EXHIBIT 10.2
SEVERANCE AGREEMENT
THIS AGREEMENT is made and entered into as of this 7th day of
September, 1997, by and between THE CENTRIS GROUP, INC., a Delaware corporation
(the "Company"), and XXXX X. XXXXXX ("Executive").
RECITALS
WHEREAS, the Executive is currently employed by the Company and is
considered a key employee of the Company; and
WHEREAS, the Company desires to retain the services of the Executive;
and
WHEREAS, the Company and the Executive desire to set forth the amounts
payable and benefits to be provided by the Company to the Executive in the event
of a termination of the Executive's employment with the Company under the
circumstances set forth herein after the happening of a Change in Control (as
defined herein);
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, and intending to be legally bound hereby, the
parties agree as follows:
AGREEMENT
1. Continued Employment. In reliance upon the promises of the Company
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hereinafter contained, the Executive agrees that, for a period of not less than
six (6) months commencing on the date set forth above, and subject to reasonable
absences for illness, holiday and vacation or personal leave of absence in
accordance with the Company's policies and practices in effect on the date
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hereof, the Executive will continue his employment with the Company and shall
devote his best efforts to such duties as may be assigned to him by the Company
from time to time.
2. Other Severance Arrangements. Except to the extent specifically set
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forth herein, in the event of the termination of the Executive's employment with
the Company, the Executive shall be entitled to receive any Company benefits
payable under any employee benefit plan, program, policy or arrangement as such
may then be in effect, including all such termination arrangements with
Executive that may be described in any employment agreement.
3. Effective Date. This Agreement shall be effective as of the date
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first above written ("Effective Date") and shall continue and remain in full
force and effect until the termination of Executive's employment with the
Company, unless this Agreement is earlier terminated by the parties in writing.
The completion of six (6) months of employment with the Company by the Executive
as set forth in Section 1 shall not be a condition precedent to the
effectiveness of this Agreement or to the payments of amounts or provision of
benefits hereunder in the event the Executive's employment with the Company is
terminated under the circumstances described in Section 4(b).
4. Termination of Employment.
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(a) Events Requiring No Payments Under Section 5: In the event
the Executive's employment with the Company is terminated under any of the
following circumstances, no payments shall be or become due and owing, and the
Company shall have no other obligations under Section 5 of this Agreement:
(i) By either party for any reason prior to the happening
of a Change in Control (as hereinafter defined);
(ii) By either party for any reason at any time more than
two (2) years after a Change in Control;
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(iii) By the Company at any time, whether prior to,
contemporaneous with or subsequent to a Change in Control, for reason of
"Cause" (as hereinafter defined) or due to the request or demand of any
regulatory authority; or
(iv) By the Executive at any time, whether prior to,
contemporaneous with or subject to a Change in Control, upon his
retirement or resignation for reasons other than "Good Reason" (as
hereinafter defined).
Notwithstanding the foregoing, nothing contained in this Section 4(a) shall
prevent the Executive or his spouse, heirs, estate or personal representative
from receiving any amounts payable under any other plan, program, policy or
arrangement that is not a severance plan, program, policy or arrangement.
(b) Events Requiring Payments Under Section 5: In the event
the Executive's employment with the Company is terminated under any of the
following circumstances set forth in (i) and (ii) below, the Company shall make
the payments and provide the benefits as set forth in Section 5:
(i) By the Company, contemporaneously with or
within two (2) years after the happening of a Change in Control, for any
reason other than (1) for Cause or (2) due to the request or demand of any
regulatory authority; or
(ii) By the Executive, contemporaneously with
or within two (2) years after a Change in Control, for Good Reason.
(c) For purposes of this Agreement, the term "Cause" shall
mean (i) the commission by Executive of any material act of fraud or dishonesty;
(ii) a final conviction of Executive of a felony in either a state or federal
court proceeding; (iii) intentional and willful failure by Executive to
faithfully carry out his duties and responsibilities as an employee of the
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Company, after reasonable notice in writing to and discussion thereafter with
Executive; and (iv) Executive engaging in activities which place Executive in a
direct or indirect conflict with the Company or its interests. The decision as
to the existence of "Cause," as described in (i), (iii) and (iv) above, shall be
determined by a majority of the Company's nonemployee Directors; provided,
however, if there is a change in the composition of the Board such that those
persons who served as nonemployee Directors on the Effective Date of this
Agreement represent less than fifty percent (50%) of the total number of
nonemployee Directors, then "Cause" shall be determined by use of the Settlement
of Disputes provisions set forth in Section 8 of this Agreement.
(d) For purposes of this Agreement, the term "Good Reason"
shall mean the following five (5) events; provided, however, that Executive may
waive in writing his objection to the occurrence of any such event, in which
case such event will no longer constitute "Good Reason":
(i) Any material breach by the Company of its
obligations contained in this Agreement;
(ii) The assignment to the Executive of any
duties inconsistent with the status of his position with the Company as
such duties and position existed on the day immediately preceding the
happening of a Change in Control, or an alteration in the nature or
status of the Executive's duties and responsibilities that renders
the Executive's position to be of less dignity, responsibility or
scope from that which existed on the day immediately preceding the
happening of a Change in Control; provided, however, it shall not be an
event of Good Reason if the Executive is assigned additional duties for
the Company or any affiliate or subsidiary of the Company which are not
inconsistent with the duties described in Section 1 hereof so long as the
aggregate of all duties assigned to the Executive in connection with his
service with the Company, its affiliates or subsidiaries do not require
the Executive to devote, on a consistent and sustained basis,
substantially more time than other senior level executives of the Company
are required to devote to their duties;
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(iii) A reduction by the Company in the
Executive's annual base salary as was in effect on the day immediately
preceding the happening of a Change in Control or as the same may be
increased from time to time;
(iv) The failure of the Company to continue
in effect of the benefits enjoyed by the Executive under the Company's
1988 Employee Stock Plan or its 1991 Employee Stock Option Plan or under
the Company's Incentive Compensation Program, or any other compensation
plan, program or arrangement, or any of the Company's pension, retirement,
profit sharing, savings, life insurance, medical, health-and-accident,
disability or other employee benefit plans, programs or arrangements as
they existed on the day immediately preceding the happening of a Change in
Control, or the failure of the Company to continue the Executive's
participation therein; or the failure by the Company to provide the
Executive with the number of paid vacation days to which he is entitled
on the basis of years of service and position with the Company in
accordance with the Company's normal vacation policy, or the failure of
the Company to continue or if the Company adversely changes or reduces
other specific contractual benefits or perquisites provided to Executive
as they existed on the day immediately preceding the happening of a Change
in Control, including, but not limited to, providing an automobile or an
automobile allowance, club memberships, and dues for professional
associates for Executive;
(v) The assignment of the Executive to an office
which is located more than 50 miles from the office at which the Executive
was primarily performing his duties on the day immediately preceding the
happening of a Change in Control.
(e) For purposes of this Agreement, a "Change in Control"
shall mean the occurrence, after the Effective Date hereof, of any of the
following events if such events are not approved by the Board of Directors of
the Company prior to their occurrence:
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(i) At any time during the term of this
Agreement, any "Person" (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")
and the regulations of the Securities and Exchange Commission (the
"SEC") thereunder, each as in effect on the Effective Date of this
Agreement (including any such Persons that may be deemed to be acting
in concert with respect to the Company or the acquisition,
ownership or voting of Company securities) becomes, directly or
indirectly, the "Beneficial Owner" (as defined in Rule 13d-3 under the
Exchange Act and the regulations of the SEC thereunder, each as in effect
on the Effective Date of this Agreement), without the prior approval of
the Board of Directors of the Company, of outstanding securities of the
Company representing 15% or more of the combined voting power of the
Company's then outstanding securities; provided, however, that the concept
of any Person becoming the owner of 15% or more of the combined voting
shares shall not include: (A) the Company, any wholly owned subsidiary of
the Company, any employee benefit plan of the Company or of a subsidiary
of the Company, or any Person holding voting shares for or pursuant to the
terms of any such employee benefit plan; or (B) any Person if such Person
would not otherwise be a 15% stockholder but for a reduction in the number
of outstanding voting shares resulting from a stock repurchase program or
other similar plan instituted by the Company or from a self-tender offer
of the Company, which stock repurchase plan or Company self-tender offer
commenced on or after the Effective Date of this Agreement; provided,
however, that the concept of becoming the owner of 15% or more of the
combined voting shares shall include such Beneficial Owner after the first
date upon which (x) such Person, since the date of commencement of such
stock repurchase plan or Company self-tender offer, shall have acquired
Beneficial Ownership of, in the aggregate, additional voting shares of the
Company representing 1% or more of the voting shares then outstanding, and
(y) such Person, together with all affiliates and associates of such
Person, shall Beneficially Own 15% or more of the voting shares of the
Company then outstanding. In calculating the percentage of outstanding
voting shares that are Beneficially Owned by a Person for purposes of this
subsection, voting shares that are Beneficially Owned by such Person shall
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be deemed outstanding, and voting shares that are not Beneficially Owned
by such Person and that are subject to issuance upon the exercise or
conversion of outstanding conversion rights, exchange rights, warrants or
options shall not be deemed outstanding. The Board of Directors shall have
the sole and absolute authority to make a final determination as to
whether any Person is or is not to be considered a 15% Stockholder for
purposes of this Agreement, which determination shall be conclusive for
all purposes and shall be binding upon the Company and upon the Executive;
(ii) At any time during the term of this
Agreement the composition of the Board of Directors of the Company is
changed such that persons who were directors of the Company as of the
Effective Date, or persons nominated or elected as directors by a
majority of such persons who were directors as of the Effective Date, do
not continue to comprise a majority of the members of such Board of
Directors of the Company;
(iii) At any time during the term of this
Agreement the stockholders of the Company approve a merger or
consolidation of the Company with, or a reorganization transaction
involving the Company and, any other entity, other than a merger,
consolidation or reorganization which would result in the voting
securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 50% of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation; or
(iv) At any time during the term of this
Agreement the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of more than 50% of its consolidated assets.
5. Obligations of the Company Upon Termination of Employment. Upon
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termination of Executive's employment with the Company under the circumstances
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set forth in Section 4(b), the Executive shall be entitled to receive,
notwithstanding such termination, the following payments and to be provided the
following benefits:
(a) Salary and Bonus: Subject to the limitations set forth in
Section 7 hereof, the Company shall pay to the Executive that amount which is
equal to his regular base salary, at the rate then in effect, for a period of
two (2) years, plus a bonus in an amount which shall be equal to the largest
cash bonus actually received by Executive during his term of employment with the
Company; provided, however, that if Executive shall have entered into an
Employment Agreement with the Company which is in effect at the time of
Executive's termination, then and in that event the Company and Executive hereby
agree that upon Executive's termination Executive shall be entitled to receive
either (i) the salary and bonus termination payments under this Section 5(a), or
(ii) the salary and bonus terminations payments provided for in such Employment
Agreement, whichever salary and bonus termination payment is the greater; but
under no conditions shall Executive be entitled to receive upon termination both
the salary and bonus termination payments under this Severance Agreement and the
salary and bonus termination payments under any such Employment Agreement.
(b) Method of Payment: The payments due to Executive
under Section 5(a) of this Agreement shall be made as follows:
(i) The Company shall pay to the Executive his
regular base salary in installments consistent with the Company's payroll
practices then in effect, or in a single lump sum payment, whichever
method is selected by Executive, in his sole discretion;
(ii) The Company shall pay to Executive the
bonus payments in a single lump sum; and
(iii) Any lump sum payments due to Executive shall
be paid to Executive on the Effective Date of his termination of
employment.
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(c) Other Benefits: The Company shall continue in force for
Executive for a period of two (2) years after Executive's termination the life
insurance, medical, health-and-accident and disability benefit plans or programs
then in effect on the date of Executive's termination from the Company;
provided, however, that such other benefits as are set forth in this Section
5(c) shall not be required to be available to Executive if subsequent employment
by Executive with another employer offers to Executive similar plans or programs
in which the benefits equal or exceed the benefits which Executive could receive
under the Company's plans or programs as provided herein.
6. No Duty to Mitigate. The Executive shall not be required to mitigate
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the amount of any payment required hereunder by seeking other employment or
otherwise, nor shall the amount paid hereunder be reduced or offset by any
compensation earned or received by the Executive as a result of employment with
another employer, self-employment or any amount received from any other plan,
program, policy or arrangement of the Company.
7. Nonapplicability of Excise Tax. The parties intend that this
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Agreement shall govern the rights an obligations of the parties with respect to
severance payments payable upon a termination of Executive's employment with the
Company, and that the excise tax as now provided in Section 280G of the Internal
Revenue Code shall not be applicable to payments under this Agreement.
Accordingly, the parties agree that the aggregate amount which shall be paid to
Executive under this Agreement shall be $1.00 less than that amount which would
make such payment to Executive an "excess parachute payment" under the
provisions of Sections 280G of the Internal Revenue Code, and to which an excise
tax would be applicable.
8. Settlement of Disputes.
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(a) It is specifically agreed that any controversy or dispute
between the parties to this Agreement involving the construction,
interpretation, application, performance or breach of the terms, covenants or
conditions of this Agreement or in any way arising under this Agreement shall,
on demand of one of the parties by written notice hereto served on the other in
the manner prescribed in Section 9(a) hereof, be determined pursuant to the
general reference procedures prescribed by California Code of Civil Procedure
Sections 638(1), et seq., as they may be amended from time to time, by a retired
or former judge of the Superior Court for the County of Orange, State of
California. The parties intend this general reference agreement to be
specifically enforceable in accordance with said Section 638(1).
(b) The reference may be commenced by any party hereto by the
filing in the Superior Court of the State of California for the County of Orange
of a petition or a motion for a general reference proceeding.
(c) The petition or motion may designate as a sole referee a
retired judge working with JAMS who is acceptable to that party. If the parties
to the reference proceeding are unable to mutually agree upon a referee, the
Presiding Judge or any judge of the Orange County Superior Court to whom the
matter is assigned shall appoint a retired or former Orange County Superior
Court Judge from those listed with JAMS as available to act as a referee.
(d) The petition and any opposition or response thereto shall
recite in a clear and meaningful manner the factual basis of the controversy
between the parties and identify the issues to be submitted to the referee for
decision.
(e) The parties acknowledge that this Agreement is
specifically enforceable and that the decision by the referee is tantamount to a
judgment by a trial court (CCP ss. 644) and is subject to review in accordance
with CCP ss. 645, and that any judgment rendered in the trial court is
appealable in the same manner as any other trial court judgment.
(f) The parties may agree on limited discovery. However, in
the absence of an agreement, each party may: (i) take up to three depositions
not totaling more than six hours cumulatively; (ii) propound one set of
interrogatories, not to exceed 20 single questions; (iii) serve not more than 10
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requests for admissions; and (iv) propound not to exceed 15 requests to produce
documents, all as may be "reasonable," as measured by the circumstances and
amount in dispute between the parties. Any disagreements between the parties
regarding discovery matters shall be resolved by the referee.
(g) The hearing shall be held within 60 days after the referee
is selected. The referee shall issue a written memorandum of decision setting
forth his findings of fact and conclusions of law.
9. Miscellaneous.
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(a) Notices: All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally or sent by certified
mail, return receipt requested, first-class postage prepaid, to the parties to
this Agreement at the following addresses:
If to the Company: The Centris Group, Inc.
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
If to Executive: Xxxx X. Xxxxxx
000 Xxxxxxxxx Xxxx
Xxxxxx, Xxxxxxx 00000
or to such other address as either party to this Agreement shall have last
designated by notice to the other party. All such notices and communications
shall be deemed to have been received on the earlier of the date of receipt or
the third business day after the date of mailing thereof.
(b) Binding Effect; Benefits: This Agreement shall be binding
upon and inure to the benefit of the parties to this Agreement and their
respective successors and assigns. Nothing in this Agreement, express or
implied, is intended or shall be construed to give any person, other than the
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parties to this Agreement or their respective successors or assigns, any legal
or equitable right, remedy or claim under or in respect of any agreement or any
provision contained herein.
(c) Waiver: Either party hereto may by written notice to the
other (i) extend the time for the performance of any of the obligations or other
actions of the other under this Agreement; (ii) waive compliance with any of the
conditions or covenants of the other contained in this Agreement; and (iii)
waive or modify performance of any of the obligations of the other under this
Agreement. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained herein. The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any preceding or succeeding breach, and no failure by either party to exercise
any right or privilege hereunder shall be deemed a waiver of such party's rights
or privileges hereunder or shall be deemed a waiver of such party's rights to
exercise the same any subsequent time or times hereunder.
(d) Amendment: This Agreement may be terminated,
amended, modified or supplemented only by a written instrument executed
by the Executive and the Company.
(e) Nonassignability: Neither this Agreement nor any
right, remedy, obligation or liability arising hereunder or by reason hereof
shall be assignable by either the Company or the Executive without the prior
written consent of the other party.
(f) Governing Law: This Agreement shall be governed by
and construed in accordance with the laws of the State of California,
regardless of the law that might be applied under principles of conflict of
laws.
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(g) Section and Other Headings: The section and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
(h) Withholding of Taxes: The Company may withhold
from amounts required to be paid to the Executive hereunder any applicable
federal, state, local and other taxes with respect thereto; provided, however,
that the Company shall promptly pay over the amounts so withheld to the
appropriate taxing bodies and provide to the Executive appropriate statements
on forms proscribed for such purposes on the amounts so withheld.
(i) Severability: If, for any reason, any provision of
this Agreement is held invalid, such invalidity shall not affect any other
provision of this Agreement not held so invalid, and each such other provision
shall, to the full extent consistent with law, continue in full force and
effect. If any provision of this Agreement shall be held invalid in part, such
invalidity shall in no way affect the rest of such provision not held so
invalid, and the rest of such provision, together with all other provisions of
this Agreement, shall to the full extent consistent with law continue in full
force and effect. If this Agreement is held invalid or cannot be enforced, then
to the full extent permitted by law, any prior agreement on the subject matter
of this Agreement between the Company (or any predecessor thereof) and the
Executive shall be deemed reinstated as if this Agreement had not been executed.
(j) Counterparts: This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized officer, and the Executive has signed this
Agreement, all as of the date first above written.
Company: THE CENTRIS GROUP, INC.
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By /S/ XXXXX X. XXXXXXX
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XXXXX X. XXXXXXX
President and Chief Executive Officer
Executive:
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/S/ XXXX X. XXXXXX
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XXXX X. XXXXXX
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