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EXHIBIT 24
KEY EMPLOYEE EMPLOYMENT PROTECTION AGREEMENT
THIS AGREEMENT between ALLIED Life Financial Corporation, an
Iowa corporation (the "Company"), and _______________ (the "Employee"), dated as
of this ____ day of June, 1998.
W I T N E S S E T H:
WHEREAS, the Employee holds a position of significant
importance with the Company;
WHEREAS, the Company believes that, in the event it is
confronted with a situation that could result in a change in ownership or
control of the Company, continuity of management will be essential to its
ability to evaluate and respond to such situation in the best interests of
shareholders;
WHEREAS, the Company understands that any such situation will
present significant concerns for the Employee with respect to his financial and
job security;
WHEREAS, the Company desires to assure itself of the
Employee's services during the period in which it is confronting such a
situation, and to provide the Employee certain financial assurances to enable
the Employee to perform the responsibilities of his position without undue
distraction and to exercise his judgment without bias due to his personal
circumstances;
WHEREAS, to achieve these objectives, the Company and the
Employee desire to enter into an agreement providing the Company and the
Employee with certain rights and obligations upon the occurrence of a Change of
Control (as defined in Section 2);
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is hereby agreed by and between the Company and
the Employee as follows:
1. Operation of Agreement. (a) Effective Date. The effective
date of this Agreement shall be the date on which a Change of Control occurs
(the "Change of Control Date"), provided that, except as provided in Section
1(b), if the Employee is not employed by the Company on the Change of Control
Date, this Agreement shall be void and without effect.
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(b) Termination of Employment Following a
Potential Change of Control. Notwithstanding Section l(a), if (i) the Employee's
employment is terminated by the Company without Cause (as defined in Section 2)
after the occurrence of a Potential Change of Control and prior to the
occurrence of a Change of Control and (ii) a Change of Control occurs within one
year of such termination, the Employee shall be deemed, solely for purposes of
determining his rights under this Agreement, to have remained employed until the
date such Change of Control occurs and to have been terminated by the Company
without Cause immediately after this Agreement becomes effective.
(c) Termination of Employment following Death or
Disability. This Agreement shall terminate automatically upon
the Employee's death or termination due to Disability (as defined
in Section 2).
2. Definitions. (a) Change of Control. For the
purposes of this Agreement, a "Change of Control" shall mean the
happening of any of the following:
(i) Any person or entity, including a "group"
as defined in Section 13(d)(3)of the Securities Exchange Act of 1934,
as amended (the "Act"), other than the Company, a subsidiary of the
Company, or any employee benefit plan of the Company or its
subsidiaries, becomes the direct or indirect beneficial owner of the
Company's securities having 20 percent or more of the combined voting
power of the then outstanding securities of the Company (other than as
a result of an issuance of securities initiated by the Company in the
ordinary course of business); or
(ii) As the result of, or in connection with,
any cash tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any combination
of the foregoing transactions, less than 80% of the combined voting
power of the then outstanding securities of the Company or any
successor corporation or entity entitled to vote generally in the
election of directors of the Company or such other corporation or
entity after such transaction, are held in the aggregate by holders of
the Company's securities entitled to vote generally in the election of
directors of the Company immediately prior to such transactions; or
(iii) During any period of two consecutive
years, individuals who at the beginning of any such period
constitute the Board of Directors cease for any reason to
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constitute at least a majority thereof, unless the election, or the
nomination for election by the Company's stockholders, of each director
of the Company first elected during such period was (a) approved by a
vote of at least two-thirds of the directors of the Company then still
in office who were directors of the Company at the beginning of any
such period or was made pursuant to the Stock Rights Agreement between
the Company and ALLIED Mutual.
(b) Potential Change of Control. For the
purposes of this Agreement, a "Potential Change of Control" shall mean the
happening of any of the following:
(i) any person commences a tender offer,
which if consummated would result in such person being the beneficial
owner of at least 20% of the Company's voting securities;
(ii) proxies for the election of directors of
the Company are solicited by anyone other than the Company;
or
(iii) the execution by the Company of an
agreement, the consummation of which would result in a
Change of Control of the Company;
(iv) the acquisition of beneficial ownership,
directly or indirectly, by any entity, person or group (other than the
Company, a wholly-owned subsidiary thereof or any employee benefit plan
of the Company or its subsidiaries (including any trustee of such plan
acting as such trustee)) of securities of the Company representing 10
percent or more of the combined voting power of the Company's
outstanding securities and the adoption by the Board of Directors of a
resolution to the effort that a Potential Change of Control of the
Company has occurred for purposes of this Agreement; or
(v) any person files an application with the
Commissioner of Insurance for the State of Iowa pursuant to Iowa Code
ss. 521A.3 with respect to the Company or ALLIED Life Insurance Company
or any direct or indirect controlling shareholder of the Company.
(c) Cause. For the purposes of this Agreement,
"Cause" means (i) the Employee's conviction or plea of nolo contendere to a
felony; (ii) an act or acts of dishonesty or gross misconduct on the Employee's
part which result or are intended to result in material damage to the Company's
business
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or reputation; or (iii) repeated material violations by the Employee of his
position, authority, duties, obligations or responsibilities as in effect at the
Change of Control Date, which violations are demonstrably willful and deliberate
on the Employee's part and which result in material damage to the Company's
business or reputation.
(d) Good Reason. "Good Reason" means the
occurrence of any of the following, without the express written consent of the
Employee, after the occurrence of a Potential Change of Control or a Change of
Control:
(i) (A) the assignment to the Employee of any
duties inconsistent in any material adverse respect with the Employee's
position, authority or responsibilities as in effect at the Change of
Control Date, or (B) any other material adverse change in Employee's
authority or responsibilities;
(ii) any failure by the Company, other than
an insubstantial or inadvertent failure remedied by the Company
promptly after receipt of notice thereof given by the Employee, to
provide the Employee with (A) an annual base salary, as it may be
increased from time to time (the "Base Salary"), which is at least
equal to the Base Salary paid to the Employee immediately prior to the
Change of Control Date, or (B) incentive compensation opportunities at
a level which is at least equal to the level of incentive compensation
opportunities made available to the Employee immediately prior to the
Change of Control Date;
(iii) the failure by the Company to permit
the Employee (and, to the extent applicable, his dependents) to
participate in or be covered under all pension, retirement, deferred
compensation, savings, medical, dental, health, disability, group life,
accidental death and travel accident insurance plans and programs of
the Company and its affiliated companies at a level that is
commensurate with the Employee's participation in such plans
immediately prior to the Change of Control Date (or, if more favorable
to the Employee, at the level made available to the Employee or other
similarly situated officers at any time thereafter);
(iv) the Company's requiring the Employee to
be based at any office or location more than 25 miles from that
location at which he performed his services for the Company immediately
prior to the Change of Control, except for travel reasonably required
in the performance of the Employee's responsibilities; or
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(v) any failure by the Company to obtain the
assumption and agreement to perform this Agreement by a
successor as contemplated by Section 5.
In no event shall the mere occurrence of a Change of Control, absent any further
impact on the Employee, be deemed to constitute Good Reason.
(e) Disability. For purposes of this Agreement,
"Disability" shall mean the Employee's inability to perform the duties of his
position, as determined in accordance with the policies and procedures
applicable with respect to the Company's long-term disability plan, as in effect
immediately prior to the Change of Control Date.
(f) Notice of Termination. Any termination by
the Company for Cause or by the Employee for Good Reason shall be communicated
by Notice of Termination to the other party hereto given in accordance with
Section 6(d). For purposes of this Agreement, a "Notice of Termination" means: a
written notice given, in the case of a termination for Cause, within 10 business
days of the Company's having actual knowledge of the events giving rise to such
termination, and in the case of a termination for Good Reason, within 90 days of
the later to occur of (x) the Change of Control Date or (y) the Employees having
actual knowledge of the events giving rise to such termination, and which (I)
indicates the specific termination provision in this Agreement relied upon, (ii)
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Employee's employment under the provision so
indicated, and (iii) if the termination date is other than the date of receipt
of such notice, specifies the termination date of this Agreement (which date
shall be not more than 30 days after the giving of such notice). The failure by
the Employee to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason shall not waive any right of The
Employee hereunder or preclude the Employee from asserting such fact or
circumstance in enforcing his rights hereunder.
(g) Date of Termination. For the purpose of this
Agreement, the term "Date of Termination" means (I) in the case of a termination
for which a Notice of Termination is required, the date of receipt of such
Notice of Termination or, if later, the date specified therein, as the case may
be, and (ii) in all other cases, the actual date on which the Employee's
employment terminates.
3. Employment Protection Benefits. (a) Basic Benefits.
If on or before the second anniversary of the Change
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of Control Date (x) the Company terminates the Employee's employment for any
reason other than for Cause or Disability or (y) the Employee voluntarily
terminates his employment for Good Reason, then the Company shall pay the
Employee the following amounts:
(i) the Employee's Base Salary earned through
the Date of Termination (the "Earned Salary");
(ii) a cash amount (the "Severance Amount")
equal to the sum of
(A) the Employee's annual Base Salary; and
(B) the higher of the annual bonuses payable to
the Employee in respect of either of the two
fiscal years ended immediately preceding the
fiscal year in which the Change of Control
occurs; and
(iii) any vested amounts or benefits owing to
the Employee under the Company's otherwise applicable employee benefit
plans and programs, including any compensation previously deferred by
the Employee (together with any accrued earnings thereon) and not yet
paid by the Company and any accrued vacation pay not yet paid by the
Company (the "Accrued Obligations").
The Earned Salary and Severance Amount shall be paid in a single lump sum as
soon as practicable, but in no event more than ten business days (or at such
earlier date required by law) following the Employee's Date of Termination.
Accrued Obligations shall be paid in accordance with the terms of the applicable
plan, program or arrangement.
In addition to the other benefits provided in this
Section, on the Change of Control Date, the Employee shall, subject to the
provisions of Section 3(e)(iii), become fully vested in any and all outstanding
stock options granted to Employee for shares of common stock of the Company or
to the extent that such options are not vested, shall receive a lump-sum cash
payment equal to the spread of all non-vested, forfeited options as of the date
such options are forfeited.
(b) Continuation of Benefits. If the Employee
receives the Severance Amount described in this Section 3, the Employee (and, to
the extent applicable, his dependents) shall be entitled, after the Date of
Termination until the earlier of (x) the first anniversary of his Date of
Termination (the "End Date")
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or (y) the date the Employee becomes eligible for comparable benefits under a
similar plan, policy or program of a subsequent employer, to continue
participation in all of the Company's employee and Employee welfare and fringe
benefit plans (the "Benefit Plans") as were generally provided to the Employee
in accordance with the Company's policies and practices immediately prior to the
Change of Control Date. To the extent any such benefits cannot be provided under
the terms of the applicable plan, policy or program, the Company shall provide a
comparable benefit under another plan or from the Company's general assets. The
Employee's participation in the Benefit Plans will be on the same terms and
conditions that would have applied had the Employee continued to be employed by
the Company through the End Date.
(c) Indemnification. The Company shall indemnify
the Employee and hold the Employee harmless from and against any claim, loss or
cause of action arising from or out of the Employee's performance as an officer,
director or employee of the Company or any of its subsidiaries or in any other
capacity, including any fiduciary capacity, in which the Employee serves at the
request of the Company to the maximum extent permitted by applicable law and the
Company's Certificate of Incorporation and By-Laws (the "Governing Documents"),
provided that in no event shall the protection afforded to the Employee
hereunder be less than that afforded under the Governing Documents as in effect
immediately prior to the Change of Control Date.
(d) Discharge of the Company's Obligations.
Except as expressly provided in Section 4, the Severance Amount and the other
amounts payable and benefits provided in respect of the Employee pursuant to
this Section 3 following termination of his employment shall be in full and
complete satisfaction of the Employee's rights under this Agreement and any
other claims he may have in respect of his employment by the Company or any of
its subsidiaries. Such amounts shall constitute liquidated damages with respect
to any and all such rights and claims and, upon the Employee's receipt of such
amounts, the Company shall be released and discharged from any and all liability
to the Employee in connection with this Agreement or otherwise in connection
with the Employee's employment with the Company and its subsidiaries. Without
limiting the generality of the foregoing, the Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Employee or others whether by reason of the
subsequent employment of the Employee or otherwise. Nothing in this Section
3(d),
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however, shall in any way limit the Company's obligations to the Employee
pursuant to Section 3(c) hereof.
(e) Limit on Payments by the Company.
(i) Application of Section 3(e). In the
event that any amount or benefit paid or distributed to the Employee pursuant to
this Agreement, taken together with any amounts or benefits otherwise paid or
distributed to the Employee by the Company or any affiliated company
(collectively, the "Covered Payments"), would be an "excess parachute payment"
as defined in Section 280G of the Code and would thereby subject the Employee to
the tax (the "Excise Tax") imposed under Section 4999 of the Code (or any
similar tax that may hereafter be imposed), the provisions of this Section 3(e)
shall apply to determine the amounts payable to Employee pursuant to this
Agreement.
(ii) Calculation of Benefits. Immediately
following delivery of any Notice of Termination, the Company shall notify the
Employee of the aggregate present value of all termination benefits to which he
would be entitled under this Agreement and any other plan, program or
arrangement as of the projected Date of Termination, together with the projected
maximum payments, determined as of such projected Date of Termination that could
be paid without the Employee being subject to the Excise Tax.
(iii) Imposition of Payment Cap. If (x) the
aggregate value of all compensation payments or benefits to be paid or provided
to the Employee under this Agreement and any other plan, agreement or
arrangement with the Company exceeds the amount which can be paid to the
Employee without the Employee incurring an Excise Tax and (y) the Employee would
receive a greater net after-tax amount (taking into account all applicable taxes
payable by the Employee, including any Excise Tax) by applying the limitation
contained in this Section 3(e)(iii), then the amounts payable to the Employee
under this Section 3 shall be reduced (but not below zero) to the maximum amount
which may be paid hereunder without the Employee becoming subject to such an
Excise Tax (such reduced payments to be referred to as the "Payment Cap"). In
the event the Employee receives reduced payments and benefits hereunder,
Employee shall have the right to designate which of the payments and benefits
otherwise provided for in this Agreement that he or she will receive in
connection with the application of the Payment Cap. In addition, the Employee
may elect, by written notice to the Company delivered not later than the Change
of Control Date, that, in lieu of limiting the benefits payable hereunder (or,
if required to avoid an Excise Tax without regard to the payments made
hereunder), the
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"Requisite Portion" (as defined below) of the stock options held by the Employee
which are not then exercisable shall not become exercisable by reason of the
Change of Control, but rather shall become exercisable in accordance with their
original terms. The Requisite Portion shall mean the portion of all such stock
options pertaining to the least number of shares necessary to avoid the
imposition of an Excise Tax (taking into account the potential payment of
severance benefits hereunder); it being understood that the portion of the
options which would become exercisable at the last date after the Change of
Control shall be first taken into account to satisfy this requirement, with such
other portions of other options, in reverse order of exercise date, applied
thereunder until a sufficient number of options have not been accelerated to
avoid the imposition of an Excise Tax.
(iv) Application of Section 280G. For
purposes of determining whether any of the Covered Payments will
be subject to the Excise Tax and the amount of such Excise Tax,
(A) such Covered Payments will be treated as
"parachute payments" within the meaning of Section
280G of the Code, and all "parachute payments" in
excess of the "base amount" (as defined under
Section 280G(b)(3) of the Code) shall be treated
as subject to the Excise Tax, unless, and except
to the extent that, in the good faith judgment of
the Company's independent certified public
accountants appointed prior to the Effective Date
or tax counsel selected by such accountants (the
"Accountants"), the Company has a reasonable basis
to conclude that such Covered Payments (in whole
or in part) either do not constitute "parachute
payments" or represent reasonable compensation for
personal services actually rendered (within the
meaning of Section 280G(b)(4)(B) of the Code) in
excess of the "base amount," or such "parachute
payments" are otherwise not subject to such Excise
Tax, and
(B) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the
Accountants in accordance with the principles of
Section 280G of the Code.
(v) Applicable Tax Rates. For purposes of
determining whether the Employee would receive a greater net after-tax benefit
were the amounts payable under this Agreement
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reduced in accordance with Section 3(e)(iii), the Employee shall be deemed to
pay:
(A) Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the
calendar year in which the first amounts are to be
paid hereunder, and
(B) any applicable state and local income taxes at the
highest applicable marginal rate of taxation for such
calendar year, net of the maximum reduction in
Federal incomes taxes which could be obtained from
the deduction of such state or local taxes if paid in
such year,
provided, however, that the Employee may request that such determination be made
based on his individual tax circumstances, which shall govern such determination
so long as the Employee provides to the Accountants such information and
documents as the Accountants shall reasonably request to determine such
individual circumstances.
(vi) Adjustments in Respect of the Payment
Cap. If the Employee receives reduced payments and benefits under this Section
3(e) (or this Section 3(e) is determined not to be applicable to the Employee
because the Accountants conclude that Employee is not subject to any Excise Tax)
and it is established pursuant to a final determination of a court or an
Internal Revenue Service proceeding (a "Final Determination") that,
notwithstanding the good faith of the Employee and the Company in applying the
terms of this Agreement, the aggregate "parachute payments" within the meaning
of Section 280G of the Code paid to the Employee or for his benefit are in an
amount that would result in the Employee being subject to an Excise Tax and the
Employee would still be subject to the Payment Cap under the provisions of
Section 3(e)(iii), then the amount equal to such excess parachute payments shall
be deemed for all purposes to be a loan to the Employee made on the date of
receipt of such excess payments, which the Employee shall have an obligation to
repay to the Company on demand, together with interest on such amount at the
applicable Federal rate (as defined in Section 1274(d) of the Code) from the
date of the payment hereunder to the date of repayment by the Employee. If this
Section 3(e) is not applied to reduce The Employee's entitlements under this
Section 3 because the Accountants determine that the Employee would not receive
a greater net after-tax benefit by applying this Section 3(e) and it is
established pursuant to a Final Determination that, notwithstanding the good
faith of the Employee and the Company in applying the terms of this Agreement,
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the Employee would have received a greater net after-tax benefit by subjecting
his payments and benefits hereunder to the Payment Cap, then the aggregate
"parachute payments" paid to the Employee or for his benefit in excess of the
Payment Cap shall be deemed for all purposes a loan to the Employee made on the
date of receipt of such excess payments, which the Employee shall have an
obligation to repay to the Company on demand, together with interest on such
amount at the applicable Federal rate (as defined in Section 1274(d) of the
Code) from the date of the payment hereunder to the date of repayment by the
Employee. If the Employee receives reduced payments and benefits by reason of
this Section 3(e) and it is established pursuant to a Final Determination that
the Employee could have received a greater amount without exceeding the Payment
Cap, then the Company shall promptly thereafter pay the Employee the aggregate
additional amount which could have been paid without exceeding the Payment Cap,
together with interest on such amount at the applicable Federal rate (as defined
in Section 1274(d) of the Code) from the original payment due date to the date
of actual payment by the Company.
4. Legal Fees and Expenses. If the Employee asserts any claim
in any contest (whether initiated by the Employee or by the Company) as to the
validity, enforceability or interpretation of any provision of this Agreement,
the Company shall pay the Employee's legal expenses (or cause such expenses to
be paid) including, without limitation, his reasonable attorney's fees, on a
quarterly basis, upon presentation of proof of such expenses, provided that the
Employee shall reimburse the Company for such amounts, plus simple interest
thereon at the 90-day United States Treasury Xxxx rate as in effect from time to
time, compounded annually, if the arbitrator shall find that the Employee did
not have a good faith basis to assert or defend the claim in question.
5. Successors. This Agreement shall inure to the benefit of
and be binding upon the Company and its successors. The Company shall require
any successor to all or substantially all of the business and/or assets of the
Company, whether direct or indirect, by purchase, merger, consolidation,
acquisition of stock, or otherwise, by an agreement in form and substance
satisfactory to the Employee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent as the Company would be
required to perform if no such succession had taken place. This Agreement is
personal to the Employee and is not assignable by the Employee otherwise than by
will or the laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Employee's legal representatives.
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6. Employment with Subsidiaries. Employment with the Company
for purposes of this Agreement shall include employment with any corporation or
other entity in which the Company has a direct or indirect ownership interest of
50% or more of the total combined voting power of the then outstanding
securities of such corporation or other entity entitled to vote generally in the
election of directors or managers.
7. Company's Option to Fix Expiration Date. The Company shall
have the right prior to the Change of Control Date, in its sole discretion,
pursuant to unanimous action by the Board, to determine an expiration date for
this Agreement, which expiration date shall not become effective until the date
fixed by the Board for such expiration date, which date shall be at least 180
days after notice thereof is given by the Company to the Employee in accordance
with Section 6(d); provided, however, that no such action shall be taken by the
Board prior to January 1, 1999 or following a Potential Change of Control until,
in the opinion of the Board, any such proposal or offer has been abandoned or
terminated; and provided further, that in no event shall the Board fix an
expiration date pursuant to this Section on and after the Change of Control
Date.
8. No Waiver. The Employee's failure to insist upon strict
compliance with any provision of this Agreement shall not be deemed a waiver of
such provision or any other provision of this Agreement. A waiver of any
provision of this Agreement shall not be deemed a waiver of any other provision,
and any waiver of any default in any such provision shall not be deemed a waiver
of any later default thereof or of any other provision.
9. Miscellaneous. (a) Applicable Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of Iowa,
applied without reference to principles of conflict of laws.
(b) Arbitration. Any dispute or controversy
arising under or in connection with this Agreement shall be resolved by binding
arbitration. The arbitration shall be held in Des Moines, Iowa, and except to
the extent inconsistent with this Agreement, shall be conducted in accordance
with the Expedited Employment Arbitration Rules of the American Arbitration
Association then in effect at the time of the arbitration, and otherwise in
accordance with principles which would be applied by a court of law or equity.
The arbitrator shall be acceptable to both the Company and the Employee. If the
parties cannot agree on an acceptable arbitrator, the dispute shall be heard by
a panel of three arbitrators, one appointed by
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each of the parties and the third appointed by the other two arbitrators.
(c) Entire Agreement. Upon the Change of Control
Date, this Agreement shall constitute the entire agreement between the parties
hereto with respect to the matters referred to herein. Notwithstanding anything
else to the contrary, this Agreement is not intended to replace or supersede any
other written agreement with the Employee, but rather is intended solely to
provide the Employee with additional rights and obligations upon a Change of
Control which may supplement rather than replace any rights or obligations the
Employee may have pursuant to any written agreement with the Company which is in
effect on such Change of Control Date. There are no promises, representations,
inducements or statements between the parties other than those that are
expressly contained herein. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives. In the event any provision of
this Agreement is invalid or unenforceable, the validity and enforceability of
the remaining provisions hereof shall not be affected. The Employee acknowledges
that he is entering into this Agreement of his own free will and accord, and
with no duress, that he has read this Agreement and that he understands it and
its legal consequences.
(d) Notices. All notices and other
communications hereunder shall be in writing and shall be given by hand-delivery
to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Employee: at the home address of the Employee noted
on the records of the Company
If to the Company: ALLIED Life Financial Corporation
000 0xx Xxxxxx
Xxx Xxxxxx, Xxxx 00000-0000
Attn.: Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
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IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officer and Employee has hereunto set his
hand as of the day and year first above written.
ALLIED LIFE FINANCIAL
CORPORATION
By
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Name:
Title:
WITNESSED:
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[Name]
WITNESSED:
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