EXHIBIT 10.7
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement") is by and between Millers
American Group, Inc. (the "Company") and David N. Thompson ("Employee").
RECITALS
A. Employee was employed by the Company or its predecessor pursuant to
the terms of an Employment Agreement dated October 1, 1998 and effective
November 1, 1998, between The Millers Mutual Fire Insurance Company
("Millers Mutual") and Employee (the "Employment Agreement").
B. As the result of the conversion of Millers Mutual to a stock insurance
company, Employee became an employee of the Company.
C. The employment of Employee with the Company was terminated effective
as of September 13, 1999.
D. Employee and the Company desire to set forth their agreement with
respect to the termination of employment of Employee with the Company.
AGREEMENTS
In consideration of the above premises and the mutual covenants and
agreements set forth herein, including the payments to be made to Employee,
the parties hereto agree as follows:
1. TERMINATION OF EMPLOYMENT. Employee acknowledges and agrees that
Employee's employment with the Company is terminated effective as of
September 13, 1999. Employee further agrees that Employee has resigned as
an officer and director of the Company and any subsidiary of the Company
effective September 13, 1999.
2. SEVERANCE PAYMENT. Subject to the compliance by Employee with the
terms of this Agreement, Employee will receive as a severance payment an
amount equal to Employee's annual base salary of $300,000 to be paid
through October 31, 2001, in accordance with Section 9(d) of the Employment
Agreement. The severance payment will be paid on the Company's regular
payroll periods. Employee acknowledges and agrees that Employee is not
eligible for any other policy, plan or arrangement under which any
severance payment or benefit have been or will be made to Employee.
3. STOCK OPTIONS. Employee is party to a Stock Option Agreement with the
Company dated as of April 21, 1999 (the "Option Agreement") pursuant to
which Employee was granted options to purchase 6,529 shares of Common Stock
at an exercise price of $721.49 per share (the "Options"), thirty-three
percent (2,155 shares) of the Options vested on April 21, 1999, thirty-
three percent (2,155 shares) of the Options were scheduled to vest on April
21, 2000 and thirty-four percent (2,219 shares) were scheduled to vest on
April 21, 2001. The Company agrees that Employee may exercise Options
covering up to 2,155 shares of Common Stock of the Company vested as of
April 21, 1999 pursuant to the terms of the Option Agreement. Employee
hereby acknowledges and agrees that the Options scheduled to vest on April
21, 2000 and April 21, 2001 are cancelled and Employee releases the Company
from any claim with respect to the cancelled Options.
4. RELOCATION EXPENSES. The Company agrees to reimburse Employee for up
to a maximum of $15,000 of reasonable documented direct out of pocket
expenses incurred by Employee to relocate to the Chicago, Illinois area
within 60 days after the date of this Agreement. The Company will pay to
Employee the aggregate amount of $118,794.00 representing the sum of all
previously unreimbursed relocation expenses claimed by Employee and an
additional amount for tax adjustment purposes no later than the first
regularly scheduled payroll period after the execution of this Agreement.
5. NONDISCLOSURE, NONCOMPETE, NONSOLICITATION. Employee acknowledges
that Employee shall continue to be bound by the Nondisclosure, Noncompete,
and Nonsolicitation covenants set forth in the Employment Agreement and the
Option Agreement in accordance with the terms of such covenants as modified
hereby. Notwithstanding any provision of the Noncompete provisions of the
Employment Agreement or the Option Agreement to the contrary, the Company
agrees to modify such Noncompete provisions to permit Employee to accept a
position in the property and casualty insurance business in a capacity
consistent with Employee's background and Employee shall not be prohibited
from being affiliated with any entity that competes with the Company;
provided however, that Employee does not engage in activities competitive
with any of the existing programs of the Company or its subsidiaries.
Employee further represents and warrants that Employee has not violated in
any manner the Nondisclosure, Noncompete, or Nonsolicitation provisions of
the Employment Agreement or the Option Agreement at any time during
Employee's employment by the Company or any subsidiary or predecessor of
the Company nor has Employee violated such Nondisclosure, Nonsolicitation
or Noncompete covenants (as modified by this Agreement) at any time after
the termination of Employee's employment with the Company.
6. RELEASE. Employee, individually, and on behalf of Employee's assigns,
heirs, executors, administrators, and legal representatives, hereby
irrevocably and unconditionally releases, waives and discharges any claims
against the Company, and each of its respective predecessors, successors,
parent companies, subsidiaries, affiliates, assigns, and their respective
employees, officials, employees, officers, directors, agents and legal
representatives (collectively, "Releasees"), from any and all claims,
demands, damages, actions causes of action, or suits in equity, of
whatsoever kind of nature, whether known or unknown, suspected or
unsuspected, that Employee had or which may arise by virtue of Employee's
employment with or separation from the Company, or otherwise arising out of
any event, action or omission occurring on or before the Effective Date of
this Agreement, including, but not limited to, (i) claims arising under
federal, state, or local laws prohibiting age, sex, race, national origin,
disability, religion, retaliation, or any other form of discrimination,
including but not limited to the Age Discrimination in Employment Act, as
amended, 29 U.S.C. 621 et seq.; Title VII of the 1964 Civil Rights Act, as
amended, 42 U.S.C. 2000e et seq.; the 1866 Civil Rights Act, 42 U.S.C.
1981; the Americans With Disabilities Act, 42 U.S.C. 12101 et seq.; the
Rehabilitation Act of 1973, 29 U.S.C. 701 et seq.; as well as applicable
state Fair Employment Practice laws, (ii) claims arising under the Fair
Labor Standards Act or the National Labor Relations Act, (iii) intentional
infliction of emotional distress (outrageous conduct) or any other tort
claims, (iv) common law claims, (v) breach of contract claims,
(vi) promissory estoppel claims, (vii) retaliatory discharge claims,
(viii) wrongful discharge claims, and/or (ix) any other legal and equitable
claims regarding Employee's employment with the Company, the continuation
of employment or the termination of said employment.
7. INDEMNIFICATION. Nothing in this Agreement shall be deemed to
terminate any indemnification obligations of the Company in effect prior to
the date hereof pursuant to which Employee was indemnified as an officer or
director of the Company.
8. CONFIDENTIALITY. Employee acknowledges that this Agreement is subject
to the approval of the Company and may contain terms and conditions that
differ from any similar type of agreement between the Company and any other
former employee of the Company. Unless otherwise permitted by the Chairman
of the Board of the Company, Employee agrees to keep confidential the terms
of this Agreement (and the terms of any other similar agreement with any
other past, present or future employee of the Company known to Employee)
and shall not disclose such terms to any other past, present or future
employee or otherwise.
9. REPRESENTATIONS. Employee warrants and represents that: (i) Employee
has read this Agreement and fully understands it to be a release and waiver
of all claims, known or unknown, present or future, that Employee has or
may have against the Company, its predecessors, successors, parent
companies, subsidiaries, affiliates, assigns, and employees, agents,
officers, directors or officials arising out of Employee's employment or
separation from employment, (ii) Employee has not transferred or assigned
any claim Employee may have against the Company, (iii) Employee has been
advised that Employee should consult with Employee's own attorney before
signing this Agreement, (iv) Employee is of legal age, is legally competent
to execute this Agreement, and that Employee executes this Agreement
voluntarily of Employee's own free will and accord, without reliance on any
representation of any kind or character not expressly stated in this
Agreement and without any coercion, undue influence, threat or intimidation
of any kind or type whatsoever, (v) any and all questions regarding the
terms of this Agreement have been asked and answered to Employee's complete
satisfaction, (vi) the consideration provided for herein is good and
valuable, (vii) except as provided by this Agreement, Employee has no
contractual right or claim to any or all of the money described in Section
2, and (viii) this Agreement has been entered into voluntarily and
knowingly by Employee and Employee has consulted with, or has had
sufficient opportunity to consult with, an attorney of Employee's own
choosing.
10. VIOLATION OF AGREEMENT. In the event that there has been a violation of
this Agreement by Employee, (i) no further payments of the severance
payment shall be payable by the Company, (ii) Employee shall promptly upon
demand by the Company return to the Company the amount of any portion of
the severance payment received by Employee and (iii) Employee agrees to pay
the Company's expenses caused by such breach, including the Company's
attorney's fees and expenses.
11. GOVERNING LAW. This Agreement shall be governed by, construed and enforced
in accordance with, and subject to, the laws of Texas.
12. COUNTERPARTS. This Agreement may be executed in multiple counterparts each
of which shall be deemed an original agreement and all of which shall
evidence one and the same Agreement.
13. SEVERABILITY AND REFORMATION. The parties hereto intend all provisions of
this Agreement to be enforced to the fullest extent permitted by law. If,
however, any provision of this Agreement is held to be illegal, invalid, or
unenforceable under present or future law, such provision shall be fully
severable, and this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision were never a part hereof, and
the remaining provisions shall remain in full force and effect and shall
not be affected by the illegal, invalid, or unenforceable provision or by
its severance.
14. NOTICES. All notices and other communication required or permitted to be
given hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally, mailed by certified mail (return receipt
requested) or sent by overnight delivery service, cable, telegram,
facsimile transmission or telex to the parties at the following addresses
or at such other addresses as shall be specified by the parties by like
notice:
(a) If to the Company: Millers American Group, Inc.
300 Burnett Street
Fort Worth, Texas 76102-2799
Attention: Chairman
Facsimile No.: (800) 826-9865
(b) If to Employee: To the address of Employee listed on
the signature page hereof
Notice so given shall, in the case of notice so given by mail, be
deemed to be given and received on the fourth calendar day after
posting, in the case of notice so given by overnight delivery service,
on the date of actual delivery and, in the case of notice so given by
cable, telegram, facsimile transmission, telex or personal delivery,
on the date of actual transmission or, as the case may be, personal
delivery.
15. ENTIRE AGREEMENT. IT IS UNDERSTOOD AND AGREED THAT THIS AGREEMENT
CONTAINS THE ENTIRE AGREEMENT BETWEEN THE PARTIES AND SUPERSEDES ANY AND
ALL PRIOR AGREEMENTS, ARRANGEMENTS, OR UNDERSTANDINGS BETWEEN THE PARTIES
RELATED TO THE SUBJECT MATTER. NO ORAL UNDERSTANDINGS, STATEMENTS,
PROMISES OR INDUCEMENTS CONTRARY TO THE TERMS OF THIS AGREEMENT EXIST.
THIS AGREEMENT CANNOT BE CHANGED, ALTERED OR TERMINATED ORALLY.
[Signature Page Follows]
<PAGE>
EXECUTED by Employee the 10th day of January, 2000.
Employee Millers American Group, Inc.
/S/ DAVID N. THOMPSON By: /S/ JOY J. KELLER
-------------------------------- ------------------------------
David N. Thompson Name: Joy J. Keller
Address: 910 Houston Street ----------------------------
Suite 901 Title: President
Fort Worth, Texas 76102 ----------------------------
Acknowledged:
/S/ CAROL A. THOMPSON
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Employee's Spouse
