EXHIBIT 10.45
MUTUAL RELEASE AGREEMENT
This Mutual Release Agreement (the "Agreement") dated as of July 30, 2004 by and
between Financial Industries Corporation, a Texas company (the "Company"), and
Xxxxxx X. Xxxxx ("Xxxxx"), a resident of Texas.
Whereas, the Company and Xxxxx are parties to an employment agreement dated as
of November 4, 2002 (the "Employment Agreement"); and
Whereas, the Company and Xxxxx previously entered into an amendment to the
Employment Agreement, dated as of October 9, 2003 ("Amendment No. 1"), whereby
the Employment Period (as defined in the Employment Agreement, as amended) of
Xxxxx ended on February 20, 2004 or such earlier date as established by the
Company; and
Whereas, the Company has notified Xxxxx that the Employment Period ended as of
January 7, 2004; and
Whereas, in connection with the end of the Employment Period, Amendment No. 1
provides that the Company will make a severance payment to Xxxxx (the "Xxxxxxxxx
Payment"); and
Whereas, the Employment Agreement provides that, following the end of the
Employment Period, the parties will execute a mutual release with respect to
matters arising out of the Employment Agreement and Xxxxx'x employment with the
Company; and
Whereas, the Company has asserted certain claims against Xxxxx arising out of
matters which took place during the term of the Employment Agreement; and
Whereas, Xxxxx has asserted claims against the Company pertaining to (i) his
eligibility to receive fees as a director of the Company with respect to the
period after January 7, 2004 and (ii) interest on the Severance Payment; and
Whereas, the Company has, following the end of the Employment Period, offered to
pay to Xxxxx the sum of $262,500, representing (i) the amount of the Severance
Payment less claims in the amount of $97,500 which have been asserted by the
Company as offsets to the Severance Payment, (ii) to provide to Xxxxx a Partial
Mutual Release, and (iii) to arbitrate Xxxxx'x entitlement to the balance of the
Severance Payment; and
Whereas, the Company and Xxxxx have continued discussions and negotiations with
respect to a mutually acceptable compromise settlement; and
Whereas, the Company and Xxxxx desire to compromise and settle the disputes and
controversies between them; and
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Whereas, Xxxxx and the Company intend that the full terms and conditions of
their mutual release be set forth in this Agreement.
Now Therefore, in consideration of the recitals, covenants, releases, and
agreements contained herein, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, Xxxxx and the Company
agree as follows:
1. Representations and Warranties. Xxxxx hereby represents and warrants to the
Company that he is not a party to, nor has any knowledge of,
(a) any employment or severance agreements dated on or after November 4,
2002, involving any employee of the Company, other than (i) agreements
which have been submitted to, and approved by the Board of Directors
of the Company, (ii) the letter agreement dated as of May 14, 2003,
between Xxxxx and Xxxxxx Xxxxxx, (iii) the letter agreement dated
March 21, 2003, between Xxxxx and Xxxx Xxxxxxxx (iv) the severance
agreement dated as of December 2, 2002 between the Company and Xxxxxx
Xxxx, (v) the severance agreements provided to employees located in
the Seattle office of the Company, in connection with the closing of
that office; (vi) the severance agreement offered to Xxxxxx Xxxxxx;
and (vii) employment or severance agreements approved by or known to
the Company's Office of Human Resources, Legal Department, or other
appropriate Company business office, provided that such Company office
or Legal Department received or generated written notification or
documentation of the existence of the agreement; or
(b) any significant contract, agreement or commitment, written or oral
dated on or after November 4, 2002, made by Xxxxx with any consultant,
vendor or other third party, other than those contracts, agreements or
commitments which were (i) processed using guidelines in accordance
with the procedures set forth in FIC Operating Policy No. 6.05 (eff.
January 22, 2002, and October 16, 2003), copies of which are attached
hereto and made a part hereof; or (ii) approved by or known to the
Company's Legal Department, Office of Human Resources, or other
appropriate Company business office, provided that such Company office
or Legal Department received or generated written notification or
documentation of the existence of the agreement.
(c) The Company reserves the right to seek reimbursement for any agreement
within the scope of paragraph 1(a) or any contract, agreement, or
commitment within the scope of paragraph 1(b), for which agreement,
contract, or commitment, the Company received inadequate consideration
or benefit and that was not made with reasonable business judgment.
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(d) The Company represents and warrants that none of its current Directors
or Officers have knowledge of any employment or severance agreement or
contract, agreement, or commitment with any consultant, vendor or
third party for which it would have the right to seek reimbursement
under this Agreement.
(e) Xxxxx represents and warrants that he has no knowledge of any specific
agreement within the scope of para. (1)(a)(vii), and after careful
thought and review of all relevant documents in his possession, that
he has no recollection of any contract, agreement or commitment within
the scope of para. 1(b). If any is found to exist, the Company may not
seek reimbursement from Xxxxx if his current lack of recollection is
reasonable under all the circumstances.
(f) These representations neither increase nor decrease the standards of
accountability or liability defined in Xxxxx'x Employment Agreement.
2. Severance Payment. Within five business days following the execution of
this Agreement, the Company will pay to Xxxxx the amount of $340,000, less
applicable deductions for federal income taxes and other related payroll
taxes plus interest at 6% (six per cent) per annum from June 11,' 2004, if
this Agreement is not signed by all parties by June 23, 2004. Xxxxx
acknowledges that said payment is in full satisfaction of the amount
otherwise payable to him under the provisions of Amendment No. 1 to the
Employment Agreement.
3. Matters Released.
A. Except for claims based upon acts committed after the date of this
Agreement, Xxxxx releases, waives, and forever discharges the Company,
its Affiliates, and their respective subsidiaries, affiliates,
employees, officers, shareholders, members, partners, directors,
agents, attorneys, predecessors, successors and assigns, from and
against any and all claims, liabilities, demands, causes of action,
costs, expenses, attorneys' fees, damages and obligations of every
kind and nature in law, equity, or otherwise, known and unknown,
suspected and unsuspected, disclosed and undisclosed, including but
not limited to any and all such claims and demands directly or
indirectly arising out of or in any way connected with Xxxxx'x
employment with and services as a director of the Company and its
Affiliates; claims or demands related to compensation or other amounts
under any compensatory arrangement, stock, stock options, or any other
ownership interests in the Company or any Affiliate, vacation pay,
fringe benefits, expense reimbursements, severance benefits, or any
other form of compensation or equity; claims pursuant to any federal,
state, local law, statute or cause of action including, but not
limited to, the federal Civil Rights Act of 1964, as amended; the
federal Age Discrimination in Employment Act of 1967, as amended; the
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federal Americans with Disabilities Act of 1990; tort law, contract
law; wrongful discharge, discrimination; defamation; harassment; or
emotional distress; provided, however, that Xxxxx'x waiver and release
will not relieve the Company from (a) any of the obligations under the
second sentence of Section 6.4 of the Employment Agreement, and (b)
any of its rights with respect to obligations of Xxxxx under Article
VII of the Employment Agreement, to the extent such obligations are to
be performed after the end of the Employment Period (as that term is
defined in the Employment Agreement); and
B. Except for claims based upon acts committed after the date of this
Agreement, the Company releases, waives, and forever discharges Xxxxx
and his executors, administrators, successors and assigns, from and
against any and all claims, liabilities, demands, causes of action,
costs, expenses, attorneys' fees, damages and obligations of every
kind and nature in law, equity, or otherwise, known and unknown,
suspected and unsuspected, disclosed and undisclosed, including but
not limited to any and all such claims and demands directly or
indirectly arising out of or in any way connected with Xxxxx'x
employment with or service as a director of the Company and its
Affiliates (collectively, "Claims"); provided, however, that:
(i) Company's waiver and release does not relieve Xxxxx from any of
the obligations under Article VII of the Employment Agreement, to
the extent such obligations are to be performed after the end of
the Employment Period (as that term is defined in the Employment
Agreement); and
(ii) Company's waiver and release does not extend to any and all
Claims arising out of a,breach by Xxxxx of the representations
and warranties set forth in paragraph 1 of this Agreement.
4. Other Matters:
Upon receipt of the severance payment referred to in para. 2 above, Xxxxx
shall tender his resignation to the Company from his position on the Board
of Directors of the Company.
5. Governing Law.
The validity, construction, interpretation, and administration of this
Mutual Release Agreement will be controlled and governed by the substantive
laws of the State of Texas and is to be performed in Xxxxxx, Xxxxxx County,
Texas.
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6. Entire Agreement.
This Agreement constitutes the entire agreement, covenant and consideration
between the parties with respect to the matters set forth herein. Neither
party relies upon any other consideration, covenant, promise or agreement
not contained in this document for the covenants made in this document.
EXECUTED this 30th day of July, 2004
By: /s/ Xxxxxx X. Xxxxx
______________________________________
Xxxxxx X. Xxxxx
Financial Industries Corporation
By: /s/ Xxxxxxxx X. Xxxxxx
__________________________________
Title: Vice President & Secretary
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