<PAGE> 1
EXHIBIT 10.3
SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT (the "Agreement") is made and entered into as
of the 7 day of May, 2000, by and between F. GEORGE DUNHAM III, an individual
resident of the State of Texas ("Executive") and INSPIRE INSURANCE SOLUTIONS,
INC., a Texas corporation (the "Company"). The Company and Executive have
mutually agreed that it is appropriate for Executive to resign from all
positions he now holds with the Company on the terms set forth below.
1. RESIGNATION: Executive has resigned from all offices, directorships
and all other positions he currently holds with the Company effective May 3,
2000. The foregoing resignation includes Executive's position as trustee, agent,
advisor or committee member under all employee benefit plans and trusts of the
Company, and his position as authorized signatory on any and all bank accounts
of the Company.
2. PAYMENT TO EXECUTIVE: In return for the provisions and covenants
contained herein, the Company agrees to pay to Executive $1,300,000.00, less
federal income tax and other required withholdings.
3. INSURANCE: The Company shall allow Executive, his spouse, and family
to continue to enjoy the health care benefits provided under the Company's
health care plan until they become eligible for coverage under a comparable
group health care plan, provided a conversion privilege is available under the
Company's health care plan and for so long as such coverage remains renewable.
Furthermore, the Company will pay for the cost of such coverage for a period of
three years from the date of termination of employment, including the cost of
any guarantee of renewability. Thereafter, Executive will bear the cost of
insurance, including the cost of any guarantee of renewability.
4. INDEMNITY AND OFFICER/DIRECTOR INSURANCE: The Company acknowledges
that it has maintained Director's and Officer's Liability Insurance through the
date of this Agreement and applicable coverage thereunder is afforded to
Executive, subject to the terms and conditions therein contained. Additionally,
the Company acknowledges that Executive is entitled to any applicable indemnity
provided under Article VIII of the Company's Bylaws.
5. LEGAL DEFENSE: The Company agrees to continue to provide Executive
with a legal defense in the Class Action Suit styled Southland Securities
Corporation vs. INSpire Insurance Solutions, Inc., et al, Cause No. 99CV-243-R
pending in the United States District Court Northern District of Texas, and any
other litigation brought against Executive arising out of his role as an
officer/director during the period of Executive's employment, provided any such
litigation does not arise out of actions of Executive that are adverse to the
Company. The Company further agrees to provide Executive with separate counsel
on terms mutually acceptable to the parties in the event the Company's counsel
determines at any time while the litigation is continuing that a conflict exists
in its representation of both parties.
<PAGE> 2
6. CONFIDENTIAL INFORMATION: Executive acknowledges that during his
affiliation with the Company, he has been given access to or become acquainted
with certain confidential information relating to the organization, business,
properties, operation and condition of the Company, including, but not limited
to, financial, managerial and other corporate and business information and
records of the Company and its shareholders and its business processes,
customers, suppliers and other proprietary data as more fully described in
Section 12 "confidential data" under the Employment Contract between the parties
effective July 1, 1997 and Exhibit "C" thereto (the "Confidential Information").
Executive also assigns to the Company all proprietary rights in such material
and agrees to comply with all of the terms and conditions of said Section 12 and
to hold the Confidential Information in strict confidence and will not disclose,
publish, sell or license said Confidential Information to any third party, nor
use it in any manner.
7. NONINTERFERENCE AGREEMENT: In recognition of Executive's past and
future relationship with the Company, and in return for the agreements of the
Company made herein, Executive agrees that for a period of three (3) years
following the date hereof, (i) he will not solicit any employee of the Company
for employment or engage in any conduct designed to entice or suggest that an
employee leave the Company for any other opportunity and (ii) he will not
solicit the Company's current customers or those prospective customers shown in
the pipeline report to the Board of Directors of the Company of April 27, 2000.
8. NONDISPARAGEMENT: In return for the agreements herein made, the
parties hereto agree that each will not directly or indirectly do, say, write,
authorize or otherwise create or publish anything that will in any way disparage
the other party or any past or present employee, agent, officer or director or
consultant or other business associates of the Company.
9. RELEASE AND WAIVER OF CLAIMS:
(a) In consideration of the agreements of the Company herein,
the receipt and sufficiency of which Executive hereby acknowledges, except for
claims relating to breach of this Agreement and subject to the provisions of
Paragraphs 9(c) and (d) hereof, Executive knowingly and voluntarily hereby
fully, finally, completely and generally forever releases the Company, its
predecessors, successors, and its affiliates, officers and directors (the
"Released Parties"), from any and all claims, actions, demands, causes of
action, liabilities, debts and obligations of whatever kind or character,
whether now known or unknown, arising from, relating to or in any way connected
with any relationship that now exists or that ever may have existed between
Executive and the Company, including, without limitation, Executive's
shareholdings in the Company, Executive's directorships and/or offices and/or
other positions he may now hold or may have ever held with the Company or any of
its subsidiaries or affiliates; or claims, actions, demands, causes of action,
liabilities, debts and obligations of whatever kind or character, known or
unknown, arising from, relating to or in any way connected with Executive's
employment with or separation of employment from the Company or otherwise,
including any contractual claims of employment or claims of discrimination in
employment on the basis of race, color, sex, national origin, religion,
disability, age under the Age Discrimination in Employment Act, or any other
claim of discrimination under state or
<PAGE> 3
federal law anti-discrimination provisions, or handicap, if any, Executive may
have, and attorney's fees and costs, if any, occurring on or before the date of
this Agreement.
(b) In consideration of the agreements of Executive herein,
the receipt and sufficiency of which the Company hereby acknowledges, except for
claims relating to a breach of this Agreement and subject to the provisions of
Paragraphs 9(c) and (d) hereof, the Company knowingly and voluntarily hereby
fully, finally, completely and generally releases Executive from any and all
claims, actions, demands, causes of action, liabilities, debts and obligations
of whatever kind or character, whether known or unknown, arising from, relating
to or in any way connected with any relationship that now exists or that may
have existed between Executive and the Company, including, without limitation,
Executive's shareholdings in the Company, Executive's directorships and/or
offices and/or other positions he may now hold or may have ever held with the
Company or any of its subsidiaries or affiliates; or claims, actions, demands,
causes of action, liabilities, debts and obligations of whatever character,
known or unknown, arising from, relating to or in any way connected with
Executive's employment with or separation of employment from the Company or
otherwise; provided, however, the foregoing release and waiver shall not extend
to any fraudulent or willful or gross misconduct of Executive nor shall such
release and waiver extend to the provisions of Section 12 "confidential data"
contained in the employment contract between the parties, effective July 1,
1997.
(c) The Company agrees to and does hereby release Executive,
and Executive does hereby release the Company, from any and all terms,
conditions and covenants under the employment contract between the parties,
effective July 1, 1997, specifically including the covenant not to compete
contained in Section 11 of said contract; provided, however, and notwithstanding
the foregoing, Section 12 "confidential data" shall continue in full force and
effect.
(d) Notwithstanding anything contained herein to the contrary,
the release and waivers contained in this paragraph 9 shall not extend to or
otherwise affect the parties' respective rights, obligations and liabilities
contained in that certain Commercial Lease Agreement, dated November 13, 1998,
by and between the Company and IIS Realty, Ltd., and such agreement shall
continue in full force and effect and shall not be impaired or otherwise
affected by the foregoing waiver and release or any other terms and provisions
contained herein.
10. FULL PAYMENT: The payment described in Paragraph 2 satisfies all of
Executive's claims against the Released Parties, as well as any claim for
attorneys' fees against the Released Parties, in connection with the subject
matter of this Agreement. Executive further agrees that he will be responsible
for any personal income tax, FICA, or other tax liability, if any, resulting
from all payments under this Agreement, except such as may have been withheld by
the Company pursuant to Paragraph 2 of this Agreement.
11. STOCK OPTION AND OTHER BENEFIT PLANS: Executive's rights in the
Company's stock option and other benefit programs maintained by the Company
including his right to
<PAGE> 4
exercise outstanding options granted under the Company's stock option plan shall
be governed by the terms and conditions of the appropriate stock option and
other plans.
12. LEGAL CONSTRUCTION: If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws effective
during the term of this Agreement, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part of this Agreement; and the
remaining provisions of this Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement. Furthermore, in lieu of such illegal, invalid
or unenforceable provision, there shall be added automatically as part of this
Agreement, a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
THE PARTIES AGREE THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED AND ENFORCED UNDER
THE LAWS OF THE STATE OF TEXAS. THE PARTIES AGREE THAT ANY LITIGATION RELATING
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT MUST BE BROUGHT AND DETERMINED BY A
COURT OF COMPETENT JURISDICTION IN TARRANT COUNTY, TEXAS.
13. ENTIRE AGREEMENT: This Agreement supersedes that certain Letter of
Intent dated May 2, 2000 between the parties hereto and any and all other
agreements, either oral or in writing, between the parties hereto regarding the
parties or Executive's employment by the Company and contains all of the
covenants, agreements and understandings between the parties with respect to
such interests in any manner whatsoever.
14. EQUITABLE REMEDIES: Executive and the Company acknowledge that
neither party would enter into this Agreement but for the agreements of the
other contained herein and that the other would be irreparably injured by a
violation of the provisions of this Agreement and that neither would have
adequate remedy at law in the event of such violation. Therefore, Executive and
the Company acknowledge that injunctive relief, specific performance or any
other appropriate equitable remedy (without bond or other security being
required) are appropriate remedies to enforce compliance by the other of its
obligations hereunder.
15. SUCCESSORS: This Agreement shall be binding upon and inure to the
benefit of the parties, and shall be fully enforceable by the Company and its
successors and assigns. However, Executive understands and agrees that his
obligations and benefits pursuant to this Agreement are personal to Executive
and may not be assigned by Executive to any person.
16. COUNTERPARTS: This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute but one agreement.
17. REPRESENTATION: EXECUTIVE AND THE COMPANY HEREBY FURTHER REPRESENT
AND WARRANT THAT EACH HAS READ THE ABOVE PROVISIONS AND THAT EACH HAS HAD A
SUFFICIENT OPPORTUNITY TO DISCUSS THOROUGHLY THIS AGREEMENT WITH ANYONE THEY
MIGHT DESIRE PRIOR TO
<PAGE> 5
SIGNING BELOW. FURTHER, IN SIGNING THIS AGREEMENT, EXECUTIVE AND THE COMPANY
HAVE NOT RELIED ON OR BEEN INDUCED TO EXECUTE THIS AGREEMENT BY ANY STATEMENTS,
REPRESENTATIONS, AGREEMENTS OR PROMISES, ORAL OR WRITTEN, MADE BY THE OTHER, ITS
AGENTS, EMPLOYEES, SERVANTS OR ATTORNEYS OTHER THAN THOSE EXPRESSLY WRITTEN
ABOVE IN THIS AGREEMENT.
18. Executive understands that he will be allowed up to 21 days to
review and consider this Agreement before signing it. Executive understands that
he may use as little, or as much, of the 21-day period as he wishes prior to
signing. If Executive desires to enter into this Agreement, he will sign the
document and deliver it to Company within the 21-day period. If Executive does
not sign this document and deliver it to Company before the close of business
within the 21-day period, then this Agreement will not be effective or
enforceable and Executive will not receive the benefits stated above. Executive
may revoke this Agreement within seven days of signing it. Revocation may be
effected by presenting a written notice of revocation to Company not later than
the close of business on the seventh day after Executive signs this Agreement.
If Executive revokes this Agreement, it will not be effective or enforceable and
Executive will not receive the benefits stated above. If Executive does not
revoke this Agreement, its terms will be effective beginning eight days after
the day that Executive signs this Agreement. Immediately following Executive's
signature on this Agreement, Company will deliver a check for $1,300,000 to
Cantey & Hanger, L.L.P., to be held in trust for Executive throughout the 7-day
revocation period. If Executive revokes this Agreement within the seven days,
Cantey & Hanger, L.L.P. will return the consideration to Company. Otherwise,
Cantey & Hanger, L.L.P. will release the consideration to Executive on the
eighth day following his signature on this Agreement. Company has advised
Executive to consult with an attorney before signing this Agreement. Executive
understands that whether or not to do so is his decision, and he must pay any
costs that he incurs as a result of consulting with an attorney.
NOTICE TO SPOUSE
You and your spouse are hereby advised to consult with an attorney
prior to executing this Agreement. If you accept the terms of this Agreement, it
must be signed by you and your spouse and returned to the undersigned. After the
execution of this Agreement, you have a period of seven days in which you and
your spouse may revoke this Agreement. Notification of revocation should be in
writing and returned to the Company. The effective date of this Agreement (and
the date for payment of the amount due under Paragraph 2) is eight days after
you and your spouse execute this Agreement.
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
I have read and understood the foregoing Agreement, including the Release and
Waiver in Paragraph 9, have been advised to and have had the opportunity to
discuss it with anyone I desire, including an attorney of my own choice, agree
to its terms, acknowledge receipt of a copy of same, and the sufficiency of the
payments recited therein, and sign this Agreement, including the Release and
Waiver in Paragraph 9, voluntarily.
INSPIRE INSURANCE SOLUTIONS, INC.
By:
R. E. Cox, III, Chairman
F. GEORGE DUNHAM, III
[Signature] Dated:
SPOUSE'S AGREEMENT
The undersigned, ______________________________, being the spouse of
Executive, a party to this Agreement, by her execution of this Agreement in the
space provided below, joins with Executive and consents to the provisions of
this Agreement, and in particular consents to the release and waiver provisions
of Paragraph 9 of this Agreement, and agrees to be bound by the terms and
provisions of the Agreement to the same extent as her spouse, F. George Dunham,
III, with the effect that the undersigned shall be jointly and severally bound
by each agreement and obligation and release and waiver of F. George Dunham, III
contained in the Agreement. The undersigned confirms that I have read and
understood the foregoing Agreement, have been advised to and have had the
opportunity to discuss it with anyone I desire, including an attorney of my
choice, agree to its terms, acknowledge receipt of a copy of same, and the
sufficiency of the consideration recited therein, and sign this Agreement,
including the Release and Waiver in Paragraph 9, voluntarily.
[Signature] Dated:
