SEPARATION AGREEMENT
AND GENERAL AND SPECIAL RELEASE OF CLAIMS
This Separation Agreement and General and Special Release of Claims
(the "Agreement") is made and entered into as of December 31, 1996 by and
between Xxxxxx X. Xxxxxx ("Xxxxxx") on the one hand and Amwest Insurance Group,
Inc., a Delaware corporation ("Amwest"), Amwest Surety Insurance Company, a
California corporation ("Amwest Surety"), and Far West Insurance Company, a
California Corporation ("Far West") (together with their affiliates sometimes
collectively referred to as the "Companies"), on the other hand.
WHEREAS, Xxxxxx has been for several years prior to the
execution of this Agreement, an executive employee, officer and director of
Amwest and of Amwest's subsidiaries, Amwest Surety and Far West; and
WHEREAS, Xxxxxx desires to resign from all of his present
officer and employee positions with Amwest, Amwest Surety, Far West and any of
their respective affiliates; and
WHEREAS, Xxxxxx and Amwest, Amwest Surety, and Far West are
desirous of entering into this Agreement to resolve amicably all matters between
them on the terms set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual
covenants set forth herein, the parties hereto agree as follows:
1. Resignation as Officer & Employee - Xxxxxx hereby
voluntarily resigns, effective November 22, 1996, as an officer and
employee of Amwest, Amwest Surety, Far West and any and all of their
respective affiliates. The Companies accept Xxxxxx'x resignations.
Xxxxxx understands that his resignations are final and irrevocable and
that the Companies are relying on his resignations in business and
employment planning. However, Xxxxxx is not resigning as a director
or as a member of the Board of Directors (or any committee thereof) of
Amwest, Amwest Surety, Far West or any of their respective affiliates.
Xxxxxx agrees to execute appropriate letters of resignation
simultaneously with the execution of this Agreement.
2. Severance Payments - For so long as Xxxxxx is in full
compliance with the terms of this Agreement, Amwest Surety shall pay to
Xxxxxx as severance pay an amount equal to an aggregate gross amount of $
200,567, less payroll taxes, payable every two weeks at the same time as
salary is paid to Amwest Surety executives, in twenty-six equal
installments each in the gross amount of
$7,714.12, less payroll taxes, commencing December 10, 1996. Except as
specifically set forth in this Agreement, Xxxxxx acknowledges and agrees
that there are no other monies or benefits, including without limitation,
vacation pay, sick pay or bonus, payable now or in the future from Amwest,
Amwest Surety, Far West or any of their affiliates.
3. Stock Options - It is acknowledged and agreed that Xxxxxx
currently holds options to purchase 55,900 shares of Amwest's Common Stock
(the "Stock Options"), 30,700 of which are currently vested, and 25,200 of
which are unvested, at various exercise prices ranging from $8.375 to
$14.25 per share. The Stock Options were granted pursuant to stock option
agreements dated December 3, 1990, March 17, 1992, May 20, 1993, March 22,
1994, April 4, 1995, April 4, 1995 and April 10, 1996 (collectively the
"option Agreements").
The parties intend that, notwithstanding any provisions to
the contrary contained in the Option Agreements or elsewhere, none of the
Stock Options shall expire, terminate or accelerate by virtue of Xxxxxx'x
resignations contemplated in Paragraph 1 above. Consequently, it is hereby
agreed that each of the Option Agreements is hereby amended and modified to
provide language to the following effect: "If Optionee both: (a) ceases to
be employed by the Company or its parent or any subsidiary, and (b) ceases
to be a member of the Board of Directors of the Company or its parent or
any subsidiary other than as a result of Optionee's retirement or death,
then this Option, subject to earlier termination pursuant to other relevant
provisions of this Option Agreement, shall expire three months after the
later to occur of (a) and (b) above, and during such period after Optionee
ceases to be an employee and a member of the Board of Directors of the
Company (or its parent or any subsidiary), this Option shall be exercisable
only as to those shares, if any, with respect to which the Optionee could
have exercised the Option as of the date of cessation of employment or
cessation of service as a member of the Board of Directors of the Company,
whichever is later."
4. Insurance - Amwest Surety agrees to ask its carriers to
consent to continuance of coverage under its group health, life and
disability insurance plans, as they presently exist and as they may from
time to time be amended with respect to executive employees, for Xxxxxx and
his presently-designated dependents at the same levels as existed at time
of termination through November 30, 1997. If such consent is given Amwest
Surety will pay the cost of such coverage. Provided, however, Amwest Surety
shall be under no obligation to change its group insurance carrier(s),
or to self-insure, or, except as provided in the 2nd-to-last sentence
of this Paragraph 4, otherwise to provide or pay for medical, dental, life
and/or disability coverage or expenses if such carriers refuse to consent.
Provided further, should Xxxxxx become eligible for medical, dental, life,
and/or disability insurance paid for in whole or in part by another
employer, Xxxxxx shall immediately notify Amwest Surety, and Amwest
Surety will then be entitled to discontinue Xxxxxx'x (and any
dependents') coverage under the particular plan in question. At that
time, or in the event Amwest Surety's insurance carrier(s) refuse to
consent to cover Xxxxxx under Amwest Surety's group health, disability
and/or life insurance plans, Amwest Surety will pay to Xxxxxx in one lump
sum, an amount equal to the premiums then paid for such medical, dental,
life and/or disability insurance coverage, multiplied by the number of
months then remaining during which installment payments are to be made
under this Agreement. Nothing herein shall in any way affect Xxxxxx'x
entitlements to continuation coverage under and in accordance with COBRA.
5. Accrued But Untaken Sick and Vacation Pay; Other Employee
Payments - Melton acknowledges that Amwest Surety owes Xxxxxx the gross amount
of $37,064.25, less payroll taxes, in full payment of any and all accrued but
untaken sick and vacation pay owed by the Companies to Xxxxxx.
6. Termination Of Senior Executive Severance Agreement;
Indemnity Agreement - The parties agree that effective immediately, any Senior
Executive Severance Agreement by and between Amwest and Xxxxxx is hereby
terminated and shall be of no further force or effect. It is hereby agreed that
all Indemnity Agreements by and between Amwest and Xxxxxx shall remain in full
force and effect.
7. Covenant Not to Compete - Xxxxxx agrees with Amwest
Surety that during the period of time payments are made to Xxxxxx as specified
in Paragraph 2 herein, he will not, in the counties of California,
or elsewhere in the United States where Amwest, Amwest Surety, Far West, or
any of their respective affiliates currently conduct their businesses,
directly or indirectly own an interest in, operate, join, control or
participate in, or be connected as an officer, employee, director, agent,
independent contractor, partner, shareholder, consultant or principal of any
corporation, partnership, agency, proprietorship, firm, association,
person or other entity which sells, markets, underwrites or issues surety,
fidelity or bail bonds; provided, however, that Xxxxxx shall not be prohibited
hereunder from being employed by a business entity whose revenues
derived from surety insurance premiums were at least $10,000, but were
less than 10% of such entity's total revenues for its last fiscal year. Xxxxxx
agrees that nothing contained in this Paragraph 7 reduces or in any way
diminishes his fiduciary or other duties or responsibilities owed to Amwest,
Amwest Surety or Far West as a member of the boards of directors of such
corporations.
8. Remedies For Breach of Agreement - In the event Xxxxxx
breaches or in any way violates any provision of this Agreement, including
specifically the Covenant Not to Compete set forth in Paragraph 7 above, in
addition to all the remedies available to Amwest Surety at law and in equity,
Amwest Surety shall be entitled immediately: a) to cease making any further
payments set forth in Paragraph 2 above, b) to provide Xxxxxx with notice that
he will forfeit any unvested Stock Options to which he would otherwise have been
entitled under Paragraph 3 herein, and c) to terminate any and all coverage
under the plans set forth in Paragraph 4 above, except for COBRA continuation
coverage. In addition, Amwest Surety and Xxxxxx recognize and acknowledge that
any breach of the Covenant Not to Compete by Xxxxxx can not reasonably or
adequately compensate Amwest Surety in damages, and that Amwest Surety shall be
entitled to injunctive relief, which may include, but not be limited to,
restraining Xxxxxx from rendering any service that would breach the Covenant Not
to Compete set forth in Paragraph 7, the arbitration agreement contained in
paragraph 10 notwithstanding. No remedy conferred on Amwest Surety by any of the
specific provisions in this Agreement, including this Paragraph 8, is intended
to be exclusive of any other remedy, and each and every remedy shall be
cumulative, and shall be in addition to every other remedy given hereunder or
hereafter existing at law or in equity, or by statute or otherwise. The election
of any one or more remedies by Amwest Surety shall not constitute a waiver of
its right to pursue other available remedies. Amwest Surety agrees to provide to
Xxxxxx notice of breaches of this Agreement by Xxxxxx (including reasonable
specifics which form the basis for such breach) 15 days before it shall exercise
any of the remedies set forth herein. If Xxxxxx, in the opinion of Amwest
Surety, does not fully and completely cure all breaches specified in the notice
within 15 days after his receipt of such notice, Amwest Surety shall be entitled
to exercise any or all of its rights set forth in this paragraph in addition to
every other right or remedy existing at law or in equity, by statute or
otherwise.
9. Releases
A. General and Special Releases By Xxxxxx.
-As a material provision of this Agreement, Xxxxxx (for himself, his
agents, heirs, successors, assigns, executors and/or administrators) does
hereby and forever release and discharge Amwest, Amwest Surety and Far West
and each of their past and present parent, subsidiary and affiliated
corporations, divisions or other entities, if any, as well as the successors,
shareholders, officers, directors, heirs, predecessors, assigns, agents,
employees, attorneys and representatives of each of them, past or present, from
any and all causes of action, actions, judgments, liens, debts, contracts,
indebtedness, damages, losses, claims, liabilities, rights, interests and
demands of whatsoever kind or character, known or unknown, suspected to exist or
not suspected to exist, anticipated or not anticipated, whether or not
heretofore brought before any state or federal court or before any state or
federal agency or other governmental entity, which Xxxxxx has or may have
against any released person or entity, by reason of any and all acts, omissions,
events or facts occurring or existing prior to the date hereof, including,
without limitation, all claims attributable to the employment of Xxxxxx, all
claims attributable to the termination of that employment, and all claims
arising under any federal, state or other governmental statute, regulation or
ordinance or common law, such as, for example and without limitation, Title VII
of the Civil Rights Act of 1964 which prohibits discrimination on the basis of
sex, race, color, national origin and religion, the civil Rights Act of 1866,
the Americans With Disabilities Act, the Age Discrimination in Employment Act
which prohibits discrimination on the basis of age over 40, the California Fair
Employment and Housing Act which prohibits discrimination on the basis of race,
religious creed, color, national origin, ancestry, physical disability, mental
disability, medical condition, marital status, age over 40, and sex, the
California Labor Code, wrongful termination claims and claims for breach of
implied or express contract, excepting only those obligations expressly recited
to be performed hereunder.
B. General and Special Releases By Amwest, Amwest Surety and
Far West. - As a material provision of this Agreement, Amwest, Amwest Surety and
Far West do hereby and forever release and discharge Xxxxxx from any and all
causes of action, actions, judgments, liens, debts, contracts, indebtedness,
damages, losses, claims, liabilities, rights, interests and demands of
whatsoever kind or character, known or unknown, suspected to exist or not
suspected to exist, anticipated or not anticipated, whether or not heretofore
brought before any state or federal court or before any state or federal agency
or other governmental entity, which the Companies may have against any released
person or entity, by reason of any and all acts, omissions, events or facts
occurring or existing prior to the date hereof, including, without limitation,
all claims attributable to the employment of Xxxxxx, all claims attributable to
the termination of that employment, and all claims arising under any federal,
state or other governmental statute, regulation or ordinance or common law, such
as, for example and without limitation, Title VII of
the civil Rights Act of 1964 which prohibits discrimination on the basis of sex,
race, color, national origin and religion, the civil Rights Act of 1866, the
Americans With Disabilities Act, the Age Discrimination in Employment Act which
prohibits discrimination on the basis of age over 40, the California Fair
Employment and Housing Act which prohibits discrimination on the basis of race,
religious creed, color, national origin, ancestry, physical disability, mental
disability, medical condition, marital status, age over 40, and sex, the
California Labor Code, wrongful termination claims and claims for breach of
implied or express contract, excepting only those obligations expressly recited
to be performed hereunder.
C. Excepted Claims. - Notwithstanding the provisions of
Paragraph 9B, nothing contained herein or in any other provision of this
Agreement shall release, acquit or discharge Xxxxxx from any claim: (a) arising
out of or relating to Xxxxxx gaining in fact any personal profit or advantage
from or at the expense of Amwest, Amwest Surety or Far West or any of their
affiliates to which Xxxxxx is not or was not legally entitled, (b) relating to
an accounting of profits made from the purchase or sale by Xxxxxx of securities
of Amwest in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or similar provisions of any state law, or (c) based upon or arising
out of Xxxxxx'x knowingly fraudulent, deliberately dishonest or willful
misconduct.
D. Waiver Of Unknown Claims. It is further understood
and agreed that all rights of the parties hereto under Section 1542 of
the Civil Code of California and any similar law of any state or
territory of the United States are hereby expressly waived. This section reads
as follows:
1542. Extent of General Release by Creditor Against Unknown
Claims. A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have
materially affected his settlement with the debtor.
Xxxxxx and the Companies hereby declare and represent that no
promise, inducement, or agreement not set forth in this Agreement has been made
to any of them, and that this Agreement contains the entire agreement between
the parties hereto.
10. Arbitration - As a material part of this Agreement,
Xxxxxx and the Companies expressly agree that any and all disputes,controversies
or claims arising out of or concerning this Agreement,any alleged breach of this
Agreement, or the matters resolved and settled by this Agreement, including but
not limited to disputes, controversies or claims arising out of Xxxxxx'x
employment by the Companies or its termination, or this Agreement, whether
arising under theories of liability or damages based on contract, tort or
statute, shall be determined exclusively by final and binding arbitration before
a single arbitrator in accordance with the Employment Dispute Resolution Rules
of the American Arbitration Association, unless other rules are provided in this
Paragraph, and that judgment upon the award rendered by the arbitrator may be
rendered in any court of competent jurisdiction. Claims subject to exclusive
final and binding arbitration under this Agreement include, without limitation,
claims that otherwise could be tried in court to the court or to a jury in the
absence of this Agreement. Such claims include, without limitation, claims for
breach of contract, breach of the implied covenant of good faith and fair
dealing, breach of oral or written promise, wrongful termination, constructive
discharge, infliction of emotional distress, defamation, interference with
contract relations or prospective economic advantage, negligence,
misrepresentation, retaliation, or employment discrimination, and including
without limitation any claim for punitive damages or allegedly lost compensation
or recovery for personal injury on any theory of pleading or proof, claims for
attorneys' fees, or alleged violations of the California Labor Code (including
Section 970), the California Constitution, the California Fair Employment and
Housing Act prohibiting discrimination based on sex, race, religious creed,
color, national origin, ancestry, physical disability, mental disability,
medical condition, marital status, or age over 40, Title VII of the 1964 civil
Rights Act prohibiting discrimination based on race, color, religion, sex or
national origin, and the Americans with Disabilities Act prohibiting
discrimination based on disability, and the Age Discrimination in Employment Act
prohibiting discrimination based on age over 40, as these statutes have been
from time to time amended. XXXXXX AND THE COMPANIES EXPRESSLY GIVE UP AND WAIVE
ALL RIGHTS TO A JURY TRIAL IN COURT ON ANY SUCH STATUTORY OR OTHER CLAIMS. Any
arbitration shall be held in Los Angeles, California. The Arbitrator will make
his/her award in writing and shall accompany it with an opinion discussing the
evidence and setting forth the reasons for the award. The Companies and Employee
shall equally share the fees and costs of the Arbitrator.
11. Entire Agreement - This Agreement constitutes a single
integrated contract expressing the entire agreement of the parties with respect
to the subject matter hereof and supersedes all prior and contemporaneous oral
and written agreements and discussions with respect to the subject matter
hereof. There are no other agreements, written or oral,
express or implied, between the parties hereto, concerning the subject matter
hereof, except as set forth herein. This Agreement may be amended or modified
only by an agreement in writing.
12. Governing Law; Notices; Separability -
(a) The formation, construction, and performance
of this Agreement shall be construed in accordance with the laws of
California and the promises contained in Paragraph 7 shall be construed as
a separate covenant in each of the separate cities and counties of the United
States in which Amwest, Amwest Surety, or Far West and their respective
affiliates are presently engaged in business.
(b) Any notice required or permitted under this
Agreement shall be given in writing to
Amwest, Amwest Surety, and Far West either by personal service or by registered
or certified mail, postage prepaid, addressed to Amwest, in care of its
President, at its then principal place of business. Any such notice to Xxxxxx
shall be given in a like manner and, if mailed, shall be addressed to Xxxxxx at
000 Xxxxxxxx Xxxxx, Xxxxx Xxxxxxx, XX. 00000. For the purpose of determining
compliance with any time limit in this Agreement, a notice shall be deemed to
have been duly given (i) on the date of service, if served personally on the
party to whom notice is to be given, or (ii) on the third business day after
mailing, if mailed to the party to whom the notice is to be given in the manner
provided in this subsection.
(c) In the event that any provision of this
Agreement is determined to be invalid,
prohibited or unenforceable for any reason, this Agreement shall be construed as
if such invalid, prohibited or unenforceable provision had been more narrowly
drawn so as not to be invalid, prohibited or unenforceable. If, notwithstanding
the foregoing, any provision of this Agreement would be held to be invalid,
prohibited or unenforceable, such provision shall be ineffective to the extent
of such invalidity, prohibition or unenforceability, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. If any provision is
held invalid or unenforceable with respect to particular circumstances, it shall
nevertheless remain in full force and effect in all other circumstances.
13. Nonassignability; Death or Disability of Xxxxxx - This
Agreement may not be assigned by Melton. If Xxxxxx should become disabled or die
while any amounts are still payable to him hereunder, all such amounts shall be
paid in accordance with the terms of this Agreement to Xxxxxx in the event of
his disability or to Xxxxxx'x executor, administrator, conservator or estate in
the event of his death.
14. Further Assurances; Xxxxxx Activities - The parties agree
they will sign any and all documents, certificates, and all other instruments
necessary to carry out the purposes and intent of this Agreement. In addition,
Xxxxxx agrees that from and after November 22, 1996, he shall not, in any
manner, represent or act for, or on behalf of, Amwest, Amwest Surety and Far
West, their affiliates, or any of them, except as Amwest's Chairman of the Board
of Directors or President shall direct in writing.
15. Confidential Information and Trade Secrets -Xxxxxx hereby
reaffirms his continuing obligation to safeguard the confidentiality of trade
secrets and confidential information known to him through his employment with
Amwest, Amwest Surety and Far West, their affiliates, or any of them, affirms
that nothing in this Agreement abridges such obligations, and agrees to consult
at once with the President of Amwest regarding any questions he may have
regarding the meaning or application of such obligations in a specific
circumstance. Xxxxxx acknowledges that he is in possession of material
information not generally available to the public regarding Amwest, Amwest
Surety and Far West and their affiliates. Xxxxxx acknowledges that he is aware
of the provisions of the securities laws prohibiting the disclosure of such
material inside information to third parties, including but not limited to
securities analysts, and agrees that he shall not make any such disclosures
without the prior written consent of Amwest's President. Furthermore, Xxxxxx
agrees from the date this Agreement is executed through December 31, 1998 he
will not communicate in a derogatory manner with any person (except his
counsel), including without limitation, any stock analyst or stockholder or
employee of Amwest, Amwest Surety or Far West, or any of them, regarding Amwest,
Amwest Surety or Far West or their affiliates, without the prior consent of the
President of Amwest; provided, however, Xxxxxx shall be permitted, without the
prior consent of the President of Amwest, to discuss with potential employers
the responsibilities Xxxxxx had while employed by Amwest, Amwest Surety and Far
West.
16. Business Reputation of Amwest, Amwest Surety and Far Xxxx
- Xxxxxx agrees that the business reputation of Amwest, Amwest Surety and Far
West, their affiliates and each of them is of critical importance to such
companies. Xxxxxx agrees that he shall not, for the term of this Agreement
(during which time Xxxxxx acknowledges and agrees that he owes Amwest, Amwest
Surety and Far West a duty of loyalty), make or disclose to any person any
statement, in written or oral form, if it could be reasonably expected that the
business reputation(s) of Amwest, Amwest Surety, Far West, and/or their
affiliates and/or any of their respective employees, or any of them, could be
injured or damaged in any fashion whatsoever as a result of such statement.
17. Waiting Period and Right Of Revocation - XXXXXX
ACKNOWLEDGES THAT HE IS AWARE THAT AND IS HEREBY ADVISED THAT HE HAS THE RIGHT
TO CONSIDER THIS AGREEMENT FOR TWENTY-ONE DAYS BEFORE SIGNING IT AND THAT IF HE
SIGNS IT PRIOR TO THE EXPIRATION OF TWENTY-ONE DAYS, XXXXXX IS WAIVING THIS
RIGHT FREELY AND VOLUNTARILY.
XXXXXX ALSO ACKNOWLEDGES THAT HE IS AWARE OF AND IS HEREBY
ADVISED OF HIS RIGHT TO REVOKE THIS AGREEMENT FOR A PERIOD OF SEVEN DAYS
FOLLOWING THE SIGNING OF THIS AGREEMENT AND THAT 'IT SHALL NOT BECOME EFFECTIVE
OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED. TO REVOKE THIS
AGREEMENT, XXXXXX MUST NOTIFY AMWEST SURETY WITHIN SEVEN DAYS OF SIGNING IT.
18. Attorney Advice - XXXXXX ACKNOWLEDGES THAT HE IS AWARE OF
HIS RIGHT TO CONSULT AN ATTORNEY, THAT HE HAS BEEN ADVISED TO CONSULT WITH AN
ATTORNEY, AND THAT HE HAS HAD THE OPPORTUNITY TO CONSULT WITH AN ATTORNEY, IF
DESIRED, PRIOR TO SIGNING THIS AGREEMENT.
19. Understanding Of Agreement - Xxxxxx states that he
has carefully read this Agreement, that he has had sufficient time and
opportunity to consider its terms and get legal advice, that he understands
its final and bindingffect, that the only promises made to him to sign this
Agreement are those stated above and that Xxxxxx is signing this Agreement
voluntarily.
AMWEST INSURANCE GROUP, INC.
Dated: December , 1996 By:
---------------------
Xxxx X. Xxxxxx
President
AMWEST SURETY INSURANCE COMPANY
Dated: December , 1996 By:
---------------------
Xxxx X. Xxxxxx
President
FAR WEST INSURANCE COMPANY
Dated: December , 1996 By:
---------------------
Xxxx X. Xxxxxx
President
Dated: December , 1996 By:
--------------------
Xxxxxx X. Xxxxxx
