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EXHIBIT (c)(5)
ACORDIA, INC.
DIRECTORS DEFERRED COMPENSATION PLAN
ARTICLE I.
INTRODUCTION AND RESTATEMENT OF PURPOSE
This instrument is a continuation and complete restatement,
effective January 1, 1995, of the Acordia, Inc. Directors Deferred Compensation
Plan (the "Plan"), originally effective April 1, 1992. The purpose of the Plan
is to allow Eligible Directors to elect whether to receive or defer payment of
Compensation.
ARTICLE II.
DEFINITIONS AND RULES OF CONSTRUCTION
Section 2.1. Definitions. As used in the Plan, the following
words and phrases, when capitalized, shall have the following meanings except
where used in a context that plainly requires a different meaning:
(a) "Accounts" means, with respect to a Participant, his Cash
Deferral Account and his Stock Deferral Account.
(b) "Affiliate" has the meaning given to that term in Rule
12b-2 under the Securities Exchange Act of 1934, as amended.
(c) "Beneficiary" means, with respect to a Participant, the
person or persons designated pursuant to Section 6.4 to receive
payments under the Plan in the event of the Participant's death.
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(d) "Board of Directors" means the Company's board of
directors.
(e) "Cash Compensation" means, with respect to an Eligible
Director, (1) meeting fees payable to the Eligible Director; and (2)
retainers payable to the Eligible Director, to the extent the Eligible
Director has elected to have those retainers paid in the form of cash.
(f) "Cash Deferral Account" means the bookkeeping account used
to record a Participant's interest attributable to his deferred Cash
Compensation and any cash dividends paid on Common Stock credited to
his Stock Deferral Account.
(g) "Committee" means the Committee appointed pursuant to
Article III to administer the Plan.
(h) "Common Stock" means the common stock, par value $1.00 per
share, of the Company.
(i) "Company" means Acordia, Inc.
(j) "Compensation" means, with respect to an Eligible
Director, the Cash Compensation and the Stock Compensation earned by
the Eligible Director for his serving in that capacity.
(k) "Deferral Agreement" means the written agreement entered
into between an Eligible Director and the Company pursuant to which the
Eligible Director elects to defer Compensation pursuant to the Plan.
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(l) "Eligible Director" means any individual serving as a
member of the Board of Directors who is not an officer or otherwise
employed by the Company or any of its Affiliates.
(m) "Fair Market Value" means with respect to a share of
Common Stock, the last sale price on the trading day of the appropriate
date of reference, or on the preceding trading day if the appropriate
date was not a trading day, of one share of Common Stock on the
principal exchange on which such shares are listed, or if not listed on
an exchange, on the NASDAQ National Market System or any similar system
then in use, or, if shares of the Common Stock are not listed on the
NASDAQ Market System, the mean between the closing high bid and low
asked quotations of one share of Common Stock on the date in questions
as reported by NASDAQ or any similar system then in use, or, if no such
quotations are available, the Fair Market Value on the date in question
of one share of Common Stock as the Committee shall determine.
(n) "Investment Return" means, with respect to any calendar
year, the average of the monthly average rates of the ten-year United
States Treasury Notes for the 12-month period ending on September 30 of
the preceding calendar year plus 150 basis points.
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(o) "Participant" means the Eligible Director who has elected
to defer Compensation pursuant to Article IV of the Plan.
(p) "Plan" means the Acordia, Inc. Directors Deferred
Compensation Plan, as set forth in this instrument and as amended from
time to time.
(q) "Stock Compensation" means, with respect to an Eligible
Director, the retainers earned by the Eligible Director for his serving
in that capacity, to the extent the Eligible Director elects to have
those retainers paid in the form of Common Stock.
(r) "Stock Deferral Account" means the bookkeeping account
used to record the interest of a Participant attributable to his
deferred Stock Compensation and any stock dividends paid on the Common
Stock credited to his Accounts.
Section 2.2. Rules of Construction. The following rules of
construction shall govern in interpreting the Plan.
(a) Governing Law. The provisions of this instrument shall be
construed and governed in all respects under and by the internal laws
of the State of Indiana.
(b) Gender. Words used in the masculine gender shall be
construed to include the feminine gender, where appropriate, and vice
versa.
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(c) Number. Words used in the singular shall be construed to
include the plural, where appropriate, and vice versa.
(d) Headings. The headings and subheadings in the Plan are
inserted for convenience of reference only and are not to be considered
in the construction of any provision of the Plan.
(e) Savings Clause. If any provision of the Plan shall be held
to be illegal or invalid for any reason, that provision shall be deemed
to be null and void, but the invalidation of that provision shall not
otherwise impair or affect the Plan.
ARTICLE III.
ADMINISTRATION
Section 3.1. Committee. The Company shall appoint a Committee
of not less than three persons to represent the Company in all matters
concerning the administration of this Plan. Members of the Company's Board of
Directors are not eligible for appointment. The Company may remove a Committee
member for any reason by giving him written notice and may fill any vacancies
thus created. All decisions of the Committee shall be by vote of a majority of
its members.
Section 3.2. Powers and Duties of the Committee. Subject to
the specific limitations stated in this Plan, the Committee shall have the
following powers, duties, and responsibilities:
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(a) To carry out the general administration of the Plan;
(b) To cause to be prepared all forms necessary or appropriate
for the administration of the Plan;
(c) To keep appropriate books and records;
(d) To determine amounts to be distributed to participants and
others under the provisions of the Plan;
(e) To determine, consistent with the provisions of this
instrument, all questions of eligibility, rights, and status of
Participants and others under the Plan;
(f) To adopt rules and regulations for the administration of
the Plan, provided that the rules are not inconsistent with the
provisions of this Plan, and to interpret, alter, amend, or revoke any
rules and regulations they have adopted;
(g) To interpret, with discretionary authority, the provisions
of this Plan and to resolve with discretionary authority, all disputed
questions of Plan interpretation and benefit eligibility; and
(h) To exercise all other powers and duties specifically
conferred upon the Committee elsewhere in this instrument.
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ARTICLE IV.
ELIGIBILITY AND PARTICIPATION
Section 4.1. Participation. Any Eligible Director may become a
Participant by electing to defer Compensation pursuant to Section 4.2.
Section 4.2. Election to Defer Compensation.
(a) Election Procedure. Within a reasonable time before the
beginning of each calendar year, the Committee shall provide each
Eligible Director with a Deferral Agreement. An Eligible Director may
elect to defer Compensation for a calendar year by submitting a
completed Deferral Agreement to the Committee prior to the first day of
the calendar year. On the Deferral Agreement, the Eligible Director
shall indicate the amount or percentage of his Cash Compensation, if
any, to be deferred for the calendar year and the amount or percentage
of his Stock Compensation, if any, to be deferred for the calendar
year. Subject to Subsection (b), an election made under this Section
shall be effective as of the first day of the calendar year. The
election for any calendar year shall be irrevocable, but a Participant
may make a new election for each calendar year in which he is an
Eligible Director.
(b) New Participant Deferrals. If an Eligible Director becomes
an Eligible Director subsequent to January 1 of a calendar year and has
not previously
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served as a member of the Board of Directors, that Eligible Director
may elect within 30 days of his election as an Eligible Director to
defer all or any part of his Compensation for the remainder of the
calendar year in which he was elected. The Eligible Director's election
shall be irrevocable. Elections for calendar years beginning after a
Participant's initial deferral election shall be governed by Subsection
(a).
ARTICLE V.
PARTICIPANTS' ACCOUNTS
Section 5.1. Establishment of Accounts. The Committee shall create and
maintain adequate records to disclose the interest in the Plan of each
Participant and Beneficiary. Records shall be in the form of individual
bookkeeping accounts, which will be credited with deferrals pursuant to Section
4.2 and with dividends and Investment Return pursuant to this Article V. Each
Participant who defers Cash Compensation shall have a separate Cash Deferral
Account. Each Participant who defers Stock Compensation shall have a separate
Stock Deferral Account and a separate Cash Deferral Account. A Participant's
interest in his Accounts shall be fully vested at all times.
Section 5.2. Cash Deferral Account.
(a) Crediting of Cash Compensation and Deferrals. A Participant's Cash
Compensation shall be credited with all Cash Compensation deferred by the
Participant
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pursuant to Section 4.2. A Participant's Cash Compensation deferral
shall be credited to his Cash Deferral Account as of the date on which
the deferred Cash Compensation otherwise would have been paid to the
Participant.
(b) Crediting of Investment Return. For each calendar year, a
Participant's Cash Deferral Account shall be credited with an
Investment Return pursuant to this Subsection.
(1) On or before December 31 of each year, the Company shall
estimate the Investment Return for the following calendar year. The
actual investment return to be credited to Participants' Cash Deferral
Accounts for a calendar year shall be equal to the Investment Return.
(2) Investment Return shall be credited to a Participant's
Cash Deferral Account monthly, on the last day of each month, based on
the value of the Participant's Cash Deferral Account as of the last day
of the immediately preceding month and upon the Investment Return
estimated by the Company pursuant to Paragraph (1) above.
(3) Notwithstanding any termination of the Plan pursuant to
Article VII, Investment Return shall continue to be credited to a
Participant's Cash Deferral Account until all amounts credited to that
Account have been distributed.
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(c) Crediting of Cash Dividends. A Participant's Cash Deferral
Account shall be credited with the amount of any cash dividend (or the
Fair Market Value of a dividend paid in property other than Common
Stock) paid on Common Stock credited to the Participant's Stock
Deferral Account.
Section 5.3. Stock Deferral Account.
(a) Crediting of Stock Deferrals. A Participant's Stock
Deferral Account shall be credited with all Stock Compensation deferred
by the Participant pursuant to Section 4.2. A Participant's Stock
Compensation deferral shall be credited to his Stock Deferral Account
as of the date on which the deferred Stock Compensation otherwise would
have been paid to the Participant.
(b) Crediting of Stock Dividends. A Participant's Stock
Deferral Account shall be credited with a number of full or fractional
shares of Common Stock paid as a dividend on Common Stock credited to
the Participant's Stock Deferral Account.
(c) Other Adjustments. The value of a Participant's Stock
Deferral Account shall also be appropriately adjusted for any change in
the Common Stock by reason of any recapitalization, reorganization,
merger, consolidation, or any similar change affecting the Common
Stock.
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Section 5.4. Accounts Unfunded. Accounts shall be accounting accruals,
in the names of Participants, on the Company's books. Accounts shall be
unfunded, so that the Company's obligation to pay amounts due under the Plan is
merely a contractual duty to make payments when due under the Plan. The
Company's promise to pay amounts under the Plan shall not be secured in any way,
and the Company shall not set aside or segregate assets for the purpose of
paying its obligations under the Plan.
ARTICLE VI.
PAYMENT OF DEFERRED COMPENSATION
Section 6.1. General Distribution Rules. Compensation deferred under
the Plan for each calendar year, together with any attributable Investment
Return and dividends, shall be distributed in accordance with the election made
by the Participant for that calendar year pursuant to Section 6.2. Amounts
credited to a Participant's Cash Deferral Account shall be distributed in cash.
Amounts credited to a Participant's Stock Deferral Account shall be distributed
in the form of Common Stock, except that fractional shares of Common Stock shall
be distributed in cash.
Section 6.2. Distribution Elections. As part of his Deferral Agreement
for each calendar year, a Participant may select, from among the options
described in this Section, the form and time for the payment of his Compensation
deferred for the calendar year (and any
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attributable Investment Return and dividends). A Participant's election for each
calendar year shall be irrevocable, but the Participant may make a new election
for each calendar year's deferrals.
(a) Time of Distribution. As part of his Deferral Agreement
for each calendar year, the Participant shall specify, with respect to
the Compensation deferred pursuant to the Deferral Agreement, the year
to which payment of the Compensation is deferred. Amounts payable in a
lump sum shall be paid on January 1 of the year to which payment has
been deferred. Distribution of amounts payable in installments shall
begin on January 15th of the year to which payment is deferred, and
subsequent installments shall be made on January 15th of each
succeeding year in the distribution period.
(b) Form of Distribution. As part of his Deferral Agreement
for a calendar year, a Participant shall elect to have his deferred
Compensation for the calendar year (and attributable Investment Return
and dividends) distributed in one of the following forms:
(1) A lump sum payment; or
(2) Substantially equal annual installments
over a specified number of years not exceeding 10.
Section 6.3. Distributions Upon Death. If a Participant dies before all
amounts credited to his Accounts are distributed, the balance of his Accounts
shall be paid
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to his Beneficiary in the same manner they would have been paid to the
Participant had he survived to the payment date.
Section 6.4. Designation of Beneficiary. Each Participant, at the
time he elects to participate in the Plan, shall file with the Committee a
Beneficiary designation, on a form supplied by the Committee, designating one or
more Beneficiaries to receive payments otherwise due to the Participant in the
event of the Participant's death. A Beneficiary designation will be effective
only if the signed Beneficiary designation form is filed with the Committee
during the Participant's life. Filing of a completed and signed Beneficiary
designation form will cancel all Beneficiary designations previously signed and
filed with the Committee. A Participant may designate one or more primary
Beneficiaries and one or more contingent Beneficiaries. If no designated primary
Beneficiary survives the Participant, amounts remaining unpaid at the time of
the Participant's death shall be paid to the contingent Beneficiary surviving
the Participant who is next in the order specified by the Participant. If that
contingent Beneficiary dies before receiving all of the amounts due under the
Plan, the unpaid amount shall be paid to the contingent Beneficiary's estate. If
no person has been designated as the Participant's Beneficiary, or if no person
designated as Beneficiary survives the Participant, the Participant's estate
shall be his Beneficiary.
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ARTICLE VII.
AMENDMENT AND TERMINATION
Section 7.1. Amendment. The Company reserves the right to
amend the Plan at any time by action of the Board of Directors. The Company,
however, may not make any amendment that affects the rights of Participants or
their Beneficiaries to receive payment with respect to any Compensation deferred
prior to the date of the amendment.
Section 7.2. Termination. The Company reserves the right to
terminate the Plan at any time as it deems appropriate. In the event the Company
elects to terminate the Plan, the Company shall notify each Participant in
writing of its intent to terminate the Plan at least two weeks prior to the
termination date. In the event of termination, each Participant's Account shall
be distributed in the form elected by the Participant pursuant to Section 6.2.
To the extent distribution of a Participant's Account has not begun before the
termination date, distribution shall commence as though the Participant had
elected pursuant to Subsection 6.2(a) to have payment of his deferred
Compensation under the Plan commence in the first calendar year beginning after
the termination date.
Section 7.3. Restoration of Compensation. If the Plan is
terminated pursuant to Section 7.2, then with respect to periods after the
effective date of the termination, an Eligible Director's full Compensation
shall be paid on a non-deferred basis.
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ARTICLE VIII.
MISCELLANEOUS
Section 8.1. Relationship. Notwithstanding any other provision
of this Plan, this Plan and any action taken pursuant to it shall not be deemed
or construed to establish a trust or fiduciary relationship of any kind between
or among the Company, Participants, Beneficiaries, or any other persons. The
Plan is intended to be unfunded for purposes of the Internal Revenue Code of
1986, as amended. The rights of Participants and Beneficiaries to receive
payment of Deferred Compensation pursuant to the Plan is strictly a contractual
right to payment, and this Plan does not grant, nor shall it be deemed to grant,
Participants, Beneficiaries, or any other person any interest in or right to any
of the funds, property, or assets of the Company other than as a general
unsecured creditor of the Company.
Section 8.2. Nonassignability Clause. Neither a Participant
nor his Beneficiary or any other person shall have any right or power to
transfer, sell, assign, commute, anticipate, pledge, alienate, or otherwise
convey or encumber in advance any of the payments that may become due under the
Plan, and any attempt to do so shall be void. Any payments that may become due
under this Plan are expressly declared to be nonassignable and nontransferable
and shall not be subject to attachment, garnishment, execution, or be
transferrable by operation of law in the event of
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bankruptcy, insolvency, or otherwise, except to the extent otherwise required
by law.
Acordia, Inc. has caused this Acordia, Inc. Directors Deferred
Compensation Plan to be executed by its duly authorized officers as of the ____
day of December, 1994.
ACORDIA, INC.
DATED:_____________________ By:_________________________
Chairman and
Chief Executive Officer
ATTEST:
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Secretary
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