SEVERANCE AGREEMENT BETWEEN FPIC INSURANCE GROUP, INC. AND CHARLES DIVITA, III
Exhibit
10.3
BETWEEN
FPIC
INSURANCE GROUP, INC.
AND
XXXXXXX
XXXXXX, III
THIS
AGREEMENT, effective as of the 8th
of December, 2006, between FPIC Insurance Group, Inc., a Florida corporation
(the “Company"), and Xxxxxxx Xxxxxx, III, an individual (the
"Executive").
W
I T N E S S E T H:
WHEREAS,
the Executive is a valuable employee of the Company and an integral part of
its
management and a key participant in the decision making process relative to
planning and policy for the Company; and
WHEREAS,
the Company wishes to encourage the Executive to continue his career and
services with the Company for the period during and after an actual or
threatened Change in Control (as hereinafter defined);
NOW
THEREFORE, it is hereby agreed by and between the parties hereto as
follows:
1. Definitions.
a. "Board"
shall mean the Board of Directors of the Company.
b. "Cause"
shall mean the Executive's fraud or dishonesty that has resulted or is likely
to
result in material economic damage to the Company, or the Executive's willful
nonfeasance if such nonfeasance is not cured within ten days of written notice
from the Company, as determined in good faith by a vote of at least two-thirds
of the non-employee directors of the Company at a meeting of the Board at which
the Executive is provided an opportunity to be heard.
c. "Change
in Control" shall mean the earlier of the following events:
(i) either
(A) receipt by the Company of a report on Schedule 13D, or an amendment to
such
a report, filed with the Securities and Exchange Commission pursuant to Section
13(d) of the Securities Exchange Act of 1934 (the "1934 Act"), disclosing that
any person (as such term is used in Section 13(d) of the 0000 Xxx) ("Person"),
is the beneficial owner, directly or indirectly, of twenty (20) percent or
more
of the outstanding stock of the Company, or (B) actual knowledge by the Company
of facts on the basis of which any Person is required to file such a report
on
Schedule 13D, or to file an amendment to such a report, with the SEC (or would
be required to file such a report or amendment upon the lapse of the applicable
period of time specified in Section 13(d) of the 0000 Xxx) disclosing that
such
Person
1
is
the beneficial owner, directly or indirectly, of twenty (20) percent or more
of
the outstanding stock of the Company;
(ii) purchase
by any Person, other than the Company or a wholly owned subsidiary of the
Company, of shares pursuant to a tender or exchange offer to acquire any stock
of the Company (or securities convertible into stock) for cash, securities
or
any other consideration provided that, after consummation of the offer, such
Person is the beneficial owner (as defined in Rule 13d-3 under the 1934 Act
regardless of whether the Company or such Person would otherwise be subject
to
the 1934 Act), directly or indirectly, of twenty (20) percent or more of the
outstanding stock of the Company (calculated as provided in paragraph (d) of
Rule 13d-3 under the 1934 Act in the case of rights to acquire stock regardless
of whether the Company or such Person would otherwise be subject to the 1934
Act);
(iii) either
(A) the filing by any Person acquiring, directly or indirectly, twenty percent
(20%) or more of the outstanding stock of the Company of a statement with the
Florida Department of Insurance pursuant to § 628.461 of the Florida Statutes or
a successor statutory provision, or (B) actual knowledge by the Company of
facts
on the basis of which any Person acquiring, directly or indirectly, twenty
percent (20%) or more of the outstanding stock of the Company or a controlling
company is required to file such a statement pursuant to § 628.461 or a
successor provision.
(iv) approval
by the shareholders of the Company of (A) any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation
or
pursuant to which shares of stock of the Company would be converted into cash,
securities or other property, other than a consolidation or merger of the
Company in which holders of its stock immediately prior to the consolidation
or
merger have substantially the same proportionate ownership of common stock
of
the surviving corporation immediately after the consolidation or merger as
immediately before, or (B) any consolidation or merger in which the Company
is
the continuing or surviving corporation but in which the common shareholders
of
the Company immediately prior to the consolidation or merger do not hold at
least a majority of the outstanding common stock of the continuing or surviving
corporation (except where such holders of common stock hold at least a majority
of the common stock of the corporation that owns all of the common stock of
the
Company), or (C) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all or substantially all the assets
of
the Company, or (D) any merger or consolidation of the Company where, after
the
merger or consolidation, one Person owns 100% of the shares of stock of the
Company (except where the holders of the Company's common stock immediately
prior to such merger or consolidation own at least 90% of the outstanding stock
of such Person immediately after such merger or consolidation); or
(v) a
change in the majority of the members of the Board within a 24-month period
unless the election or nomination for election by the Company's shareholders
of
each new director was approved by the vote of at least two-thirds of
2
d. "Code"
shall mean the Internal Revenue Code of 1986, as amended.
e. "Constructive
Discharge" shall mean any (i) material change by the Company of the Executive's
position, functions, or duties to an inferior position, functions, or duties
from that in effect on the date of this Agreement, (ii) assignment or
reassignment by the Company of the Executive without the Executive's consent
to
another place of employment more than 50 miles from the Executive's current
place of employment, (iii) liquidation, dissolution, consolidation or merger
of
the Company, or transfer of all or substantially all of its assets, other than
a
transaction or series of transactions in which the resulting or surviving
transferee entity has, in the aggregate, a net worth at least equal to that
of
the Company immediately before such transaction and expressly assumes this
Agreement and all obligations and undertakings of the Company hereunder, or
(iv)
reduction in the Executive's base salary or target bonus
opportunity.
f. "Coverage
Period" shall mean the period beginning on the Starting Date and ending on
the
Ending Date. The "Starting Date" shall be the date on which a Change in Control
occurs. The "Ending Date" shall be the earlier of (i) the date on which a public
announcement is made by the Company of its intention to abandon a Change in
Control transaction, or (ii) the date that is 36 full calendar months following
the date on which a Change in Control occurs, or (iii) if such Change in Control
is subject to shareholder approval of such transaction, the date that is 36
months following the date on which the actual consolidation, merger or sale
transaction occurs.
g. "ERISA"
shall mean the Employee Retirement Income Security Act of 1974, as
amended.
h. "Independent
Tax Counsel" shall mean an attorney, a certified public accountant with a
nationally recognized accounting firm, or a compensation consultant with a
nationally recognized actuarial and benefits consulting firm, with expertise
in
the area of executive compensation tax law, who shall be selected by the Company
and shall be reasonably acceptable to the Executive, and whose fees and
disbursements shall be paid by the Company.
2. Term.
This
Agreement shall be effective as of the date of this Agreement and shall continue
thereafter until (i) the date of the termination of the Executive's employment
if such date is prior to the Coverage Period or (ii) if a Change in Control
shall occur prior to the termination of the Executive’s employment, this
Agreement shall remain in effect until all of the obligations of the parties
hereunder are satisfied.
3
3. Severance
Benefit.
a. If
at any time during the Coverage Period the Executive's employment hereunder
is
terminated by the Company for any reason other than Cause, death or disability,
or by the Executive in the event of a Constructive Discharge, then the Company
shall pay to the Executive (or if the Executive has died before receiving all
payments to which he has become entitled hereunder, the estate of the Executive)
severance pay in a lump sum cash amount equal to two times the sum of
Executive's (i) annual salary and (ii) target bonus opportunity for the current
calendar year (if greater than the target bonus opportunity, the average of
the
annual bonuses for the three prior calendar years). The Company shall also
pay
Executive any unpaid salary or benefits accrued to the date of termination.
In
such event, the Executive shall be 100% vested in all stock options, stock
appreciation rights, contingent stock, restricted stock and other long-term
incentive plans. The Executive's termination of employment with the Company
to
become an employee of a corporation that owns 100% of the Company shall not
be
considered a termination of employment for purposes of this Agreement. The
subsequent termination of Executive's employment from such corporation shall
be
considered a termination of employment for purposes of this
Agreement.
b. The
Company and the Executive, upon mutual written agreement, may waive any of
the
provisions in paragraph 1(e) that would otherwise constitute a Constructive
Discharge. Pursuant to paragraph 3(a) of this Agreement, Executive may terminate
his employment in the event of a Constructive Discharge by providing written
notice to the Company within three months after the occurrence of such event,
specifying the event relied upon for a Constructive Discharge. Within ten days
of receiving such written notice from Executive, the Company may cure the event
that constitutes a Constructive Discharge.
c. If
at any time during the Coverage Period the Executive's employment is terminated
by the Company for any reason other than Cause, death or disability or by the
Executive in the event of a Constructive Discharge, and the Executive is
entitled to the benefits described under subparagraph 1(b) or subparagraph
4(b)
of his Employment Agreement dated as of December 14, 2005and as extended and
amended thereafter, then the Executive shall be permitted to select either
the
benefits (i) that he would otherwise have been entitled to receive for the
remaining term of his Employment Agreement or (ii) those payments provided
for
under this Agreement. The Executive shall be permitted to receive benefits
under
either the Employment Agreement or this Agreement, but not benefits from both
the Employment Agreement and this Agreement.
d. For
a period commencing with the month in which termination of employment as
described in paragraph 3(a) above shall have occurred, and ending
twenty-four months
thereafter, the Executive shall be entitled to all benefits under the Company's
welfare benefit plans (within the meaning of Section 3(1) of ERISA), as if
the
Executive were still employed during such period, at the same level of benefits
and at the same dollar cost to the Executive as is available to all of the
Company's senior executives generally and if and to the extent that equivalent
benefits shall not be payable or provided under any such plan, the Company
shall
pay or provide tax equivalent benefits on an individual basis. The benefits
provided in accordance with this paragraph 3(d) shall be secondary to any
comparable benefits provided by another employer.
4
e. If
Independent Tax Counsel shall determine that the aggregate payments made to
the
Executive pursuant to this Agreement and any other payments to the Executive
from the Company that constitute "parachute payments" as defined in Section
280G
of the Code (or any successor provision thereto) ("Parachute Payments") would
be
subject to the excise tax imposed by Section 4999 of the Code (the "Excise
Tax"), then payments under this Agreement shall be reduced to the maximum amount
that would not trigger such excise tax. The Executive shall be permitted to
select the benefits to be reduced.
f. In
the event of any termination of the Executive's employment described in
paragraph 3(a), the Executive shall be under no obligation to seek other
employment, and, except as provided in paragraph 3(a), there shall be no offset
against amounts due the Executive under this Agreement on account of any
remuneration attributable to any subsequent employment.
4. Source
of Payments.
All
payments provided for in paragraph 3 above shall be paid in cash from the
general funds of the Company; provided, however, that such payments shall be
reduced by the amount of any payments made to the Executive or his dependents,
beneficiaries or estate from any trust or special or separate fund established
by the Company to assure such payments. The Company shall not be required to
establish a special or separate fund or other segregation of assets to assure
such payments, and, if the Company shall make any investments to aid it in
meeting its obligations hereunder, the Executive shall have no right, title
or
interest whatever in or to any such investments except as may otherwise be
expressly provided in a separate written instrument relating to such
investments. Nothing contained in this Agreement, and no action taken pursuant
to its provisions, shall create or be construed to create a trust of any kind,
or a fiduciary relationship between the Company and the Executive or any other
person. To the extent that any person acquires a right to receive payments
from
the Company pursuant to this Agreement, such right shall be no greater than
the
right of an unsecured creditor of the Company.
5. Mediation
and Arbitration.
Any
dispute or controversy arising out of or in relation to this Agreement shall
first be submitted to mediation in the City of Jacksonville, Florida in
accordance with the Commercial Mediation Rules of the American Arbitration
Association. If mediation fails to resolve such dispute or controversy, then
such dispute or controversy shall be determined and settled by arbitration
in
the City of Jacksonville, Florida, in accordance with the Commercial Arbitration
Rules of the American Arbitration Association then in effect, and judgment
upon
the award rendered by the arbitrator may be entered in any court of competent
jurisdiction. The parties hereto agree to use good faith efforts to select
a
mediator and, if mediation fails to resolve such dispute or controversy, an
arbitrator. If the parties cannot agree upon a mediator or arbitrator, such
mediator or arbitrator shall be selected in accordance with the relevant
Commercial Rules of the American Arbitration Association then in effect. The
Company's mediation and arbitration expenses, as well as any litigation costs,
including legal counsel and reasonable experts, shall be paid by the Company.
The Executive's mediation and arbitration costs, as well as any litigation
costs, including legal counsel and reasonable experts, shall be paid by the
Company, unless the trier of fact determines the Executive's claims thereunder
are without merit. Whenever any action is required to be taken under this
Agreement within a specified period of time and the taking of such action is
materially affected by a matter submitted to mediation
5
6. Income
Tax Withholding.
The
Company may withhold from any payments made under this Agreement all federal,
state or other taxes as shall be required pursuant to any law or governmental
regulation or ruling.
7. Entire
Understanding.
This
Agreement contains the entire understanding between the Company and the
Executive with respect to the subject matter hereof and supersedes any prior
severance agreement between the Company and the Executive, except that this
Agreement shall not affect or operate to reduce any benefit or compensation
inuring to the Executive of any kind elsewhere provided and not expressly
provided for in this Agreement, including without limitation, any benefit or
compensation provided under an executive incentive compensation program of
the
Company.
8. Severability.
If,
for any reason, any one or more of the provisions or part of a provision
contained in this Agreement shall be held by a court of competent jurisdiction
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or part
of a
provision of this Agreement not held so invalid, illegal or unenforceable,
and
each other provision or part of a provision shall to the full extent consistent
with law continue in full force and effect.
9. Consolidation,
Merger, or Sale of Assets.
If
the
Company consolidates or merges into or with, or transfers all or substantially
all of its assets to, another corporation, the term "Company" as used herein
shall mean such other corporation and this Agreement shall continue in full
force and effect.
10.
Notices.
All
notices, requests, demands and other communications required or permitted
hereunder shall be given in writing and shall be deemed to have been duly given
if hand delivered or mailed, postage prepaid, certified or registered, first
class as follows:
a. to
the Company:
FPIC
Insurance Group, Inc.
Attention:
Chief Executive Officer
000
Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx,
Xxxxxxx 00000
6
b. to
the Executive:
Xxxxxxx
Xxxxxx, III
000
X. Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxxxx,
XX 00000
or
to such other address as either party shall have previously specified in writing
to the other.
11. No
Attachment.
Except
as required by law, no right to receive payments under this Agreement shall
be
subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge or hypothecation or to execution, attachment, levy or similar
process or assignment by operation of law, and any attempt, voluntary or
involuntary, to effect any such action shall be null, void and of no
effect.
12. Binding
Agreement.
This
Agreement shall be binding upon, and shall inure to the benefit of, the
Executive and the Company and their respective permitted successors and
assigns.
13. Modification
and Waiver.
This
Agreement may not be modified or amended except by an instrument in writing
signed by the parties hereto. No term or condition of this Agreement shall
be
deemed to have been waived, nor shall there be any estoppel against the
enforcement of any provision of this Agreement except by written instrument
signed by the party charged with such waiver or estoppel. No such written waiver
shall be deemed a continuing waiver unless specifically stated therein, and
each
such waiver shall operate only as to the specific term or condition waived
and
shall not constitute a waiver of such term or condition for the future or as
to
any act other than that specifically waived.
14. Headings
of No Effect.
The
paragraph headings contained in this Agreement are included solely for
convenience of reference and shall not in any way affect the meaning or
interpretation of any of the provisions of this Agreement.
15. Governing
Law.
This
Agreement and its validity, interpretation, performance, and enforcement shall
be governed by the laws of the State of Florida without giving effect to the
choice of law provisions in effect in such State.
7
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as
of the date first above written.
| FPIC INSURANCE GROUP, INC. | ||
| |
|
|
| By: | /s/ Xxxx X. Xxxxx | |
|
Xxxx X. Xxxxx President and Chief Executive Officer
|
||
| |
||
| /s/ Xxxxxxx Xxxxxx, III | ||
|
Xxxxxxx Xxxxxx, III |
||
8
