 22, 2003 and
February 20, 2004 as the ending date of the Employment Period. Upon
the advance written request of Executive, the Company may, but is not
obligated to, consent to an earlier date between August 22, 2003 and
February 20, 2004 as the ending date of the Employment Period.. At the
end of the Employment Period, Executive shall be entitled to receive
the payment (and only the payment) set forth in paragraph 4 of this
Amendment No. 1 to the Employment Agreement.
3. Section 4.2 is hereby deleted in its entirety. The phrase "or his Annual
Bonus in violation of Section 4.2" is hereby deleted from Section 1.22(a)(viii).
Section 1.22(a)(x) is hereby deleted in its entirety.
4. Article IV -Compensation is amended by the addition of the following
section:
4.2 Severance Payment. At the end of the Employment Period, Executive
shall be entitled to receive, a severance payment in the amount of
$360,000, net of any applicable deductions for federal income taxes
and other related payroll taxes. The Company shall make such severance
payment to the Executive on the later of (i) January 9, 2004 or (ii)
ten business days following the last day of the Employment Period, as
determined in accordance with the provisions of Section 3.1 of this
Agreement, as amended
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5. All capitalized terms in this Amendment shall have the meaning set forth
in the Agreement, in the absence of a different definition set forth herein.
6. To the extent that any terms of this Amendment are inconsistent with the
express terms of the Agreement, this Amendment shall control. All other terms in
the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, Company and Executive have caused this Amendment to be
executed as of this 9th day of October, 2003.
Financial Industries Corporation
By: /s/ R. Keith Long
___________________________________
Title: Chairman
Executive: By: /s/ Eugene E. Payne
____________________________________
Eugene E. Payne
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