1
EXHIBIT (c)(10)
TRANSACTION AGREEMENT
This Agreement is made this 28th day of February, 1997, by and between
Acordia, Inc., a Delaware company (the "Company") and Keith A. Maib (the
"Executive").
WHEREAS, the Company, in anticipation of a possible Change in Control (as
hereinafter defined) desires to provide the Executive additional compensation
and benefits to assure the Company of the services of Executive prior to the
Change in Control; and
WHEREAS, the Company and the Executive have entered into an Employment
Agreement dated August 1, 1996, (the "Employment Agreement"), which may be
modified by mutual consent; and
WHEREAS, the Company and Executive have mutually agreed to modify the
Employment Agreement as set forth herein;
NOW, THEREFORE, it is hereby agreed as follows:
1. Definitions and Construction.
1.1. Definitions.
"Beneficiary" shall mean the person designated in writing by the
Executive on Attachment 1 hereof as the recipient of benefits in the event of
the death of the Executive.
"Board" shall mean the Board of Directors of the Company.
"Cause" shall mean a reasonable determination by the Chief Executive
Officer of the Company that Executive (i) failed to obey the reasonable and
lawful orders of the Company; (ii) acted with gross negligence in the
performance of his obligations or in a manner materially detrimental to the
Company and/or its subsidiaries; (iii) willfully breached or habitually
neglected his duty; (iv) has been convicted of a felony; (v) committed any act
involving dishonesty or fraud; or (vi) violated any of the provisions of Section
6 hereof.
"Change in Control" shall mean (i) a merger or consolidation in
which the Company is not the surviving entity; (ii) a change in majority of the
Board over a twenty-four (24) month period, not taking into account directors
nominated by a majority of the current directors; (iii) a complete liquidation
of the Company; or (iv) sale or disposition of all or a substantial part of the
Company's
2
assets, such as disposition of the assets relating to the brokerage business of
the Company.
"Compensation Committee" shall mean the Compensation Committee of
the Board.
"Disability" shall have the meaning set forth in the Company's long
term Executive Disability plan as in effect of execution of this Agreement.
"Salary" shall mean an annual base salary existing at the time of
execution of this Agreement ($225,004), plus increments thereon as of the time
of a Termination as a result of a Change in Control.
"Successor" shall mean any acquiror of a substantial portion of the
assets of the Company, and shall include an acquiror of the assets relating to
the brokerage business of the Company.
"Termination as a result of a Change in Control" shall occur if upon
or following a Change in Control or, with respect to (ii), if in anticipation of
a Change in Control,
(i) Anthem Insurance Companies, Inc., or one
of its affiliates ("Anthem"), or a Successor does not (x)
assume both the Employment Agreement and this Agreement and
(y) offer Executive a position comparable to his position at
the time of execution of this Agreement; or
(ii) Executive's position with the Company
is not comparable to his position at the time of execution of
this Agreement.
For purposes of this Agreement, a position shall not be comparable if (i)
Executive is assigned to any duties substantially inconsistent with his
position, duties or responsibilities with the Company immediately prior to the
Change in Control or his duties or responsibilities are substantially reduced as
compared with such duties and responsibilities immediately prior to the Change
in Control; (ii) Executive's Salary or target annual incentive or long term
incentive opportunities are materially reduced as compared to his Salary and
target annual incentives and long term incentive opportunities immediately prior
to the Change in Control; or (iii) Executive is assigned to duties or
responsibilities involving a residence relocation or business travel obligations
substantially greater than existing prior to the Change in Control. If Executive
2
3
accepts a position at Anthem, or a Successor, it shall be deemed to be
comparable for the purposes of this Agreement.
An event shall be deemed to be in anticipation of a Change in Control if it
occurs after the execution of this Agreement and if a Change in Control in fact
occurs within 12 months following the event.
A voluntary termination by Executive or a termination for Cause shall not
constitute a Termination as a result of a Change in Control.
1.2. Terms not otherwise defined shall have the meaning set forth in the
Employment Agreement.
1.3. In the event of any inconsistency between this Agreement and the
Employment Agreement, this Agreement shall control.
1.4. Other than Section 10 hereof, no provision of this Agreement shall
operate to reduce any amounts or benefits payable under the Employment
Agreement, standing alone or in aggregate, however, any benefit provided under
both agreements shall be paid only once.
2. Term of this Agreement. This Agreement shall expire on the earlier of (a)
December 31, 1997 or (b) the date on which Acordia and Anthem Insurance
Companies Inc. publicly announce that the companies are no longer pursuing the
possible disposition of the brokerage business of Acordia, provided, however,
that if on or before December 31, 1997, the Board has approved the general terms
of a transaction that would be a Change in Control, this Agreement shall be
extended to the earlier of the closing of the Change in Control or December 31,
1998.
3. Severance Compensation. In the event of a Termination as a result of a Change
in Control, Executive shall receive a severance payment equal to his Salary for
24 months' payable in accordance with Section 7.1 hereof, which should be in
lieu of any other severance.
4. Incentive Plans.
4.1. Annual Incentive Plan ("AIP") for 1997. Awards shall be determined
and paid under the AIP for the 1997 Plan Year based on the performance goals
established by the Compensation Committee. However, in the event of a Change in
Control prior to the payment of the 1997 Plan Year Award, such AIP Award payable
to Executive for the 1997 Plan Year shall be in an amount at least equal to the
full "target" level amount for the year.
3
4
4.2. Long Term Incentive Plan ("LTI") for 1997. The performance goals for
award of LTI payments based on 1997 performance shall include a Change in
Control. In the event of a Change in Control prior to the award of the 1997 Plan
Year LTI Award, such 1997 LTI Plan Year Award shall be of an amount at least
equal to the "target" level LTI for the 1997 Plan Year, and shall be fully
vested and paid to the Executive.
4.3. 1998 and 1999 AIP. In the event of a Termination as a result of a
Change in Control, Executive shall be paid an amount equal to 50% of the target
AIP award for each of the 1998 and 1999 Plan Years, which target amounts shall
each be at least equal to the 1997 AIP target award applicable to the Executive.
4.4. 1998 and 1999 LTI. In the event of a Termination as a result of a
Change in Control, Executive shall be paid an amount equal to 50% of the target
LTI awards for each of the 1998 and 1999 Plan Years, which target amounts shall
each be at least equal to the 1997 LTI target award applicable to the Executive.
4.5. Prior Stock Awards. All Company 1992 Stock Compensation Plan awards
will fully vest in the event of a Change in Control.
5. Benefits.
5.1. Retirement Programs. Service under the Company's Cash Balance Pension
Plan, the 401(k) Plan, and the Supplemental Executive Retirement Plan shall
cease as of the date of a Termination as a result of a Change in Control.
5.2. Health, Dental and Other. In the event of a Termination as a result
of a Change in Control, the Company shall provide continued coverage to
Executive and his or her dependents under the Company's welfare plans for the
period for which severance is paid under this Agreement at an after tax cost to
the Executive no greater than that incurred by similarly situated employees of
Anthem Insurance Companies Inc. during that same period. Such coverage shall be
provided either through the plans or by reimbursing the Executive for the cost
of COBRA coverage. Executive shall have rights to elect COBRA coverage without
any offset for periods of extended coverage under this Agreement upon expiration
of the severance period.
6. Restrictions on Executive. The provisions of the Employment Agreement
relating to Non-Disclosure, Return of Property and Competition (Sections 12, 13,
and 14) shall continue in full force and effect, and, if Executive is employed
by Anthem, the terms "Company" and "Assigned
4
5
Subsidiary" in those provisions shall refer to Anthem, as applicable.
7. Timing of Payments.
7.1. Severance. Subject to Section 8 hereof, severance payments shall
begin upon the date of Termination as a result of a Change in Control and shall
continue to be paid on the same basis as Salary is paid, until paid in full
(without regard to any Disability of Executive), or, in the event of the
Executive's death, any balance remaining due shall be paid in a lump sum, within
30 days of the death, to the Executive's Beneficiary in lieu of any other
severance.
7.2. 1998 and 1999 AIP and LTI. Subject to Section 8 hereof, the 1998 and
1999 AIP and LTI payments provided for in Sections 4.3 and 4.4 hereof shall be
paid ratably in equal bi-weekly installments over the period beginning on the
date of the Termination as a result of a Change in Control and ending on the
second anniversary of the Termination as a result of a Change in Control
(without regard to any disability of Executive), or in the event of the
Executive's death, any balance remaining due (i.e., amounts which would have
been paid had the death not occurred) shall be paid in a lump sum within 30 days
of the death, to the Executive's beneficiary.
8. Conditions. Payments made pursuant to this Agreement in connection with
termination of employment shall be made only upon execution of a written
release, in a form acceptable to the Company.
9. Anthem Guarantee. In the event the Successor to the Company does not assume
the obligations under this Agreement and the Employment Agreement, Anthem
Insurance Companies Inc. shall guarantee the obligations of the Company under
both agreements. In the event the Successor does assume such agreements, but
does not fulfill its obligations under Section 5, Anthem Insurance Companies
Inc. shall provide comparable benefits under its plans or programs.
10. Tax Provisions. Notwithstanding any other provision of this Agreement, if
there occurs a Change in Control and any payments made by the Company, Anthem,
or a Successor to Executive hereunder or otherwise would be subject to the
excise tax or taxes imposed by Section 4999 of the Internal Revenue Code of
1986, as amended ("Code") (hereinafter "Change in Control Payments"), then the
amount of such Change in Control Payments hereunder shall be determined by
comparing:
(a) amounts payable pursuant to this Agreement reduced by excise
taxes (and further reduced by
5
6
all other applicable taxes) using the highest marginal tax rates;
and
(b) the present value (as determined for purposes of Section 280G of
the Code) of not more in the aggregate than 2.99 times Executive's
applicable base amount under Section 280G of the Code.
The greater of (a) or (b) above shall be paid to Executive as Change
in Control Payments. Any applicable reductions shall be conclusively
determined by an independent auditor.
11. Miscellaneous.
11.1. Assignment. The Company, in its sole discretion, may assign its
rights and duties under this Agreement, but Executive may not. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of (a)
the Company and its Successors and assigns and any purchaser of the Company or
all or a substantial part of the Company's assets, such as the assets relating
to the brokerage business of the Company, and (b) Executive, and his designees
and his estate.
11.2. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana.
11.3. Severability. If any provision of this Agreement shall be determined
to be invalid, illegal or unenforceable in whole or in part, neither the
validity of the remaining part of such provision nor the validity of any other
provision of this Agreement shall in any way be affected. Should any particular
non-disclosure or non-competition covenant, provision or clause of this
Agreement be held unreasonable or unenforceable for any reason, including
without limitation, the time period, geographic area and/or scope of activity
covered by such covenant, provision or clause, the Company and Executive
acknowledge and agree that such covenant, provision or clause shall be given
effect and enforced to whatever extent would be reasonable and enforceable under
applicable law.
11.4. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions of this Agreement shall not be deemed a waiver of
such term, covenant or condition, nor shall any waiver or relinquishment of any
right or power under this Agreement at any one or more times be deemed a waiver
or relinquishment of such right or power at any other time or times.
6
7
11.5. Modifications. This Agreement may be modified or amended only by an
instrument in writing signed by all parties affected by the modification or
amendment.
11.6. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
11.7. Headings. The various headings of this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any of its provisions.
11.8 Remedies. Executive acknowledges that a remedy at law for any breach
or threatened breach of the provisions of this Agreement would be inadequate and
therefore agrees that the Company shall be entitled to injunctive relief, both
preliminary and permanent, in addition to any other available rights and
remedies in case of any such breach or threatened breach; provided, however,
that nothing contained herein shall be construed as prohibiting the Company from
pursuing any other remedies available for any such breach or threatened breach.
Executive further acknowledges and agrees that in the event of a breach by
Executive of any provision of this Agreement, the Company shall be entitled, in
addition to all other remedies to which the Company may be entitled under this
Agreement, to recover from Executive all reasonable attorney fees incurred by
the Company in enforcing this Agreement. The Company acknowledges and agrees
that in the event the Executive is the prevailing party in an action by the
Company to enforce this Agreement, the Executive shall be entitled to recover
from the Company all reasonable attorneys' fees incurred by the Executive in
defending the action.
11.9 Mitigation. Executive shall have no duty to mitigate nor shall the
obligations of the Company under this Agreement be reduced by any other
compensation earned by Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement.
EXECUTIVE ACORDIA, INC.
Name: Keith A. Maib
________________________________
By:_____________________________
Signed:_____________________________
Printed: Frank C. Witthun
_____________________________
Title: President and Chief Executive Officer
7
8
ANTHEM INSURANCE COMPANIES, INC.
By:_____________________________
Printed: Patrick M. Sheridan
________________________________
Title: Executive Vice President and
Chief Financial Officer
____________________________________
8
9
ATTACHMENT I
Beneficiary Designation: I hereby designate the beneficiary on file with the
Company's retirement plan as my Beneficiary for purposes of this Agreement. If I
have not designated a beneficiary under the Acordia Deferred Compensation
Program, I hereby designate ________________________ as my Beneficiary.
Signed:__________________________________
Executive
Date:____________________________________
9