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EXHIBIT 10(y)
SETTLEMENT AGREEMENT AND GENERAL RELEASE

 
THIS  SETTLEMENT AGREEMENT AND GENERAL RELEASE is made and entered into by and
between G. Edward Combs (hereinafter collectively referred to as "Combs"), and
21st CENTURY INSURANCE GROUP, and the agents, employees, divisions, subsidiaries
and related companies of 21st CENTURY INSURANCE GROUP (hereinafter collectively
referred to as the "Company").
 
WHEREAS, Combs is voluntarily resigning his employment with the Company
effective December 31, 2004; and
 
WHEREAS, Combs and the Company desire to fully and finally settle all matters
and differences between them, including, but not limited to, all matters and
differences arising out of Combs’ employment with the Company, his resignation
from the Company, and any and all administrative complaints or lawsuits which
have been or may be filed by Combs against the Company; and
 
WHEREAS, Combs hereby represents to the Company that he has discussed all
aspects of any claims, causes of action, or rights he may have against the
Company, and this Settlement Agreement and General Release, with his legal
counsel, if any, to the fullest extent he deems appropriate and necessary, that
he has been fully advised by his legal counsel as to his rights to the fullest
extent he deems appropriate and necessary, that he understands that he may be
waiving significant legal rights or claims by signing this Agreement, and that
he enters into this Settlement Agreement and General Release with a full and
complete understanding of its terms; and
 
WHEREAS, all parties hereto represent and agree that this Settlement Agreement
and General Release is the result of negotiation between the parties concerning
its terms; and
 
WHEREAS, the Company has a legitimate right and interest to prevent unauthorized
and impermissible disclosure of its trade secrets, confidential and proprietary
information;
 
NOW, THEREFORE, in consideration of the premises and mutual promises herein
contained, it is agreed as follows:
 
Initial /s/ GEC______
Page 1 of 9
Date 12/8/2004_____

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(1)
NON - ADMISSION OF LIABILITY

 
This Settlement Agreement and General Release shall not in any way be construed
as an admission by the Company of any liability or wrongful conduct whatsoever,
or as an admission by the Company of any acts of discrimination or wrongful
conduct whatsoever against Combs, or against any other persons, and the Company
specifically disclaims any liability to, wrongful conduct toward, or
discrimination against Combs, or against any other persons, on the part of
itself, its employees, its agents, its divisions, or its related companies or
their employees or agents.

 
(2)
RESIGNATION BY COMBS AND NO RE-EMPLOYMENT BY THE COMPANY

Combs irrevocably agrees that effective December 31, 2004, he will voluntarily
resign from active employment with the Company and as an officer of the Company
and officer or director with each of its subsidiaries.
 
Combs further agrees that he will not at any time hereafter apply for or seek
employment with the Company or any of its subsidiaries. In the event that such
an application is filed by Combs, he agrees that the Company shall have the
absolute right to reject, or to refuse to process, that application, without
recourse by him.

 
(3)
AVAILABILITY OF COMBS IN PENDING OR FUTURE LITIGATION

Combs agrees that he will make himself available to the Company and its counsel
in connection with any pending or future litigation or administrative proceeding
where his knowledge and truthful testimony may be required. Combs further agrees
that he shall be entitled to no other moneys, compensation or consideration,
except those as set forth in paragraph “5” hereof entitled “Consideration by the
Company”, except that if he incurs out-of-pocket expenses in conjunction with
providing such assistance, knowledge or testimony, he will be reimbursed for
such out-of-pocket expenses. Combs will be given reasonable notice of such need
for his availability, which must also take into account that he may be engaged
in other employment.
 
Initial /s/ GEC______
Page 2 of 9
Date 12/8/2004_____

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(4)
NONDISCLOSURE AND NONINTERFERENCE

 
Combs agrees that he shall not now nor in the future engage in any unfair
competition prohibited under California law with respect to the Company, shall
not disclose to third parties any of the Company's confidential or proprietary
information, and including and in connection therewith agrees that he shall not
now nor in the future violate any provision of the California Uniform Trade
Secrets Act, California Civil Code §§ 3426 et seq. or for a period of 18 months
following the date hereof, engage in any solicitation of the Company's
employees. The Company agrees to use its best efforts to cease using Combs’ name
in any advertising materials mailed or published 30 days after the effective
date of this Agreement.

 
(5)
CONSIDERATION BY THE COMPANY

 
The Company agrees that when it receives the original of this Settlement
Agreement and General Release executed by Combs, and when the waiting periods
specified in paragraphs 12 and 13 below have expired, the Company will:

 
(a)
Pay Combs the equivalent of fourteen months’ salary ($385,000) in a lump sum
payment.

     

 
(b)
Pay Combs a cash bonus of $272,250 for his 2004 performance.

     

 
(c)
Vest Combs’ currently unvested 58,510 stock options (granted February 26, 2003)
as of the effective date of his termination.

     

 
(d)
Vest Combs’ remaining 3,000 shares of Restricted Stock at termination.

     

 
(e)
Pay Combs his accrued, vested, but unused vacation pay.

     

 
(f)
Provide Combs with COBRA medical coverage consistent with his current coverage
for 18 months following termination, to be paid for by the Company.

     

 
(g)
Provide Combs with six months of outplacement services with a professional
outplacement firm.

     

 
(h)
Give Combs his laptop computer, docking station and printer (after removal of
company information and software).

Initial /s/ GEC______
Page 3 of 9
Date 12/8/2004_____

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(6)
NO OTHER FILINGS

 
Combs represents that he has not filed nor will he file any charges or
complaints against the Company with either the United States Equal Employment
Opportunity Commission or the State of California Department of Fair Employment
and Housing, or any other local, state, or federal agency (except for Workers
Compensation and unemployment claims, which are not released pursuant to Section
10 below), and that if any of these agencies assumes jurisdiction of any
complaint or charge against the Company on behalf of Combs, based upon Combs’
employment with the Company or his resignation from the Company, or any other
matter concerning or pertaining to Combs, and the Company, Combs will
immediately request said agency to withdraw from the matter.
 
Combs also covenants and represents that he shall have no right whatsoever to
file any lawsuit nor institute any other legal proceedings of any type
whatsoever against the Company based upon or arising out of or during Combs’
employment with the Company, or any other matter pertaining to Combs and the
Company based upon facts, acts, or omissions occurring prior to the date of the
signing of this Agreement by Combs.

 
(7)
RETURN OF COMPANY PROPERTY

Combs agrees that he will return to the Company all Company property, with the
exception of those items listed in 5(h), including Company documents in his
possession, including documents stored electronically on any media.

 
(8)
CONFIDENTIALITY

Combs represents and agrees that he will keep the terms of this Settlement
Agreement and General Release completely confidential, and that he will not
hereafter disclose any information concerning the contents of this settlement to
anyone, specifically including, but by no means limited to, any past, present,
or prospective employee or applicant for employment of the Company or to any
representative of any media, except for his legal and tax advisors and immediate
family, whom he will inform of the terms of this confidentiality provision and
their obligations to comply with it. Combs understands that the Company may
disclose this Settlement Agreement and General Release to its auditors,
regulators, or as otherwise required by law or regulation.
 
Initial /s/ GEC______
Page 4 of 9
Date 12/8/2004_____

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(9)
FULL AND INDEPENDENT KNOWLEDGE

 
Combs represents and agrees that he has thoroughly discussed all aspects of this
Settlement Agreement and General Release with his legal counsel, if any, to the
fullest extent he deems appropriate and necessary, that his legal counsel, if
any, has fully explained to Combs as to his legal rights and that he may be
waiving significant legal rights by signing this Settlement Agreement and
General Release, that he has carefully read and fully understands all of the
provisions of this Settlement Agreement and General Release, and that he is
voluntarily entering into this Settlement Agreement and General Release.

 
(10)
COMPLETE RELEASE

 
Combs does hereby, and for his heirs, representatives, successors, and assigns,
release, acquit, and forever discharge the Company and the Company's owners,
stockholders, predecessors, successors, assigns, agents, directors, officers,
employees, representatives, attorneys, subsidiaries, affiliates (and agents,
directors, officers, employees, representatives and attorneys of such
subsidiaries and affiliates) and all persons acting by, through, under or in
concert with any of them, from any and all charges, complaints, claims,
liabilities, obligations, promises, agreements, controversies, costs, losses,
debts, expenses, damages, actions, causes of action, suits, rights, and demands,
of any nature whatsoever, known or unknown, suspected or unsuspected, from the
beginning of time to the date of execution hereof (hereinafter "Claim" or
"Claims"). This release of Claims includes a release of any rights or claims
Combs may have under the Age Discrimination in Employment Act of 1967, as
amended, which prohibits age discrimination in employment; Title VII of the
Civil Rights Act of 1964, which prohibits discrimination on the basis of race,
color, religion, creed, national origin or sex; the Equal Pay Act, which
prohibits paying men and women unequal pay for equal work; or any other local,
state, or federal law or regulation, including, but not limited to, such local,
state, or federal law or regulation prohibiting employment discrimination. This
release of Claims also includes a release by Combs of any claims for wrongful
termination of employment, intentional or negligent infliction of emotional
distress, fraud, or any other claims based upon any local, state, or federal
common law, statute, or other basis for liability, except for claims under the
California Workers Compensation Act, the California Unemployment Insurance
Compensation Act, the Occupational Safety and Health Act, Social Security, the
Employee Retirement Income Security Act, and other claims which cannot be waived
as a matter of law or public policy.
 
Initial /s/ GEC______
Page 5 of 9
Date 12/8/2004_____

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(11)
UNKNOWN CLAIMS

Combs expressly waives and relinquishes all rights and benefits afforded by
Section 1542 of the Civil Code of the State of California, and does so
understanding and acknowledging the significance and consequence of such
specific waiver of Section 1542. Section 1542 of the Civil Code of the State of
California states as follows:
 
"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 his must have materially affected his settlement with the debtor."
 
Thus, notwithstanding the provisions of Section 1542, and for the purposes of
implementing a full and complete release and discharge of the Company, and the
Company's owners, stockholders, predecessors, successors, assigns, agents,
directors, officers, employees, representatives, attorneys, subsidiaries,
affiliates (and agents, directors, officers, employees, representatives and
attorneys of such subsidiaries and affiliates), and all persons acting by,
through, or in concert with any of them, Combs expressly acknowledges that this
Settlement Agreement and General Release is intended to include in its effect,
without limitation, all Claims which Combs does not know or suspect to exist in
his favor at the time of execution hereof, and that the settlement agreed upon
contemplates the extinguishment of any such Claim or Claims.

 
(12)
PERIOD FOR REVIEW AND CONSIDERATION OF AGREEMENT

Combs understands and acknowledges that he has been given a period of twenty-one
(21) days to review and consider this Agreement before signing it. Combs further
understands and acknowledges that he may use as much of this twenty-one (21) day
period as he wishes prior to signing this Agreement.
 
Initial /s/ GEC______
Page 6 of 9
Date 12/8/2004_____

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(13)
COMBS’ RIGHT TO REVOKE AGREEMENT

 
Combs acknowledges and represents that he understands that he may revoke this
Agreement within seven (7) days of his signing it. Revocation can be made by
delivering a written notice of revocation to Richard A. Andre, Senior Vice
President of Human Resources, 21st Century Insurance Group, 6301 Owensmouth
Avenue, Woodland Hills, California 91367. For this revocation to be effective,
written notice must be received by Richard A. Andre no later than the close of
business on the seventh day after Combs signs this Agreement otherwise, Combs
agrees to provide written notice to Richard A. Andre after the expiration of the
revocation period of this Agreement that he has elected not to revoke. If Combs
revokes this Agreement, no part of this Agreement shall be effective or
enforceable for any purpose, and Combs will not be entitled to receive any of
the benefits described in paragraph 5 entitled "Consideration by the Company."

 
(14)
NO REPRESENTATIONS

Combs acknowledges that, except as expressly set forth herein, no
representations of any kind or character have been made to his by the Company,
or by any of its agents, employees, representatives, or attorneys to induce the
execution of this Settlement Agreement and General Release.

 
(15)
OWNERSHIP OF CLAIMS

Combs represents and agrees that he has not heretofore assigned or transferred,
or purported to have assigned or transferred, to any person whomsoever, any
Claim or any portion thereof or interest therein, and Combs agrees to indemnify,
defend, and hold harmless the Company and all others persons released herein,
against any and all Claims, based on, arising out of, or in connection with any
such transfer or assignment or purported transfer or assignment, of any Claims,
or any portion thereof or interest therein.
 
Initial /s/ GEC______
Page 7 of 9
Date 12/8/2004_____

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(16)
SUCCESSORS

 
This Settlement Agreement and General Release shall be binding upon Combs and
his heirs, representatives, successors and assigns, and shall inure to the
benefit of the Company, and the Company's owners, stockholders, predecessors,
successors, assigns, agents, directors, officers, employees, representatives,
attorneys, subsidiaries, affiliates (and agents, directors, officers, employees,
representatives and attorneys of such subsidiaries and affiliates), and all
persons acting by, through, under or in concert with any of them, and to their
heirs, representatives, successors, and assigns.

 
(17)
MISCELLANEOUS

 
(a)
This Settlement Agreement and General Release shall in all respects be
interpreted, enforced and governed under the laws of the State of California.
The language of all parts of this Settlement Agreement and General Release shall
in all cases be construed as a whole, according to its fair meaning, and not
strictly for or against any of the parties.

     

 
(b)
In the event of a breach of this Agreement by Combs, the Company may immediately
terminate payment of any consideration otherwise due to Combs under Paragraph 5
of this Agreement without further obligation. Such remedy is in addition to any
other remedies that the Company may assert against Combs as a result of a breach
of this Agreement by Combs.

     

 
(c)
Should any provision of this Settlement Agreement and General Release be
declared or determined by any Court to be illegal or invalid, the validity of
the remaining parts, terms, or provisions shall not be affected thereby and said
illegal or invalid part, term, or provision shall be deemed not to be a part of
this settlement Agreement and General Release.

     

 
(d)
As used in this Settlement Agreement and General Release, the masculine,
feminine or neuter gender and the singular or plural number, shall be deemed to
include the others whenever the context so indicates or requires.

 
 
Page 8 of 9
 

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(e)
This Settlement Agreement and General Release sets forth the sole and entire
agreement between the parties hereto and there are no other agreements, whether
oral, written, express or implied, not set forth in this Settlement Agreement
and General Release. This Settlement Agreement and General Release fully
supersedes any and all prior agreements or understandings between the parties
hereto pertaining to the subject matter hereof, including but not limited to the
Retention Agreement executed April 4, 2003. Notwithstanding the foregoing, all
Indemnity Agreements entered into between Combs and the Company, and its
subsidiaries, shall continue in full force and effect according to their terms.

PLEASE READ CAREFULLY. THIS SETTLEMENT AGREEMENT AND GENERAL RELEASE INCLUDES A
RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

Executed at Woodland Hills, California,
this 8th day of December, 2004
 
/s/ G. Edward Combs
 
Executed at Woodland Hills, California,
this 8th day of December, 2004.
 
/s/ Richard A. Andre
G. EDWARD COMBS
 
RICHARD A. ANDRE
Senior Vice President, Human Resources
21st Century Insurance Group

 
Page 9 of 9
 

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