-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Bfz/uSiUkFuuB8K1gqDzLjMVvWmywlanaPOVK5qjq4zmZ6gLbv8LR6hoKl5tyEQs 3lzC202nitWtqlWZKqdXLg== 0000035733-04-000002.txt : 20040107 0000035733-04-000002.hdr.sgml : 20040107 20040106173205 ACCESSION NUMBER: 0000035733-04-000002 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20040105 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20040107 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FINANCIAL INDUSTRIES CORP CENTRAL INDEX KEY: 0000035733 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 742126975 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-04690 FILM NUMBER: 04511114 BUSINESS ADDRESS: STREET 1: LEGAL DEPARTMENT STREET 2: 6500 RIVER PLACE BLVD., BUILDING ONE CITY: AUSTIN STATE: TX ZIP: 78730 BUSINESS PHONE: 512 404-5000 MAIL ADDRESS: STREET 1: 6500 RIVER PLACE BLVD., BUILDING ONE STREET 2: LEGAL DEPARTMENT CITY: AUSTIN STATE: TX ZIP: 78730 FORMER COMPANY: FORMER CONFORMED NAME: GOLDEN UNITED INVESTMENT CO STOCK PLAN DATE OF NAME CHANGE: 19731128 FORMER COMPANY: FORMER CONFORMED NAME: ILEX CORP DATE OF NAME CHANGE: 19730801 FORMER COMPANY: FORMER CONFORMED NAME: GOLDEN UNITED INVESTMENT CO DATE OF NAME CHANGE: 19730801 8-K 1 fic8k010604.txt FIC 8K FILED ON 01/06/04 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): December 31, 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 - 1 - Item 5 - Other Events and Regulation FD Disclosure. (1) Sale of New Era Companies: Financial Industries Corporation ("FIC"), through FIC Financial Services, Inc. (a subsidiary of FIC) ("FICFS") sold the New Era companies which it had previously acquired in May, 2003, pursuant to a Stock Purchase Agreement dated as of December 31, 2003 (the "December New Era Stock Purchase Agreement"). The companies were sold to BCDP Holdings, LLP, which was established by five of the individuals who had an ownership interest in one or more of the New Era companies prior to FIC's purchase of those companies (Scott Bell, Mike Cochran, Wayne Desselle, Chris Murphy and John Pesce). The companies which were sold are: (i) Total Consulting Group, Inc. ("TCG"), (ii) JNT Group, Inc. ("JNT") and (iii) three companies collectively referred to as "Paragon" - Paragon Benefits, Inc., The Paragon Group, Inc., and Paragon National, Inc. FIC has agreed to indemnify the purchasers for a portion of specified liabilities relating to operations of one of the New Era companies during part of the period it was owned by FIC. The December New Era Stock Purchase Agreement provides that the consideration for the transaction is $1.00. Prior to the closing, intercompany payables or loans owed by the New Era companies to FIC or its affiliates were satisfied in full or canceled, and certain tangible and intangible assets used by the New Era companies in connection with the operation of their business were assigned to Paragon National. FIC expects that the sale of the New Era companies will contribute a loss in the amount of approximately $5.0 million to its financial results for the fourth quarter of 2003, before the impact of taxes. FIC has not determined the amount, if any, of tax benefit related to this loss on sale. (2) Termination of Employment Agreements. Also, at the time of the sale, Messrs. Bell, Cochran, Desselle, Murphy and Pesce each resigned their employment with FICFS. In addition, each such individual entered into an agreement releasing FIC and FICFS from all obligations under his five-year employment contract with FICFS and from any claims he may have under the May, 2003 purchase agreements under which FIC originally acquired the New Era companies (including any claims to the restricted shares of FIC common stock held in escrow under those agreements). A total of 155,597 shares of FIC common stock had been held in escrow for the five individuals under the May, 2003 agreements. Each of the release agreements also provides for the release by FIC and FICFS of any claims which they may have against - 2 - each of the individuals (i) with respect to his employment agreement or his employment with and/or resignation from FICFS, or (ii) the acquisition of the New Era Companies by FICFS, except for any rights that FIC or FICFS may have to enforce the terms and conditions of the release agreement or the December New Era Stock Purchase Agreement. Under the agreements, each of the five individuals received a payment of $10,000, which payment is treated as wages and subject to standard payroll deductions and withholdings. The December New Era Stock Purchase Agreement and the release agreements do not release FIC from obligations to deliver up to a maximum of 65,294 shares of FIC common stock to any of the six other sellers of the New Era companies in connection with the May, 2003 transactions or any claims of liabilities of such persons under the May, 2003 purchase agreements or related employment agreements. (3) Sale of Actuarial Risk Consultants, Inc. and Amendment to Employment Agreement of George Wise. On December 31, 2003, FIC, through InterContinental Life Corporation (a subsidiary of FIC) ("ILCO") sold Actuarial Risk Consultants, Inc. ("ARC"), an actuarial consulting subsidiary which it had established in December, 2002. The sale of ARC was to George M. Wise, III, who is currently Vice President and Chief Financial Officer of FIC. The consideration for the transaction was $10,000. Prior to the closing, all intercompany payables owed by ARC to FIC or its affiliates were satisfied in full, and certain tangible and intangible assets used by ARC in connection with the operation of its business were assigned to ARC. On December 31, 2003, Mr. Wise and FIC entered into an amendment to Mr. Wise's employment agreement. The amendment provides that the term of the agreement now ends on March 31, 2004, instead of December 31, 2005. Mr. Wise has agreed to continue as Chief Financial Officer of FIC until March 31, 2004. Effective January 1, 2004, his rate of compensation was reduced to $152,000 per year and he may devote up to one day each week to the business of ARC. Under the amendment, Mr. Wise will receive a severance payment of $310,000, one-half of which is payable in January, 2004 and the balance on March 31, 2004. In connection with the amendment, Mr. Wise released FIC from certain claims he may have, including claims related to matters arising out of his employment agreement or his employment relationship with FIC. - 3 - Also, in connection with the sale of ARC to Mr. Wise, FIC entered into a consulting agreement with ARC. Under the terms of the agreement, FIC and its insurance subsidiaries may (but are not obligated to) obtain up to 2,000 hours of actuarial consulting services from ARC during the period from January 1, 2004 to December 31, 2005. The agreement provides that actuarial consulting services provided by either Mr. Wise or Cory Zass (the President of ARC) will be billed at the rate of $125.00 per hour. (4) Agreements. The descriptions of the agreements in this report are qualified by reference to the complete agreements which are filed as exhibits and are incorporated herein by reference. Item 7. Financial Statements and Exhibits . (c) Exhibits Exhibit 10.1 Stock Purchase Agreement dated December 31, 2003, by and between BCDP Holdings, LLP, Financial Industries Corporation and FIC Financial Services, Inc. Exhibit 10.2 Acquisition Agreement dated December 31, 2003, by and between InterContinental Life Corporation and George M. Wise, III . Exhibit 10.3 Agreement and Release dated December 31, 2003, by and between Scott A. Bell, FIC Financial Services, Inc., and Financial Industries Corporation. Exhibit 10.4 Agreement and Release dated December 31, 2003, by and between Mike Cochran, FIC Financial Services, Inc., and Financial Industries Corporation. Exhibit 10.5 Agreement and Release dated December 31, 2003, by and between Wayne C. Desselle, FIC Financial Services, Inc., and Financial Industries Corporation. Exhibit 10.6 Agreement and Release dated December 31, 2003, by and between Chris Murphy, FIC Financial services, Inc., and Financial Industries Corporation. Exhibit 10.7 Agreement and Release dated December 31, 2003, by and between John Pesce, FIC Financial services, Inc., and Financial Industries Corporation. Exhibit 10.8 Amendment No. 1 dated December 31, 2003, to Employment Agreement between George Wise and Financial Industries Corporation. - 4 - Exhibit 10.9 Consulting Agreement between Actuarial Risk Consultants, Inc. and Financial Industries Corporation. Exhibit 99.1 Press release dated January 6, 2005, issued by Financial Industries Corporation Item 9. REGULATION FD DISCLOSURE On January 5, 2004, Financial Industries Corporation ("FIC") issued a press release announcing that it has sold (i) the New Era companies which it had previously acquired in May, 2003 and (ii) Actuarial Risk Consultants, Inc., its actuarial consulting subsidiary. A copy of the press release is filed as Exhibit 99.1 to this report and is incorporated herein by reference. NOTE: The information in Item 9 of this report (including Exhibit 99.1) is furnished pursuant to Item 9 and shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. Such information will not be deemed an admission as to the materiality of any information contained in Item 9 that is required to be disclosed solely by regulation FD. Statements regarding the effects and results of the transactions, agreements and other matters described in this report, including expected losses, as well as any other statements that are not historical facts in this report, are forward-looking statements that involve certain risks, uncertainties and assumptions. These include, but are not limited to, final accounting results, third party claims and other factors detailed in the company's filings with the Securities and Exchange Commission (SEC), which are available free of charge on the SEC's website at www.sec.gov. Should one or more of these risks or uncertainties materialize, of should underlying assumptions prove incorrect, actual results may vary materially from those indicated. - 5 - 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: January 6, 2004 By: /s/ Eugene E. Payne ___________________________________ Eugene E. Payne President and Chief Executive Officer - 6 - EX-10 3 exhibit-10_1.txt STOCK PURCHASE AGREEMENT BETWEEN BCDP & FIC EXHIBIT 10.1 STOCK PURCHASE AGREEMENT This Stock Purchase Agreement (the "Agreement") is made as of December 31, 2003, by and between BCDP Holdings, LLP, a Delaware registered limited liability partnership ("Buyer"), Financial Industries Corporation, a Texas corporation ("FIC"), and FIC Financial Services, Inc., a Nevada corporation ("Seller"). RECITALS WHEREAS, Seller owns all of the issued and outstanding shares (the "Shares") of the capital stock of: (i) Paragon Benefits, Inc., a Texas corporation ("Paragon Benefits"), which consists of 20,000 shares of common stock, par value $0.10 per share; (ii) The Paragon Group, Inc., a Texas corporation ("Paragon Group"), which consists of 30,000 shares of common stock, par value $0.10 per share; (iii) Paragon National, Inc., a Texas corporation ("Paragon National"), which consists of 20,000 shares of common stock, par value $0.10 per share; (iv) Total Compensation Group Consulting, Inc., a Texas corporation ("TCG"), which consists of 28,313 shares of common stock, par value $0.10 per share; and (v) JNT Group, Inc., a Texas corporation ("JNT" and, together with Paragon Benefits, Paragon Group, Paragon National and TCG, the "Companies"), which consists of 1,000 shares of common stock, par value $1.00 per share; WHEREAS, Seller desires to sell the Shares to the Buyer, on the terms and subject to the conditions set forth herein; and WHEREAS, the Buyer desires to purchase all of the Seller's right, title and interest to the Shares, on the terms and subject to the conditions set forth herein. NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: AGREEMENT Section 1. Purchase and Sale of the Shares. 1.1 Purchase and Sale; Closing. On the terms and subject to the conditions herein expressed and based on the representations, warranties, covenants and agreements contained herein, Seller hereby sells, transfers and assigns the Shares to Buyer and Buyer hereby purchases the Shares from Seller, all effective concurrently with the execution of this Agreement (the "Closing") and at such place and time as the parties may mutually agree. The purchase price ("Purchase Price") for the Shares shall consist of an amount of cash payable by Buyer equal to one dollar ($1.00), by payment at Closing. The Shares shall be delivered to Buyer at the Closing, free and clear of any and all Encumbrances, other than those restrictions arising from applicable federal and state securities laws. - 1 - 1.2 Closing Deliveries. At the Closing: (a) Seller. The Seller shall deliver, or cause to be delivered, to Buyer the following: (i) stock certificates duly endorsed to Buyer, or accompanied by stock powers duly endorsed to Buyer, representing the Shares against delivery by Buyer to Seller of the Purchase Price referred to in Section 1.1; (ii) evidence satisfactory to Buyer that the liability owed by JNT to Prosperity Bank in the approximate amount of $74,000 has been satisfied in full prior to Closing and any collateral, if any, securing such liability has been released prior to the Closing; (iii)evidence satisfactory to Buyer that any intercompany payables or loans owed by the Companies to FIC or any Affiliate of FIC (other than a Company) have been satisfied in full, canceled or transferred to an Affiliate other than a Company prior to Closing; (iv) a bill of sale (the "Bill of Sale") to be effective prior to the Closing in the form attached hereto as Exhibit A; and (v) such other documents, instruments and certificates as Buyer may reasonably request in connection with the transactions contemplated by this Agreement. (b) Buyer. The Buyer shall deliver, or cause to be delivered, to Seller the following: (i) the Purchase Price by cash; (ii) the Bill of Sale; and (ii) such other documents, instruments and certificates as Seller may reasonably request in connection with the transactions contemplated by this Agreement. - 2 - Section 2. Representations and Warranties of FIC and Seller. FIC and Seller hereby represent and warrant, jointly and severally, to Buyer that, as of the date of this Agreement: 2.1 Organization and Standing. Each Company is a corporation duly formed, validly existing and in good standing under the laws of the State of Texas. Each Company has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Buyer has been furnished complete and correct copies of the Articles of Incorporation and Bylaws of each of the Companies, each as currently in effect. 2.2 Authority. The execution, delivery and performance by FIC and Seller of this Agreement and any other documents, instruments and transactions contemplated by this Agreement (collectively, the "Documents") to which either is a party and the consummation by FIC and Seller of the transactions contemplated hereby and thereby, have been duly authorized by all necessary corporate action. All corporate action on the part of FIC and Seller and their officers, directors and shareholders necessary for the authorization, execution and delivery of the Documents, and the performance of all obligations of FIC and Seller hereunder and thereunder has been taken. The Documents have been duly executed and delivered by FIC and Seller and when executed and delivered by the other parties thereto will constitute valid and legally binding obligations of FIC and Seller enforceable in accordance with their respective terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) to the extent indemnification provisions contained herein or in any Document may be limited by applicable federal or state securities laws. 2.3 Noncontravention; Required Consents. The execution, delivery and performance by FIC and Seller of the Documents do not and will not violate, conflict with or result in the breach or default of any provision of FIC's or the Seller's Articles of Incorporation or Bylaws. The execution, delivery and performance by FIC and Seller of the Documents do not and will not (a) conflict with or violate any law or Governmental Order applicable to FIC or Seller or any of their respective properties or assets, except in each case for any conflicts or violations which would not reasonably be expected to have a material adverse effect on the business of the Companies, (b) require any consent, approval, authorization or other order of, action by, registration or filing with or declaration or notification to any Governmental Authority or any other party, except where such failure to obtain such consent or make such filing would not reasonably be expected to have a material adverse effect on the business of the Companies, or (c) conflict with, result in any violation or breach of, constitute a default (or event which with the giving of notice, or lapse of time or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of FIC's, Seller's, or the Companies' respective assets, or result in the imposition or acceleration of any payment, time of payment, vesting or increase in the amount of compensation or benefit payable, pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license or permit, or franchise to which FIC, Seller, or a Company is a party or by which their respective assets are bound, except in each case for any conflicts, violations, defaults, acceleration or termination which would not reasonably be expected to have a material adverse effect on the business of the Companies. - 3 - 2.4 Ownership of the Company Stock. (a) The authorized capital stock of Paragon Benefits is 1,000,000 shares of common stock, par value $0.10 per share, of which 20,000 shares are issued and outstanding as of the date hereof; the authorized capital stock of Paragon Group is 1,000,000 shares of common stock, par value $0.10 per share, of which 30,000 shares are issued and outstanding as of the date hereof; the authorized capital stock of Paragon National is 1,000,000 shares of common stock, par value $0.10 per share, of which 20,000 shares are issued and outstanding as of the date hereof; the authorized capital stock of TCG is 500,000 shares of common stock, par value $0.10 per share, of which 28,313 shares are issued and outstanding as of the date hereof (consisting of 16,110 shares of Class A Common Stock, 3,890 shares of Class B Common Stock, 2,222 shares of Class C Common Stock, 2,778 shares of Class D Common Stock, 2,778 shares of Class E Common Stock, and 535 shares of Class F Common Stock), and 500,000 shares of preferred stock, par value $0.10 per share, of which no shares are issued and outstanding; and the authorized capital stock of JNT is 1,000,000 shares of common stock, par value $1.00 per share, of which 1,000 shares are issued and outstanding as of the date hereof. The Seller constitutes the sole shareholder of the Companies. Upon the consummation of the transactions contemplated hereby, Buyer will own 100% of the issued and outstanding shares of capital stock of the Companies. No Person has any preemptive right to purchase any shares of capital stock or any other securities of the Companies, other than the shareholders of JNT who have preemptive rights to purchase shares of capital stock of JNT pursuant to the Articles of Incorporation of JNT and applicable state law. There are no outstanding securities or other instruments of the Companies which are convertible into or exchangeable for any shares of capital stock of the Companies and there are no commitments to issue such securities or instruments or otherwise make a Person a shareholder of a Company (except the Buyer pursuant to this Agreement). There is no existing option, warrant, right, call, or commitment of any character granted or issued by any Company governing the issuance of any shares of capital stock of such Company or any "phantom" securities giving the holder thereof any economic attributes of ownership. (b) The Seller holds of record and owns beneficially the Shares. The Shares are fully paid and non-assessable and, except for any right of the Buyer under this Agreement, are free and clear of all Encumbrances, demands, preemptive rights and adverse claims of any nature, other than transfer restrictions under federal and state securities laws. Seller has full voting power over all Shares, and is subject to no proxy, shareholders' agreement, voting trust or other agreement relating to the voting of any of the Shares. There is no agreement between the Seller and any other Person with respect to the disposition of the Shares. Upon the Closing, the Seller will have transferred record and beneficial ownership of the Shares to the Buyer. - 4 - 2.5 Financial Statements. The unaudited balance sheets and profit and loss statements for the Companies as of November 30, 2003 are set forth on Exhibit B attached hereto (the "Company Financial Statements"). To the Knowledge of FIC and Seller, the Company Financial Statements (including any notes thereto) present fairly the financial condition of the Companies as of the date thereof and the results of its operations for the period then ended. To the Knowledge of FIC and Seller, there has been no material change in the financial condition or results of operations of the Companies since November 30, 2003 which would reasonably be expected to have a material adverse effect on the business of the Companies, taken as a whole. 2.6 Assets. The Companies, in the aggregate, have at least one hundred thirty seven thousand five hundred dollars ($137,500) of cash or cash equivalents (including checks outstanding), free and clear of all Encumbrances. 2.7 No Brokers. There are no brokers, financial advisors or finders or other Persons who have any valid claim against Seller or the Companies, or any of their respective assets for a commission, finders' fee, brokerage fee, advisory fee or other similar fee in connection with this Agreement, or the transactions contemplated hereby, by virtue of any actions taken by or on behalf of the Companies, Seller or the Companies' officers, employees or agents. 2.8 No Subsidiaries. No Company has any Subsidiary. Section 3. Representations of Buyer. Buyer represents and warrants to FIC and Seller that: 3.1 Authority. Buyer is duly formed, validly existing and in good standing under the laws of the State of Delaware, and has full organizational power and authority to execute, deliver and perform this Agreement and any other Documents to which it is a party. The execution, delivery and performance by Buyer of this Agreement and any other Documents to which Buyer is a party and the consummation by Buyer of the transactions contemplated hereby and thereby, have been duly authorized by all necessary partnership action. All partnership action on the part of Buyer and its partners necessary for the authorization, execution and delivery of the Documents, and the performance of all obligations of Buyer hereunder and thereunder, has been taken. The Documents have been duly executed and delivered by Buyer and when executed and delivered by the other parties thereto will constitute valid and legally binding obligations of Buyer enforceable in accordance with their respective terms, except that enforcement thereof may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors' rights and remedies generally and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). - 5 - 3.2 Noncontravention; Required Consents. The execution, delivery and performance by Buyer of the Documents do not and will not violate, conflict with or result in the breach or default of any provision of Buyer's Statement of Qualification as a Limited Liability Partnership or Partnership Agreement. The execution, delivery and performance by Buyer of the Documents do not and will not (a) conflict with or violate any law or Governmental Order applicable to Buyer or any of its properties or assets, except in each case for any conflicts or violations which would not reasonably be expected to have a material adverse effect on the Buyer's business, (b) require any consent, approval, authorization or other order of, action by, registration or filing with or declaration or notification to any Governmental Authority or any other party, except where such failure to obtain such consent or make such filing would not reasonably be expected to have a material adverse effect on the Buyer's business or (c) conflict with, result in any violation or breach of, constitute a default (or event which with the giving of notice, or lapse of time or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of Buyer's assets, or result in the imposition or acceleration of any payment, time of payment, vesting or increase in the amount of compensation or benefit payable, pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license or permit, or franchise to which Buyer is a party or by which its assets are bound, except in each case for any conflicts, violations, defaults, acceleration or termination which would not reasonably be expected to have a material adverse effect on Buyer's business. 3.3 No Brokers. There are no brokers, financial advisors or finders or other Persons who have any valid claim against Buyer, or any of its assets for a commission, finders' fee, brokerage fee, advisory fee or other similar fee in connection with this Agreement, or the transactions contemplated hereby, by virtue of any actions taken by or on behalf of the Buyer or the Buyer's officers, employees or agents. 3.4 Investment Experience. Buyer and each of the partners thereof is knowledgeable, sophisticated and experienced in business and financial matters of the type contemplated by this Agreement, is able to evaluate the risks and merits of an investment in the Shares and is financially able to bear the risks thereof. 3.5 Company Information. Buyer and each of the partners thereof has been afforded access to information regarding the Companies sufficient to enable them to evaluate the risks and merits of purchasing the Shares and executing this Agreement and consummating the transactions contemplated hereby. The offering of the Shares to Buyer was made only through direct, personal communication between Seller and Buyer and the partners thereof or their duly authorized representatives and not through any public solicitation or advertising. - 6 - 3.6 Restricted Securities. Buyer acknowledges that (i) the Shares have not been registered under the Securities Act or the securities or "blue sky" laws of any state or other domestic or foreign jurisdiction, (ii) the Shares may not be sold, transferred or otherwise disposed of except pursuant to an effective registration statement thereunder or an applicable exemption therefrom and (iii) the certificates evidencing the Shares shall contain a legend or legends indicating applicable transfer restrictions. 3.7 Purchase for Own Account. Buyer is acquiring the Shares for investment, and not with a view towards their public offering or distribution. Buyer understands that it must bear the economic risk of such investment indefinitely unless the Shares are registered pursuant to the Securities Act, or an exemption from such registration is available, and that Seller is not aware of any present intentions of the Companies to register the Shares. Buyer further understands that there is no assurance that an exemption from the Securities Act will be available or, if available, that such exemption will allow the Buyer to dispose of or otherwise transfer any or all of the Shares under the circumstances, in the amounts or at the times the Buyer might propose. Section 4. Covenants and Agreements. 4.1 Reporting. FIC, Seller and Buyer agree to report for tax, financial accounting, SEC and all other purposes that the Purchase Price reflects the current value of the Shares and the sole consideration for the Shares. 4.2 JNT Transition. (a) FIC, Seller and Buyer will devote commercially reasonable resources necessary to complete their respective responsibilities under the JNT Transition Plan attached hereto as Exhibit C (the "JNT Transition Plan") by January 31, 2004. (b) Buyer acknowledges that on and after the Closing, neither Seller nor FIC shall have any obligations with respect to the Companies and the operations thereof other than as set forth in Section 4.2(a). 4.3 Flip Protection. (a) Upon (i) a sale of more than 50% of the equity securities of any Company by means of any transaction or series of transactions (including, without limitation, any reorganization, merger or consolidation) to any Person (other than an Affiliate of such Company) or any Persons, acting together, which would constitute a "group" (as such term is defined in Rule 13d-5 promulgated under the Exchange Act), (ii) a sale of all or substantially all of the assets of any Company to any Person (other than an Affiliate of such Company) or any Persons, acting together, which would constitute a "group" (as such term is defined in Rule 13d-5 promulgated under the Exchange Act) or (iii) an acquisition of the voting control of a Company (i.e., the ability to elect a majority of the members of the Board of Directors of a Company) by any Person (other than an Affiliate of such Company) or any Persons, acting together, which would constitute a "group" (as such term is defined in Rule 13d-5 promulgated under the Exchange Act) by means of any transaction or series of transactions (including, without limitation, any reorganization, merger or consolidation), that is consummated prior to January 31, 2005, Buyer shall pay Seller at the closing of such transaction fifty percent (50%) of the proceeds therefrom (net of fees and expenses incurred by Buyer in respect of such transaction). Seller agrees and acknowledges that Buyer intends to convert the Companies into limited partnerships owned directly and indirectly by Buyer as soon as practicable after the Closing and that this Section 4.3(a) shall not apply to such conversions. - 7 - (b) Notwithstanding the terms of Section 4.3(a), upon (i) a sale of more than 50% of the equity securities of any Company by means of any transaction or series of transactions (including, without limitation, any reorganization, merger or consolidation) to Industrial-Alliance Pacific Life Insurance Company ("IAP") or any Affiliate thereof, (ii) a sale of all or substantially all of the assets of any Company to IAP or any Affiliate thereof or (iii) an acquisition of the voting control of a Company (i.e., the ability to elect a majority of the members of the Board of Directors of a Company) by IAP by means of any transaction or series of transactions (including, without limitation, any reorganization, merger or consolidation) that is consummated prior to June 30, 2006, Buyer shall pay Seller at the closing of such transaction fifty percent (50%) of the proceeds therefrom (net of fees and expenses incurred by Buyer in respect of such transaction). 4.4 COBRA. As of the Closing, the participation by employees of the Companies in each Benefit Plan sponsored by FIC shall terminate. FIC and Seller will comply with the applicable continuation coverage requirements for its Benefit Plans, including (a) Section 4980B of the Internal Revenue Code of 1986, as amended and Sections 601 through 608, inclusive, of the Employment Retirement Income Security Act of 1974 and (b) any applicable state statutes mandating health insurance continuation coverage for employees. 4.5 Earl Johnson. FIC and Seller acknowledge that the Buyer or any of the Companies may employ Earl Johnson after the Closing. FIC, Seller and Buyer acknowledge that Earl Johnson has made certain claims against FIC and Seller, including certain claims arising out of Earl Johnson's employment agreement between him and Seller. If the Buyer or any of the Companies employs Earl Johnson after the Closing, FIC and Seller agree, without waiving any rights related to Earl Johnson, that neither will sue Buyer or any of the Companies hiring Earl Johnson as an employee or independent contractor with respect to any matters arising out of Earl Johnson's employment with Seller. 4.6 Taxes. (a) Seller shall prepare and file (or cause to be prepared and filed) all returns of and forms required to be filed with respect to the Companies for any taxable period ending on or before the Closing and shall pay all Taxes related thereto. Buyer shall prepare and file (or cause to be prepared and filed) all returns and forms required to be filed with respect to the Companies for any taxable period ending after the Closing, and pay (or cause to be paid) all Taxes which accrue with respect to the Companies for any taxable period ending after the Closing. (b) Seller shall pay and shall indemnify and hold harmless Buyer against any and all Taxes of or payable by the Companies attributable to operations, acts or omissions of the Companies prior to and through the Closing. (c) Buyer shall pay and shall indemnify and hold harmless Seller against any and all Taxes of or payable by the Companies attributable to operations, acts or omissions of Buyer or the Companies after the Closing. - 8 - (d) Seller shall be entitled to receive all refunds of federal income taxes of the Companies (and any interest thereon) with respect to all periods through the Closing (the "Pre-Closing Period"), unless any such refunds are carried as an asset by the Company on the Closing, and all refunds of state or local income or franchise taxes of the Companies (and any interest thereon) with respect to periods ending on or prior to the Closing. Buyer shall pay to Seller within five business days after receipt thereof any such refunds received by Buyer. (e) Buyer shall be entitled to all refunds of federal income taxes of the Companies with respect to all periods ending after the Closing (the "Post-Closing Period") (and any interest thereon), and all refunds of state or local income or franchise taxes of the Companies with respect to periods ending after the Closing (and any interest thereon). Seller shall pay to Buyer within five business days after receipt thereof any such refunds received by Seller. Section 4.7. Computer Transition. Seller shall provide computer network support and hosting at no charge to Buyer to allow for an "orderly transition of the computer networks and websites to Buyer." For purposes of the foregoing, an orderly transition of the computer networks and websites shall be deemed to have been completed, and the obligations of Seller under this Section 4.7 shall be deemed to have been satisfied, upon (i) the transfer to Buyer of all of the equipment and software set forth on Exhibit A to the Bill of Sale, including full and complete control of software and hardware, and (i) the transfer of all computer files of Buyer from Seller's equipment to Buyer's equipment. Such transition shall be completed as soon as administratively feasible, but shall not occur later than January 31, 2004. Section 4.8. Vacate Property. Buyer shall cause the Companies to completely vacate the property located at 6500 River Place Blvd., Building Four-Suite 201, Austin, Texas 78730 no later than March 31, 2004. Section 5. Indemnification. 5.1 Survival. The representations, warranties, covenants and other agreements of the parties contained herein or in any Document shall survive the Closing for a period of two (2) years following the Closing Date (the "Survival Period"), except for the covenants and other agreements set forth in Sections 4.5, 4.6, 5.2(c), 5.3(b) and 5.4 which shall survive indefinitely and the covenants and other agreements set forth in Section 4.3 which shall survive as set forth therein. - 9 - 5.2 Indemnification by FIC and Seller. (a) FIC and Seller, jointly and severally, shall indemnify Buyer and its affiliates, partners, principals, officers, directors, managers, members, employees, independent contractors, agents, representatives, and other similarly situated parties, and the successors, heirs and personal representatives of any of them (collectively, "Buyer Indemnified Parties"), against and hold them harmless from one hundred percent of any and all damage, claim, loss, liability and expense (including, without limitation, reasonable expenses of investigation and attorneys' fees and expenses) (collectively, "Damages") incurred or suffered by any Buyer Indemnified Party arising out of or relating to any breach of any representation, warranty, covenant or other agreement of FIC or Seller contained herein or in any Document, that is asserted in writing to FIC or Seller prior to the expiration of the Survival Period. Notwithstanding the provisions of this Section 5.2(a), the maximum liability of FIC and Seller under this Section 5.2(a) shall be the Purchase Price (other than (i) Damages arising under Section 2.6, (ii) Damages arising under Section 4, (iii) Damages arising out of the liability owed by JNT to Prosperity Bank in the approximate amount of $74,000 and (iv) Damages arising out of any intercompany payable or loan amount owed to FIC or any Affiliate thereof (other than the Companies)). (b) In addition to the provisions of Section 5.2(a), FIC and Seller, jointly and severally, shall indemnify the Buyer Indemnified Parties against and hold them harmless from seventy five percent of any and all Damages (other than Damages for which the Buyer Indemnified Parties are entitled to full indemnification under Section 5.2(a)) incurred or suffered by any Buyer Indemnified Party arising out of or relating to the operations of JNT from the period commencing on October 1, 2003 and ending on the date hereof that are asserted in writing to FIC or Seller prior to the expiration of the Survival Period; provided, however, that such indemnity obligation of FIC and Seller under this Section 5.2(b) shall not exceed in the aggregate one hundred thousand dollars ($100,000.00). (c) FIC and Seller, jointly and severally, shall indemnify the Buyer Indemnified Parties against and hold them harmless from any and all Damages incurred or suffered by any Buyer Indemnified Party arising out of or relating to any claim, demand, action or cause of action of whatever kind, character and description, brought by Earl Johnson or on his behalf in connection with that certain Employment Agreement, dated as of May, 2003, by and between Earl Johnson and Seller. 5.3 Indemnification by Buyer. (a) Buyer shall indemnify Seller and its affiliates (including, without limitation, FIC), partners, principals, officers, directors, managers, members, employees, independent contractors, agents, representatives, and other similarly situated parties, and the successors, heirs and personal representatives of any of them (collectively, the "Seller Indemnified Parties"), against and hold them harmless from any and all Damages incurred or suffered by any Seller Indemnified Party arising out of or relating to any breach of any representation, warranty, covenant or other agreement of Buyer contained herein or in any Document, or the application of the indemnification covenant of Section 4.5 herein, that is asserted in writing to Buyer prior to the expiration of the Survival Period. Notwithstanding the provisions of this Section 5.3, the maximum liability of Buyer under this Section 5.3(a) shall be the Purchase Price. - 10 - (b) Buyer shall indemnify the Seller Indemnified Parties (including, without limitation, FIC) against and hold them harmless from any and all Damages incurred or suffered by any Seller Indemnified Party arising out of or relating to any claim, demand, action or cause of action of whatever kind, character and description, brought by Arthur Howard or on his behalf arising from or relating to services allegedly provided by Arthur Howard to FICFS or any of the Companies in connection with that certain Consulting Agreement, dated as of June 1, 2003, by and between Arthur Howard and TCG. 5.4 Indemnification; Notice and Settlements. A party seeking indemnification pursuant to Sections 5.2 or 5.3 (an "Indemnified Party") with respect to a claim, action or proceeding initiated by a Person who is not a Buyer Indemnified Party or a Seller Indemnified Party shall give prompt written notice to the party from whom such indemnification is sought (the "Indemnifying Party") of the assertion of any claim, or the commencement of any action or proceeding, in respect of which indemnity may be sought hereunder; provided that the failure to give such notice shall not affect the Indemnified Party's rights to indemnification hereunder, unless such failure shall prejudice in any material respect the Indemnifying Party's ability to defend such claim, action or proceeding. The Indemnifying Party shall have the right to assume the defense of any such action or proceeding at its expense. If the Indemnifying Party shall elect not to assume the defense of any such action or proceeding, or fails to make such an election within 20 days after it receives such notice pursuant to the first sentence of this Section 5.4, the Indemnified Party may assume such defense at the expense of the Indemnifying Party. The Indemnified Party shall have the right to participate in (but not control) the defense of an action or proceeding defended by the Indemnifying Party hereunder and to retain its own counsel in connection with such action or proceeding, but the fees and expenses of such counsel shall be at the Indemnified Party's expense unless (i) the Indemnifying Party and the Indemnified Party have mutually agreed in writing to the retention of such counsel or (ii) the named parties in any such action or proceeding (including impleaded parties) include the Indemnifying Party and the Indemnified Party, and representation of the Indemnifying Party and the Indemnified Party by the same counsel would create a conflict (in which case the Indemnifying Party shall not be permitted to assume the defense of such claim, action or proceeding); provided that, unless otherwise agreed by the Indemnifying Party, if the Indemnifying Party is obligated to pay the fees and expenses of such counsel, the Indemnifying Party shall be obligated to pay only the fees and expenses associated with one attorney or law firm (plus local counsel as required), as applicable, for the Indemnified Party. An Indemnifying Party shall not be liable under Section 5.2 or 5.3 for any settlement effected without its written consent, of any claim, action or proceeding in respect of which indemnity may be sought hereunder. Section 6. Definitions. Unless otherwise stated in this Agreement, the following capitalized terms have the following meanings: "Affiliate" means, with respect to any Person, 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 that directly or indirectly controls, is controlled by, or is under common control with such Person. For the purposes of this definition, the term "control" means (a) the power to direct or cause the direction of management or policies of such Affiliate, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, or (b) the power substantially to influence the direction of strategic management policies of such Affiliate. - 11 - "Benefit Plan" means any pension, profit-sharing, deferred compensation, retirement, medical, insurance or other plan or arrangement providing benefits to any employee, including without limitation any employee benefit plan within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended. "Encumbrance" means any security interest, pledge, mortgage, lien (including tax liens), charge, encumbrance, easement, adverse claim, adverse preferential arrangement, restriction or defect in title. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Governmental Authority" means any United States federal, state or local government or any foreign government, any governmental, regulatory, legislative, executive or administrative authority, agency or commission or any court, tribunal, or judicial body. "Governmental Order" means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority. "Knowledge" means actual knowledge. FIC or Seller will be deemed to have "Knowledge" of a particular fact or other matter if any individual (other than Scott Bell, Mike Cochran, Wayne Deselle, Chris Murphy, John Pesce, Earl Johnson, William Tedrow and Sheryl Kinlaw) who is serving, or who has at any time served, as a director or officer of FIC or Seller (or in any similar capacity) has, or at any time had, actual knowledge of that fact or other matter. "Permitted Encumbrances" means (a) Encumbrances for taxes and other governmental charges and assessments which are not yet due and payable, (b) Encumbrances of landlords and liens of carriers, warehousemen, mechanics and materialmen and other like Encumbrances arising in the ordinary course of business for sums not yet due and payable and (c) other Encumbrances or imperfections on property which are not material in amount or do not materially detract from the value of or materially impair the existing use of the property affected by such Encumbrance or imperfection. "Person" means any individual, corporation, limited liability company, partnership, limited partnership, association, trust or any other entity or organization of any kind or character, including a governmental authority. "Securities Act" means the Securities Act of 1933, as amended. - 12 - "Subsidiary" means any 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 which is under the control of a Company. "Taxes" means all federal, state, county, local or other taxes, charges, levies or other assessments of any kind whatsoever, including without limitation, (a) income, accumulated earnings, franchise, excise, sales, use, gross receipts, ad valorem, profits, real or personal property, capital stock, license, payroll, withholding, employment, workers' compensation, social security, transfers and gains taxes, and (b) interest, penalties, additions to tax and any similar impositions with respect thereto. Section 7. Miscellaneous. 7.1 Successors and Assigns. The provisions of this Agreement shall be binding upon, and inure to the benefit of, the permitted respective successors, assigns, heirs, executors and administrators of the parties hereto. 7.2 Entire Agreement. This Agreement, including all schedules and exhibits hereto, embody the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings relating to such subject matters, with exception of the Agreement and Releases entered into as of the date hereof and the Bill of Sale. 7.3 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Signatures delivered by telecopy shall be considered for all purposes to be the same as original signatures. 7.4 Severability. If any provision of this Agreement is held by final judgment of a court of competent jurisdiction to be invalid, illegal or unenforceable, such invalid, illegal or unenforceable provision shall be severed from the remainder of this Agreement, and the remainder of this Agreement shall be enforced. In addition, the invalid, illegal or unenforceable provision shall be deemed to be automatically modified, and, as so modified, to be included in this Agreement, such modification being made to the minimum extent necessary to render the provision valid, legal and enforceable. 7.5 Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, irrespective of any conflict-of-laws rule or principle of any jurisdiction that might refer the governance or construction of this Agreement to the laws of any other jurisdiction. This Agreement can be performed in whole or in part in Travis County, Texas, and venue for any action relating to this Agreement shall be proper only in federal or state courts located within Travis County, Texas. Each party agrees that it must bring any action related to this Agreement or any other Document only in the federal or state courts located within Travis County, Texas. - 13 - 7.6 Notices. Any notices or demands required or permitted to be given hereunder shall be deemed sufficiently given if in writing and delivered, transmitted or mailed (with all postage and charges prepaid), addressed to the recipient at the address provided below, or at such other address as any party may from time to time designate by written notice to the other parties given in accordance with this Section 7.6. Any such notice, if personally delivered or transmitted by facsimile, shall be deemed to have been given on the date so delivered or transmitted or, if mailed, be deemed to have been given on the day after such notice is placed in the United States mail in accordance with this Section 7.6. Buyer: BCDP Holdings, LLP 4201 Bee Cave Road, Suite C-101 Austin, Texas 78746 Attn: Scott A. Bell FIC: Financial Industries Corporation 6500 River Place Blvd., Building One Austin, Texas 78730 Attn: Gene Payne and Ted Fleron Seller: FIC Financial Services, Inc. 6500 River Place Blvd., Building One Austin, Texas 78730 Attn: Ted Fleron 7.7 Further Assurances. Each party of this Agreement hereby covenants and agrees, without the necessity of any further consideration, to execute and deliver any and all such further documents and take any and all such other actions as may be reasonably necessary to appropriately carry out the intent and purposes of this Agreement and the other Documents and to consummate the transactions contemplated. Each party will use its good faith efforts to carry out and comply with the provisions of this Agreement. 7.8 No Third-Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and their respective successors and permitted assigns. [Signature page follows] - 14 - SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase Agreement as of the day and year first above written. BUYER: BCDP HOLDINGS, LLP By: /S/ Scott A. Bell _____________________________ Scott A. Bell Partner FIC: FINANCIAL INDUSTRIES CORPORATION By: /s/ Theodore A. Fleron _____________________________ Theodore A. Fleron Vice President and Secretary SELLER: FIC FINANCIAL SERVICES, INC. By: /s/ Theodore A. Fleron _____________________________ Theodore A. Fleron Secretary - 15 - EXHIBIT A BILL OF SALE AND ASSIGNMENT AGREEMENT This BILL OF SALE AND ASSIGNMENT AGREEMENT (this "Agreement"), is entered into as of December 30, 2003, by and among PARAGON NATIONAL, INC., a Texas corporation ("Paragon"), FINANCIAL INDUSTRIES CORPORATION, a Texas corporation ("FIC"), and FIC FINANCIAL SERVICES, INC., a Nevada corporation ("FICFS"). W I T N E S S E T H: WHEREAS, to induce BCDP Holding, LLP, a Delaware limited liability partnership ("BCDP"), to enter into a stock purchase agreement pursuant to which FIC and FICFS will sell, and BCDP will purchase, all of the shares of capital stock of Paragon, Paragon Benefits, Inc., a Texas corporation, The Paragon Group, Inc., a Texas corporation, Total Compensation Group Consulting, Inc., a Texas corporation, and JNT Group, Inc., a Texas corporation, FICFS and FIC desire to enter into this Agreement to convey to Paragon certain assets of FICFS and FIC currently located at 6500 River Place Blvd., Building Four-Suite 201, Austin, Texas 78730; NOW, THEREFORE, in consideration of the premises, the terms and conditions set forth herein, the mutual benefits to be gained by the performance thereof and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. Definitions. "Encumbrance" shall mean any security interest, pledge, mortgage, lien (including tax liens), charge, encumbrance, easement, adverse claim, adverse preferential arrangement, restriction or defect in title. "Licensed Assets" shall mean the assets of FIC and FICFS currently located at 6500 River Place Blvd., Building Four-Suite 201, Austin, Texas 78730 (including, without limitation, computers, including work stations, laptop computers and file servers) that contain Software that is licensed to FIC and/or FICFS under an enterprise license. "Permitted Encumbrances" shall mean (a) Encumbrances for taxes and other governmental charges and assessments which are not yet due and payable, (b) Encumbrances of landlords and liens of carriers, warehousemen, mechanics and materialmen and other like Encumbrances arising in the ordinary course of business for sums not yet due and payable and (c) other Encumbrances or imperfections on property which are not material in amount or do not materially detract from the value of or materially impair the existing use of the property affected by such Encumbrance or imperfection. - 16 - "Software" shall mean Microsoft Windows XP, Microsoft Office XP, Papervision, McAfee Antivirus or Quickbooks Premier Network Edition. SECTION 2. Assignment. FIC and FICFS do hereby convey, transfer and assign, to Paragon all right, title and interest in and to the assets currently located at 6500 River Place Blvd., Building Four-Suite 201, Austin, Texas 78730 (free and clear of all Encumbrances, except for Permitted Encumbrances) which shall include the assets set forth on Exhibit A attached hereto and exclude (i) the assets set forth on Exhibit B attached hereto and (ii) the Licensed Assets. Notwithstanding the foregoing, any asset that is a fixture or that is not physically located at 6500 River Place Blvd., Building Four-Suite 201, Austin, Texas 78730 as of the date hereof shall not be conveyed, transferred or assigned to Paragon pursuant to this Agreement. SECTION 3. Convent to Assign. FIC and FICFS shall convey, transfer and assign to Paragon all right, title and interest in and to each Licensed Asset upon the receipt by FIC or FICFS on or prior to February 15, 2004 of a certificate executed by an authorized officer of Paragon certifying that such Licensed Asset no longer contains Software that is licensed to FIC or FICFS under an enterprise license, together with evidence reasonably satisfactory to FIC and FICFS of the removal and/or replacement of such software. Any Licensed Asset that contains software that is licensed to FIC and/or FICFS under an enterprise license on February 15, 2004 shall be promptly delivered to FIC at the sole expense of Paragon. FIC and FICFS agree to provide a list of each Licensed Asset to Paragon on or before January 9, 2004 and the Software contained therein. SECTION 4. Disclaimer of Warranty. EXCEPT AS IS EXPRESSLY SET FORTH HEREIN, NEITHER FIC NOR FICFS MAKES ANY REPRESENTATION OR WARRANTY AS TO ANY MATTER, EXPRESS OR IMPLIED, INCLUDING ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WARRANTY AGAINST INFRINGEMENT OR ANY OTHER WARRANTY AS TO THE CONDITION OR OPERATION OF ANY OF THE ASSETS CONVEYED, TRANSFERED AND ASSIGNED PURSUANT TO THIS AGREEMENT. SECTION 5. Further Assurances. FIC and FICFS hereby each agree that it and its successors shall execute, deliver, acknowledge, file and record, or cause to be executed, delivered, acknowledged, filed and recorded, any and all such further bills of sale, deeds, general conveyances, endorsements, assignments, confirmations and other good and sufficient instruments of conveyance, transfer and assignment as Paragon or its successors or assigns shall reasonably request in order to complete, insure and perfect the conveyance, transfer and assignment of any assets hereby conveyed, transferred and assigned. - 17 - SECTION 6. Parties in Interest. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. SECTION 7. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without regard to the principles of conflicts of law thereof, except to the extent that mandatory principles of conflicts of law require the application of the laws of another jurisdiction wherein any of the properties, assets and interests hereby conveyed, transferred, assigned and contributed or intended so to be are located to determine the validity or effect of the conveyance, transfer, assignment and contribution thereof. SECTION 8. Severability. In the event any provision contained herein shall be held to be invalid, illegal or unenforceable for any reason, the invalidity, illegality or unenforceability thereof shall not affect any other provision hereof, and, to the extent permitted by law, this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. SECTION 9. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. - 18 - IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above written. PARAGON NATIONAL, INC. By: Name: Title: FINANCIAL SERVICES CORPORATION By: Theodore A. Fleron Vice President and Secretary FIC FINANCIAL SERVICES, INC. By: Theodore A. Fleron Secretary - 19 - EXHIBIT A TO BILL OF SALE River Place Point IV, Suite 201, 6500 River Place Blvd. Note: to the extent there is any overlap between items in this inventory, only one such item will be included in the inventory (e.g., Mike Cochran's office shows a computer below, but is also listed in the inventory of computers) Teresa Bly's office Spare office 1-Desk 2-Desk 1-Maroon Chair 1-Maroon Chair 2-Black Guest Chairs 1-Black Chair 1-Book Shelf 1-Vert. 4 Drawer File 1-2 Drawer Lat. File 1-Book Shelf 1-Computer 1-Computer Desk 1-Telephone/Paragon 3-Monitor 2-Prints 3-Towers 4-Plants 3-Keyboards 1-Stamp Machine 1-2 Drawer Lat. File 1-Fax Machine 1-Binding Maching JEM File Room Open Room 1-Maroon Chair 1-4 Draw. Vert. File 1-Pink Chair 1-Black Book Shelf 7-Black 4 Draw. Lat File 1-Work Station (DA) 1-Computer Table Hallway In Front of Chris Murphy's Office Chris Murphy's Office 1-Dray Erase Board 1-Desk 1-Print 1-Maroon Chair 3-Black Guest Chairs 2-Telephones (JEM/Para) 1-2 Draw. Lat. File 1-Bookshelf 5-Prints 4-Plants 1-Plant Table 1-Round Guest Table - 20 - EXHIBIT A TO BILL OF SALE River Place Point IV, Suite 201, 6500 River Place Blvd. Note: to the extent there is any overlap between items in this inventory, only one such item will be included in the inventory (e.g., Mike Cochran's office shows a computer below, but is also listed in the inventory of computers) Lane's Office Paragon/TCG File Room 1-Desk 10-Black 4 Draw. Lat File 1-Maroon Chair 1-Cream 4 Drw Lat File 1-2 Draw. Lat File 1-Cream 4 Drw Vert File 1-Bookshelf 1-(2) Step Stool/Ladder 1-Black Guest Chair 1-Blue Leather Guest Chair Jamie Barraza Office Sharon Schweihs Office 1-Black 4 Drw Vert File 2-Black Guest Chairs 1-Credenza 1-Bookshelf 1-Desk 1-Desk 1-Maroon Chair 1-Phone (JEM) 2-Blue/Leather Guest Chair 1-Adding Machine 1-Phone (JEM) 1-Credenza 1-Dry Erase Board 1-Maroon Chair 1-Book Shelf 1-Gray Chair Hallway in Front of Formerly Rylee Jamie Barraza's Office Wegmann's Office 1-Laser Printer 1-Bookshelf 1-Fax Machine/TCG 1-Desk 1-Fax Machine/JEM 1-Credenza 1-Computer 2-Black Guest Chairs 1-Black 4 Drawer Lateral File 1-Paper Shredder 1-Dry Erase Board 1-Fax/Printer 2-Black Leather Desk Chair (From Pat's Conf. Room) 1-Plastic Storage Bin 1-Cream Metal Cab 1-Bulletin Board 1-Telephone (JEM) Side Reception Area Scott Bell Office 1-Maroon Chair 1-Desk 1-Gray Chair 1-Credenza with Hutch 1-Telephone (JEM) 2-Black Guest Chairs 2-Computers 1-Executive Leather Chair 1-Computer 1-Round Guest Table 3-Black Guest Chairs 1-2 Drawer Lateral File (Black) 1-2 Drawer Later File 3-Plants 1-Printer 1-Telephone (Paragon) 1-Tall Standing Lamp 1-Laptop - 21 - EXHIBIT A TO BILL OF SALE River Place Point IV, Suite 201, 6500 River Place Blvd. Note: to the extent there is any overlap between items in this inventory, only one such item will be included in the inventory (e.g., Mike Cochran's office shows a computer below, but is also listed in the inventory of computers) Office Across From Scott Bell Micah Trexler's Office 1-Desk 1-Desk 1-Credenza 1-Credenza 1-Black Guest Chair 1-Bookshelf 1-Bookshelf 1-Dry Erase Board 1-TX Wall Map 1-Computer 1-Maroon Chair 1-Telephone (TCG) 1-Telephone (TCG) 1-Maroon Chair 2-Black Guest Chairs Scott Bell Hallway John Pesce's Conference Room 2 Prints 1-TV with Stand 1-Board Room Table 9-Black Leather Chairs 1-Mini Fridge 1-Red Leather Executive Chair 1 Plant John Pesce's Office Mike Cochran's Office 1-Desk 1-Desk 1-Black Leather Chair From Conf. Room 1-Credenza With Hutch 2-Blue Leather Guest Chairs 1-Computer 1-Plasma Flat Screen 1-2 Drawer Later File 1-Telephone (TCG) 1-Round Guest Table 1-Plant 2-Blue Leather Guest Chairs 1-Executive Leather Chair 1-Telephone (TCG) Teri Hoyt Hallway Front Reception Area 2-Prints 1-Red Leather Chair 1-Sofa Couch 7-Plants 1-Bookshelf 1-Desk 1-Computer 1-Phone (TCG) 1-Black Chair 1-Printer 5-Wall Prints Copier Room Training Room 1-Copy Machine 5 Small Training Tables 1-Dry Erase Board 3 Gray Chairs 1-2 Drw Vert. File - 22 - EXHIBIT A TO BILL OF SALE River Place Point IV, Suite 201, 6500 River Place Blvd. Note: to the extent there is any overlap between items in this inventory, only one such item will be included in the inventory (e.g., Mike Cochran's office shows a computer below, but is also listed in the inventory of computers) Kitchen David Allen's Office 4-Chairs 2-Black Guest Chairs 1-Fridge 1-Desk 1-Microwave 1-Credenza 1-Water Machine 1-Maroon Chair 1-Clock 1-Bookshelf 1-Bulletin Board 2-Telephones/TCG/JEM 3-Pictures 1-Monitor 1-TV (DA owns) 1-Printer (DA owns) Teri Hoyt's Office TCG Cube 1 1-Desk 1-Maroon Chair 1-Credenza with Hutch 1-2 Drw. Vert. File 1-Maroon Chair 1-Telephone 2-Black Guest Chairs 1-Postage Machine 1-End Table (TH owns) 1-Large Cube 1-2 Drw Black Lat File 2-4 Drw Vert File 1-Bookshelf 1-Standing Lamp (TH) 1-Standing Fan (TH) 1-Printer 1-Telephone (TCG) TCG Cube 2 TCG Cube 3 1-Black Metal Book Shelf 1-Computer 1-Maroon Chair 1-Scanner 1-File/Info Bin 1-Phone 1-Computer 1-Printer 1-Drw Vert File 1-Drw Vert. File 1-Large Cube 1-Black Chair 1-Wicker Chair 1-Large Cube TCG Cube 4 Formerly Pat Tedrow's Conf Room 1-Maroon Chair 8-Leather Chairs 1-Monitor 1-Maroon Chair 1-Copier 1-Easel 1-Binding Machine 1-Conference Table 3-Phones 1-TCG Phone 1-Scanner 1-Large Cube - 23 - EXHIBIT A TO BILL OF SALE River Place Point IV, Suite 201, 6500 River Place Blvd. Note: to the extent there is any overlap between items in this inventory, only one such item will be included in the inventory (e.g., Mike Cochran's office shows a computer below, but is also listed in the inventory of computers) Front Conference Room Hallway to Pat Tedrow's Office 4-Maroon Chairs 3-Prints 4-Red Leather Chairs 1-Painting 1-Plant Call Center Phone Room 5-JEM Computers 2-Servers 2 Paragon Computers 3-Phone Systems 10 Paragon Phones 3-Network Switches 3 JEM Phones 2-Dell Power Connect #3248 10 Big Cubes 1 Dell Power Connect #5224 12 Little Cubes 3 Levitron 48 Part Extreme 6 1 Black Chair Universal Patch Panel 3 Little Black Chairs 5 Levitron 5e Extreme Universal 9 Red Chairs 48 Part Patch Panel 7 Gray Chairs Items Taken Out Of Office Wireless Router TCG's Original Server TCG and Paragon Computer Equipment Equipment Make Model Copier Xerox 5328 Docking Station Toshiba PA3082U2PRP Fax Brother Intellifax 2800 Fax Xerox Work Centre 385 Keyboard Laboratory HK 900-1 Keyboard HP 5181 Keyboard Dell RT7020 Keyboard Dell Quiet Key Keyboard Dell Optiplex GN270-Accompanying Keyboard Dell Optiplex GX270-Accompanying Keyboard Logitech CE0682 Laptop Toshiba Satellite Pro 6100 Laptop Satellite 1110-5153 Laptop Toshiba Satellite L35S125 Laptop HP PavilionN5270 Laptop currently used by Mike Cochran - 24 - EXHIBIT A TO BILL OF SALE River Place Point IV, Suite 201, 6500 River Place Blvd. Note: to the extent there is any overlap between items in this inventory, only one such item will be included in the inventory (e.g., Mike Cochran's office shows a computer below, but is also listed in the inventory of computers) Laptop currently used by Jamie Barraza Laptop currently used by Lisa Tritz Laptop currently used by Scott Bell Laptop currently used by Wayne Desselle Laptop currently used by John Pesce Equipment Make Model Monitor Elements 723B Monitor HP Pavilion MX50 Monitor Dell 1B00FP Monitor Compaq 1024 Monitor HP Pavilion Monitor Dell Optiplex GN270-Accompanying Monitor Dell Opitiplex GX270-Accompanying Monitor ADC 5VLR Monitor HP Pavilion MX50 Mouse Laboratory P918M Mouse Generic Generic Mouse Dell Mouse Belkin Wheel Mouse Mouse Dell Optiplex GN270-Accompanying Mouse Dell Optiplex GX270-Accompanying Mouse Logitech CE0682 Printer Compaq IJ650 Printer HP Laserjet 4 Printer HP Deskjet 960c Printer HP Deskjet 6127 Printer HP 4600DN Scanner HP C8500A Scanner Visioneer Onetouch 8650 Switch Dell Power Connect 3248 Switch Dell Power Connect 3248 Switch Dell Power Connect 5224 Tower Laboratory Custom Built Tower HP Pavilion XG836 Tower Dell Optiplex GN270 Tower Compaq Deskpro XL5100 Tower HP Pavilion Tower Dell Optiplex GN270 Tower Dell Optiplex GX270 Phone System Sprint Protege CTX KSU 431700 Phone System ATT Partner 103F - 25 - EXHIBIT A TO BILL OF SALE River Place Point IV, Suite 201, 6500 River Place Blvd. Note: to the extent there is any overlap between items in this inventory, only one such item will be included in the inventory (e.g., Mike Cochran's office shows a computer below, but is also listed in the inventory of computers) JEM COMPUTER EQUIPMENT Post Post Move Move Equipment Make Model Serial No. Location User Fax Fax Keyboard Dell RT7D20 TH-04N454-35E-6452 Austin Rylee Wegmann Keyboard Hp KB-9970 2C05106935B Austin Keyboard Dell RT7D20 TH-04N454-37171-358-A838 Austin Keyboard HP 5181 BD11708898 Austin Keyboard Dell SK-8110 CN-07N242-38842-2C3-OU88 Houston Chris Duke Keyboard Dell SK-8110 CN-07N242-38842-2C1-2F39 Houston Bryan Smith Keyboard Compaq KB-0133 CF32704669 Austin Keyboard Sharon Schweihs Keyboard Keyboard HP 5302 N02702114 Houston Keyboard HP E06333KUS221-C N/A Austin Monitor View Sonic VLCDS22034-1B A0A014900260 Austin Rylee Wegmann Monitor Impression Impression 7SP D991007945 Austin Monitor Radius Radius L-1 592033536 Austin Monitor View Sonic A70-VCDTS21543-3R CZ01701979 Austin Monitor US LOGIC V-1710 171003042116.00 Houston Chris Duke Monitor Envision EN-1700s T7KF25AG03176 Houston Bryan Smith Monitor View Sonic VCDTS21543-3R CZ03501360 Austin Monitor Sharon Schweihs Monitor Monitor View Sonic VCDTS21654-2R 216004703032 Houston Monitor View Sonic VCDTS21543-3R CZ03501356 Austin Mouse Dell M-UVDEL1 LNB33154721 Austin Rylee Wegmann Mouse HP M-S34 LZB11670536 Austin Mouse Dell M-UVDEL1 LNA33518926 Austin Mouse Logitech 830386-0000 LZC03804267 Austin Mouse HP M-UR69 LNA15223477 Houston Chris Duke Mouse HP P8131-0 K024105108 Houston Bryan Smith
-26- EXHIBIT A TO BILL OF SALE River Place Point IV, Suite 201, 6500 River Place Blvd. Note: to the extent there is any overlap between items in this inventory, only one such item will be included in the inventory (e.g., Mike Cochran's office shows a computer below, but is also listed in the inventory of computers) Post Post Move Move Equipment Make Model Serial No. Location User Mouse HP N3+Optical 30831348 Austin Mouse Sharon Schweihs Mouse Mouse HP P8131 4304453 Houston Mouse HP M-S34 LZE00250021 Austin Phone System Lucent Partner 103H Postage Meter Pitney Bowes DM200 PB3519832 Austin Public Postage Scale Austin Public Printer HP Laster Jet 4050 C4251A USBB040327 Houston Paragon Benefits Printer HP Laster Jet4050TNC4254A USCF045742 Austin Public Printer HP 8100 Austin Public Printer HP Chris Duke, Bryan Router/Modem Netopia Caymon 3500 Series 881228 Houston Smith Scanner HP Scanjet ADF 3882H151 Houston Chris Duke Speakers Polk Audio Houston Chris Duke Chris Duke, Bryan Smith Switch Houston Smith Switch D-Link DSS 24 HIL297000138 Tower Dell DHM 6JCXG31 Austin Ryee Wegmann Tower HP e-pc 42 US2200613 Austin Tower Dell DHM FJCXG31 Houston Bryan Smith Tower HP Pavilion 7915 MX139A4841 Austin Tower HP Pavilion A250N MXK3200VZN Houston Chris Duke Tower Compaq Presario S5200NX MXK33710MM Austin Tower HP Pavilion 7850 MX10204198 Austin Tower Sharon Schweihs Tower Tower HP Pavilion 763n MX25100717 Houston Tower HP LC2000 P1798A US03641712 Austin UPC APC Backup XS 1500 JB0250012376 UPC Omnismart 850PNP
- 27 - EXHIBIT A TO BILL OF SALE River Place Point IV, Suite 201, 6500 River Place Blvd. Note: to the extent there is any overlap between items in this inventory, only one such item will be included in the inventory (e.g., Mike Cochran's office shows a computer below, but is also listed in the inventory of computers) Other All software on any of the computers of any of the companies will be transferred to the Buyers (other than Microsoft Windows XP, Microsoft Office XP, Papervision, McAfee Antivirus and Quickbooks Premier Network Edition) All application software of any kind purchased or developed by the companies prior to June 1, 2003 or after June 1, 2003 will be part of the sale of the companies to the Buyers. Upon completion of the sale of the companies to the Buyer, the Seller will promptly (within 3 business days) provide all passwords, boxes, receipts or other knowledge or items needed to Buyer so that they will be enabled to take complete and total control of all computer equipment and software in this inventory. Any furniture or equipment of any kind at the JEM office at 1022 Hercules, Houston, TX 77058 not listed above shall become the property of the Buyers upon the sale of the companies. Any furniture or equipment of any kind at the Paragon office at 16815 Royal Crest Dr., Houston, TX 77058 not listed above shall become the property of the Buyers upon the sale of the companies. All files or other material removed from the JEM office in Houston and moved to any location owned or used by FIC. - 28 - EXHIBIT B STOCK PURCHASE AGREEMENT River Place Point IV, Suite 201, 6500 River Place Blvd. Teresa Bly's Office Side Reception Area Formerly Pat Tedrow's Office 1-Sofa Table 1-Typewriter 1-Desk 1-Round Guest Table 4-Leather Chairs 1-Leather Couch 1-Computer 3-Monitors 1-Exec. Leather Chair Phone Room 3-Racks TCG and Paragon Computer Equipment Equipment Make Model Patch Panel Leviton Cat 6 eXtreme Universal 48 port Patch Panel Leviton Cat 6 eXtreme Universal 48 port Patch Panel Leviton Cat 6 eXtreme Universal 48 port Patch Panel Leviton Cat 5e Gigamax Universal 48 port Patch Panel Leviton Cat 5e Gigamax Universal 48 port Patch Panel Leviton Cat 5e Gigamax Universal 48 port Patch Panel Leviton Cat 5e Gigamax Universal 48 port Patch Panel Leviton Cat 5e Gigamax Universal 48 port - 29 - EXHIBIT B Financials JEM BALANCE SHEET AS OF NOVEMBER 30, 2003 ASSETS Cash Note 1 50,161 Accounts Receivable Note 2 157,704 ________ 207,865 Property & Equipment Equipment Note 3 78,546 Furniture & Fixtures Note 3 1,732 Software Note 3 373,257 Less: Accum Deprec Note 3 (49,773) ________ 403,762 Other Assets Security Deposit Note 4 1,746 Receivable from FICFS Note 5 76,837 _______ 78,583 TOTAL ASSETS 690,211 LIABILITIES Current Liabilities Accounts Payable Note 6 126,552 Tax Liabilities Note 4 9,497 FIT Liabilities (67,462) Intercompany Payable - ILINA 401,573 Intercompany Payable - FICFS 12,494 ________ 482,654 Long-term Liabilities Note Payable Note 7 76,837 0 ________ TOTAL LIABILITIES 559,491 - 30 - STOCKHOLDERS EQUITY Capital Stock Note 4 152,549 Retained Earnings Note 4 103,455 Net Income (Loss) (125,285) _________ 130,719 _________ TOTAL LIAB & STOCKHOLDERS EQUITY 690,211 Note 1: See spreadsheet "JEM-BANK-RECS-11-30-03". Note 2: See spreadsheet "JEM-outstanding receivables-113003". Billings for September - November are estimated at 37,306 per month (average of June - August). Note 3: See spreadsheet "JEM-Fixed-Asset-Detail-113003". Note 4: Number from acquisition Balance Sheet. Note 5: Equal to Prosperity Bank note since FICFS must retire the debt as part of the JEM purchase. Note 6: See spreadsheet "JEM-accounts payable - 113003". Note 7: Amount per Mark Humphrey at Prosperity Bank. - 31 - EXHIBIT B JEM INCOME STATEMENT FOR THE PERIOD ENDING NOVEMBER 30, 2003 Revenues Note 1 221,217 General Expenses 413,964 Net Income before Federal _________ Income Taxes (192,747) Federal Income Tax Expense (67,462) _________ Net Income (Loss) (125,285) Note 1: Billings for September - November are estimated at 37,306 per month or 111,918. - 32 - EXHIBIT B PARAGON BALANCE SHEET AS OF NOVEMBER 30, 2003 ASSETS Current Assets Cash Note 1 151,810 Accounts Receivable Note 2 9,496 ________ 161,306 Property & Equipment Equipment Note 3 7,524 Furniture & Fixtures Note 3 7,159 Software Note 3 0 Less: Accum Deprec Note 3 (793) ________ 13,891 Other Assets Other Assets Note 2 903 _______ 903 TOTAL ASSETS 176,099 LILABILITIES Current Liabilities Accounts Payable Note 4 155,530 Commission Advances Note 5 207,155 FIT Liabilities (81,601) Intercompany Payable - ILINA 147,941 ________ 429,024 Long-term Liabilities 0 ________ 0 ________ TOTAL LIABILITIES 429,024 - 33 - STOCKHOLDERS EQUITY Capital Stock Note 2 2,000 Retained Earnings Note 2 (103,379) Net Income (Loss) (151,546) _________ (252,925) TOTAL LIAB & STOCKHOLDERS EQUITY 176,099 Note 1: See spreadsheet "PARAGON-BANK-RECS-11-30-03". Note 2: Number from acquisition Balance Sheet Note 3: See spreadsheet "Paragon-Fixed-Asset-Detail-113003". Note 4: See spreadsheet "PARAGON-accounts payable - 113003". Note 5: Per Valerie Yakelashek of Industrial Alliance Pacific Insurance (IAP). - 34 - EXHIBIT B PARAGON INCOME STATEMENT FOR THE PERIOD ENDING NOVEMBER 30, 2003 Revenues Note 1 445,230 General Expenses Note 2 678,377 Net Income before Federal _________ Income Taxes (233,147) Federal Income Tax Expense (81,601) _________ Net Income (Loss) (151,546 Note 1: An adjustment was made to establish an advance commission liability of 207,155 as of November 30. The liability as of the acquisition date was 31,331. Therefore, the net effect was a reduction in revenues of 175,824. Note 2: Includes 24,375 for building 4 rent (September - November); an accrual of 44,523 for expense to TCG; and an accrual of 58,432 for expense to JEM. - 35 - EXHIBIT B TCG BALANCE SHEET AS OF NOVEMBER 30, 2003 ASSETS Current Assets Cash Note 1 52,191 Accounts Receivable Note 2 68,516 ________ 120,707 Property & Equipment Fixed Assets - General Note 3 15,984 Equipment Note 3 40,739 Furniture & Fixtures Note 3 10,607 Software Note 3 11,123 Less: Accum Deprec Note 3 (42,879) ________ 35,574 Other Assets Intercompany Paragon Note 4 59,601 Security Deposit Note 5 7,215 Other Assets Note 5 4,255 Prepaid Rent Note 5 14,430 Prepaid Expense Note 6 14,656 ______ 100,157 TOTAL ASSETS 256,438 LILABILITIES Current Liabilities Accounts Payable Note 7 81,582 Deferred Revenue Note 8 111,430 Deferred Rent Note 9 24,375 FIT Liability (117,866) Intercompany Payable - ILINA 305,745 Intercompany Payable - FICFS 67,108 ________ 472,375 Long-term Liabilities 0 ________ 0 ________ TOTAL LIABILITIES 472,375 - 36 - STOCKHOLDERS EQUITY Capital Stock Note 5 881,260 Retained Earnings Note 5 (878,304) Net Income (Loss) (218,893) _________ (215,937) TOTAL LIAB & STOCKHOLDERS EQUITY 256,438 Note 1: See spreadsheet "TCG-BANK-RECS-11-30-03". Note 2: See spreadsheet "TCG-outstanding receivables-113003". Note 3: See spreadsheet "TCG-Fixed-Asset-Detail-113003". Note 4: 10% of Paragon revenue (44,523) plus rent (15,078). Note 5: Number from acquisition Balance Sheet. Note 6: 457 promotional material - 21 months to be expensed (698 per month). Note 7: See spreadsheet "TCG-accounts payable - 113003". Note 8: See spreadsheet "TCG-CONSULTING-CONTRACTS-REV-BY-MONTH-113003". Note 9: September - November rent in bulding 4 at 8,125 per month. - 37 - EXHIBIT B TCG INCOME STATEMENT FOR THE PERIOD ENDING NOVEMBER 30, 2003 Revenues Note 1 293,839 General Expenses Note 2 630,598 Net Income before Federal _________ Income Taxes (336,759) Federal Income Tax Expense (117,866) _________ Net Income (Loss) (218,893 Note 1: Includes 10% of Paragon revenue (44,523). Consulting contract revenue is recognized as it is earned; as of November 30, 111,430 of contract revenue has been deferred. Note 2: Includes 24,375 for building 4 rent (September - November); and an accrual of 50,000 for legal expenses to Arty Howard. - 38 - EXHIBIT C JNT Transition Plan Item Description Status 457 Overdeposits Error made in crediting deduction Will be twice; based on this credit, claims Completed were overpaid; Letter sent from JEM threatening Legal Action Decision made to eat difference of approx $3500 and apology letter to be sent DCA Audit and Identified that MBI does not reflect Open Claim Checks individual payroll deductions for some Target participants so claims checks are on Completion hold on system; audit is in progress 12/24/03 to correct MBI and determine claims checks to be generated. Priority due to reimburse as deduction received FLEX Spending Related to DCA Audit but for Flex Open Audit Spending Accounts. May be the same Target problem but less exposure since Completion participants are paid in advance 12/31/03 of deduction being credited MBI-All Claims Claims paid through MBI for Flex Target Audit Cards have not been properly audited Completion since September. Audit needs to be 1/31/04 completed to find any improper or questionable claims, contact partic- ipants for receipts if needed, make any corrections, and do appropriate 1099 forms Invoices for JEM All payments since September to JEM Target Services Included need to be audited to determine if funds Completion With Prayroll deposited in 125 claims account or 403(b) 1/31/04 Deductions or 457 accounts included payments for JEM services in addition to payroll deductions. These payments need to be accounted for in JEM's statements Invoices for JEM All JEM fee schedules need to be Target Services Directly compared to invoices sent to clients Completion Billed (it does not appear that any have been 1/31/04 done since August and if clients have not been billed, invoices need to be sent and followed up on by phone. QuickBooks files on JEM server as well as the Invoice Files (Roberta has these) can be used to do this. - 39 - Movement of JEM, 457 FIC IT personnel will facilitate access Target and 125 Solution to the existing websites by the new Completion Websites ASP for the New Era Companies and other- 1/31/04 wise support transfer of these websites by the new ASP to its own hosting environment. Balancing of 125 No reconciliation of 125 bank accounts Target accounts to the MBI system have been done since Completion September, per Roberta. This needs to 1/31/04 be completed and any amounts owed to schools or vice versa needs to be handled. Control of JEM Bank FIC personnel will facilitate the transfer Target Accounts of control of JNT bank accounts to JNT- Completion designated manager immediately following 1/9/04 Closing. 125 Statements to It does not appear that any accounting Target Clients of 125 accounts and activity has been Completion provided to clients since September. 1/31/04 These need to be produced and sent out with explanations FIC Transition FIC, at its expense, will commit to JNT Personnel Robert Mitchell, as well as up to 3 of the current FIC employees assigned to JNT (other than Kala Heide), as agreed to by Buyer, during January 2004 for the sole purpose of completing the items set forth on this JNT Transition Plan. It is the reasonable expectation of the parties as of December 31, 2003 that completing the items set forth on this JNT Transition Plan will require Roberta Mitchell to commit a maximum of 80% of her time during the first week of January, a maximum of 60% of her time during the second week of January, 40% of her time during the third week of January and 20% of her time during the fourth week of January. Notwithstanding the foregoing, FIC will not be obligated to commit Roberta Mitchell, or any other designee of FIC, to JNT any more than is necessary to complete the items set forth on this JNT Transition Plan. FIC is not obligated to make any further staffing commitment than as is set forth herein. - 40 - EX-10 4 exhibit-10_2.txt ACQUISITION AGREEMENT 12/31/03 - SELL OF ARC EXHIBIT 10.2 ACQUISITION AGREEMENT THIS ACQUISITION AGREEMENT ("Agreement") is made and entered into as of the 31st day of December, 2003, between InterContinental Life Corporation, a Delaware business corporation ("ILCO") and George M. Wise, III, an individual and a resident of the State of Texas ("BUYER"). W I T N E S S E T H: WHEREAS, ILCO owns all of the issued and outstanding shares of capital stock of Actuarial Risk Consultants, Inc. ("ARC"); and WHEREAS, ILCO deems it advisable and in the best interests of ILCO that BUYER acquire all the issued and outstanding capital stock of ARC, all on the terms and subject to the conditions contained in this Agreement. NOW, THEREFORE, ILCO and BUYER, in consideration of the agreements and conditions contained herein, hereby agree as follows: ARTICLE I PURCHASE 1.01 Purchase of ARC Common Stock. Subject to the terms and conditions of this Agreement, and in reliance on the agreements of the parties contained herein, at the Closing (as hereinafter defined), ILCO agrees to sell, assign, transfer and deliver to BUYER, and BUYER agrees to purchase and acquire from ILCO, all of the issued and outstanding shares of ARC's common stock (the "Shares"), and upon completion of the Closing, BUYER shall own the Shares. The authorized capital stock of ARC consists of 1,000 shares of common stock, $0.01 par value per share, of which 1,000 shares are issued and outstanding, and all of which are owned of record and beneficially by ILCO. 1.02 Purchase Price. The Purchase Price is $10,000. On the Closing Date (as hereinafter defined) and subject to the terms and conditions set forth in this Agreement and in consideration of the sale, assignment, transfer and delivery of the Shares, BUYER agrees to pay the Purchase Price to ILCO in connection with the purchase. 1.03 Closing. (a) The closing of the sale and purchase of the Shares contemplated by this Agreement (the "Closing") shall take place at the offices of ILCO in Austin, Texas, at 10:00 a.m. local-time, on December 31, 2003, or such other date as ILCO and BUYER may mutually agree upon in writing (the "Closing Date"). -1- (b) At the Closing, ILCO shall deliver or cause to be delivered to BUYER (i) stock certificates evidencing all Shares duly endorsed in blank or accompanied by stock powers duly executed in blank, free of all encumbrances, other than restrictions imposed by the United States federal or state securities laws, (ii) a bill of sale (the "Bill of Sale") in the form of Exhibit 1.03 pursuant to which the tangible and intangible assets set forth on Exhibit A to the Bill of Sale owned, leased, licensed or otherwise held by ILCO are assigned to ARC, free and clear of all Encumbrances, except for Permitted Encumbrances and the Encumbrances disclosed on Exhibit A to the Bill of Sale; and (iii) such other documents required to be delivered by ILCO to BUYER at or prior to the Closing Date in connection with the transactions contemplated hereby. As used herein, "Permitted Encumbrances" means (a) Encumbrances for taxes and other governmental charges and assessments which are not yet due and payable, (b) Encumbrances of landlords and liens of carriers, warehousemen, mechanics and materialmen and other like Encumbrances arising in the ordinary course of business for sums not yet due and payable and (c) other Encumbrances or imperfections on property which are not material in amount or do not materially detract from the value of or materially impair the existing use of the property affected by such Encumbrance or imperfection. (c) At the Closing, BUYER shall pay the Purchase Price by certified check payable to ILCO. ARTICLE II AGREEMENTS OF THE PARTIES 2.01 No Representations or Warranties. Neither ILCO nor ARC makes any representations or warranties to BUYER with respect to ARC or the Shares being purchased by BUYER pursuant to this Agreement. 2.02 Acknowledgments of BUYER. BUYER acknowledges that: (i) BUYER is knowledgeable, sophisticated and experienced in business and financial matters of the type contemplated by this Agreement, is able to evaluate the risks and merits of an investment in the Shares and is financially able to bear the risks thereof; (ii) The offering of the Shares to BUYER was made only through direct, personal communication between the parties and not through any public solicitation or advertising; (iii) The Shares have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or the securities or "blue sky" laws of any state or other domestic or foreign jurisdiction; the Shares may not be sold, transferred or otherwise disposed of except pursuant to an effective registration statement thereunder or an applicable exemption therefrom; (iii) the certificates evidencing the Shares shall contain a legend or legends indicating applicable transfer restrictions; -2- (iv) Buyer is acquiring the Shares for investment, and not with a view towards their public offering or distribution. Buyer understands that it must bear the economic risk of such investment indefinitely unless the Shares are registered pursuant to the Securities Act, or an exemption from such registration is available, and that Seller is not aware of any present intentions of the Companies to register the Shares. Buyer further understands that there is no assurance that an exemption from the Securities Act will be available or, if available, that such exemption will allow the Buyer to dispose of or otherwise transfer any or all of the Shares under the circumstances, in the amounts or at the times the Buyer might propose. 2.03 Intercompany Liabilities. As of the date of this Agreement, the amount of intercompany liabilities of ARC to Investors Life Insurance Company of North America ("Investors-NA"), an affiliate of ILCO, are $97,981.43. Immediately prior to the Closing Date, ILCO will cause ARC to pay to Investors-NA the amount of such intercompany liabilities then outstanding. 2.04 Employee Benefit Plans. (a) Exhibit 2.04 lists of all Benefit Plans sponsored by ILCO which currently cover any employees of ARC. For purposes of this Agreement, "Benefit Plan" means any pension, profit- sharing, deferred compensation, retirement, medical, insurance or other plan or arrangement providing benefits to any Employee, including without limitation any employee benefit plan within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended. (b) ARC does not independently maintain any Benefit Plan. The employees of ARC participate only in Benefit Plans sponsored by ILCO. ( c ) As of the Closing Date, the participation by employees of ARC in each such Benefit Plan shall terminate. ILCO shall cause employees of ARC to receive such notices as may be required under COBRA rules and regulations. 2.05 Insurance. ARC participates as an additional insured in certain liability, property, workers' compensation, conduct of business, malpractice and other similar insurance maintained by ILCO. As of the Closing Date, ILCO will cause ARC's participation under such insurance coverage to terminate. 2.06 Lease. ARC is a party to a lease agreement dated February 10, 2003,as amended as of June 1, 2003, between ARC and Investors Life Insurance Company of North America, a subsidiary of ILCO, pertaining to space in Building II located at 6500 River Place Blvd., Austin, Texas the "Lease Agreement"). At the Closing the Lease Agreement will be cancelled, effective as of March 31, 2004. In consideration of the ILCO's consent to the continuation of the Lease Agreement beyond the Closing, BUYER agrees to pay, or cause the payment of, the payment obligations of ARC under the Lease Agreement, for the period from the Closing Date to March 31, 2004. -3- 2.07 Facilities. For the period beginning on the Closing Date and ending on March 31, 2004, BUYER will be permitted to continue to occupy the space which is leased to ARC pursuant to the Lease Agreement described in Section 2.06, hereof. As of the Closing Date, all written and other arrangements between or among ARC, on the one hand, and ILCO or any affiliate of ILCO on the other hand, under which ILCO, or any of its affiliates, provided any services or facilities to ARC prior to the Closing Date (other than those services or facilities provided in accordance with the Lease Agreement described in Section 2.06 hereof) or which ARC provided any services or facilities to the Seller or any of its affiliates prior to the Closing Date, will terminate. 2.8 Data Processing Transition. For a transition period of thirty (30) days following the Closing Date, ILCO will assist BUYER in obtaining a copy of data pertaining to the business and operations of ARC which is stored on hardware or network equipment owned by ILCO or its affiliates, it being understood by the parties that such hardware or network equipment are not included in the equipment to be transferred to BUYER pursuant to this Agreement. 2. 9 Tax Matters. (a) ILCO shall prepare and file (or cause to be prepared and filed) all returns of and forms required to be filed with respect to ARC for any taxable period ending on or before the Closing Date and shall pay all Taxes related thereto. BUYER shall prepare and file (or cause to be prepared and filed) all returns and forms required to be filed with respect to ARC for any taxable period ending after the Closing Date, and pay (or cause to be paid) all Taxes which accrue with respect to ARC for any taxable period ending after the Closing Date. (b) ILCO shall pay and shall indemnify and hold harmless BUYER against any and all Taxes of or payable by ARC attributable to operations, acts or omissions of ARC prior to the Closing Date. ( c ) BUYER shall pay and shall indemnify and hold harmless ILCO against any and all Taxes of or payable by ARC attributable to operations, acts or omissions of BUYER or ARC on and after the Closing Date. (d) ILCO shall be entitled to receive all refunds of federal income taxes of ARC (and any interest thereon) with respect to all periods through the Closing Date (the "Pre-Closing Period"), unless any such refunds are carried as an asset by ARC on the Closing Date, and all refunds of state or local income or franchise taxes of ARC (and any interest thereon) with respect to periods ending on or prior to the Closing Date. BUYER shall pay to ILCO within five business days after receipt thereof any such refunds received by BUYER. -4- (e) BUYER shall be entitled to all refunds of federal income taxes of ARC with respect to all periods ending after the Closing Date (the "Post-Closing Period") (and any interest thereon), and all refunds of state or local income or franchise taxes of ARC with respect to periods ending after the Closing Date (and any interest thereon). ILCO shall pay to BUYER within five business days after receipt thereof any such refunds received by ILCO. BUYER shall be solely responsible for and shall indemnify and hold ILCO harmless with respect to all other Taxes imposed by any taxing authority with respect to ARC or its business for the Post- Closing Period. (f) As used herein, the term "Taxes" means all federal, state, county, local or other taxes, charges, levies or other assessments of any kind whatsoever, including without limitation, (a) income, accumulated earnings, franchise, excise, sales, use, gross receipts, ad valorem, profits, real or personal property, capital stock, license, payroll, withholding, employment, workers' compensation, social security, transfers and gains taxes, and (b) interest, penalties, additions to tax and any similar impositions with respect thereto. 2.10 Indemnification. (a) BUYER agrees to indemnify ILCO and its officers, directors, agents and affiliates in respect of, and hold each of them harmless from and against, any and all Damages incurred by ILCO and its officers, directors, agents and affiliates as a result of the negligence or misconduct of BUYER in the conduct of the operations of the COMPANY after the Closing. (b) ILCO agrees to indemnify BUYER in respect of, and hold BUYER harmless from and against, any and all Damages incurred by BUYER as a result of the negligence or misconduct of ILCO or its affiliates in the conduct of the operations of ARC prior to the Closing. ( c ) All claims by any party seeking indemnification for Damages under this Agreement (" Indemnified Party") will be asserted as to the party from which indemnity is sought hereunder ("Indemnifying Party") and resolved as follows: (1) In the event any claim or demand for which an Indemnifying Party would be liable for Damages to an Indemnified Party under this Agreement is asserted against or sought to be collected from such Indemnified Party by a person other than ILCO, BUYER or any of their affiliates ("Third Party Claim"), the Indemnified Party shall deliver a notice of claim ("Claim Notice") within 30 days to the Indemnifying Party. The Indemnifying Party will notify the Indemnified Party as soon as practicable but not in any event more than 30 calendar days of receipt of the Claim Notice ("Notice Period") whether the Indemnifying Party desires, at the sole cost and expense of the Indemnifying Party, to defend the Indemnified Party against such Third Party Claim. -5- (A) If the Indemnifying Party notifies the Indemnified Party within the Notice Period that the Indemnifying Party desires to defend the Indemnified Party with respect to the Third Party Claim pursuant to this Agreement, then theIndemnifying Party will have the right to defend, at its sole cost and expense, such Third Party Claim by all appropriate proceedings, which proceedings will be diligently prosecuted by the Indemnifying Party to a final conclusion or will be settled at the discretion of the Indemnifying Party (with the consent of the Indemnified Party, which consent will not be unreasonably withheld). The Indemnifying Party will have full control of such defense and proceedings, including any compromise or settlement thereof; provided, that if requested by the Indemnifying Party, the Indemnified Party agrees, at the sole cost and expense of the Indemnifying Party, to cooperate with the Indemnifying Party and its counsel in contesting any Third Party Claim that the Indemnifying Party elects to contest, or, if appropriate and related to the Third Party Claim in question, in making any counterclaim against the person asserting the Third Party Claim, or any cross-compliant against any person (other than the Indemnified Party or any of its affiliates). The Indemnified Party may participate in, but not control, any defense or settlement of any Third Party Claim controlled by the Indemnifying Party, and except as provided in the preceding sentence, the Indemnified Party will bear its own costs and expenses with respect to such participation. (B) If the Indemnifying Party fails to notify the Indemnified Party within the Notice Period that the Indemnifying Party desires to defend the Indemnified Party, or if the Indemnifying Party gives such notice but fails to prosecute diligently or settle the Third Party Claim, or if the Indemnifying Party fails to give any notice whatsoever within the Notice Period, then the Indemnified Party will have the right to defend, at the sole cost and expense of the Indemnifying Party, the Third Party Claim by all appropriate proceedings, which proceedings will be promptly and vigorously prosecuted by the Indemnified Party to a final conclusion or will be settled at the discretion of the Indemnified Party (with the consent of the Indemnifying Party, which consent will not be unreasonably withheld). The Indemnified Party will have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that if requested by the Indemnified Party, the Indemnifying Party agrees, at the sole cost and expense of the Indemnifying Party, to cooperate with the Indemnified Party and its counsel in contesting any Third Party Claim which the Indemnified Party is contesting, or, if appropriate and related to the Third Party Claim in questions, in making any counterclaim against the person asserting the Third Party Claim, or any cross-complaint against any person (other than the Indemnifying Party of any of its affiliates). The Indemnifying Party may participate in, but not control, any defense or settlement controlled by the Indemnified Party, and the Indemnifying Party will bear its own costs and expenses with respect to such participation. Notwithstanding the foregoing provisions, if the Indemnifying Party has notified the Indemnified Party with reasonable promptness that the Indemnifying Party disputes its liability to the Indemnified Party with respect to such Third Party Claim and if such dispute is resolved in favor of the Indemnifying Party, the Indemnifying Party will not be required to bear the costs and expenses of the Indemnified Party's defense or of the Indemnifying Party's participation therein at the Indemnified Party's request, and the Indemnified Party will reimburse the Indemnifying Party in full for all costs and expenses incurred by the Indemnifying Party in connection with such litigation. -6- (2) In the event any Indemnified Party should have a claim against any Indemnifying Party hereunder that does not involve a Third Party Claim being asserted against or sought to be collected from the Indemnified Party, the Indemnified Party shall deliver notice within 30 days to the Indemnifying Party. The failure by any Indemnified Party to give such notice shall not impair such party's rights hereunder except to the extent that an Indemnifying Party demonstrates that it has been prejudiced thereby. 2.11 Termination. This Agreement may be terminated, and the transactions contemplated hereby may be abandoned, upon notice by the terminating party to the other party: (a) At any time before the Closing, by mutual written agreement of all parties hereto; (b) At any time after February 15, 2004, by ILCO if the transactions contemplated by this Agreement have not been consummated on or before such date and such failure to consummate is not caused by a breach of this Agreement by ILCO ; or (c) At any time after February 15, 2004, by BUYER if the transactions contemplated by this Agreement have not been consummated on or before such date and such failure to consummate is not caused by a breach of this Agreement by BUYER 2.12 Effect of Termination. If this Agreement is validly terminated pursuant to Section 2.11, this Agreement will forthwith become null and void, and there will be no liability on the part of any party hereto (or any of their respective officers, directors, employees, agents, consultants, or other representatives). 2.13 Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be given by confirmed telecopy or registered mail addressed: (a) If to BUYER: George Wise, 3001 Huron Club Court Austin, Texas 7873 (b) If to ILCO: Theodore A. Fleron, General Counsel Financial Industries Corporation 6500 River Place Blvd., Austin, Texas 78730 -7- All notices and other communications required or permitted under this Agreement that are addressed as provided in this Section 2.13 will (1) if delivered personally, be deemed given upon delivery, (2) if delivered by facsimile transmissions, be deemed given when sent and confirmation or receipt is received, and (3) if delivered by mail in the manner described above, be deemed given on the third business day after the deposit in a regular depositary of the United States mail. Any party from time to time may change its address for the purpose of notices to that party by giving notice to the other parties hereto specifying a new address, but no such notice will be deemed to have been given until it is actually received by the party sought to be charged with the contents thereof. 2.14 Expenses. Except as otherwise provided herein, each party hereto shall pay its own expenses, including without limitation, legal and accounting fees and expenses, incident to its negotiation and preparation of this Agreement and to its performance and compliance with the provisions contained herein. 2.15 Titles and Headings. Titles and headings to Sections herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. 2.16 No Third-Party Beneficiaries. Nothing in this Agreement or in any agreement attached hereto as an exhibit is intended or shall be construed to give any person, other than the parties hereto, any legal or equitable right, remedy or claim under or in respect of this Agreement or any agreement attached hereto as an exhibit or any provision contained herein or therein. 2.17 Entire Agreement. This Agreement, together with the contracts executed and delivered pursuant hereto, supersedes all prior discussions and agreements between the parties with respect to the subject matter of this Agreement, and this Agreement, including documents, certificates and contracts executed and delivered pursuant hereto, contains the sole and entire agreement between the parties hereto with respect to the subject matter hereof. 2.18 Public Announcements. At all times at or before the Closing, the parties will consult with the other before issuing or making any reports, statements, or releases to the public with respect to this Agreement or the transactions contemplated hereby If either party is unable to obtain the consent of the other party of its public report, statement, or release and such report, statement, or release is, in the opinion of legal counsel to such party, required by law in order to discharge such party's disclosure obligations, then such party may make or issue the legally required report, statement, or release and promptly furnish the other party with a copy thereof. 2.19 Further Assurances; Cooperation. Each party hereto agrees that, from time to time after the Closing, upon the reasonable request of any other party, it will cooperate and will cause its respective affiliates to cooperate to effect the orderly transition of the businesses, operations and affairs of ARC from ownership and control by ILCO to BUYER. Without limiting the generality of the foregoing, (a) ILCO will give and will cause its affiliates to give BUYER reasonable access to all books and records reasonably requested by BUYER in the preparation of any post-Closing financial statements, reports, or tax returns of ARC; and (b) BUYER will give representatives of ILCO and its affiliates reasonable access to all books and records of ARC reasonably requested by ILCO or its affiliates in the preparation of any post-Closing financial statements, reports, or tax returns of ARC. -8- 2.20 Waiver. Any term or condition of this Agreement may be waived at any time by the party that is entitled to the benefit thereof. A waiver on one occasion will not be deemed to be a waiver of the same or any other breach on a future occasion. All remedies, either under this Agreement, or by law or otherwise afforded, will be cumulative and not alternative, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the party waiving such terms or conditions. 2.21 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas without giving effect to any choice or conflicts of law provision or rule (whether of the State of Texas or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Texas. 2.22 Binding Effect. This Agreement is binding upon and will inure to the benefit of the parties and their respective successors and permitted assignees. 2.23 No Assignment. This Agreement or any right or obligation hereunder may not be assigned by any party hereto without the prior written consent of the other parties hereto and any attempt to do so will be void. 2.24 Invalid Provisions. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law, and if the rights or obligations of the parties under this Agreement will not be materially and adversely affected thereby, (a) such provision will be fully severable; (b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof; ( c ) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom; and (d) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible. 2.25 Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their intent, and no rule of strict construction shall be applied against any party. Any reference to any federal, state, local or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. 2.26 Execution in Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement, and shall become a binding agreement when one or more counterparts have been signed by each of the parties and delivered to each of the other parties. 2.27 Brokers. The parties mutually agree that all negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by the parties without the assistance of a broker. BUYER represents and agrees that no claim by any person for a finder's fee, brokerage commission or similar payment may arise. -9- IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written. InterContinental Life Corporation By: /s/ Theodore A. Fleron ____________________________________ Name: Theodore A. Fleron Title: Vice President and Secretary Buyer /s/ George Wise _____________________________________ -10- Exhibit 1.03 BILL OF SALE AND ASSIGNMENT AGREEMENT This BILL OF SALE AND ASSIGNMENT AGREEMENT (this "Agreement"), is entered into as of December 30, 2003, by and between InterContinental Life Corporation, a Texas corporation ("ILCO"), Actuarial Risk Consultants, Inc. ("ARC"), a Nevada corporation, and George Wise, an individual resident of the state of Texas ("Wise"). W I T N E S S E T H: WHEREAS, to induce George Wise to enter into a stock purchase agreement pursuant to which ILCO will sell, and George Wise will purchase, all of the shares of capital stock of ARC, and ILCO desires to enter into this Agreement to convey to ARC certain assets of ILCO currently located at 6500 River Place Blvd., Austin, Texas 78730; NOW, THEREFORE, in consideration of the premises, the terms and conditions set forth herein, the mutual benefits to be gained by the performance thereof and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. Definitions. "Encumbrance" shall mean any security interest, pledge, mortgage, lien (including tax liens), charge, encumbrance, easement, adverse claim, adverse preferential arrangement, restriction or defect in title. "Licensed Assets" shall mean the assets identified on Exhibit A, hereto, as "licensed assets", which contain software that is licensed to Financial Industries Corporation ("FIC") under an enterprise license. -11- "Permitted Encumbrances" shall mean (a) Encumbrances for taxes and other governmental charges and assessments which are not yet due and payable, (b) Encumbrances of landlords and liens of carriers, warehousemen, mechanics and materialmen and other like Encumbrances arising in the ordinary course of business for sums not yet due and payable and (c) other Encumbrances or imperfections on property which are not material in amount or do not materially detract from the value of or materially impair the existing use of the property affected by such Encumbrance or imperfection. SECTION 2. Assignment. ILCO does hereby convey, transfer and assign, to ARC all right, title and interest in and to the assets listed on Exhibit A hereto free and clear of all Encumbrances, except for Permitted Encumbrances, and excluding those assets which are identified on Exhibit A as Licensed Assets. SECTION 3. Convent to Assign. ILCO shall convey, transfer and assign to ARC all right, title and interest in and to each Licensed Asset upon the receipt by ILCO on or prior to February 15, 2004 of a certificate executed by an authorized officer of ARC certifying that such Licensed Asset no longer contains software that is licensed to FIC under an enterprise license, together with evidence reasonably satisfactory to ILCO of the removal of such software. Any Licensed Asset that contains software that is licensed to FIC under an enterprise license on February 15, 2004 shall be promptly delivered to FIC at the sole expense of ARC. SECTION 4. Disclaimer of Warranty. EXCEPT AS IS EXPRESSLY SET FORTH HEREIN, ILCO MAKES NO REPRESENTATION OR WARRANTY AS TO ANY MATTER, EXPRESS OR IMPLIED, INCLUDING ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WARRANTY AGAINST INFRINGEMENT OR ANY OTHER WARRANTY AS TO THE CONDITION OR OPERATION OF ANY OF THE ASSETS. -12- SECTION 5. Further Assurances. ILCO hereby agrees that it and its successors shall execute, deliver, acknowledge, file and record, or cause to be executed, delivered, acknowledged, filed and recorded, any and all such further bills of sale, deeds, general conveyances, endorsements, assignments, confirmations and other good and sufficient instruments of conveyance, transfer and assignment as ARC or its successors or assigns shall reasonably request in order to complete, insure and perfect the conveyance, transfer and assignment of any Assets hereby conveyed, transferred and assigned. SECTION 6. Parties in Interest. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. SECTION 7. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without regard to the principles of conflicts of law thereof, except to the extent that mandatory principles of conflicts of law require the application of the laws of another jurisdiction wherein any of the properties, assets and interests hereby conveyed, transferred, assigned and contributed or intended so to be are located to determine the validity or effect of the conveyance, transfer, assignment and contribution thereof. SECTION 8. Severability. In the event any provision contained herein shall be held to be invalid, illegal or unenforceable for any reason, the invalidity, illegality or unenforceability thereof shall not affect any other provision hereof, and, to the extent permitted by law, this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. SECTION 9. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above written. -13- AREA ITEM ITEM NUMBER NUMBER Reception 63x30 desk cherry 3/160/76LR 2 30" Cnr Desk Cherry 3/76/76 1 Corner Sleeve-metal DE 200 1 63" Hutch Low Curved Cherry H/108/40C 1 Mobile Ped, Box/Box/File Central Lock Cherry 3/50/50/3 1 Mobius Mid Back Chair Grade M2/Solo Currant 4704 1 Occasional Table-Cylinder 21" Round x 20" High Cherry Laminate OP-C2120 1 Pennant Guest Chair 62x-Guxx 2 Table 1 Highback Leather Chair 9039GH706 1 Common Area Bookcases 35.5" x 79" four Adjustable Shelves B/90/200/35 3 42" Round Table and 18" Base 3/105/00MT;81222 1 Conference Room 86.5" Top Conference, Cherry; Laminate Cylinder Base 18" 3/220/120MT; 81222 1 Midback off/Conf Chair 9139GL 6 Desk High Bookcase B/80/72/35 1 File Room Laminate Door Cabinet 400E-2436B 1 HON File Cabinets 784L 9 Typing Stand FW-42 1 Supply Cabinet 1 Cory's Office 71" x 45" Curved Desk Full Mod w/two Wire Ports 3/180/113 1 71" Credenza 3/180/50/6 1 Guest Chair KL-2503 2 Highback Leather Chair 9067ZH 1 Mobile Ped, Box/Box/File Central Lock Cherry 3/50/50/3 1 Desk High Bookcase B/80/72/35 1 Larry's Office 71" x 34" Desk Frame 3/180/86 1 Corner Sleeve-Metal DE 200 1 -14- AREA ITEM ITEM NUMBER NUMBER Continuation of Larry's Office Mobile Ped, Box/Box/File Central Lock Cherry 3/50/50/3 1 Guest Chair KL-2503 1 Desk High Bookcase B/80/72/35 1 Highback Leather Chair 9039GH 1 Kent's Office 71" x 34" Desk Frame 8582;8084 1 Mobile Ped, Box/Box/File Central Lock Cherry 3/50/50/3 1 Guest Chair KL-2503 1 Desk High Bookcase B/80/72/35 1 Highback Leather Chair 9039GH 1 Alisa's Office 71" x 34" Desk Frame 3/180/86 1 Corner Sleeve-Metal DE 200 1 Mobile Ped, Box/Box/File Central Lock Cherry 3/50/50/3 1 Guest Chair KL-2503 1 Desk High Bookcase B/80/72/35 1 Highback Leather Chair 9039GH 1 Joyce's Office 71" x 34" Desk Frame 3/180/86 1 Corner Sleeve-Metal DE 200 1 Mobile Ped, Box/Box/File Central Lock Cherry 3/50/50/3 1 Guest Chair KL-2503 1 Desk High Bookcase B/80/72/35 1 Highback Leather Chair 9039GH 1 Table 3/90/61T 1 Extra Office 71" Curved Desk 3/180/113 1 71" Credenza 3/180/50/6 1 Guest Chair KL-2503 1 Highback Leather Chair 9067ZH 1 Mobile Ped, Box/Box/File Central Lock Cherry 3/50/50/3 1 Desk High Bookcase B/80/72/35 1 Office Cube Boise Workspace Cub 1 Highback Leather Chair 9039GH 1 Guest Chair 1 -15- PRODUCT SERIAL NUMBER MODEL NUMBER ASSIGNED TO LICENSED ASSET? 18" LCD Flat Panel Display MUL8007A0041850 FPD1830 Alisa Gateway DS 600 XL (YG2) 29303947 600YG2 Alisa Yes Gateway Keyboard-GW 104+PS2 b283595 sk-9921 Alisa GW Logitech USB Optical Mouse L2B24415217 Alisa Docking Station D7002480194 PRSHR Alisa Gateway 300SPlus PC MUL7003D0032720 FPD1730 April Yes Gateway E Series 31535639 E Series April Yes Microsoft Natural Keyboard 2100900344B KB-7903 April HighMark Mouse CB2CO1205331 April HP Deskjet 990cxi MY274110HK 990cxi April Speakers CA-2022R April 18" LCD Flat Panel Display QS7330900563 FPD1730 Cory Gateway 200XL 31539562 Cory Yes GW Logitech USB Optical Mouse L2B24414997 Cory HP Deskjet MY39B1N1JF 5850 Cory ipaq pocket pc 5Y2CKWG1V5MO h5455 Cory Yes Wireless Card Slot 7Z29JJP5Y098 Cory Ipaq Charger Adapter Cory Auto Adapter Kit Cory HP Laser Jet 4100 MFP series USRGY10998 C9148A File Room HP Deskjet MY39P1N146 5850 File Room Refrigerator K2002600169 HSEWNAP File Room 18" LCD Flat Panel Display MUL8007B0002463 FPD1830 Joyce Miscrosoft Natural Keyboard 71305 545 43155600204 Joyce Brother Typewriter April Brother Printer U60563B3J212902 HL-5040 Joyce 18" LCD Flat Panel Display MUL8007A0042618 FPD1830 Kent Gateway DS 600 XL (YG2) 29303945 600YG2 Kent Yes Gateway Keyboard-GW 104+PS2 B321373 SK-9921 Kent Docking Station ??? PRSHR Kent GW Logitech USB Optical Mouse LZB24414997 Kent 18" LCD Flat Panel Display MUL8007B002278 FPD1830 Larry Gateway DS 600 XL (YG2) 29303946 600YG2 Larry Yes Gateway Keyboard-GW 104+PS2 B283593 sk-9921 Larry GW Logitech USB Optical Mouse LZB24415297 Larry Docking Station PRSHR Larry Compaq Computer 9X2BKQDZ5034 CPQ EVO N1000C George Yes Gateway Keyboard-GW 104+PS2 B263543 sk-9920 Gateway Keyboard-GW 104+PS2 CO17353 sk-9921 Gateway Mouse HCA24210776 Airline Adapter (3) AJ/KH/LS Warranty (3) AJ/KH/LS Carrying Cases (3) AJ/KH/LS Projector Best Buy Conf Room Data Line to B1
-16- PRODUCT MODEL NUMBER ASSIGNED TO Lucent A2011-2 BLK 400112884 Cory TMX-1105Blk 400107918 Extra Office A2011 Black 400112884 Larry TMX-1105Blk 400107918 Empty (Front) SBC-4000 Multi-Line phone 400119491 April A2011 Black 400112884 Alisa TMX-1105Blk 400107918 Empty (Cube) A2011 Black 400112884 Joyce Polycom Sound Station (Intercom phone) S/N 12731920 Conference TMX-2105Blk 400107868 File Room Cell Phone SCP-5300 George Wise Cell Phone SCP-5300 Cory Zass -17- InterContinental Life Corporation By: Name:__________________________________ Title:_________________________________ Actuarial Risk Consultants, Inc. By: Name:__________________________________ Title:_________________________________ George Wise -18- Exhibit 2.04 1. InterContinental Life Corporation Employees Savings and Investment Plan 2. InterContinental Life Corporation Employees Retirement Plan 3. InterContinental Life Corporation Medical Insurance Plan 4. InterContinental Life Corporation Dental Insurance Plan 5. InterContinental Life Corporation Group Life Insurance Plan 6. InterContinental Life Corporation Long Term Disability Plan 7. InterContinental Life Corporation Section 125 Plan 8. InterContinental Life Corporation Tuition Reimbursement Plan -19- EX-10 5 exhibit-10_3.txt BELL - AGREEMENT AND RELEASE 12/31/03 EXHIBIT 10.3 AGREEMENT AND RELEASE This Agreement and Release (this "Release") is made and entered into as of the 31st day of December, 2003, by and between Scott A. Bell ("Bell"), FIC Financial Services, Inc., a Nevada corporation ("FICFS"), and Financial Industries Corporation, a Texas corporation ("FIC"). W I T N E S S E T H: WHEREAS, on May 30, 2003, FICFS acquired all of the shares of capital stock of Paragon Benefits, Inc., a Texas corporation ("Paragon Benefits"), The Paragon Group, Inc., a Texas corporation ("Paragon Group"), and Paragon National, Inc., a Texas corporation ("Paragon National" and, together with Paragon Benefits and Paragon Group, "Paragon") pursuant to that certain Stock Purchase Agreement, dated as of May 30, 3003 (the "Paragon Stock Purchase Agreement"), by and among Bell, Wayne Desselle, Chris Murphy, FIC and FICFS; WHEREAS, pursuant to the Paragon Stock Purchase Agreement, 105,593 shares of common stock, par value $.20 per share, of FIC (the "FIC Shares") were issued to Bell, Wayne Desselle and Chris Murphy and deposited in escrow to be distributed to Bell, Wayne Desselle and Chris Murphy upon the achievement of certain financial performance goals as set forth in the Paragon Stock Purchase Agreement; WHEREAS, on May 30, 2003, Bell became an employee of FICFS pursuant to that certain Employment Agreement, dated as of May 30, 2003 (the "Employment Agreement"), by and between Bell and FICFS; WHEREAS, on May 30, 2003, FICFS acquired (i) from John Pesce, Mike Cochran, Arthur Howard, Geoffrey Calaway, W.M. Hartman, Edward F. Harman, III, M.B. Donaldson, Alycia Andrews, Charles Francis, Tom Cook, David Allen and Marcus Smith all of the shares of capital stock of Total Compensation Group Consulting, Inc., a Texas corporation ("TCG"), and (ii) from Earl Johnson and TCG all of the shares of capital stock of JNT Group, Inc., a Texas corporation ("JNT" and, together with Paragon and TCG, the "New Era Companies"), with Bell participating in the negotiations and sale of the New Era Companies to FICFS; WHEREAS, Bell has resigned his employment with FICFS, effective as of December 31, 2003; WHEREAS, Bell has asserted certain claims against FICFS and FIC under the Paragon Stock Purchase Agreement and the Employment Agreement, asserting rights to recover certain amounts allegedly owed to Bell under the Employment Agreement in connection with his resignation, including accelerated salary and bonus, and demanding the release of the FIC Shares from escrow pursuant to the Paragon Stock Purchase Agreement and the Employment Agreement; - 1 - WHEREAS, FICFS and FIC have at all times denied, and continue to deny, any liability to Bell and have denied, and continue to deny, any and all claims asserted by Bell arising out of the Paragon Stock Purchase Agreement and Employment Agreement; WHEREAS, Bell, FICFS and FIC have agreed to resolve fully and finally any and all differences between them; WHEREAS, the parties recognize that arbitration, litigation and other disputes between them are expensive, uncertain, and time-consuming, and that settlement on agreeable terms is preferable to ongoing disputes and litigation; WHEREAS, the parties desire to provide the below-described mutual releases of claims, and Bell, FICFS and FIC desire to enter into this Release and agree to the terms and provisions hereof; and WHEREAS, the settlement provided for herein is not and shall not in any way be construed or deemed to be evidence or an admission or a concession of any fault, liability, fact or amount of damages, or any other matter whatsoever on the part of the parties, and the parties are entering into this Release solely to avoid the substantial expense, inconvenience and burden of litigation and to completely and finally put to rest all claims; NOW, THEREFORE, in consideration of the mutual promises contained in this Release, the parties agree as follows: 1. Any and all Bell Claims (as hereinafter defined) shall be and hereby are fully and finally settled, satisfied, released and discharged in consideration of (i) the sum of TEN THOUSAND DOLLARS ($10,000.00), which shall be paid by FICFS or FIC by check delivered to Bell upon the execution by Bell of this Release, and (ii) the release by FIC and FICFS of all FIC Claims (as hereinafter defined) pursuant to this Release. Bell agrees that FIC's and FICFS's release of any and all FIC Claims pursuant to this Release and the above-described payment are contrary to FIC's and FICFS's normal policies and interests, and are good and valuable consideration for Bell's release of all Bell Claims pursuant hereto. Except for the payment to be made pursuant to this paragraph, Bell agrees that FICFS and FIC have paid him all sums owed Bell by virtue of the Paragon Stock Purchase Agreement and Employment Agreement, whether with respect to past, present and/or future periods of time, including, without limitation, any and all vacation pay, severance pay, salary, bonus, stock, variable and other wages, and any and all other compensation amounts and expense reimbursements, and that he has no rights, with respect to past, present and/or future periods of time, to the FIC Shares. The parties agree that the described payment is to be treated as wages and subject to standard payroll deductions and withholdings. - 2 - 2. Any and all FIC Claims shall be and hereby are fully and finally settled, satisfied, released and discharged in consideration of the release by Bell of all Bell Claims pursuant to this Release. FIC and FICFS agree that Bell's release of any and all Bell Claims pursuant to this Release is contrary to Bell's normal policies and interests, and is good and valuable consideration for FIC's and FICFS's release of all FIC Claims pursuant hereto and for the above described payment to Bell. 3. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Bell, for and on behalf of his present and former assignors, creditors, assigns, heirs, executors, spouses, personal representatives, administrators, transferees and attorneys (collectively, the "Bell Releasors"), hereby knowingly and voluntarily and forever release, acquit and discharge FICFS and FIC and their respective past, present and future parent companies, stockholders, owners, subsidiaries, divisions, related or affiliated entities, predecessors and successors, their respective present and former officers, directors, partners, limited partners, principals, members, stockholders, owners, employees, agents, servants, subrogees, insurers and attorneys, and their respective successors, predecessors, assigns, representatives, heirs, executors, spouses, personal representatives, administrators, transferees and attorneys from any and all claims or causes of action, including debts, suits, rights of action, dues, sums of money, accounts, bonds, bills, covenants, contracts, controversies, agreements, promises, damages, judgments, variances, executions, demands, rights, liabilities, losses or obligations of any kind or nature whatsoever, matured or unmatured, liquidated or unliquidated, absolute or contingent, accrued or unaccrued, known or unknown, suspected or unsuspected, whether heretofore or hereafter accruing, whether or not asserted, threatened, alleged or litigated in any forum, at law, admiralty, equity or otherwise, including without limitation, claims for indemnity or contribution, or for costs, expenses (including without limitation amounts paid in settlement) and attorneys' fees which any person or entity has, owns or holds, or might have had, owned or held, formerly had or hereafter might have, own or hold, directly, indirectly, individually, representatively, derivatively or in any capacity for or because of anything done or omitted prior to and including the date hereof including, but not limited to, those which arise out of or are directly or indirectly related in any way to (i) Bell's employment with and/or resignation from FICFS, including, without limitation, any and all claims for sums allegedly owed Bell under the Employment Agreement, including, without limitation, any and all vacation pay, severance pay, salary, bonus, stock, variable and other wages, and any and all other compensation amounts and expense reimbursements, or (ii) the acquisition of the New Era - 3 - Companies by FICFS, including, without limitation, any and all claims for the release of the FIC Stock to Bell under the Paragon Stock Purchase Agreement and/or the Employment Agreement (collectively, "Bell Claims"); provided, however, that this Release shall not include a release of any rights the Bell Releasors may have to enforce the terms and conditions of this Release or the Stock Purchase Agreement, dated as of the date hereof (the "New Era Stock Purchase Agreement"), by and among BCDP Holdings, LLP, a Delaware limited liability partnership ("BCDP"), FICFS and FIC. 4. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, FICFS and FIC and their respective past, present and future parent companies, stockholders, owners, subsidiaries, divisions, related or affiliated entities, predecessors and successors, their respective present and former officers, directors, partners, limited partners, principals, members, stockholders, owners, employees, agents, servants, subrogees, insurers and attorneys, and their respective successors, predecessors, assigns, representatives, heirs, executors, spouses, personal representatives, administrators, transferees and attorneys (collectively, the "FIC Releasors"), hereby knowingly and voluntarily and forever release, acquit and discharge Bell, the New Era Companies and their respective assigns, heirs, executors, spouses, representatives, administrators, transferees, past, present and future parent companies, subsidiaries, divisions, related or affiliated entities, predecessors and successors, subrogees, insurers and attorneys from any and all claims or causes of action, including debts, suits, rights of action, dues, sums of money, accounts, bonds, bills, covenants, contracts, controversies, agreements, promises, damages, judgments, variances, executions, demands, rights, liabilities, losses or obligations of any kind or nature whatsoever, matured or unmatured, liquidated or unliquidated, absolute or contingent, accrued or unaccrued, known or unknown, suspected or unsuspected, whether heretofore or hereafter accruing, whether or not asserted, threatened, alleged or litigated in any forum, at law, admiralty, equity or otherwise, including without limitation, claims for indemnity or contribution, or for costs, expenses (including without limitation amounts paid in settlement) and attorneys' fees which any person or entity has, owns or holds, or might have had, owned or held, formerly had or hereafter might have, own or hold, directly, indirectly, individually, representatively, derivatively or in any capacity for or because of anything done or omitted prior to and including the date hereof including, but not limited to, those which arise out of or are directly or indirectly related in any way to (i) the Employment Agreement or Bell's employment with and/or resignation from FICFS, or (ii) the acquisition of the New Era Companies by FICFS, including the Paragon Stock Purchase Agreement (collectively, "FIC Claims"); provided, however, that this Release shall not include a release of any rights the FIC Releasors may have to enforce the terms and conditions of this Release or the New Era Stock Purchase Agreement. - 4 - 5. Neither this Release nor any payments or performance by the Bell Releasors or the FIC Releasors shall in any way be construed as an admission by the Bell Releasors or the FIC Releasors, or any of their parents, subsidiaries, affiliates, or related companies, of any acts of wrongdoing, negligence, or violation of any statute, law, or legal right. The parties hereto are settling any and all FIC Claims and Bell Claims solely in the interest of reasonable compromise. Neither this Release nor any of its terms and provisions nor any of the negotiations or proceedings in connection with it (a) is, or is intended to be, an admission by any party or any evidence of the truth of any fact alleged, or the validity of any claim that has been or could have been asserted, or of any liability, fault or wrongdoing of such party, or (b) shall be offered or received in evidence in any action or proceeding of any kind other than such proceedings as may be necessary to consummate, defend or enforce this Release. 6. Bell represents that he has not transferred or assigned, to any person or entity, any Bell Claim, or any portion thereof, or interest therein. FICFS and FIC represent that neither has transferred or assigned, to any person or entity, any FIC Claim, or any portion thereof, or interest therein. 7. The parties represent and acknowledge that in executing this Release, no party has relied upon any representation(s) by any other party, or agents or attorneys of any other party, except as expressly contained in this Release. 8. The parties hereby expressly waive any and all claims based upon representations that are not set forth in this Release, including, without limitation, claims for fraudulent inducement of this Release. 9. The parties agree, each to the others, that the statements, representations, agreements and covenants contained herein are contractual in nature and not mere recitations of fact, and that the agreements and covenants herein shall be binding upon the parties, their respective heirs, administrators, representatives, executors, successors and assigns, and shall inure to the benefit of their respective heirs, administrators, representatives, executors, successors and assigns. 10. The language of this Release shall, in all cases, be construed as a whole, according to its fair meaning, and not strictly for, or against, any of the parties. 11. Should any provision of this Release be declared, or be determined, by any court to be illegal or invalid, the validity of the remaining parts, terms or provisions of this Release shall not be affected and any illegal or invalid part, term, or provision, should not be deemed to be a part of this Release. 12. Each party agrees to enter into or execute such additional documents as are or may be necessary to carry out the intent and express terms of this Release. - 5 - 13. This Release may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall be deemed one and the same instrument. 14. Each party shall bear their own costs and attorney's fees in connection with this Release. 15. The parties agree that any disputes arising under or related to this Release shall be submitted to binding arbitration. Such arbitration shall be conducted pursuant to the then-current rules of the American Arbitration Association ("AAA"). However, AAA need not conduct said arbitration as the parties may agree to utilize any other commercially suitable service or qualified individual. 16. This Release shall be construed and enforced in accordance with the laws of the State of Texas. The parties agree that this Release affects interstate commerce and that the arbitration, referenced in paragraph 15, shall be subject to the Federal Arbitration Act. 17. The failure of a party to insist upon strict performance of any provision of this Release shall not constitute a waiver of, or estoppel against asserting, the right to require performance in the future. A waiver or estoppel in any one instance shall not constitute a waiver or estoppel with respect to a later breach. 18. This Release sets forth the entire agreement between the parties, and fully supersedes any and all prior and contemporaneous agreements or understandings, oral or written, between the Parties pertaining to the subject matter in this Release. This Release may only be amended or modified in a writing duly executed by both Parties. - 6 - MY SIGNATURE BELOW SUBSTANTIATES THAT I HAVE READ THE ABOVE AGREEMENT AND RELEASE AND AGREE AND CONSENT TO THE TERMS AND CONDITIONS THEREIN. Witness my hand this 31st day of December, 2003. /s/ Scott A. Bell ______________________________________ Scott A. Bell Subscribed and sworn to by Scott A. Bell before the undersigned Notary Public, on this 31st day of December, 2003. ______________________________________ Notary Public for the State of Texas My Commission Expires: ______________ * * * * * * * * * * * Witness my hand this 31st day of December, 2003. FIC Financial Services, Inc. By: /s/ Theodore A. Fleron ___________________________________ Theodore A. Fleron Secretary Subscribed and sworn to by Theodore A. Fleron before the undersigned Notary Public on this 31st day of December, 2003. ______________________________________ Notary Public for the State of Texas My Commission Expires: ______________ - 7 - * * * * * * * * * * * Witness my hand this 31st day of December, 2003. Financial Industries Corporation By: /s/ Theodore A. Fleron ___________________________________ Theodore A. Fleron Vice President and Secretary Subscribed and sworn to by Theodore A. Fleron before the undersigned Notary Public on this 31st day of December, 2003. ______________________________________ Notary Public for the State of Texas My Commission Expires: ______________ - 8 - EX-10 6 exhibit-10_4.txt COCHRAN - AGREEMENT AND RELEASE EXHIBIT 10.4 AGREEMENT AND RELEASE This Agreement and Release (this "Release") is made and entered into as of the 31st day of December, 2003, by and between Mike Cochran ("Cochran"), FIC Financial Services, Inc., a Nevada corporation ("FICFS"), and Financial Industries Corporation, a Texas corporation ("FIC"). W I T N E S S E T H: WHEREAS, on May 30, 2003, FICFS acquired all of the shares of capital stock of Total Compensation Group Consulting, Inc., a Texas corporation ("TCG"), pursuant to that certain Stock Purchase Agreement, dated as of May 30, 3003 (the "TCG Stock Purchase Agreement"), by and among Arthur Howard, Geoffrey Calaway, W.M. Hartman, Edward Harman, III, M.B. Donaldson, Teri Hoyt, Alycia Andrews, Charles Francis, Tom Cook, David Allen and Marcus Smith (each, a "Shareholder," and collectively, the "Shareholders"), Cochran, John Pesce, TCG, FIC and FICFS; WHEREAS, pursuant to the TCG Stock Purchase Agreement, 50,004 shares of common stock, par value $.20 per share, of FIC (the "FIC Shares") were issued to Cochran and John Pesce and deposited in escrow to be distributed to Cochran and John Pesce in accordance with the TCG Stock Purchase Agreement; WHEREAS, on May 30, 2003, Cochran became an employee of FICFS pursuant to that certain Employment Agreement, dated as of May 30, 2003 (the "Employment Agreement"), by and between Cochran and FICFS; WHEREAS, on May 30, 2003, FICFS acquired (i) from Scott Bell, Wayne Desselle and Chris Murphy all of the shares of capital stock of Paragon Benefits, Inc., a Texas corporation ("Paragon Benefits"), The Paragon Group, Inc., a Texas corporation ("Paragon Group"), and Paragon National, Inc., a Texas corporation ("Paragon National" and, together with Paragon Benefits and Paragon Group, "Paragon"), and (ii) from Earl Johnson and TCG all of the shares of capital stock of JNT Group, Inc., a Texas corporation ("JNT" and, together with Paragon and TCG, the "New Era Companies"), with Cochran participating in the negotiations and sale of the New Era Companies to FICFS; WHEREAS, Cochran has resigned his employment with FICFS, effective as of December 31, 2003; WHEREAS, Cochran has asserted certain claims against FICFS and FIC under the TCG Stock Purchase Agreement and the Employment Agreement, asserting rights to recover certain amounts allegedly owed to Cochran under the Employment Agreement in connection with his resignation, including accelerated salary and bonus, and demanding the release of the FIC Shares from escrow pursuant to the TCG Stock Purchase Agreement and the Employment Agreement; - 1 - WHEREAS, FICFS and FIC have at all times denied, and continue to deny, any liability to Cochran and have denied, and continue to deny, any and all claims asserted by Cochran arising out of the TCG Stock Purchase Agreement and Employment Agreement; WHEREAS, Cochran, FICFS and FIC have agreed to resolve fully and finally any and all differences between them; WHEREAS, the parties recognize that arbitration, litigation and other disputes between them are expensive, uncertain, and time-consuming, and that settlement on agreeable terms is preferable to ongoing disputes and litigation; WHEREAS, the parties desire to provide the below-described mutual releases of claims, and Cochran, FICFS and FIC desire to enter into this Release and agree to the terms and provisions hereof; and WHEREAS, the settlement provided for herein is not and shall not in any way be construed or deemed to be evidence or an admission or a concession of any fault, liability, fact or amount of damages, or any other matter whatsoever on the part of the parties, and the parties are entering into this Release solely to avoid the substantial expense, inconvenience and burden of litigation and to completely and finally put to rest all claims; NOW, THEREFORE, in consideration of the mutual promises contained in this Release, the parties agree as follows: 1. Any and all Cochran Claims (as hereinafter defined) shall be and hereby are fully and finally settled, satisfied, released and discharged in consideration of (i) the sum of TEN THOUSAND DOLLARS ($10,000.00), which shall be paid by FICFS or FIC by check delivered to Cochran upon the execution by Cochran of this Release, and (ii) the release by FIC and FICFS of all FIC Claims (as hereinafter defined) pursuant to this Release. Cochran agrees that FIC's and FICFS's release of any and all FIC Claims pursuant to this Release and the above-described payment are contrary to FIC's and FICFS's normal policies and interests, and are good and valuable consideration for Cochran's release of all Cochran Claims pursuant hereto. Except for the payment to be made pursuant to this paragraph, Cochran agrees that FICFS and FIC have paid him all sums owed Cochran by virtue of the TCG Stock Purchase Agreement and Employment Agreement, whether with respect to past, present and/or future periods of time, including, without limitation, any and all vacation pay, severance pay, salary, bonus, stock, variable and other wages, and any and all other compensation amounts and expense reimbursements, and that he has no rights, with respect to past, present and/or future periods of time, to the FIC Shares. The parties agree that the described payment is to be treated as wages and subject to standard payroll deductions and withholdings. - 2 - 2. Any and all FIC Claims shall be and hereby are fully and finally settled, satisfied, released and discharged in consideration of the release by Cochran of all Cochran Claims pursuant to this Release. FIC and FICFS agree that Cochran's release of any and all Cochran Claims pursuant to this Release is contrary to Cochran's normal policies and interests, and is good and valuable consideration for FIC's and FICFS's release of all FIC Claims pursuant hereto and for the above described payment to Cochran. 3. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Cochran, for and on behalf of his present and former assignors, creditors, assigns, heirs, executors, spouses, personal representatives, administrators, transferees and attorneys (collectively, the "Cochran Releasors"), hereby knowingly and voluntarily and forever release, acquit and discharge FICFS and FIC and their respective past, present and future parent companies, stockholders, owners, subsidiaries, divisions, related or affiliated entities, predecessors and successors, their respective present and former officers, directors, partners, limited partners, principals, members, stockholders, owners, employees, agents, servants, subrogees, insurers and attorneys, and their respective successors, predecessors, assigns, representatives, heirs, executors, spouses, personal representatives, administrators, transferees and attorneys from any and all claims or causes of action, including debts, suits, rights of action, dues, sums of money, accounts, bonds, bills, covenants, contracts, controversies, agreements, promises, damages, judgments, variances, executions, demands, rights, liabilities, losses or obligations of any kind or nature whatsoever, matured or unmatured, liquidated or unliquidated, absolute or contingent, accrued or unaccrued, known or unknown, suspected or unsuspected, whether heretofore or hereafter accruing, whether or not asserted, threatened, alleged or litigated in any forum, at law, admiralty, equity or otherwise, including without limitation, claims for indemnity or contribution, or for costs, expenses (including without limitation amounts paid in settlement) and attorneys' fees which any person or entity has, owns or holds, or might have had, owned or held, formerly had or hereafter might have, own or hold, directly, indirectly, individually, representatively, derivatively or in any capacity for or because of anything done or omitted prior to and including the date hereof including, but not limited to, those which arise out of or are directly or indirectly related in any way to (i) Cochran's employment with and/or resignation from FICFS, including, without limitation, any and all claims for sums allegedly owed Cochran under the Employment Agreement, including, without limitation, any and all vacation pay, severance pay, salary, bonus, stock, variable and other wages, and any and all other compensation amounts and expense reimbursements, or (ii) the acquisition of the - 3 - New Era Companies by FICFS, including, without limitation, any and all claims for the release of the FIC Stock to Cochran under the TCG Stock Purchase Agreement and/or the Employment Agreement (collectively, "Cochran Claims"); provided, however, that this Release shall not include a release of any rights the Cochran Releasors may have to enforce the terms and conditions of this Release or the Stock Purchase Agreement, dated as of the date hereof (the "New Era Stock Purchase Agreement"), by and among BCDP Holdings, LLP, a Delaware limited liability partnership ("BCDP"), FICFS and FIC. 4. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, FICFS and FIC and their respective past, present and future parent companies, stockholders, owners, subsidiaries, divisions, related or affiliated entities, predecessors and successors, their respective present and former officers, directors, partners, limited partners, principals, members, stockholders, owners, employees, agents, servants, subrogees, insurers and attorneys, and their respective successors, predecessors, assigns, representatives, heirs, executors, spouses, personal representatives, administrators, transferees and attorneys (collectively, the "FIC Releasors"), hereby knowingly and voluntarily and forever release, acquit and discharge Cochran, the New Era Companies and their respective assigns, heirs, executors, spouses, representatives, administrators, transferees, past, present and future parent companies, subsidiaries, divisions, related or affiliated entities, predecessors and successors, subrogees, insurers and attorneys from any and all claims or causes of action, including debts, suits, rights of action, dues, sums of money, accounts, bonds, bills, covenants, contracts, controversies, agreements, promises, damages, judgments, variances, executions, demands, rights, liabilities, losses or obligations of any kind or nature whatsoever, matured or unmatured, liquidated or unliquidated, absolute or contingent, accrued or unaccrued, known or unknown, suspected or unsuspected, whether heretofore or hereafter accruing, whether or not asserted, threatened, alleged or litigated in any forum, at law, admiralty, equity or otherwise, including without limitation, claims for indemnity or contribution, or for costs, expenses (including without limitation amounts paid in settlement) and attorneys' fees which any person or entity has, owns or holds, or might have had, owned or held, formerly had or hereafter might have, own or hold, directly, indirectly, individually, representatively, derivatively or in any capacity for or because of anything done or omitted prior to and including the date hereof including, but not limited to, those which arise out of or are directly or indirectly related in any way to (i) the Employment Agreement or Cochran's employment with and/or resignation from FICFS, or (ii) the acquisition of the New Era Companies by FICFS, including the TCG Stock Purchase Agreement (collectively, "FIC Claims"); provided, however, that this Release shall not include a release of any rights the FIC Releasors may have to enforce the terms and conditions of this Release or the New Era Stock Purchase Agreement. - 4 - 5. Neither this Release nor any payments or performance by the Cochran Releasors or the FIC Releasors shall in any way be construed as an admission by the Cochran Releasors or the FIC Releasors, or any of their parents, subsidiaries, affiliates, or related companies, of any acts of wrongdoing, negligence, or violation of any statute, law, or legal right. The parties hereto are settling any and all FIC Claims and Cochran Claims solely in the interest of reasonable compromise. Neither this Release nor any of its terms and provisions nor any of the negotiations or proceedings in connection with it (a) is, or is intended to be, an admission by any party or any evidence of the truth of any fact alleged, or the validity of any claim that has been or could have been asserted, or of any liability, fault or wrongdoing of such party, or (b) shall be offered or received in evidence in any action or proceeding of any kind other than such proceedings as may be necessary to consummate, defend or enforce this Release. 6. Cochran represents that he has not transferred or assigned, to any person or entity, any Cochran Claim, or any portion thereof, or interest therein. FICFS and FIC represent that neither has transferred or assigned, to any person or entity, any FIC Claim, or any portion thereof, or interest therein. 7. FIC and FICFS (collectively, the "Indemnifying Parties"), jointly and severally, shall indemnify TCG and Cochran and their respective successors, heirs, personal representatives and assigns (collectively, the "Indemnified Parties"), against and hold them harmless from any and all damage, claim, loss and liability (excluding any expenses incurred by the Indemnified Parties, including, without limitation, attorneys' fees) (collectively, "Damages") arising directly out of any right of contribution asserted by a Shareholder against any Indemnified Party to the extent such right of contribution arises directly out of any dispute, claim, litigation or similar proceeding initiated by FIC or FICFS against such Shareholder that is related to the TCG Stock Purchase Agreement and/or the transactions contemplated thereby. An Indemnified Party seeking indemnification pursuant to this paragraph shall give prompt written notice to the Indemnifying Parties of the assertion of any claim, or the commencement of any action or proceeding, in respect of which indemnity may be sought hereunder; provided that the failure to give such notice shall not affect the Indemnified Party's rights to indemnification hereunder, unless such failure shall prejudice in any material respect the Indemnifying Parties' ability to defend such claim, action or proceeding. An Indemnified Party shall have the right to settle the claim for Damages at any time, subject to the approval of the Indemnifying Parties which shall not be unreasonably withheld. 8. The parties represent and acknowledge that in executing this Release, no party has relied upon any representation(s) by any other party, or agents or attorneys of any other party, except as expressly contained in this Release. 9. The parties hereby expressly waive any and all claims based upon representations that are not set forth in this Release, including, without limitation, claims for fraudulent inducement of this Release. - 5 - 10. The parties agree, each to the others, that the statements, representations, agreements and covenants contained herein are contractual in nature and not mere recitations of fact, and that the agreements and covenants herein shall be binding upon the parties, their respective heirs, administrators, representatives, executors, successors and assigns, and shall inure to the benefit of their respective heirs, administrators, representatives, executors, successors and assigns. 11. The language of this Release shall, in all cases, be construed as a whole, according to its fair meaning, and not strictly for, or against, any of the parties. 12. Should any provision of this Release be declared, or be determined, by any court to be illegal or invalid, the validity of the remaining parts, terms or provisions of this Release shall not be affected and any illegal or invalid part, term, or provision, should not be deemed to be a part of this Release. 13. Each party agrees to enter into or execute such additional documents as are or may be necessary to carry out the intent and express terms of this Release 14. This Release may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall be deemed one and the same instrument. 15. Each party shall bear their own costs and attorney's fees in connection with this Release. 16. The parties agree that any disputes arising under or related to this Release shall be submitted to binding arbitration. Such arbitration shall be conducted pursuant to the then-current rules of the American Arbitration Association ("AAA"). However, AAA need not conduct said arbitration as the parties may agree to utilize any other commercially suitable service or qualified individual. 17. This Release shall be construed and enforced in accordance with the laws of the State of Texas. The parties agree that this Release affects interstate commerce and that the arbitration, referenced in paragraph 16, shall be subject to the Federal Arbitration Act. 18. The failure of a party to insist upon strict performance of any provision of this Release shall not constitute a waiver of, or estoppel against asserting, the right to require performance in the future. A waiver or estoppel in any one instance shall not constitute a waiver or estoppel with respect to a later breach. 19. This Release sets forth the entire agreement between the parties, and fully supersedes any and all prior and contemporaneous agreements or understandings, oral or written, between the Parties pertaining to the subject matter in this Release. This Release may only be amended or modified in a writing duly executed by both Parties. - 6 - MY SIGNATURE BELOW SUBSTANTIATES THAT I HAVE READ THE ABOVE AGREEMENT AND RELEASE AND AGREE AND CONSENT TO THE TERMS AND CONDITIONS THEREIN. Witness my hand this 31st day of December, 2003. /s/ Mike Cochran ______________________________________ Mike Cochran Subscribed and sworn to by Mike Cochran before the undersigned Notary Public, on this 31st day of December, 2003. ______________________________________ Notary Public for the State of Texas My Commission Expires: ______________ * * * * * * * * * * * Witness my hand this 31st day of December, 2003. FIC Financial Services, Inc. By: /s/ Theodore A. Fleron ___________________________________ Theodore A. Fleron Secretary Subscribed and sworn to by Theodore A. Fleron before the undersigned Notary Public on this 31st day of December, 2003. ______________________________________ Notary Public for the State of Texas My Commission Expires: ______________ - 7 - * * * * * * * * * * * Witness my hand this 31st day of December, 2003. Financial Industries Corporation By: /s/ Theodore A. Fleron ___________________________________ Theodore A. Fleron Vice President and Secretary Subscribed and sworn to by Theodore A. Fleron before the undersigned Notary Public on this 31st day of December, 2003. ______________________________________ Notary Public for the State of Texas My Commission Expires: ______________ - 8 - EX-10 7 exhibit-10_5.txt DESSELLE - AGREEMENT AND RELEASE EXHIBIT 10.5 AGREEMENT AND RELEASE This Agreement and Release (this "Release") is made and entered into as of the 31st day of December, 2003, by and between Wayne C. Desselle ("Desselle"), FIC Financial Services, Inc., a Nevada corporation ("FICFS"), and Financial Industries Corporation, a Texas corporation ("FIC"). W I T N E S S E T H: WHEREAS, on May 30, 2003, FICFS acquired all of the shares of capital stock of Paragon Benefits, Inc., a Texas corporation ("Paragon Benefits"), The Paragon Group, Inc., a Texas corporation ("Paragon Group"), and Paragon National, Inc., a Texas corporation ("Paragon National" and, together with Paragon Benefits and Paragon Group, "Paragon") pursuant to that certain Stock Purchase Agreement, dated as of May 30, 3003 (the "Paragon Stock Purchase Agreement"), by and among Desselle, Scott Bell, Chris Murphy, FIC and FICFS; WHEREAS, pursuant to the Paragon Stock Purchase Agreement, 105,593 shares of common stock, par value $.20 per share, of FIC (the "FIC Shares") were issued to Desselle, Scott Bell and Chris Murphy and deposited in escrow to be distributed to Desselle, Scott Bell and Chris Murphy upon the achievement of certain financial performance goals as set forth in the Paragon Stock Purchase Agreement; WHEREAS, on May 30, 2003, Desselle became an employee of FICFS pursuant to that certain Employment Agreement, dated as of May 30, 2003 (the "Employment Agreement"), by and between Desselle and FICFS; WHEREAS, on May 30, 2003, FICFS acquired (i) from John Pesce, Mike Cochran, Arthur Howard, Geoffrey Calaway, W.M. Hartman, Edward F. Harman, III, M.B. Donaldson, Alycia Andrews, Charles Francis, Tom Cook, David Allen and Marcus Smith all of the shares of capital stock of Total Compensation Group Consulting, Inc., a Texas corporation ("TCG"), and (ii) from Earl Johnson and TCG all of the shares of capital stock of JNT Group, Inc., a Texas corporation ("JNT" and, together with Paragon and TCG, the "New Era Companies"), with Desselle participating in the negotiations and sale of the New Era Companies to FICFS; WHEREAS, Desselle has resigned his employment with FICFS, effective as of December 31, 2003; WHEREAS, Desselle has asserted certain claims against FICFS and FIC under the Paragon Stock Purchase Agreement and the Employment Agreement, asserting rights to recover certain amounts allegedly owed to Desselle under the Employment Agreement in connection with his resignation, including accelerated salary and bonus, and demanding the release of the FIC Shares from escrow pursuant to the Paragon Stock Purchase Agreement and the Employment Agreement; - 1 - WHEREAS, FICFS and FIC have at all times denied, and continue to deny, any liability to Desselle and have denied, and continue to deny, any and all claims asserted by Desselle arising out of the Paragon Stock Purchase Agreement and Employment Agreement; WHEREAS, Desselle, FICFS and FIC have agreed to resolve fully and finally any and all differences between them; WHEREAS, the parties recognize that arbitration, litigation and other disputes between them are expensive, uncertain, and time-consuming, and that settlement on agreeable terms is preferable to ongoing disputes and litigation; WHEREAS, the parties desire to provide the below-described mutual releases of claims, and Desselle, FICFS and FIC desire to enter into this Release and agree to the terms and provisions hereof; and WHEREAS, the settlement provided for herein is not and shall not in any way be construed or deemed to be evidence or an admission or a concession of any fault, liability, fact or amount of damages, or any other matter whatsoever on the part of the parties, and the parties are entering into this Release solely to avoid the substantial expense, inconvenience and burden of litigation and to completely and finally put to rest all claims; NOW, THEREFORE, in consideration of the mutual promises contained in this Release, the parties agree as follows: 1. Any and all Desselle Claims (as hereinafter defined) shall be and hereby are fully and finally settled, satisfied, released and discharged in consideration of (i) the sum of TEN THOUSAND DOLLARS ($10,000.00), which shall be paid by FICFS or FIC by check delivered to Desselle upon the execution by Desselle of this Release, and (ii) the release by FIC and FICFS of all FIC Claims (as hereinafter defined) pursuant to this Release. Desselle agrees that FIC's and FICFS's release of any and all FIC Claims pursuant to this Release and the above-described payment are contrary to FIC's and FICFS's normal policies and interests, and are good and valuable consideration for Desselle's release of all Desselle Claims pursuant hereto. Except for the payment to be made pursuant to this paragraph, Desselle agrees that FICFS and FIC have paid him all sums owed Desselle by virtue of the Paragon Stock Purchase Agreement and Employment Agreement, whether with respect to past, present and/or future periods of time, including, without limitation, any and all vacation pay, severance pay, salary, bonus, stock, variable and other wages, and any and all other compensation amounts and expense reimbursements, and that he has no rights, with respect to past, present and/or future periods of time, to the FIC Shares. The parties agree that the described payment is to be treated as wages and subject to standard payroll deductions and withholdings. - 2 - 2. Any and all FIC Claims shall be and hereby are fully and finally settled, satisfied, released and discharged in consideration of the release by Desselle of all Desselle Claims pursuant to this Release. FIC and FICFS agree that Desselle's release of any and all Desselle Claims pursuant to this Release is contrary to Desselle's normal policies and interests, and is good and valuable consideration for FIC's and FICFS's release of all FIC Claims pursuant hereto and for the above described payment to Desselle. 3. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Desselle, for and on behalf of his present and former assignors, creditors, assigns, heirs, executors, spouses, personal representatives, administrators, transferees and attorneys (collectively, the "Desselle Releasors"), hereby knowingly and voluntarily and forever release, acquit and discharge FICFS and FIC and their respective past, present and future parent companies, stockholders, owners, subsidiaries, divisions, related or affiliated entities, predecessors and successors, their respective present and former officers, directors, partners, limited partners, principals, members, stockholders, owners, employees, agents, servants, subrogees, insurers and attorneys, and their respective successors, predecessors, assigns, representatives, heirs, executors, spouses, personal representatives, administrators, transferees and attorneys from any and all claims or causes of action, including debts, suits, rights of action, dues, sums of money, accounts, bonds, bills, covenants, contracts, controversies, agreements, promises, damages, judgments, variances, executions, demands, rights, liabilities, losses or obligations of any kind or nature whatsoever, matured or unmatured, liquidated or unliquidated, absolute or contingent, accrued or unaccrued, known or unknown, suspected or unsuspected, whether heretofore or hereafter accruing, whether or not asserted, threatened, alleged or litigated in any forum, at law, admiralty, equity or otherwise, including without limitation, claims for indemnity or contribution, or for costs, expenses (including without limitation amounts paid in settlement) and attorneys' fees which any person or entity has, owns or holds, or might have had, owned or held, formerly had or hereafter might have, own or hold, directly, indirectly, individually, representatively, derivatively or in any capacity for or because of anything done or omitted prior to and including the date hereof including, but not limited to, those which arise out of or are directly or indirectly related in any way to (i) Desselle's employment with and/or resignation from FICFS, including, without limitation, any and all claims for sums allegedly owed Desselle under the Employment Agreement, including, without limitation, any and all vacation pay, severance pay, salary, bonus, stock, variable and other wages, and any and all other compensation amounts and expense reimbursements, or (ii) the acquisition of the - 3 - New Era Companies by FICFS, including, without limitation, any and all claims for the release of the FIC Stock to Desselle under the Paragon Stock Purchase Agreement and/or the Employment Agreement (collectively, "Desselle Claims"); provided, however, that this Release shall not include a release of any rights the Desselle Releasors may have to enforce the terms and conditions of this Release or the Stock Purchase Agreement, dated as of the date hereof (the "New Era Stock Purchase Agreement"), by and among BCDP Holdings, LLP, a Delaware limited liability partnership ("BCDP"), FICFS and FIC. 4. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, FICFS and FIC and their respective past, present and future parent companies, stockholders, owners, subsidiaries, divisions, related or affiliated entities, predecessors and successors, their respective present and former officers, directors, partners, limited partners, principals, members, stockholders, owners, employees, agents, servants, subrogees, insurers and attorneys, and their respective successors, predecessors, assigns, representatives, heirs, executors, spouses, personal representatives, administrators, transferees and attorneys (collectively, the "FIC Releasors"), hereby knowingly and voluntarily and forever release, acquit and discharge Desselle, the New Era Companies and their respective assigns, heirs, executors, spouses, representatives, administrators, transferees, past, present and future parent companies, subsidiaries, divisions, related or affiliated entities, predecessors and successors, subrogees, insurers and attorneys from any and all claims or causes of action, including debts, suits, rights of action, dues, sums of money, accounts, bonds, bills, covenants, contracts, controversies, agreements, promises, damages, judgments, variances, executions, demands, rights, liabilities, losses or obligations of any kind or nature whatsoever, matured or unmatured, liquidated or unliquidated, absolute or contingent, accrued or unaccrued, known or unknown, suspected or unsuspected, whether heretofore or hereafter accruing, whether or not asserted, threatened, alleged or litigated in any forum, at law, admiralty, equity or otherwise, including without limitation, claims for indemnity or contribution, or for costs, expenses (including without limitation amounts paid in settlement) and attorneys' fees which any person or entity has, owns or holds, or might have had, owned or held, formerly had or hereafter might have, own or hold, directly, indirectly, individually, representatively, derivatively or in any capacity for or because of anything done or omitted prior to and including the date hereof including, but not limited to, those which arise out of or are directly or indirectly related in any way to (i) the Employment Agreement or Desselle's employment with and/or resignation from FICFS, or (ii) the acquisition of the New Era Companies by FICFS, including the Paragon Stock Purchase Agreement (collectively, "FIC Claims"); provided, however, that this Release shall not include a release of any rights the FIC Releasors may have to enforce the terms and conditions of this Release or the New Era Stock Purchase Agreement. - 4 - 5. Neither this Release nor any payments or performance by the Desselle Releasors or the FIC Releasors shall in any way be construed as an admission by the Desselle Releasors or the FIC Releasors, or any of their parents, subsidiaries, affiliates, or related companies, of any acts of wrongdoing, negligence, or violation of any statute, law, or legal right. The parties hereto are settling any and all FIC Claims and Desselle Claims solely in the interest of reasonable compromise. Neither this Release nor any of its terms and provisions nor any of the negotiations or proceedings in connection with it (a) is, or is intended to be, an admission by any party or any evidence of the truth of any fact alleged, or the validity of any claim that has been or could have been asserted, or of any liability, fault or wrongdoing of such party, or (b) shall be offered or received in evidence in any action or proceeding of any kind other than such proceedings as may be necessary to consummate, defend or enforce this Release. 6. Desselle represents that he has not transferred or assigned, to any person or entity, any Desselle Claim, or any portion thereof, or interest therein. FICFS and FIC represent that neither has transferred or assigned, to any person or entity, any FIC Claim, or any portion thereof, or interest therein. 7. The parties represent and acknowledge that in executing this Release, no party has relied upon any representation(s) by any other party, or agents or attorneys of any other party, except as expressly contained in this Release. 8. The parties hereby expressly waive any and all claims based upon representations that are not set forth in this Release, including, without limitation, claims for fraudulent inducement of this Release. 9. The parties agree, each to the others, that the statements, representations, agreements and covenants contained herein are contractual in nature and not mere recitations of fact, and that the agreements and covenants herein shall be binding upon the parties, their respective heirs, administrators, representatives, executors, successors and assigns, and shall inure to the benefit of their respective heirs, administrators, representatives, executors, successors and assigns. 10. The language of this Release shall, in all cases, be construed as a whole, according to its fair meaning, and not strictly for, or against, any of the parties. 11. Should any provision of this Release be declared, or be determined, by any court to be illegal or invalid, the validity of the remaining parts, terms or provisions of this Release shall not be affected and any illegal or invalid part, term, or provision, should not be deemed to be a part of this Release. 12. Each party agrees to enter into or execute such additional documents as are or may be necessary to carry out the intent and express terms of this Release - 5 - 13. This Release may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall be deemed one and the same instrument. 14. Each party shall bear their own costs and attorney's fees in connection with this Release. 15. The parties agree that any disputes arising under or related to this Release shall be submitted to binding arbitration. Such arbitration shall be conducted pursuant to the then-current rules of the American Arbitration Association ("AAA"). However, AAA need not conduct said arbitration as the parties may agree to utilize any other commercially suitable service or qualified individual. 16. This Release shall be construed and enforced in accordance with the laws of the State of Texas. The parties agree that this Release affects interstate commerce and that the arbitration, referenced in paragraph 15, shall be subject to the Federal Arbitration Act. 17. The failure of a party to insist upon strict performance of any provision of this Release shall not constitute a waiver of, or estoppel against asserting, the right to require performance in the future. A waiver or estoppel in any one instance shall not constitute a waiver or estoppel with respect to a later breach. 18. This Release sets forth the entire agreement between the parties, and fully supersedes any and all prior and contemporaneous agreements or understandings, oral or written, between the Parties pertaining to the subject matter in this Release. This Release may only be amended or modified in a writing duly executed by both Parties. - 6 - MY SIGNATURE BELOW SUBSTANTIATES THAT I HAVE READ THE ABOVE AGREEMENT AND RELEASE AND AGREE AND CONSENT TO THE TERMS AND CONDITIONS THEREIN. Witness my hand this 31st day of December, 2003. /s/ Wayne S. Desselle ______________________________________ Wayne C. Desselle Subscribed and sworn to by Wayne C. Desselle before the undersigned Notary Public, on this 31st day of December, 2003. ______________________________________ Notary Public for the State of Texas My Commission Expires: ______________ * * * * * * * * * * * Witness my hand this 31st day of December, 2003. FIC Financial Services, Inc. By: /s/ Theodore A. Fleron ___________________________________ Theodore A. Fleron Secretary Subscribed and sworn to by Theodore A. Fleron before the undersigned Notary Public on this 31st day of December, 2003. ______________________________________ Notary Public for the State of Texas My Commission Expires: ______________ - 7 - * * * * * * * * * * * Witness my hand this 31st day of December, 2003. Financial Industries Corporation By: /s/ Theodore A. Fleron ___________________________________ Theodore A. Fleron Vice President and Secretary Subscribed and sworn to by Theodore A. Fleron before the undersigned Notary Public on this 31st day of December, 2003. ______________________________________ Notary Public for the State of Texas My Commission Expires: ______________ - 8 - EX-10 8 exhibit-10_6.txt MURPHY - AGREEMENT AND RELEASE EXHIBIT 10.6 AGREEMENT AND RELEASE This Agreement and Release (this "Release") is made and entered into as of the 31st day of December, 2003, by and between Chris Murphy ("Murphy"), FIC Financial Services, Inc., a Nevada corporation ("FICFS"), and Financial Industries Corporation, a Texas corporation ("FIC"). W I T N E S S E T H: WHEREAS, on May 30, 2003, FICFS acquired all of the shares of capital stock of Paragon Benefits, Inc., a Texas corporation ("Paragon Benefits"), The Paragon Group, Inc., a Texas corporation ("Paragon Group"), and Paragon National, Inc., a Texas corporation ("Paragon National" and, together with Paragon Benefits and Paragon Group, "Paragon") pursuant to that certain Stock Purchase Agreement, dated as of May 30, 3003 (the "Paragon Stock Purchase Agreement"), by and among Murphy, Scott Bell, Wayne Desselle, FIC and FICFS; WHEREAS, pursuant to the Paragon Stock Purchase Agreement, 105,593 shares of common stock, par value $.20 per share, of FIC (the "FIC Shares") were issued to Murphy, Scott Bell and Wayne Desselle and deposited in escrow to be distributed to Murphy, Scott Bell and Wayne Desselle upon the achievement of certain financial performance goals as set forth in the Paragon Stock Purchase Agreement; WHEREAS, on May 30, 2003, Murphy became an employee of FICFS pursuant to that certain Employment Agreement, dated as of May 30, 2003 (the "Employment Agreement"), by and between Murphy and FICFS; WHEREAS, on May 30, 2003, FICFS acquired (i) from John Pesce, Mike Cochran, Arthur Howard, Geoffrey Calaway, W.M. Hartman, Edward F. Harman, III, M.B. Donaldson, Alycia Andrews, Charles Francis, Tom Cook, David Allen and Marcus Smith all of the shares of capital stock of Total Compensation Group Consulting, Inc., a Texas corporation ("TCG"), and (ii) from Earl Johnson and TCG all of the shares of capital stock of JNT Group, Inc., a Texas corporation ("JNT" and, together with Paragon and TCG, the "New Era Companies"), with Murphy participating in the negotiations and sale of the New Era Companies to FICFS; WHEREAS, Murphy has resigned his employment with FICFS, effective as of December 31, 2003; WHEREAS, Murphy has asserted certain claims against FICFS and FIC under the Paragon Stock Purchase Agreement and the Employment Agreement, asserting rights to recover certain amounts allegedly owed to Murphy under the Employment Agreement in connection with his resignation, including accelerated salary and bonus, and demanding the release of the FIC Shares from escrow pursuant to the Paragon Stock Purchase Agreement and the Employment Agreement; - 1 - WHEREAS, FICFS and FIC have at all times denied, and continue to deny, any liability to Murphy and have denied, and continue to deny, any and all claims asserted by Murphy arising out of the Paragon Stock Purchase Agreement and Employment Agreement; WHEREAS, Murphy, FICFS and FIC have agreed to resolve fully and finally any and all differences between them; WHEREAS, the parties recognize that arbitration, litigation and other disputes between them are expensive, uncertain, and time-consuming, and that settlement on agreeable terms is preferable to ongoing disputes and litigation; WHEREAS, the parties desire to provide the below-described mutual releases of claims, and Murphy, FICFS and FIC desire to enter into this Release and agree to the terms and provisions hereof; and WHEREAS, the settlement provided for herein is not and shall not in any way be construed or deemed to be evidence or an admission or a concession of any fault, liability, fact or amount of damages, or any other matter whatsoever on the part of the parties, and the parties are entering into this Release solely to avoid the substantial expense, inconvenience and burden of litigation and to completely and finally put to rest all claims; NOW, THEREFORE, in consideration of the mutual promises contained in this Release, the parties agree as follows: 1. Any and all Murphy Claims (as hereinafter defined) shall be and hereby are fully and finally settled, satisfied, released and discharged in consideration of (i) the sum of TEN THOUSAND DOLLARS ($10,000.00), which shall be paid by FICFS or FIC by check delivered to Murphy upon the execution by Murphy of this Release, and (ii) the release by FIC and FICFS of all FIC Claims (as hereinafter defined) pursuant to this Release. Murphy agrees that FIC's and FICFS's release of any and all FIC Claims pursuant to this Release and the above-described payment are contrary to FIC's and FICFS's normal policies and interests, and are good and valuable consideration for Murphy's release of all Murphy Claims pursuant hereto. Except for the payment to be made pursuant to this paragraph, Murphy agrees that FICFS and FIC have paid him all sums owed Murphy by virtue of the Paragon Stock Purchase Agreement and Employment Agreement, whether with respect to past, present and/or future periods of time, including, without limitation, any and all vacation pay, severance pay, salary, bonus, stock, variable and other wages, and any and all other compensation amounts and expense reimbursements, and that he has no rights, with respect to past, present and/or future periods of time, to the FIC Shares. The parties agree that the described payment is to be treated as wages and subject to standard payroll deductions and withholdings. - 2 - 2. Any and all FIC Claims shall be and hereby are fully and finally settled, satisfied, released and discharged in consideration of the release by Murphy of all Murphy Claims pursuant to this Release. FIC and FICFS agree that Murphy's release of any and all Murphy Claims pursuant to this Release is contrary to Murphy's normal policies and interests, and is good and valuable consideration for FIC's and FICFS's release of all FIC Claims pursuant hereto and for the above described payment to Murphy. 3. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Murphy, for and on behalf of his present and former assignors, creditors, assigns, heirs, executors, spouses, personal representatives, administrators, transferees and attorneys (collectively, the "Murphy Releasors"), hereby knowingly and voluntarily and forever release, acquit and discharge FICFS and FIC and their respective past, present and future parent companies, stockholders, owners, subsidiaries, divisions, related or affiliated entities, predecessors and successors, their respective present and former officers, directors, partners, limited partners, principals, members, stockholders, owners, employees, agents, servants, subrogees, insurers and attorneys, and their respective successors, predecessors, assigns, representatives, heirs, executors, spouses, personal representatives, administrators, transferees and attorneys from any and all claims or causes of action, including debts, suits, rights of action, dues, sums of money, accounts, bonds, bills, covenants, contracts, controversies, agreements, promises, damages, judgments, variances, executions, demands, rights, liabilities, losses or obligations of any kind or nature whatsoever, matured or unmatured, liquidated or unliquidated, absolute or contingent, accrued or unaccrued, known or unknown, suspected or unsuspected, whether heretofore or hereafter accruing, whether or not asserted, threatened, alleged or litigated in any forum, at law, admiralty, equity or otherwise, including without limitation, claims for indemnity or contribution, or for costs, expenses (including without limitation amounts paid in settlement) and attorneys' fees which any person or entity has, owns or holds, or might have had, owned or held, formerly had or hereafter might have, own or hold, directly, indirectly, individually, representatively, derivatively or in any capacity for or because of anything done or omitted prior to and including the date hereof including, but not limited to, those which arise out of or are directly or indirectly related in any way to (i) Murphy's employment with and/or resignation from FICFS, including, without limitation, any and all claims for sums allegedly owed Murphy under the Employment Agreement, including, without limitation, any and all vacation pay, severance pay, salary, bonus, stock, variable and other wages, and any and all other compensation amounts and expense reimbursements, or (ii) the acquisition of the - 3 - New Era Companies by FICFS, including, without limitation, any and all claims for the release of the FIC Stock to Murphy under the Paragon Stock Purchase Agreement and/or the Employment Agreement (collectively, "Murphy Claims"); provided, however, that this Release shall not include a release of any rights the Murphy Releasors may have to enforce the terms and conditions of this Release or the Stock Purchase Agreement, dated as of the date hereof (the "New Era Stock Purchase Agreement"), by and among BCDP Holdings, LLP, a Delaware limited liability partnership ("BCDP"), FICFS and FIC. 4. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, FICFS and FIC and their respective past, present and future parent companies, stockholders, owners, subsidiaries, divisions, related or affiliated entities, predecessors and successors, their respective present and former officers, directors, partners, limited partners, principals, members, stockholders, owners, employees, agents, servants, subrogees, insurers and attorneys, and their respective successors, predecessors, assigns, representatives, heirs, executors, spouses, personal representatives, administrators, transferees and attorneys (collectively, the "FIC Releasors"), hereby knowingly and voluntarily and forever release, acquit and discharge Murphy, the New Era Companies and their respective assigns, heirs, executors, spouses, representatives, administrators, transferees, past, present and future parent companies, subsidiaries, divisions, related or affiliated entities, predecessors and successors, subrogges, insurers and attorneys from any and all claims or causes of action, including debts, suits, rights of action, dues, sums of money, accounts, bonds, bills, covenants, contracts, controversies, agreements, promises, damages, judgments, variances, executions, demands, rights, liabilities, losses or obligations of any kind or nature whatsoever, matured or unmatured, liquidated or unliquidated, absolute or contingent, accrued or unaccrued, known or unknown, suspected or unsuspected, whether heretofore or hereafter accruing, whether or not asserted, threatened, alleged or litigated in any forum, at law, admiralty, equity or otherwise, including without limitation, claims for indemnity or contribution, or for costs, expenses (including without limitation amounts paid in settlement) and attorneys' fees which any person or entity has, owns or holds, or might have had, owned or held, formerly had or hereafter might have, own or hold, directly, indirectly, individually, representatively, derivatively or in any capacity for or because of anything done or omitted prior to and including the date hereof including, but not limited to, those which arise out of or are directly or indirectly related in any way to (i) the Employment Agreement or Murphy's employment with and/or resignation from FICFS, or (ii) the acquisition of the New Era Companies by FICFS, including the Paragon Stock Purchase Agreement (collectively, "FIC Claims"); provided, however, that this Release shall not include a release of any rights the FIC Releasors may have to enforce the terms and conditions of this Release or the New Era Stock Purchase Agreement. - 4 - 5. Neither this Release nor any payments or performance by the Murphy Releasors or the FIC Releasors shall in any way be construed as an admission by the Murphy Releasors or the FIC Releasors, or any of their parents, subsidiaries, affiliates, or related companies, of any acts of wrongdoing, negligence, or violation of any statute, law, or legal right. The parties hereto are settling any and all FIC Claims and Murphy Claims solely in the interest of reasonable compromise. Neither this Release nor any of its terms and provisions nor any of the negotiations or proceedings in connection with it (a) is, or is intended to be, an admission by any party or any evidence of the truth of any fact alleged, or the validity of any claim that has been or could have been asserted, or of any liability, fault or wrongdoing of such party, or (b) shall be offered or received in evidence in any action or proceeding of any kind other than such proceedings as may be necessary to consummate, defend or enforce this Release. 6. Murphy represents that he has not transferred or assigned, to any person or entity, any Murphy Claim, or any portion thereof, or interest therein. FICFS and FIC represent that neither has transferred or assigned, to any person or entity, any FIC Claim, or any portion thereof, or interest therein. 7. The parties represent and acknowledge that in executing this Release, no party has relied upon any representation(s) by any other party, or agents or attorneys of any other party, except as expressly contained in this Release. 8. The parties hereby expressly waive any and all claims based upon representations that are not set forth in this Release, including, without limitation, claims for fraudulent inducement of this Release. 9. The parties agree, each to the others, that the statements, representations, agreements and covenants contained herein are contractual in nature and not mere recitations of fact, and that the agreements and covenants herein shall be binding upon the parties, their respective heirs, administrators, representatives, executors, successors and assigns, and shall inure to the benefit of their respective heirs, administrators, representatives, executors, successors and assigns. 10. The language of this Release shall, in all cases, be construed as a whole, according to its fair meaning, and not strictly for, or against, any of the parties. 11. Should any provision of this Release be declared, or be determined, by any court to be illegal or invalid, the validity of the remaining parts, terms or provisions of this Release shall not be affected and any illegal or invalid part, term, or provision, should not be deemed to be a part of this Release. 12. Each party agrees to enter into or execute such additional documents as are or may be necessary to carry out the intent and express terms of this Release - 5 - 13. This Release may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall be deemed one and the same instrument. 14. Each party shall bear their own costs and attorney's fees in connection with this Release. 15. The parties agree that any disputes arising under or related to this Release shall be submitted to binding arbitration. Such arbitration shall be conducted pursuant to the then-current rules of the American Arbitration Association ("AAA"). However, AAA need not conduct said arbitration as the parties may agree to utilize any other commercially suitable service or qualified individual. 16. This Release shall be construed and enforced in accordance with the laws of the State of Texas. The parties agree that this Release affects interstate commerce and that the arbitration, referenced in paragraph 15, shall be subject to the Federal Arbitration Act. 17. The failure of a party to insist upon strict performance of any provision of this Release shall not constitute a waiver of, or estoppel against asserting, the right to require performance in the future. A waiver or estoppel in any one instance shall not constitute a waiver or estoppel with respect to a later breach. 18. This Release sets forth the entire agreement between the parties, and fully supersedes any and all prior and contemporaneous agreements or understandings, oral or written, between the Parties pertaining to the subject matter in this Release. This Release may only be amended or modified in a writing duly executed by both Parties. - 6 - MY SIGNATURE BELOW SUBSTANTIATES THAT I HAVE READ THE ABOVE AGREEMENT AND RELEASE AND AGREE AND CONSENT TO THE TERMS AND CONDITIONS THEREIN. Witness my hand this 31st day of December, 2003. /s/ Chris Murphy ______________________________________ Chris Murphy Subscribed and sworn to by Chris Murphy before the undersigned Notary Public, on this 31st day of December, 2003. ______________________________________ Notary Public for the State of Texas My Commission Expires: ______________ * * * * * * * * * * * Witness my hand this 31st day of December, 2003. FIC Financial Services, Inc. By: /s/ Theodore A. Fleron ___________________________________ Theodore A. Fleron Secretary Subscribed and sworn to by Theodore A. Fleron before the undersigned Notary Public on this 31st day of December, 2003. ______________________________________ Notary Public for the State of Texas My Commission Expires: ______________ - 7 - * * * * * * * * * * * Witness my hand this 31st day of December, 2003. Financial Industries Corporation By: /s/ Theodore A. Fleron ___________________________________ Theodore A. Fleron Vice President and Secretary Subscribed and sworn to by Theodore A. Fleron before the undersigned Notary Public on this 31st day of December, 2003. ______________________________________ Notary Public for the State of Texas My Commission Expires: ______________ - 8 - EX-10 9 exhibit-10_7.txt PESCE - AGREEMENT AND RELEASE EXHIBIT 10.7 AGREEMENT AND RELEASE This Agreement and Release (this "Release") is made and entered into as of the 31st day of December, 2003, by and between John Pesce ("Pesce"), FIC Financial Services, Inc., a Nevada corporation ("FICFS"), and Financial Industries Corporation, a Texas corporation ("FIC"). W I T N E S S E T H: WHEREAS, on May 30, 2003, FICFS acquired all of the shares of capital stock of Total Compensation Group Consulting, Inc., a Texas corporation ("TCG"), pursuant to that certain Stock Purchase Agreement, dated as of May 30, 3003 (the "TCG Stock Purchase Agreement"), by and among Arthur Howard, Geoffrey Calaway, W.M. Hartman, Edward Harman, III, M.B. Donaldson, Teri Hoyt, Alycia Andrews, Charles Francis, Tom Cook, David Allen and Marcus Smith (each, a "Shareholder," and collectively, the "Shareholders"), Pesce, Mike Cochran, TCG, FIC and FICFS; WHEREAS, pursuant to the TCG Stock Purchase Agreement, 50,004 shares of common stock, par value $.20 per share, of FIC (the "FIC Shares") were issued to Pesce and Mike Cochran and deposited in escrow to be distributed to Pesce and Mike Cochran in accordance with the TCG Stock Purchase Agreement; WHEREAS, on May 30, 2003, Pesce became an employee of FICFS pursuant to that certain Employment Agreement, dated as of May 30, 2003 (the "Employment Agreement"), by and between Pesce and FICFS; WHEREAS, on May 30, 2003, FICFS acquired (i) from Scott Bell, Wayne Desselle and Chris Murphy all of the shares of capital stock of Paragon Benefits, Inc., a Texas corporation ("Paragon Benefits"), The Paragon Group, Inc., a Texas corporation ("Paragon Group"), and Paragon National, Inc., a Texas corporation ("Paragon National" and, together with Paragon Benefits and Paragon Group, "Paragon"), and (ii) from Earl Johnson and TCG all of the shares of capital stock of JNT Group, Inc., a Texas corporation ("JNT" and, together with Paragon and TCG, the "New Era Companies"), with Pesce participating in the negotiations and sale of the New Era Companies to FICFS; WHEREAS, Pesce has resigned his employment with FICFS, effective as of December 31, 2003; WHEREAS, Pesce has asserted certain claims against FICFS and FIC under the TCG Stock Purchase Agreement and the Employment Agreement, asserting rights to recover certain amounts allegedly owed to Pesce under the Employment Agreement in connection with his resignation, including accelerated salary and bonus, and demanding the release of the FIC Shares from escrow pursuant to the TCG Stock Purchase Agreement and the Employment Agreement; - 1 - WHEREAS, FICFS and FIC have at all times denied, and continue to deny, any liability to Pesce and have denied, and continue to deny, any and all claims asserted by Pesce arising out of the TCG Stock Purchase Agreement and Employment Agreement; WHEREAS, Pesce, FICFS and FIC have agreed to resolve fully and finally any and all differences between them; WHEREAS, the parties recognize that arbitration, litigation and other disputes between them are expensive, uncertain, and time-consuming, and that settlement on agreeable terms is preferable to ongoing disputes and litigation; WHEREAS, the parties desire to provide the below-described mutual releases of claims, and Pesce, FICFS and FIC desire to enter into this Release and agree to the terms and provisions hereof; and WHEREAS, the settlement provided for herein is not and shall not in any way be construed or deemed to be evidence or an admission or a concession of any fault, liability, fact or amount of damages, or any other matter whatsoever on the part of the parties, and the parties are entering into this Release solely to avoid the substantial expense, inconvenience and burden of litigation and to completely and finally put to rest all claims; NOW, THEREFORE, in consideration of the mutual promises contained in this Release, the parties agree as follows: 1. Any and all Pesce Claims (as hereinafter defined) shall be and hereby are fully and finally settled, satisfied, released and discharged in consideration of (i) the sum of TEN THOUSAND DOLLARS ($10,000.00), which shall be paid by FICFS or FIC by check delivered to Pesce upon the execution by Pesce of this Release, and (ii) the release by FIC and FICFS of all FIC Claims (as hereinafter defined) pursuant to this Release. Pesce agrees that FIC's and FICFS's release of any and all FIC Claims pursuant to this Release and the above-described payment are contrary to FIC's and FICFS's normal policies and interests, and are good and valuable consideration for Pesce's release of all Pesce Claims pursuant hereto. Except for the payment to be made pursuant to this paragraph, Pesce agrees that FICFS and FIC have paid him all sums owed Pesce by virtue of the TCG Stock Purchase Agreement and Employment Agreement, whether with respect to past, present and/or future periods of time, including, without limitation, any and all vacation pay, severance pay, salary, bonus, stock, variable and other wages, and any and all other compensation amounts and expense reimbursements, and that he has no rights, with respect to past, present and/or future periods of time, to the FIC Shares. The parties agree that the described payment is to be treated as wages and subject to standard payroll deductions and withholdings. - 2 - 2. Any and all FIC Claims shall be and hereby are fully and finally settled, satisfied, released and discharged in consideration of the release by Pesce of all Pesce Claims pursuant to this Release. FIC and FICFS agree that Pesce's release of any and all Pesce Claims pursuant to this Release is contrary to Pesce's normal policies and interests, and is good and valuable consideration for FIC's and FICFS's release of all FIC Claims pursuant hereto and for the above described payment to Pesce. 3. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Pesce, for and on behalf of his present and former assignors, creditors, assigns, heirs, executors, spouses, personal representatives, administrators, transferees and attorneys (collectively, the "Pesce Releasors"), hereby knowingly and voluntarily and forever release, acquit and discharge FICFS and FIC and their respective past, present and future parent companies, stockholders, owners, subsidiaries, divisions, related or affiliated entities, predecessors and successors, their respective present and former officers, directors, partners, limited partners, principals, members, stockholders, owners, employees, agents, servants, subrogees, insurers and attorneys, and their respective successors, predecessors, assigns, representatives, heirs, executors, spouses, personal representatives, administrators, transferees and attorneys from any and all claims or causes of action, including debts, suits, rights of action, dues, sums of money, accounts, bonds, bills, covenants, contracts, controversies, agreements, promises, damages, judgments, variances, executions, demands, rights, liabilities, losses or obligations of any kind or nature whatsoever, matured or unmatured, liquidated or unliquidated, absolute or contingent, accrued or unaccrued, known or unknown, suspected or unsuspected, whether heretofore or hereafter accruing, whether or not asserted, threatened, alleged or litigated in any forum, at law, admiralty, equity or otherwise, including without limitation, claims for indemnity or contribution, or for costs, expenses (including without limitation amounts paid in settlement) and attorneys' fees which any person or entity has, owns or holds, or might have had, owned or held, formerly had or hereafter might have, own or hold, directly, indirectly, individually, representatively, derivatively or in any capacity for or because of anything done or omitted prior to and including the date hereof including, but not limited to, those which arise out of or are directly or indirectly related in any way to (i) Pesce's employment with and/or resignation from FICFS, including, without limitation, any and all claims for sums allegedly owed Pesce under the Employment Agreement, including, without limitation, any and all vacation pay, severance pay, salary, bonus, stock, variable and other wages, and any and all other compensation - 3 - amounts and expense reimbursements, or (ii) the acquisition of the New Era Companies by FICFS, including, without limitation, any and all claims for the release of the FIC Stock to Pesce under the TCG Stock Purchase Agreement and/or the Employment Agreement (collectively, "Pesce Claims"); provided, however, that this Release shall not include a release of any rights the Pesce Releasors may have to enforce the terms and conditions of this Release or the Stock Purchase Agreement, dated as of the date hereof (the "New Era Stock Purchase Agreement"), by and among BCDP Holdings, LLP, a Delaware limited liability partnership ("BCDP"), FICFS and FIC. 4. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, FICFS and FIC and their respective past, present and future parent companies, stockholders, owners, subsidiaries, divisions, related or affiliated entities, predecessors and successors, their respective present and former officers, directors, partners, limited partners, principals, members, stockholders, owners, employees, agents, servants, subrogees, insurers and attorneys, and their respective successors, predecessors, assigns, representatives, heirs, executors, spouses, personal representatives, administrators, transferees and attorneys (collectively, the "FIC Releasors"), hereby knowingly and voluntarily and forever release, acquit and discharge Pesce, the New Era Companies and their respective assigns, heirs, executors, spouses, representatives, administrators, transferees, past, present and future parent companies, subsidiaries, divisions, related or affiliated entities, predecessors and successors, subrogees, insures and attorneys, from any and all claims or causes of action, including debts, suits, rights of action, dues, sums of money, accounts, bonds, bills, covenants, contracts, controversies, agreements, promises, damages, judgments, variances, executions, demands, rights, liabilities, losses or obligations of any kind or nature whatsoever, matured or unmatured, liquidated or unliquidated, absolute or contingent, accrued or unaccrued, known or unknown, suspected or unsuspected, whether heretofore or hereafter accruing, whether or not asserted, threatened, alleged or litigated in any forum, at law, admiralty, equity or otherwise, including without limitation, claims for indemnity or contribution, or for costs, expenses (including without limitation amounts paid in settlement) and attorneys' fees which any person or entity has, owns or holds, or might have had, owned or held, formerly had or hereafter might have, own or hold, directly, indirectly, individually, representatively, derivatively or in any capacity for or because of anything done or omitted prior to and including the date hereof including, but not limited to, those which arise out of or are directly or indirectly related in any way to (i) the Employment Agreement or Pesce's employment with and/or resignation from FICFS, or (ii) the acquisition of the New Era Companies by FICFS, including the TCG Stock Purchase Agreement (collectively, "FIC Claims"); provided, however, that this Release shall not include a release of any rights the FIC Releasors may have to enforce the terms and conditions of this Release or the New Era Stock Purchase Agreement. - 4 - 5. Neither this Release nor any payments or performance by the Pesce Releasors or the FIC Releasors shall in any way be construed as an admission by the Pesce Releasors or the FIC Releasors, or any of their parents, subsidiaries, affiliates, or related companies, of any acts of wrongdoing, negligence, or violation of any statute, law, or legal right. The parties hereto are settling any and all FIC Claims and Pesce Claims solely in the interest of reasonable compromise. Neither this Release nor any of its terms and provisions nor any of the negotiations or proceedings in connection with it (a) is, or is intended to be, an admission by any party or any evidence of the truth of any fact alleged, or the validity of any claim that has been or could have been asserted, or of any liability, fault or wrongdoing of such party, or (b) shall be offered or received in evidence in any action or proceeding of any kind other than such proceedings as may be necessary to consummate, defend or enforce this Release. 6. Pesce represents that he has not transferred or assigned, to any person or entity, any Pesce Claim, or any portion thereof, or interest therein. FICFS and FIC represent that neither has transferred or assigned, to any person or entity, any FIC Claim, or any portion thereof, or interest therein. 7. FIC and FICFS (collectively, the "Indemnifying Parties"), jointly and severally, shall indemnify TCG and Cochran and their respective successors, heirs, personal representatives and assigns (collectively, the "Indemnified Parties"), against and hold them harmless from any and all damage, claim, loss and liability (excluding any expenses incurred by the Indemnified Parties, including, without limitation, attorneys' fees) (collectively, "Damages") arising directly out of any right of contribution asserted by a Shareholder against any Indemnified Party to the extent such right of contribution arises directly out of any dispute, claim, litigation or similar proceeding initiated by FIC or FICFS against such Shareholder that is related to the TCG Stock Purchase Agreement and/or the transactions contemplated thereby. An Indemnified Party seeking indemnification pursuant to this paragraph shall give prompt written notice to the Indemnifying Parties of the assertion of any claim, or the commencement of any action or proceeding, in respect of which indemnity may be sought hereunder; provided that the failure to give such notice shall not affect the Indemnified Party's rights to indemnification hereunder, unless such failure shall prejudice in any material respect the Indemnifying Parties' ability to defend such claim, action or proceeding. An Indemnified Party shall have the right to settle the claim for Damages at any time, subject to the approval of the Indemnifying Parties which shall not be unreasonably withheld. - 5 - 8. The parties represent and acknowledge that in executing this Release, no party has relied upon any representation(s) by any other party, or agents or attorneys of any other party, except as expressly contained in this Release. 9. The parties hereby expressly waive any and all claims based upon representations that are not set forth in this Release, including, without limitation, claims for fraudulent inducement of this Release. 10. The parties agree, each to the others, that the statements, representations, agreements and covenants contained herein are contractual in nature and not mere recitations of fact, and that the agreements and covenants herein shall be binding upon the parties, their respective heirs, administrators, representatives, executors, successors and assigns, and shall inure to the benefit of their respective heirs, administrators, representatives, executors, successors and assigns. 11. The language of this Release shall, in all cases, be construed as a whole, according to its fair meaning, and not strictly for, or against, any of the parties. 12. Should any provision of this Release be declared, or be determined, by any court to be illegal or invalid, the validity of the remaining parts, terms or provisions of this Release shall not be affected and any illegal or invalid part, term, or provision, should not be deemed to be a part of this Release. 13. Each party agrees to enter into or execute such additional documents as are or may be necessary to carry out the intent and express terms of this Release 14. This Release may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall be deemed one and the same instrument. 15. Each party shall bear their own costs and attorney's fees in connection with this Release. 16. The parties agree that any disputes arising under or related to this Release shall be submitted to binding arbitration. Such arbitration shall be conducted pursuant to the then-current rules of the American Arbitration Association ("AAA"). However, AAA need not conduct said arbitration as the parties may agree to utilize any other commercially suitable service or qualified individual. 17. This Release shall be construed and enforced in accordance with the laws of the State of Texas. The parties agree that this Release affects interstate commerce and that the arbitration, referenced in paragraph 16, shall be subject to the Federal Arbitration Act. 18. The failure of a party to insist upon strict performance of any provision of this Release shall not constitute a waiver of, or estoppel against asserting, the right to require performance in the future. A waiver or estoppel in any one instance shall not constitute a waiver or estoppel with respect to a later breach. - 6 - 19. This Release sets forth the entire agreement between the parties, and fully supersedes any and all prior and contemporaneous agreements or understandings, oral or written, between the Parties pertaining to the subject matter in this Release. This Release may only be amended or modified in a writing duly executed by both Parties. MY SIGNATURE BELOW SUBSTANTIATES THAT I HAVE READ THE ABOVE AGREEMENT AND RELEASE AND AGREE AND CONSENT TO THE TERMS AND CONDITIONS THEREIN. Witness my hand this 31st day of December, 2003. /s/ John Pesce ______________________________________ John Pesce Subscribed and sworn to by John Pesce before the undersigned Notary Public, on this 31st day of December, 2003. ______________________________________ Notary Public for the State of Texas My Commission Expires: ______________ * * * * * * * * * * * Witness my hand this 31st day of December, 2003. FIC Financial Services, Inc. By: /s/ Theodore A. Fleron ___________________________________ Theodore A. Fleron Secretary Subscribed and sworn to by Theodore A. Fleron before the undersigned Notary Public on this 31st day of December, 2003. ______________________________________ Notary Public for the State of Texas My Commission Expires: ______________ - 7 - * * * * * * * * * * * Witness my hand this 31st day of December, 2003. Financial Industries Corporation By: /s/ Theodore A. Fleron ___________________________________ Theodore A. Fleron Vice President and Secretary Subscribed and sworn to by Theodore A. Fleron before the undersigned Notary Public on this 31st day of December, 2003. ______________________________________ Notary Public for the State of Texas My Commission Expires: ______________ - 8 - EX-10 10 exhibit-10_8.txt EMPLOYMENT AGREEMENT - AMENDMENT 1 Amendment No. 1 to Employment Agreement This Amendment No. 1 to the Employment Agreement (the "Agreement") dated as of December 13, 2002 ("Agreement Date") by and between Financial Industries Corporation, a Texas company ("Company"), and George Wise ("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 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 March 31, 2004. The Company reserves the right, at its sole option, to establish an earlier date between January 1, 2004 and March 31, 2004 as the ending date of the Employment Period. Executive shall be entitled to receive the payment set forth in paragraph 6 of this Amendment No. 1 to the Employment Agreement. 2. The parties acknowledge that Executive received a letter dated December 3, 2003, whereby Executive was assigned to the position of Chief Actuary of the Company, reporting to the Chief Executive Officer of the Company, effective January 15, 2004. The parties agree that said letter is hereby rescinded. 3. Effective January 1, 2004, Section 2.1 of the Agreement is hereby amended in its entirety to read as follows: 2.1 Duties. Company shall employ Executive during the Employment Period as the Chief Financial Officer, 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; provided, however, that, on and after January 1, 2004, Executive may devote up to one day per week to the business of Actuarial Risk Consultants, Inc. ("ARC"), which business Executive purchased from an affiliate of the Company as of December 31, 2003. Except as provided in the preceding sentence, 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 - 1 - 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. Executive agrees that neither the modification of his duties nor the close supervision of Executive by the Audit Committee of the Board of Directors of the Company constitutes "Good Reason", within the meaning of Section 1.21 of the Agreement; 4. Effective January 1, 2004, Section 4.1 is amended in its entirety to read as follows: 4.1 Salary. Executive shall be paid in accordance with normal payroll practices (but not less frequently than monthly) at an annual rate of $152,000.00 per year. 5. Section 4.2 is hereby deleted in its entirety. 6. Article IV -Compensation is amended by the addition of the following section: 4.2 Severance Payment. In connection with the early termination of the Employment Period, Company will pay to Executive a severance payment in the amount of $310,000, one-half of which will be paid on January 1, 2004 and the balance to be paid on the last day of the Employment Period. The Company will deduct from each such installment any applicable deductions for federal income taxes and other related payroll taxes. 7. Section 7.1 is amended so as to substitute the phrase "March 31, 2004" for the phrase the second anniversary of the Date of Termination (whether or not during the Term" in the second line of said Section 7.1. Accordingly, Section 7.1, as amended, reads as follows: 7.1 Non-Competition. Executive shall not at any time during the period beginning on the Agreement Date and ending on March 31, 2004, 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 - 2 - (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. 8. (a) In consideration of the obligations of the Company hereunder, Executive hereby releases and forever discharges the persons and organizations specified in Section 6(b), below, with respect to the matters described in Section 6( c ), below. Executive acknowledges that the consideration is in addition to anything of value to which he is already entitled. Executive agrees that this release is on behalf of himself, his heirs, executors, administrators, legal representatives, successors and assigns. (b) Executive releases the Company, any parent, subsidiary or otherwise affiliated companies, successors and assigns, and all of their past, present and future officers, directors, agents, administrators, trustees, attorneys, insurers, successors and employees. Collectively, these persons and organizations are intended to be third party beneficiaries of this agreement and are referred to in this Agreement as "the Released Parties." (c) Executive releases the Released Parties from all existing, known, and unknown claims, demands, and causes of action for all existing, known, and unknown damages and remedies of any nature, which have accrued or which may ever accrue, to me or to my heirs, executors, administrators, legal representatives, successors, or assigns. This release includes but is not limited to (i) all claims under any federal, state, or local employment law or regulation, including without limitation Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. Section 2000e, et seq., the Equal Pay Act, 29 U.S.C. Section 206, the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., the Fair Labor Standards Act, 29 U.S.C. Section 201, et. seq., the Age Discrimination in Employment Act, as amended (except any claims arising after the date of this agreement), 29 U.S.C. Section 621, et seq., the Employee Retirement Income Security Act, as amended, 29 U.S.C. Section 1001, et seq., and the Texas Commission on Human Rights Act, Texas Labor Code Section 21.001, et seq.; (ii) all claims under any other state, federal, or local law or regulation and all claims at common law, - 3 - including without limitation negligence, contract, or tort claims, and all claims for backpay, front pay, damages, liquidated damages, exemplary and punitive damages, injunctive relief, costs, or attorneys' fees; (iii) all claims which Executive could assert now or claims Executive could assert in the future, concerning the terms and conditions of his employment, concerning anything that happened to Executive while he was an employee, or concerning the early termination of the Agreement; or (iv) all claims which Executive could assert pertaining to the matters described in a purported letter agreement dated July 22, 2003, between Executive and Eugene E. Payne, which letter agreement was rescinded by Executive and Eugene E. Payne in a document dated August 20, 2003. 9. 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. 10. 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 31st day of December, 2003. Financial Industries Corporation By: /s/ Theodore A. Fleron ___________________________________ Title: Vice President and Secretary ________________________________ /s/ George Wise ______________________________________ George Wise - 4 - EX-10 11 exhibit-10_9.txt CONSULTING AGREEMENT BETWEEN FIC & ARC CONSULTING AGREEMENT This Consulting Agreement ("Agreement") is made and entered into as of the 31st day of December , 2003, between FINANCIAL INDUSTRIES CORPORATION, a Texas business corporation ("FIC") and ACTUARIAL RISK CONSULTANTS, INC., a Nevada business corporation ("ARC"). W I T N E S S E T H: WHEREAS, ARC provides actuarial services to life insurance companies; and WHEREAS, ownership of ARC was acquired by George Wise from a subsidiary of FIC, effective as of December 31, 2003; and WHEREAS, ARC desires to provide certain actuarial consulting services to the life insurance subsidiaries of FIC, subject to the terms and conditions of this Agreement; NOW, THEREFORE, ARC and FIC, in consideration of the agreements and conditions contained herein, hereby agree as follows: 1. DESCRIPTION OF SERVICES. During the period from January 1, 2004 to December 31, 2005, ARC agrees to provide up to 2,000 hours of actuarial consulting services by George Wise and Cory Zass to the life insurance subsidiaries of FIC, as requested by FIC (the "Services"); provided, however, that neither FIC, nor the life insurance subsidiaries of FIC, will be obligated to request any given number of hours of Services from ARC. On and after February 1, 2004, each such request will be made in writing, signed by an authorized officer of FIC and will describe the services to be provided. Upon receipt of each such request, ARC will inform FIC in writing of the number of hours which it expects will be required in order to complete the particular request. 2. PERFORMANCE OF SERVICES. The Services to be provided by ARC under this Agreement shall be performed by, or under the supervision of, either George Wise or Cory Zass, who are employees of ARC. 3. PAYMENT. ARC will bill the applicable life insurance subsidiary of FIC at the rate of $125.00 per hour for Services provided to such subsidiary by George Wise or Cory Zass. For Services provided by employees of ARC other than Messrs. Wise or Zass, ARC will bill the applicable life insurance subsidiary of FIC in accordance with the established rate schedule of ARC with respect to such employee. This fee will be payable on a monthly basis for Services provided during the preceding month. - 1 - 4. EXPENSES. ARC will bill the applicable life insurance subsidiary of FIC for reasonable "out of pocket" expenses incurred by ARC in connection with its performance of the Services for travel, long distance telephone, filing fees paid to state insurance regulatory agencies on behalf of the life insurance company subsidiaries of FIC and other reasonable expenses approved in writing by an authorized officer of FIC. 5. TERM/TERMINATION. This Agreement shall terminate automatically on December 31, 2005, unless terminated at an earlier date upon mutual agreement of the parties. 6. RELATIONSHIP OF PARTIES. It is understood by the parties that ARC, and the employees of ARC performing the Services, are independent contractors with respect to FIC and its subsidiaries, and not employee of FIC or its subsidiaries. Neither FIC nor any of its subsidiaries will provide fringe benefits, including health insurance benefits, paid vacation, or any other employee benefit, for the benefit of employees of ARC performing the Services. 7. DISCLOSURE. ARC is required to disclose to FIC the existence of any consulting activities or interests that conflict, or may conflict, with the best interests of FIC or its subsidiaries. Prompt disclosure is required under this paragraph. 8. EMPLOYEES. ARC's employees who perform Services under this Agreement will also be bound by the provisions of this Agreement. At the request of FIC, ARC will provide adequate written evidence that such persons are ARC's employees. 9. INJURIES. ARC acknowledges that it is the obligation of ARC to obtain appropriate insurance coverage for the benefit of ARC and ARC's employees. ARC waives any rights to recovery from FIC or any subsidiary of FIC for any injuries that employees of ARC may sustain while performing the Services under this Agreement. 10. INDEMNIFICATION. (a) ARC agrees to indemnify and hold FIC and its officers and directors, its affiliates and subsidiaries and officers and directors of its affiliates and subsidiaries (the "Indemnified Parties") harmless from all claims, losses, expenses, fees including attorney fees, costs, and judgments that may be asserted against the Indemnified Parties that result from the negligence or misconduct of ARC, ARC's employees and ARC's agents in connection with the performance of the Services. - 2 - (b) FIC agrees to indemnify and hold ARC and its officers and directors harmless against any and all losses, claims, damages, or liabilities to which ARC may become subject to arising in any manner out of or in connection with the provision of the Services hereunder, unless such losses, claims, damages, or liabilities are attributable to the negligence or misconduct of ARC or its officers, employees and directors. 12. ASSIGNMENT. The obligations of ARC under this Agreement may not be assigned or transferred to any other person, firm, or corporation without the prior written consent of an authorized officer of FIC. This Agreement may not be assigned or transferred by FIC to any other person, firm, or corporation without the prior written consent of an authorized officer of ARC. 13. CONFIDENTIALITY. ARC recognizes that, in connection with the performance of the Services, ARC has and will obtain confidential and proprietary information pertaining to FIC and the life insurance subsidiaries of FIC (collectively, "Information") which are valuable, special and unique assets of FIC and its subsidiaries, and need to be protected from improper disclosure. In consideration of the disclosure of the Information, ARC agrees that it will not at any time or in any manner, either directly or indirectly, use any Information for ARC's own benefit, or divulge, disclose, or communicate in any manner any Information to any third party without the prior written consent of the Chief Executive Officer of FIC. ARC agrees that it will protect the Information and treat it as strictly confidential. A violation of this paragraph shall be a material violation of this Agreement. 14. UNAUTHORIZED DISCLOSURE OF INFORMATION. If it appears that ARC has disclosed (or has threatened to disclose) Information in violation of this Agreement, FIC shall be entitled to an injunction to restrain ARC and ARC's employees from disclosing, in whole or in part, such Information, or from providing any services to any party to whom such Information has been disclosed or may be disclosed. FIC shall not be prohibited by this provision from pursuing other remedies, including a claim for losses and damages. 15. CONFIDENTIALITY AFTER TERMINATION. The confidentiality provisions of this Agreement shall remain in full force and effect after the termination of this Agreement. 16. RETURN OF RECORDS. Upon termination of this Agreement, ARC will deliver all records, notes, data, memoranda and other materials (the "Materials") of any nature that are in ARC's possession or under ARC's control and that are the property of FIC or a subsidiary of FIC or relate to the business of FIC or a subsidiary of FIC; provided, however, that, to the extent that applicable laws or regulations require that ARC maintain a copy of the Materials, ARC may so notify FIC in writing of such requirements and retain either the original, or a copy, as applicable, of such Materials. - 3 - 17. NOTICES. All notices required or permitted under this Agreement shall be in writing and delivered as follows: (a) If to ARC: George Wise, 3001 Huron Club court Austin, Texas 7873 (b) If to FIC: Theodore A. Fleron, General Counsel Financial Industries Corporation 6500 River Place Blvd., Austin, Texas 78730 All notices and other communications required or permitted under this Agreement that are addressed as provided in this Section 17 will (i) if delivered personally, be deemed given upon delivery, (ii) if delivered by facsimile transmissions, be deemed given when sent and confirmation or receipt is received, and (iii) if delivered by mail in the manner described above, be deemed given on the third business day after the deposit in a regular depositary of the United States mail. Any party from time to time may change its address for the purpose of notices to that party by giving notice to the other parties hereto specifying a new address, but no such notice will be deemed to have been given until it is actually received by the party sought to be charged with the contents thereof. 18. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the parties and there are no other promises or conditions in any other agreement whether oral or written. This Agreement supersedes any prior written or oral agreements between the parties. 19. AMENDMENT. This Agreement may be modified or amended if the amendment is made in writing and is signed by both parties. 20. SEVERABILITY. If any provision of this Agreement shall be held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable. If a court finds that any provision of this Agreement is invalid or unenforceable, but that by limiting such provision it would become valid and enforceable, then such provision shall be deemed to be written, construed, and enforced as so limited. 21. WAIVER OF CONTRACTUAL RIGHT. The failure of either party to enforce any provision of this Agreement shall not be construed as a waiver or limitation of that party's right to subsequently enforce and compel strict compliance with every provision of this Agreement. 22. APPLICABLE LAW. This Agreement shall be governed by the laws of the State of Texas. - 4 - IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written. Actuarial Risk Consultants, Inc. By: ____________________________ Name: __________________________ Title: _________________________ Financial Industries Corporation By: ____________________________ Name: __________________________ Title: _________________________ - 5 - EX-99.1 12 exhibit-99_1.txt PRESS RELEASE OF 1/6/04 - NEW ERA AND ARC SALE FOR IMMEDIATE RELEASE January 6, 2004 FOR MORE INFORMATION CONTACT Robert Cox 512-404-5128 FINANCIAL INDUSTRIES CORPORATION ANNOUNCES SALE OF NEW ERA AND ACTUARIAL CONSULTING SUBSIDIARIES AUSTIN, Texas -- (BUSINESS WIRE) - January 6, 2004 -- Financial Industries Corporation ("FIC") today announced that it has sold the New Era companies which it had previously acquired in May 2003, pursuant to a Stock Purchase Agreement dated as of December 31, 2003 (the "December New Era Stock Purchase Agreement"). The companies were sold to BCDP Holdings, LLP, which was established by five of the individuals who had an ownership interest in one or more of the New Era companies prior to FIC's purchase of those companies (Scott Bell, Mike Cochran, Wayne Desselle, Chris Murphy and John Pesce). The companies that were sold are: (i) Total Consulting Group, Inc. ("TCG"), (ii) JNT Group, Inc. ("JNT") and (iii) three companies collectively referred to as "Paragon" - Paragon Benefits, Inc., The Paragon Group, Inc., and Paragon National, Inc. The December New Era Stock Purchase Agreement provides that the consideration for the transaction is $1.00. "Soon after these companies were purchased they began to fall behind projections for revenue and income, which has required FIC to make significant cash infusions," said Gene Payne, CEO of FIC. "The Board re-evaluated the New Era Companies and concluded that they are not a good business venture in which FIC should continue. This is one of several steps being taken by our Board of Directors to reposition FIC to concentrate on the growth of its core businesses," he added. Also, at the time of the sale, Messrs. Bell, Cochran, Desselle, Murphy and Pesce each resigned their employment with the Company's FICFS subsidiary. In addition, each such individual entered into an agreement releasing FIC and FICFS from all obligations under his five-year employment contract with FICFS and from any claims he may have under the May, 2003 purchase agreements under which FIC originally acquired the New Era companies (including any claims to the 155,597 restricted shares of FIC common stock held in escrow under those agreements). Under the agreements, each of the five individuals received a payment of $10,000. FIC expects that the sale of the New Era companies will contribute a loss in the amount of approximately $5.0 million to its financial results for the fourth quarter of 2003 before the impact of taxes. FIC has not determined the amount, if any, of tax benefit related to this loss on sale. - 1 - In a separate transaction, FIC announced that it sold Actuarial Risk Consultants, Inc. ("ARC"), an actuarial consulting subsidiary that it had established in December 2002. The sale of ARC was to George M. Wise, III, who is currently Vice President and Chief Financial Officer of FIC. The consideration for the transaction was $10,000. In addition, Mr. Wise and FIC entered into an amendment to Mr. Wise's employment agreement. The amendment provides that the term of the agreement now ends on March 31, 2004, instead of December 31, 2005. Mr. Wise has agreed to continue as Chief Financial Officer of FIC until March 31, 2004. The amendment also reduces Mr. Wise's compensation and provides for specified severance payments. Also, in connection with the sale of ARC to Mr. Wise, FIC entered into a consulting agreement with ARC. Under the terms of the agreement, FIC and its insurance subsidiaries may (but are not obligated to) obtain up to 2,000 hours of actuarial consulting services from ARC during the period from January 1, 2004 to December 31, 2005. The agreement provides that actuarial consulting services provided by either Mr. Wise or Cory Zass (the President of ARC) will be billed to FIC at a significantly discounted rate. Statements regarding the effects and results of the transactions, agreements and other matters described in this press release, including expected losses, as well as any other statements that are not historical facts, are forward-looking statements that involve certain risks, uncertainties and assumptions. These include, but are not limited to, final accounting results, third party claims and other factors detailed in the company's filings with the Securities and Exchange Commission (SEC), which are available free of charge on the SEC's website at www.sec.gov. Should one or more of these risks or uncertainties materialize, of should underlying assumptions prove incorrect, actual results may vary materially from those indicated. Financial Industries Corporation, through its various subsidiaries, markets and underwrites individual life insurance and annuity products. The Company's Nasdaq symbol is FNIN. For more information on FIC, go to http://www.ficgroup.com on the Internet. - 2 - -----END PRIVACY-ENHANCED MESSAGE-----