EXHIBIT
10.3   
 EMPLOYMENT
AGREEMENT
 
 This Employment Agreement (this
“Agreement”) is made effective as April 1, 2009 by and between Unico American
Corporation (“Company”) Terry L. Kinigstein (“Emp1oyee”) with reference to the
following facts:
  A Company is
engaged in the business of insurance and related operations. Employee will
primarily perform the job duties at the following location: 23251 Mulholland
Drive, Woodland Hills, California.
 B. Company
desires to have the services of Employee.
 C. Employee is
willing to be employed by Company.
 
 Therefore,
the parties agree as follows:
 
 1.          EMPLOYMENT.  Company
shall employ Employee as Vice President, Secretary and General Counsel of
Company.  Employee shall provide to Company the following
services:  serve as Vice President & General Counsel and Secretary
of Company and serve as other officers of all Company subsidiaries as required
by Company; day to day legal services and other management responsibilities for
the Company or affiliated companies, as required by Company.  Employee
accepts and agrees to such employment, and agrees to be subject to the general
supervision, advice and direction of Company and Company’s Board of
Directors.   This Employment Agreement supersedes all prior
Employment Agreements between the parties hereto.
 
 2.          BEST EFFORTS OF
EMPLOYEE.  Employee agrees to perform faithfully,
industriously, and to the best of Employee’s ability, experience, and talents,
all of the duties that may be required by the terms of this
Agreement.  Under no circumstances shall Employee be obligated without
his consent to relocate his residence in order to render the services or, except
for occasional business trips, to perform his duties outside of the Woodland
Hills, California area.
 
 3.          COMPENSATION
OF EMPLOYEE.
 
 3.1          Salary.  As
compensation for the services provided by Employee under this Agreement, Company
will pay Employee an annual salary of no less than $195,800 payable in
accordance with Company’s usual payroll procedures.  The annual salary
shall be subject to increase from time to time at the discretion of
Company.
 
 3.2          Bonus.  The Company
shall pay to the Employee a bonus (the “Mandatory Bonus”) on or before December
31 of each year, provided that the consolidated net income of the Company (prior
to deductions for income taxes and current Mandatory Bonuses paid to all
executive officers of Company, including Employee but including deductions for
discretionary bonuses paid to all employees) for the most recent four (4) fiscal
quarters ending prior to such payment date is equal to or greater than
$4,000,000 (the “Net Income Goal”).  The amount of the Mandatory Bonus
shall be in an amount determined by the Company, in its discretion, but shall
not be less than $15,000 less any amounts paid to Employee as a discretionary
bonus since the immediately preceding January 1.
 
 Nothing herein shall prevent the
Board of Directors from electing, in its discretion, to grant a discretionary
bonus to the Employee, in such amount as may be determined by the Board of
Directors in the event the Net Income Goal is not
met.  Notwithstanding the foregoing, if the Employee’s Agreement is
terminated by the Company other than for Cause or by Employee on account of a
breach of this Agreement by the Company, the Employee will be entitled for the
remainder of the term of this Agreement (without giving effect to the
termination) to the minimum Mandatory Bonus amount of $49,500 regardless of
whether the Net Income Goal is attained.
 
 3.3.          Upon Termination by Company for Cause
or By Employee for other than Breach by Company.Upon
termination of this Agreement by Company for Cause or by the Employee for other
than a breach of this Agreement by Company, payments under this Section 3 shall
cease; provided, however, that Employee shall be entitled to payments of accrued
but unpaid salary and vacation for periods or partial periods that occurred
prior to the date of termination.
 
 3.4.          Upon Termination Without Cause or
Breach by Company.  Upon termination of this Agreement by
Company without Cause or by Employee on account of a breach of this Agreement by
Company and the execution of a general release of the Company by the Employee to
the reasonable satisfaction of the Company, except as provided in Section 3.6
hereof, (a) Employee shall be entitled to immediate payment in full of his
salary for the remainder of the term of this Agreement, without discount or
mitigation, (b) Employee shall be entitled to his Mandatory Bonus paid as and
when provided herein for the remainder of the term of this Agreement (without
giving effect to the termination) and (c) Employee shall be entitled to his
benefits for the remainder of the term of this Agreement (without giving effect
to the termination) as described in Section 5.
 
 3.5.   Accrued
Vacation.Accrued but unpaid vacation will be paid in
accordance with the laws of the State of California and Company’s customary
procedures.
 
 3.6. Limitation On
Payments.  Notwithstanding the foregoing, in the event that it
is determined that the aggregate value of payment or distribution by the Company
to Employee pursuant to this Agreement whether paid or payable (a “Payment”)
constitutes an “excess parachute payment” as defined in Section 280G(b) of the
Internal Revenue Code of 1986, as amended (the “Code”) subject to the excise tax
imposed under Section 4999 of the Code (the “Excise Tax”), the aggregate present
value of the Payment shall be reduced to an amount expressed in a present value
without causing any Payment to be subject to the limitation of deduction under
Section 280G of the Code.  In the event any portion of the amounts
payable is reduced pursuant to this Section 3.6, the Employee and the Company
shall mutually agree on the type of payment that will be reduced.  If
the Employee and the Company are unable to reach an agreement as to the type of
payments to be reduced, all payments to the Employee shall be reduced
proportionately to achieve the necessary reduction. All determinations made
pursuant to this Section 3.6 shall be made by the Company’s independent
accounting firm, in their reasonable discretion in consultation with the
Employee’s accountants.
 
 3.7. Compliance with Section
409A. Notwithstanding any other provision of this Agreement,
to the extent that (a) any payment pursuant to this Agreement is treated as
nonqualified deferred compensation pursuant to Section 409A of the Code and (b)
Employee is a “specified employee” pursuant to Section 409A (2) (B) of the Code,
then the amount of such payment that is payable to Employee during the first 6
months following Employee’s termination of employment shall not exceed the
lesser of (i) 2 times Employee’s salary or (ii) 2 times the maximum amount that
may be taken into account under a qualified plan pursuant to Section 401(a)(17)
of the Code for the year in which such termination occurred.  Except
for the amounts described in the preceding sentence, any amount otherwise due
and payable to the Employee during the first six months after the Employee’s
termination of employment shall be paid as soon as administratively practicable
following the 6 month anniversary of the Employee’s termination of employment,
but in no event later than the next regularly scheduled payroll period following
such 6 month anniversary, in accordance with the Company’s typical payroll
practices.
 
  4.  EXPENSE
REIMBURSEMENT.  Company will reimburse Employee for
“out-of-pocket” expenses incurred by Employee in accordance with Company’s
policies in effect from time to time.
 
 5.  BENEFITS.  Employee shall be entitled to employment benefits, including
holidays, personal leave, sick leave, vacation, health insurance, disability
insurance, life insurance, and pension plan as provided by Company’s policies in
effect from time to time. These benefits shall cease upon the effective date of
termination of employment provided that this Agreement is terminated by Company
for Cause or by Employee for other than a breach of this Agreement by
Company.  Upon termination of this Agreement by Company without Cause
or by the Employee on account of a breach of this Agreement by Company, subject
to the limitation described in Section 3.6, these benefits shall continue to be
provided by Company to Employee for the remaining term of this Agreement
(without giving effect to the termination).  Notwithstanding the
foregoing, disability insurance shall be an amount sufficient to provide
compensation to Employee, if disabled, equal to 70% of the compensation that
Employee would be entitled pursuant to Sections 3.1.  Further,
during the term of this Agreement, the benefits hereunder shall not be reduced
from those provided to Employee as of December 15, 2007.
 
 6.
TERM/TERMINATION.  Employee’s employment under this Agreement
shall be for a term beginning on April 1, 2009 and ending December 31,
2011.  Notwithstanding the foregoing, this Agreement may be terminated
at any time by Company for Cause or by Employee for other than breach of this
Agreement by the Company upon thirty days written notice. This Agreement may
also be terminated by Company without Cause upon thirty days written notice or
by the Employee at any time on account of the breach of this Agreement by
Company; however, in either of such events, subject to the limitation described
in Section 3.6, the Company shall pay Employee, as and in the manner provided in
Section 3.4, all salary, bonuses and benefits as provided herein for the
remainder of the term of this Agreement.
 
 7.  CAUSE OR BREACH BY THE
COMPANY.  The term “Cause” as used in this Agreement shall mean
(i) chronic alcoholism or drug addiction, (ii) fraud, (iii) unlawful
appropriation of any money or other assets or properties of the Company or any
affiliate of the Company, (iv) a material breach by the Employee of the terms of
this Agreement which is not cured within ten (10) days after Company has given
Employee written notice describing such material breach with particularity, (v)
the conviction of the Employee of any felony involving moral turpitude or other
serious crime involving moral turpitude, (vi) the Employee’s gross moral
turpitude relevant to his office or employment with the Company or any affiliate
of the Company, and (vii) the Employee’s willful engagement in misconduct which
is demonstrably and materially injurious to the Company and its subsidiaries
taken as a whole.  No act, or failure to act, on the part of the
Employee shall be considered “willful” unless done, or omitted to be done, by
the Employee not in good faith and without a reasonable belief that the action
or omission was in the best interests of the Company and its
subsidiaries.  The Company shall be in breach of this Agreement if
there is a material breach by the Company of the terms of this Agreement which
is not cured within ten (10) days after Employee has given Company written
notice describing such material breach with particularity.
 
 8.  TERMINATION FOR
DISABILITY OR DEATH.Company shall have the option to
terminate this Agreement, if Employee becomes permanently disabled and is no
longer able to perform the essential functions of his position with reasonable
accommodation, provided that Company has provided the disability insurance
benefit described in Section 5.  Company
shall exercise this option by giving sixty days prior written notice of such
termination to Employee.  This Agreement shall terminate on the death
of Employee.  A termination of this Agreement pursuant to this Section
8 shall not be deemed a termination by Company of this Agreement without
Cause.
 
 9.  INDEMNIFICATION.To the
fullest extent permitted under the law, the Company shall indemnify the
Employee, if the Employee is made a party, or threatened to be made a party, to
any threatened, pending, or contemplated action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, by reason of the fact that
the Employee is or was an employee, officer or director of the Company or any
affiliate of the Company, in which capacity the Employee is or was serving the
Company, against any and all liabilities, costs, expenses (including reasonable
attorneys’ fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit, or
proceeding.  In the case of any claim being made, Company shall
advance reasonable costs of defense (including reasonable attorneys’ fees)
provided that Employee agrees to repay such advances if it is finally determined
that Employee was not entitled to indemnification with respect to such claim.
This Section shall not limit in any way the Employee’s rights under any
agreement relating specifically to indemnification.  This section
shall survive the termination or expiration of this Agreement.
 
 10. CONFIDENTIALITY.Employee
recognizes that he has and will have information regarding matters such as trade
secrets, customer lists, product design, and other vital information
(collectively, “Information”) which are valuable, special, and unique assets of
Company.  Employee agrees that he will not at any time or in any
manner, either directly or indirectly, divulge, disclose, or communicate in any
manner any Information to any third party without the prior written consent of
Company (which consent may not be signed by Employee on Company’s
behalf.  Employee will protect the Information and treat it as
strictly confidential.  A violation by Employee of this paragraph
shall be a material breach of this Agreement and will justify legal and/or
equitable relief.  This section shall survive the termination or
expiration of this Agreement.
 
 11.  RETURN OF
PROPERTY.  Upon termination of his employment, Employee shall
deliver to Company all property which is Company’s property or related to
Company’s business (including keys, records, notes, data, memoranda, models, and
equipment) that is in Employee’s possession or under Employee’s
control.  Such obligation shall be governed by any separate
confidentiality or proprietary rights agreement signed by
Employee.  This section shall survive the termination or expiration of
this Agreement.
 
 12. NOTICES.  All
notices required or permitted under this Agreement shall be in writing and shall
be deemed delivered when delivered in person or on the third day after being
deposited in the United States mail, postage paid, addressed as
follows:
 
 Company:
 
 Unico
American Corporation
 Cary L.
Cheldin, President
 23251
Mulholland Drive
 Woodland
Hills, California 91364
 
 Employee:
 
 Terry L.
Kinigstein
 23251
Mulholland Drive
 Woodland
Hills, California 91364
 
 Such
addresses may be changed from time to time by either party by providing written
notice in the manner set forth above.
 
 13.  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.
 
 14.  AMENDMENT.  This
Agreement may be modified or amended, if the amendment is made in writing and is
signed by both parties.
 
 15.  SEVERABILITY.If
any provisions 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 or enforceable, then such provision shall be deemed to be written,
construed, and enforced as so limited.
 
 16.  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.
 
 17.  COUNTERPARTS.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
 
 18.  HEADINGS.  The
headings in the Agreement are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement.
 
 19.  APPLICABLE
LAW.This Agreement shall be governed by the laws of the State
of California.
 
 
 COMPANY:
 Unico
American Corporation
 
 
 By/s/  Cary L.
CheldinDate:   April 1,
2009
 Cary
      L. Cheldin, President
 
 
 EMPLOYEE:
 
 
 /s/  Terry L.
Kinigstein               
Date:   April 1, 2009
 Terry L.
Kinigstein