EXHIBIT 10.1
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CEO ENGAGEMENT AGREEMENT
THIS CEO ENGAGEMENT AGREEMENT (this "AGREEMENT") is made and
entered into as of February 1, 2007, by and between Financial Industries
Corporation, a Texas corporation (hereinafter, together with its successors,
referred to as the "COMPANY"), on the one hand, and William Prouty (hereinafter
referred to as the "EXECUTIVE"), on the other hand.
W I T N E S S E T H :
WHEREAS, the Company desires to engage the Executive to act as
the Chief Executive Officer of the Company, and the Executive desires to accept
such engagement; and
WHEREAS, the parties hereto desire to set forth in writing the
terms and conditions of their understandings and agreements.
NOW THEREFORE, in consideration of the foregoing, of the
mutual promises contained herein and of other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
SECTION 1. DEFINITIONS. In addition to the terms set forth throughout
this Agreement, the following capitalized terms shall have the respective
meanings set forth below:
"ACCRUED BENEFITS" means (a) all unpaid salary earned or
accrued through the date the Executive's engagement is terminated, (b)
reimbursement for any and all unreimbursed reasonable and necessary expenses
incurred by the Executive through the date the Executive's engagement is
terminated and (c) all other unpaid payments and benefits to which the Executive
may be entitled under the terms of any applicable compensation arrangement or
benefit plan or program of the Company, in each case through the date the
Executive's engagement is terminated; provided, however, that "Accrued Benefits"
shall not include any benefits (i) payable under any severance or bonus plan or
policy of the Company or (ii) relating to any unvested stock options or other
equity-based compensation or awards.
"ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"AFFILIATE" shall have the meaning given such term in Rule
12b-2 of the Act.
"BOARD" shall mean the board of directors of the Company.
"CAUSE" shall mean any of the following: (a) the failure of
the Executive to be present for work for five (5) or more consecutive business
days (except during vacation and periods of illness as set forth herein),
without giving prior written notice to the Board (if it is reasonably
practicable to do so) and receiving approval of the Board of such absence (which
approval shall not be unreasonably withheld); (b) the Executive's conviction of
or plea of nolo contendere to any felony or any crime involving moral turpitude;
(c) the Executive's material breach of this Agreement; (d) the Executive
willfully disobeys a lawful and reasonable direction of the Board that is
consistent with and reasonably related to his position and responsibilities as
chief executive officer, and fails to cure such disobedience within ten (10)
days following his receipt of written notice thereof describing in reasonable
detail the nature of the alleged disobedience; or (e) the Executive's fraud,
willful misconduct, or theft in connection with his engagement with the Company.
During any cure period, the Executive will be given an opportunity to appear,
with his counsel if he so desires, before the Board to hear and respond to such
allegations of Cause.
"CHANGE OF CONTROL TRANSACTION" means any transaction or
series of transactions that result in (i) the acquisition by any person (or
persons who would be deemed a person under Section 13d-3 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder) of 50% or more of the outstanding shares of the Company's common
stock, or (ii) the sale or other transfer or disposition of all or substantially
all of the consolidated assets of the Company; in each case, whether structured
as a tender or exchange offer, share exchange, merger, consolidation, business
combination, recapitalization, reorganization, liquidation, dissolution, or
similar transaction or series of transactions.
"COMPENSATION COMMITTEE" shall mean the Compensation Committee
of the Board, as it shall be comprised from time to time or, if no such
committee is comprised, the Board.
"CONFIDENTIAL INFORMATION" shall mean trade secrets,
confidential or proprietary information, and all other information, documents or
materials, owned, developed or possessed by the Company or any of its
Affiliates, or their respective predecessors and successors, whether in tangible
or intangible form, that is not generally known to the public. Confidential
Information includes, but is not limited to, (a) financial information, (b)
product and service plans, costs, prices, profits and sales, (c) business ideas,
recommendations and strategies, (d) marketing plans and studies, (e)
projections, forecasts and budgets, (f) computer access codes, computer programs
and data bases (and the documentation and information contained therein), (g)
know-how, technologies, concepts and designs, (h) research and development
efforts and projects, (i) records, (j) existing or prospective client, customer,
vendor and supplier information (including, but not limited to, contracts,
identities, needs, transaction histories, volumes, characteristics, agreements,
prices, spending, preferences and habits), (k) training manuals and similar
materials, (l) skills, responsibilities, compensation and personnel files of the
employees, officers, directors and independent contractors of the Company and
its Affiliates and (m) competitive analyses.
"ENGAGEMENT PERIOD" shall mean the period during which the
Company engages the Executive to act as the Chief Executive Officer of the
Company pursuant to this Agreement.
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"GOOD REASON" means any of the following: (i) any reduction of
the Executive's status, title, position, scope of authority, or responsibilities
(including reporting responsibilities), or the assignment by the Company to the
Executive of any duties or responsibilities that are materially inconsistent
with such status, title, position, authority, or responsibilities; (ii) any
material breach of this Agreement by the Company, including without limitation
any failure by the Company to provide the Executive with the compensation and
benefits called for by this Agreement; (iii) the Company's requiring the
Executive to be relocate his office location more than fifty (50) miles from his
initial office location in Austin, Texas (excluding reasonable business-related
travel); provided, that such relocation shall not constitute "Good Reason" so
long as (x) the Company provides a reasonably comparable apartment and car in
such new location and (y) such new location is within the continental United
States (48 contiguous states and the District of Columbia) and is the Company's
then principal executive office; (iv) the consummation of a Change of Control
Transaction; or (v) any other action, omission, event, or circumstance that
under applicable law constitutes constructive termination by the Company of the
Executive's engagement.
"INCAPACITY," with respect to the Executive, shall mean that
the Executive shall become ill or be injured or otherwise incapacitated such
that, in the good faith opinion of the Board, he cannot carry out and perform
fully the essential functions of his duties hereunder, and such incapacity shall
continue for a period of thirty (30) consecutive days or for any thirty (30)
days within a ninety (90) day period.
"PERSON" shall mean any individual, corporation, limited
liability company, partnership, association, trust, unincorporated organization,
other entity or group (as defined in the Act).
"UNAUTHORIZED" shall mean: (a) in contravention of the
Company's policies or procedures; (b) otherwise inconsistent with the Company's
measures to protect its interests in any Confidential Information; (c) in
contravention of any lawful instruction or directive, either written or oral, of
the Board; or (d) in contravention of any duty existing under law or contract.
SECTION 2. TERM OF ENGAGEMENT. Unless earlier terminated in accordance
with the terms of this Agreement, the Executive's Engagement Period shall
commence on February 1, 2007 and shall end at 5:00 p.m. on January 31, 2008.
SECTION 3. DUTIES. During the Engagement Period, the Executive (a)
shall serve as Chief Executive Officer of the Company, (b) shall report directly
to the Board, (c) shall have such authority and responsibility to perform such
duties consistent with and reasonably related to his position as Chief Executive
Officer as may be assigned to him from time to time by the Board and (d) shall
devote his commercially reasonable best efforts and time, attention, knowledge
and skill to the operation of the business and affairs of the Company. The
Executive will devote his full business time (meaning typically being "on-site"
Monday morning through Friday afternoon, holidays and vacations excluded) to his
responsibilities as Chief Executive Officer of the Company. The Executive
expressly acknowledges that, without the prior written approval the Board, he
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shall not serve as an employee of or consultant to, or become engaged in any
business activity of, any Person other than the Company, DLB Capital Fund FNIN,
LLC, or their affiliates (including investment funds managed by affiliates)
during the Engagement Period.
The Company and its subsidiaries will give the Executive at
least as much prior notice of the time, place, and subject matter of each
regularly scheduled or special meeting of any board of directors (or committee
thereof) of any of the Company or any of its subsidiaries, or any proposed
action by written consent of any board of directors (or committee thereof) of
any of the Company or any of its subsidiaries, as is given to any other director
or committee member; such notices in all cases to include true and complete
copies of all documents and other materials furnished by or on behalf of any of
the Company or any of its subsidiaries to any director (or committee member) in
connection with such meeting or consent. The Executive will be entitled to
physically attend any such meeting, or if a meeting is held by means of an
audio- or video-conference, to participate in the meeting by such means.
SECTION 4. COMPENSATION. During the Engagement Period, the Executive
shall be compensated as follows:
(a) Salary. The Executive shall receive, at such intervals as are
consistent with the Company's customary payroll policies as may be in
effect from time to time, an annual salary (prorated for any partial
year) equal to $400,000 (the "SALARY").
(b) Stock Options. Concurrently with the execution of this
Agreement, the Company and the Executive shall execute the stock option
agreement attached hereto as Exhibit A (the "STOCK OPTION AGREEMENT"),
pursuant to which the Executive shall be granted an option to 150,000
shares of common stock of the Company pursuant to the terms and
conditions set forth in such Stock Option Agreement.
(c) Apartment and Car. The Executive shall be provided with an
apartment and car in Austin, Texas, in each case selected by the
Company.
(d) Expenses. The Executive shall be reimbursed, at such intervals
and in accordance with such Company policies as may be in effect from
time to time, for any and all reasonable and necessary business
expenses incurred by him for the benefit of the Company.
(e) Change of Control Payment. If (i) there occurs a Change of
Control Transaction that either (A) is approved by the Board (other
than a transaction described in clause (B) below) or (B) pursuant to
which, the Company and/or the Company's shareholders receive
consideration equivalent to at least $7.50 per share of the Company's
common stock outstanding at the time of such transaction (after taking
into account the Change of Control payment provided for in this clause
(e); such $7.50 per share to be proportionately adjusted to reflect any
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stock dividend, stock split, reverse stock split, or other subdivision
or combination of the outstanding shares of the Company's common
stock); and (ii) such Change of Control Transaction is consummated on
or before October 31, 2008, then the Company will pay the Executive
$600,000 cash concurrently with the consummation of such Change of
Control Transaction; provided, however, that the Company shall not be
obligated to make such $600,000 payment if a written letter of intent
or binding transaction agreement with respect to the Change of Control
Transaction was executed by the Company and the other party to such
transaction on or before February 15, 2007. For the avoidance of doubt,
the sale by Investors Life Insurance Company of North America
("INVESTORS LIFE") of shares of the Company held by Investors Life
shall not trigger any anti-dilution or other adjustment to the number
of shares of the Company for purposes of this Agreement.
(f) Stock Grant. The Company will issue and deliver to the
Executive 27,397 shares of Common Stock (such number of shares to be
proportionately adjusted to reflect any stock dividend, stock split,
reverse stock split, or other subdivision or combination of the
outstanding shares of the Company's common stock, the "MILESTONE
SHARES") upon the occurrence of the following event (the "MILESTONE
EVENT"): the Company's being current in all material respects in its
financial reporting obligations under the Securities Exchange Act of
1934, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder, on or before May 15, 2007. For the
avoidance of doubt, the sale by Investors Life Insurance Company of
North America ("INVESTORS LIFE") of shares of the Company held by
Investors Life shall not trigger any anti-dilution or other adjustment
to the number of shares of the Company for purposes of this Agreement.
(1) In addition, if as of the consummation of a Change of
Control Transaction, the Company has not previously issued the Milestone Shares
to the Executive, then immediately before the consummation of the Change of
Control Transaction the Company will issue the Milestone Shares to the Executive
(regardless of whether the Milestone Event has yet occurred, except that if the
Milestone Event has not occurred by May 15, 2007, and the Change of Control
Transaction is consummated after that date, the Milestone Shares shall not be
required to be issued).
(2) The Company shall use its commercially reasonable
efforts to register the Milestone Shares and the shares of common stock to be
issued pursuant to the Stock Option Agreement pursuant to a Form S-3 or S-8, to
the extent applicable, and subject to the Company's eligibility to register
shares on such form.
SECTION 5. TERMINATION OF ENGAGEMENT. The Company and the Executive
shall have the right to terminate the engagement of the Executive as set forth
in this Section 5.
(a) Incapacity of the Executive. If the Executive shall
have an Incapacity, the Board may, by giving the Executive written
notice, terminate the Executive's engagement under this Agreement. A
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termination of the Executive's engagement under this Section 5(a) shall
be effective as of the date provided in such notice. In the event of
termination under this Section 5(a), the Executive shall be entitled to
his Accrued Benefits as of the date of termination and no other
payments or benefits except pursuant to Section 10 of this Agreement
and Section 7(a) of the Stock Option Agreement.
(b) Death of the Executive. The engagement of the
Executive shall automatically terminate upon the death of the
Executive. Upon such termination, the Executive's estate or, if
applicable, his heirs shall be entitled only to the Accrued Benefits of
the Executive as of the date of termination and thereafter no other
payments or benefits shall be owed by the Company to the Executive
except pursuant to Section 10 of this Agreement and Section 7(a) of the
Stock Option Agreement.
(c) Termination by the Company for Cause. The Board may
immediately terminate the Executive's engagement for Cause by giving
the Executive written or oral notice of such termination. Upon
termination for Cause, the Executive shall receive only the Accrued
Benefits as of the date of termination and thereafter no other payments
or benefits shall be owed by the Company to the Executive.
(d) Termination by the Company without Cause. The Board
may terminate the Executive's engagement under this Agreement
immediately without any Cause (a "WITHOUT CAUSE TERMINATION") or notice
whatsoever (the date of such termination, the "WITHOUT CAUSE
TERMINATION DATE"). Upon a Without Cause Termination, so long as the
Executive is not in violation of any of the provisions of Section 6 of
this Agreement, (i) the Company shall pay the Executive, in equal
installments as set forth in Section 4(a), the applicable pro rata
portion of the Executive's Salary until the earlier of (A) January 31,
2008 or (B) Change of Control Transaction if the Executive has or will
receive the change of control payment pursuant to Section 4(e) (such
earlier date, the "SEVERANCE PAYMENT PERIOD") and (ii) if the Without
Cause Termination Date is prior to May 15, 2007, the Company shall
issue the Milestone Shares if not previously issued. For purposes of
clarification, if the Executive is not entitled to receive the change
of control payment pursuant to Section 4(e), then clause (i)(B) of the
previous sentence shall not be applicable.
(e) Termination by the Executive. The Executive may
terminate his engagement with the Company, for Good Reason or without
Good Reason, at any time upon thirty (30) days prior written notice. In
the event of termination under this Section 5(e) without Good Reason,
the Executive shall be entitled to his Accrued Benefits as of the date
of termination and no other further payments or benefits except
pursuant to Section 10 of this Agreement and Section 7(a) of the Stock
Option Agreement. In the event of termination under this Section 5(e)
for Good Reason, the Executive shall be entitled to all such payments
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and benefits as he would have been entitled to had such termination
been by the Company without Cause pursuant to Section 5(d).
(f) Change of Control Payment. Notwithstanding anything
herein to the contrary, the Executive will remain entitled to receive a
payment under Section 4(e) as long as (i) the Executive's engagement
was not terminated for Cause under Section 5(c) hereof and (ii) the
Executive, unless terminated without Cause pursuant to Section 5(d) or
for Good Reason pursuant to Section 5(e) prior thereto, remained
engaged by the Company pursuant to this Agreement through at least
January 31, 2008.
(g) Conditions to Payments Upon Termination. Any payments
under this Section 5, other than the payment of Accrued Benefits, are
conditioned upon (i) the Executive's execution and delivery of a
Release Agreement, in substantially the form attached hereto as Exhibit
B, which release is effective and non-revocable and (ii) the
resignation by the Executive from all positions held in the Company,
including any positions as a director or officer.
SECTION 6. NON-SOLICITATION, CONFIDENTIALITY, DISCOVERIES AND WORKS.
(a) Non-Solicitation. During the Engagement Period and
for a period of twelve (12) months following the termination of such
engagement, the Executive agrees that the Executive will not, either on
the Executive's own behalf or on behalf of any other Person (other than
for the benefit of the Company), directly or indirectly, solicit or
encourage any person who is then an employee or contractor of the
Company or who was an employee or contractor of the Company within the
last six (6) months of the Executive's engagement with the Company, to
leave the Company, cease working for or providing services to the
Company or discontinue doing business with the Company. "Help wanted"
and similar general solicitations not targeted at the Company's
employees shall not be deemed to violate the foregoing prohibition.
(b) Confidentiality.
(i) During the Engagement Period and for all time
following the termination, for any reason, of such engagement,
the Executive shall hold all Confidential Information in a
fiduciary capacity and agrees not to take any action which
would constitute or facilitate the Unauthorized use or
disclosure of Confidential Information.
(ii) As of the date of termination, for any reason,
of the Executive's engagement with the Company, the Executive
agrees to deliver to the Company all property and materials
within the Executive's possession or control which belong to
the Company or which contain Confidential Information.
(iii) In the event that the Executive is requested by
any governmental or judicial authority to disclose any
Confidential Information, the Executive shall (to the extent
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that it is lawful and practicable to do so) give the Company
prompt notice of such request (including, by giving the
Company a copy of such request if it is in writing), such that
the Company may seek a protective order or other appropriate
relief, and in any such proceeding the Executive shall
disclose only so much of the Confidential Information as is
required to be disclosed.
(c) Discoveries and Works. All discoveries and works made or
conceived by the Executive during and in the course of his engagement
by the Company, jointly or with others, that relate to the Company's
activities shall be owned by the Company. The terms "discoveries and
works" include, by way of example, products, inventions, computer
programs (including documentation of such programs), technical
improvements, processes, drawings, and works of authorship, including
all educational and sales materials or other publications which relate
to Company's current business. The Executive shall promptly notify and
make full disclosure to, and execute and deliver any documents
requested by, the Company to evidence or better assure title to such
discoveries and works by the Company, assist the Company in obtaining
or maintaining for itself at its own expense United States and foreign
patents, copyrights, trade secret protection and other protection of
any and all such discoveries and works, and promptly execute, whether
during his engagement or thereafter, all applications or other
endorsements necessary or appropriate to maintain trademarks, patents
and other rights for the Company and to protect its title thereto.
(d) Representations, Warranties and Acknowledgements. The
Executive acknowledges that: (i) but for the agreements contained in
this Section 6, the Company would not enter into this Agreement; (ii)
the Company considers Confidential Information to be commercially and
competitively valuable to the Company and critical to its success;
(iii) Unauthorized use or disclosure of Confidential Information could
cause irreparable harm to the Company; and (iv) by this Agreement, the
Company is taking reasonable steps to protect its legitimate interests
in its Confidential Information.
(e) Remedies. In the event of breach or threatened breach by the
Executive of any provision of this Section 6, the Company shall be
entitled to seek (i) temporary, preliminary and permanent injunctive
relief, in each case without the posting of any bond or other security,
(ii) damages and an equitable accounting of all earnings, profits and
other benefits arising from such breach, or threatened breach and (iii)
any other legal and equitable relief to which it may be entitled,
including any and all monetary damages which the Company may incur as a
result of said breach or threatened breach. The Company shall be
entitled to seek temporary and preliminary injunctive relief from a
court of competent jurisdiction. The Company may pursue any remedy
available, including declaratory relief, concurrently or consecutively,
in any order, and the pursuit of one such remedy at any time will not
be deemed an election of remedies or waiver of the right to pursue any
other remedy.
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SECTION 7. ATTORNEY'S FEES AND COSTS. If any action at law or in equity
is necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
SECTION 8. SEVERABILITY AND LIMITATION. All agreements and covenants
contained herein are severable and, in the event any of them shall be held to be
invalid by any competent court, this Agreement shall be interpreted as if such
invalid agreements or covenants were not contained herein. Should any court or
other legally constituted authority determine that for any such agreement or
covenant to be effective that it must be modified to limit its duration or
scope, the parties hereto shall consider such agreement or covenant to be
amended or modified with respect to duration and scope so as to comply with the
orders of any such court or other legally constituted authority or to be
enforceable under the laws of the State of Texas, and all other portions of such
agreement or covenants shall remain in full force and effect as originally
written.
SECTION 9. MANDATORY ARBITRATION. All claims, disputes, controversies,
differences or misunderstandings between the parties arising out of, or by
virtue of this Agreement or the interpretation of this Agreement which cannot be
settled or resolved by the parties hereto shall be settled or determined by
binding arbitration under the then-current rules of the American Arbitration
Association. The exclusive jurisdiction for any such arbitration shall be Travis
County, Texas, and each party consents to personal jurisdiction in Travis
County, Texas. The arbitrator will apportion attorneys' fees and costs in his or
her judgment. Either party may, however, seek injunctive relief in any court of
competent jurisdiction, pending arbitration. Judgment based on the arbitrator's
award may be entered in any court of competent jurisdiction.
SECTION 10. EXCULPATION AND INDEMNIFICATION. Subject to applicable law,
the Executive shall be entitled to such exculpation and indemnification under
the terms of the Company's Articles of Incorporation and bylaws and such other
liability insurance as the Company may purchase for its officers and directors
from time to time.
SECTION 11. ASSIGNMENT; SUCCESSORS. The Company may assign its rights
under this Agreement to any successor to all or substantially all the assets of
the Company, by merger or otherwise. The rights of the Executive under this
Agreement, except as provided in the last sentence of this Section 11, may not
be assigned or encumbered by the Executive, voluntarily or involuntarily, during
his lifetime, and any such purported assignment shall be void ab initio.
However, all rights of the Executive under this Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, estates, executors, administrators, heirs and beneficiaries.
Notwithstanding anything to the contrary, the Executive may assign any or all of
his rights to compensation hereunder to which the Executive is entitled to DLB
Capital Fund FNIN, LLC, a Delaware limited liability company (the "FUND"),
subject to the Executive's performance of his obligations hereunder.
SECTION 12. THIRD PARTIES. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give any person other than the
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parties hereto and their successors and permitted assigns any rights or remedies
under or by reason of this Agreement.
SECTION 13. AMENDMENT. Except as otherwise provided in Section 8, this
Agreement may not be amended or modified at any time except by a written
agreement approved and executed by the Company and the Executive. Any attempted
amendment or modification without such approval and execution shall be null and
void ab initio and of no effect.
SECTION 14. WITHHOLDING. The Company shall be entitled to withhold from
any amounts to be paid to the Executive or the Fund hereunder any federal,
state, local, or foreign withholding or other taxes or charges that it is from
time to time required to withhold.
SECTION 15. GOVERNING LAW. This Agreement and the rights and
obligations hereunder shall be governed by and construed in accordance with the
laws of the State of Texas, without regard to principles of conflicts of law of
Texas or any other jurisdiction. Subject to Section 9, the exclusive
jurisdiction for any litigation arising under or in connection with this
Agreement shall be Travis County, Texas (provided, that this limitation shall
not apply if and to the extent that the courts in Travis County, Texas, do not
have or do not accept jurisdiction over such litigation), and each party
consents to personal jurisdiction in Travis County, Texas.
SECTION 16. NOTICE. Notices given pursuant to this Agreement shall be
in writing and will be effective (a) upon delivery, if delivered personally, (b)
three days after depositing in the United Stated mail, if mailed by registered
or certified mail, return receipt requested, postage prepaid, (c) the next
business day, if sent via a reputable, established courier service that
guarantees next business day delivery or (d) upon transmission of the telecopy
in complete, readable form, if sent via telecopier followed within 24 hours by
confirmation, addressed as set forth below.
If to the Company:
Financial Industries Corporation
6500 River Place Boulevard
Building I
Austin, Texas 78730
Attention: General Counsel
Facsimile No.: (512) 404-5051
If to the Executive:
At the address for the Executive set forth on his signature
page hereto; or to such other address as the party to be notified shall have
given to the other in accordance with the notice provisions set forth herein.
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SECTION 17. NO WAIVER. No term or condition of this Agreement shall be
deemed to have been waived nor shall there be any estoppel to enforce any of the
terms of provisions of this Agreement except by written instrument of the party
charged with such waiver or estoppel. No waiver by either party at any time of
any breach by the other party of, or compliance with, any condition or provision
of this Agreement to be performed by the other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at any time.
SECTION 18. HEADINGS. The headings contained herein are for reference
only and shall not affect the meaning or interpretation of any provision of this
Agreement.
SECTION 19. ENTIRE AGREEMENT. This Agreement supersedes any and all
other agreements, either oral or in writing between the parties hereto with
respect to the engagement of the Executive by the Company. This Agreement
constitutes the entire agreement and understanding by and between the Executive
and the Company with respect to the engagement of the Executive by the Company.
No agreement or representation, oral or otherwise, express or implied, with
respect to the subject matter hereof has been made by either party which is not
set forth expressly in this Agreement.
SECTION 20. EXECUTIVE REPRESENTATIONS. The Executive hereby represents
and warrants to the Company that (a) the Executive has negotiated and entered
into this Agreement with the full advice and representation of legal counsel
specifically retained for such purpose, (b) the Executive's execution and
delivery of this Agreement and his performance of his duties and obligations
hereunder will not conflict with, or cause a default under, or give any party a
right to damages under, or to terminate, any other agreement to which the
Executive is a party or by which he is bound and (c) there are no agreements or
understandings that would make unlawful the Executive's execution or delivery of
this Agreement or his engagement hereunder.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties have executed this Agreement
in one or more counterparts, each of which shall be deemed one and the same
instrument, as of the day and year first written above.
FINANCIAL INDUSTRIES CORPORATION
By: /s/ Keith Long
--------------------------------
Name: Keith Long
Title: Chairman
EXECUTIVE:
/s/ William Prouty
------------------------------------
William Prouty
Address for Notice:
William Prouty
c/o DLB Capital
187 Danbury Road
Wilton, Connecticut 06897
Facsimile No.: (203) 761-6776
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EXHIBIT A
STOCK OPTION AGREEMENT
See Exhibit 10.2
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EXHIBIT B
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FORM OF RELEASE AGREEMENT OMITTED][GRAPHIC OMITTED]
This Release Agreement (this "RELEASE") is entered into as of
[__________], 200[__], by and between [_____________________] (the "EXECUTIVE"),
and Financial Industries Corporation, a Texas corporation, and its successors
and assigns (the "COMPANY"). The Executive and the Company are sometimes
collectively referred to as the "PARTIES."
1. The Executive's engagement with the Company is terminated effective
[__________], 200[__] (the "TERMINATION DATE"). The Parties have agreed
to avoid and resolve any alleged existing or potential disagreements
between them arising out of or connected with the Executive's
engagement with the Company including the termination thereof. The
Company expressly disclaims any wrongdoing or any liability to the
Executive.
2. The Company agrees to provide the Executive the severance benefits
provided for in his/her CEO Engagement Agreement with the Company,
dated as of ___________, 2007 (the "ENGAGEMENT AGREEMENT"), after
he/she executes this Release [FOR 40+ INSERT "AND DOES NOT REVOKE IT AS
PERMITTED IN SECTION 7 BELOW, THE DATE OF THE EXPIRATION OF SUCH
REVOCATION PERIOD BEING THE "EFFECTIVE DATE")"].
3. The Executive represents that he/she has not filed, and will not file,
any complaints, lawsuits, administrative complaints or charges relating
to the Executive's engagement with the Company and/or the termination
thereof [; PROVIDED, HOWEVER, THAT NOTHING CONTAINED IN THIS SECTION 3
SHALL PROHIBIT THE EXECUTIVE FROM BRINGING A CLAIM TO CHALLENGE THE
VALIDITY OF THE ADEA RELEASE IN SECTION 7 HEREIN]. The Executive hereby
releases the Company, its subsidiaries, affiliates, and their
respective past or present shareholders, directors, officers,
employees, consultants, independent contractors, trustees,
administrators, insurers, agents, attorneys, representatives and
fiduciaries, including without limitation all persons acting by,
through, under or in concert with any of them (collectively, the
"RELEASED PARTIES"), from any and all claims, charges, complaints,
causes of action or demands of whatever kind or nature that the
Executive now has or has ever had against the Released Parties, whether
known or unknown, to the extent arising from or relating to the
Executive's engagement with or discharge from the Company, including
but not limited to: wrongful or tortious termination; constructive
discharge; implied or express employment contracts and/or estoppel;
discrimination and/or retaliation under any federal, state or local
statute or regulation, specifically including any claims the Executive
may have under the Fair Labor Standards Act, the Americans with
Disabilities Act, Title VII of the Civil Rights Act of 1964 as amended,
and the Family and Medical Leave Act; the discrimination or other
employment laws of the State of Texas; any claims brought under any
federal or state statute or regulation for non-payment of wages or
other compensation, including grants of stock options or any other
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EXHIBIT B TO
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equity compensation (other than pursuant to the Stock Option Agreement
referred to in the Engagement Agreement); and libel, slander, or breach
of contract other than the breach of this Release or breach of such
Stock Option Agreement. This Release specifically excludes claims,
charges, complaints, causes of action or demand that post-date the
Termination Date [OR THE EFFECTIVE DATE, WHICHEVER IS LATER].
Notwithstanding the foregoing, this Release does not release or
otherwise affect the Executive's rights in respect of any of the
following: (i) rights to Accrued Benefits (as defined in the Engagement
Agreement); (ii) rights to be indemnified, contributed to, and/or held
harmless respect of any liability incurred by the Executive by reason
of or in connection with his employment with the Company and/or having
been an officer or director thereof, including without limitation such
rights under the Company's bylaws and other governing documents and
under the Engagement Agreement, respectively; (iii) any rights under
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
and any similar rights under applicable state laws; and (iv) rights
under the Stock Option Agreement (as defined in the Engagement
Agreement).
4. The Executive agrees to keep the fact that this Release exists and the
terms of this Release in strict confidence except to his/her immediate
family and his/her financial and legal advisors on a need-to-know
basis.
5. The Executive warrants that no promise or inducement has been offered
for this Release other than as set forth herein and that this Release
is executed without reliance upon any other promises or
representations, oral or written. Any modification of this Release must
be made in writing and be signed by the Executive and the Company.
6. If any provision of this Release or compliance by the Executive or the
Company with any provision of the Release constitutes a violation of
any law, or is or becomes unenforceable or void, then such provision,
to the extent only that it is in violation of law, unenforceable or
void, will be deemed modified to the extent necessary so that it is no
longer in violation of law, unenforceable or void, and such provision
will be enforced to the fullest extent permitted by law. If such
modification is not possible, such provision, to the extent that it is
in violation of law, unenforceable or void, will be deemed severable
from the remaining provisions of this Release, which provisions will
remain binding on both the Executive and the Company. This Release is
governed by, and construed and interpreted in accordance with the laws
of the State of Texas, without regard to principles of conflicts of
law. The exclusive jurisdiction for any litigation arising under or in
connection with this Agreement shall be Travis County, Texas (provided,
that this limitation shall not apply if and to the extent that the
courts in Travis County, Texas, do not have or do not accept
jurisdiction over such litigation), and each party consents to personal
jurisdiction in Travis County, Texas. This Release represents the
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EXHIBIT B TO
EMPLOYMENT AGREEMENT
entire understanding of the Parties with respect to subject matter
herein, no oral representations have been made or relied upon by the
Parties.
[FOR EXECUTIVES OVER 40 ONLY - 7. IN FURTHER
RECOGNITION OF THE ABOVE, THE EXECUTIVE HEREBY RELEASES AND DISCHARGES
THE RELEASED PARTIES FROM ANY AND ALL CLAIMS, ACTIONS AND CAUSES OF
ACTION THAT HE/SHE MAY HAVE AGAINST THE RELEASED PARTIES, AS OF THE
DATE OF THE EXECUTION OF THIS RELEASE, ARISING UNDER THE AGE
DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED (THE "ADEA"), AND
THE APPLICABLE RULES AND REGULATIONS PROMULGATED THEREUNDER. THE
EXECUTIVE ACKNOWLEDGES AND UNDERSTANDS THAT ADEA IS A FEDERAL STATUTE
THAT PROHIBITS DISCRIMINATION ON THE BASIS OF AGE IN EMPLOYMENT,
BENEFITS AND BENEFIT PLANS. THE EXECUTIVE SPECIFICALLY AGREES AND
ACKNOWLEDGES THAT: (A) THE RELEASE IN THIS SECTION 7 WAS GRANTED IN
EXCHANGE FOR THE RECEIPT OF CONSIDERATION THAT EXCEEDS THE AMOUNT TO
WHICH HE/SHE WOULD OTHERWISE BE ENTITLED TO RECEIVE UPON TERMINATION OF
HIS/HER EMPLOYMENT; (B) HIS/HER WAIVER OF RIGHTS UNDER THIS RELEASE IS
KNOWING AND VOLUNTARY AS REQUIRED UNDER THE OLDER WORKERS BENEFIT
PROTECTION ACT; (B) THAT HE/SHE HAS READ AND UNDERSTANDS THE TERMS OF
THIS RELEASE; (C) HE/SHE HAS HEREBY BEEN ADVISED IN WRITING BY THE
COMPANY TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS RELEASE;
(D) THE COMPANY HAS GIVEN HIM/HER A PERIOD OF UP TO TWENTY-ONE (21)
DAYS WITHIN WHICH TO CONSIDER THIS RELEASE, WHICH PERIOD SHALL BE
WAIVED BY THE EXECUTIVE'S VOLUNTARY EXECUTION PRIOR TO THE EXPIRATION
OF THE TWENTY-ONE DAY PERIOD; AND (E) FOLLOWING HIS/HER EXECUTION OF
THIS RELEASE HE/SHE HAS SEVEN (7) DAYS IN WHICH TO REVOKE HIS/HER
RELEASE AS SET FORTH IN THIS SECTION 7 ONLY AND THAT, IF HE/SHE CHOOSES
NOT TO SO REVOKE, THE RELEASE IN THIS SECTION 7 SHALL THEN BECOME
EFFECTIVE AND ENFORCEABLE AND THE PAYMENT LISTED ABOVE SHALL THEN BE
MADE TO HIS/HER IN ACCORDANCE WITH THE TERMS OF THIS RELEASE. TO CANCEL
THIS RELEASE, THE EXECUTIVE UNDERSTANDS THAT HE/SHE MUST GIVE A WRITTEN
REVOCATION TO THE GENERAL COUNSEL OF THE COMPANY AT 6500 RIVER PLACE
BOULEVARD, BUILDING I, AUSTIN, TEXAS 78730, EITHER BY HAND DELIVERY OR
CERTIFIED MAIL WITHIN THE SEVEN-DAY PERIOD. IF HE/SHE RESCINDS THIS
RELEASE, IT WILL NOT BECOME EFFECTIVE OR ENFORCEABLE AND HE/SHE WILL
NOT BE ENTITLED TO ANY BENEFITS FROM THE COMPANY.]
7. THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT HE/SHE HAS CAREFULLY READ
AND VOLUNTARILY SIGNED THIS RELEASE, THAT HE/SHE HAS HAD AN OPPORTUNITY
TO CONSULT WITH AN ATTORNEY OF HIS/HER CHOICE, AND THAT HE/SHE SIGNS
THIS RELEASE WITH THE INTENT OF RELEASING THE CLAIMS COVERED HEREBY.
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