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EXHIBIT (c)(12)
TRANSACTION AGREEMENT
This Agreement is made this 28th day of February, 1997, by and between
Acordia, Inc., a Delaware company (the "Company") and Daniel W. Kendall (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 to effect a smooth transition after the
Change in Control, by providing for consulting services by the Executive;
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 I hereto 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
7 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 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.
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"Disability" shall have the meaning set forth in the Company's
long term Executive disability plan as in effect at the time of execution of
this Agreement.
"Salary" shall mean an annual base salary existing at the time
of execution of this Agreement ($140,010), 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 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
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.
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A voluntary termination by Executive or a Termination for Cause shall not
constitute a Termination as a result of a Change in Control.
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 which 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. Services of Executive. During any period for which Executive is receiving
compensation and benefits pursuant to this Agreement from the Company, Anthem,
or a Successor, Executive shall be available to provide consulting services
reasonably requested by such Company, Anthem, or Successor. Subject to the
obligations under Section 7, this provision shall not be construed to preclude
Executive from accepting full-time employment elsewhere.
4. Consulting Payments. In the event of a Termination as a result of a Change in
Control, Executive shall be treated as an employee of Anthem for a period ending
on October 31, 1998; and shall receive compensation equal to 12 months' Salary
for the period from Termination as a result of Change in Control to October 31,
1998.
5. Incentive Plans.
5.1. 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.
5.2. 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.
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6. Benefits.
6.1. Retirement Programs. In the event of a Termination as a result of
a Change in Control, Executive shall continue to accumulate benefit service as
an employee for purposes of the Company's Cash Balance Pension Plan, 401(k)
Plan, and the Supplemental Executive Retirement Plan through October 31, 1998.
6.2. 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 compensation or benefits are 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 coverage period under this Section.
6.3. Retiree Medical. In the event of a Termination as a result of a
Change in Control, the Company shall provide post-retirement medical and life
benefits, under whatever Plan provisions and cost sharing arrangements exist for
similarly situated employees of Anthem retiring as of November 1, 1998, to
Executive and his eligible dependents. For purposes of determining the cost of
retiree medical coverage to Executive, Executive shall be credited with service
to October 31, 1998.
7. Restrictions on Executive.
7.1. Non-Disclosure. Executive shall not without the prior written
consent of the Chief Executive Officer of the Company (i) use for Executive's
benefit or disclose at any time during Executive's employment by the Company, or
thereafter, except to the extent required by the performance by Executive of his
duties as an executive of the Company, any information obtained or developed by
Executive while in the employ of the Company with respect to any customers,
suppliers, products, employees, financial or legal affairs, business methods or
services of the Company or any of its subsidiaries (including, without
limitation, customer lists, pricing, underwriting, marketing, financial or sales
information, forecasts, business and strategic plans, customer needs and renewal
dates, personnel, applications to or any matters pending or under the
jurisdiction of any regulatory agency or court, any threatened litigation, and
corporate policies and procedures), or any other
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confidential matter or trade secrets, except information which at the time is
generally known to the public other than as a result of disclosure by Executive
not permitted hereunder, nor (ii) take with Executive upon leaving the employ of
the Company any document, paper or property evidencing or relating to any of the
foregoing.
7.2. Return of Property. Upon termination of Executive's employment for
any reason, or at any other time the Company requests, Executive shall
immediately deliver to the Company all memoranda, notes, plans, records,
reports, manuals, computer disks, computer files and documents (and copies
thereof) and any other property or material in Executive's possession or control
relating to the business of the Company or any of its subsidiaries.
7.3. Competition. During Executive's employment by the Company and
during the time period set forth below commencing on the date of Executive's
termination of employment (and extended by the amount of time of any violation
of this Agreement):
(a) For a period of 24 months, Executive will not make any
statement or do any act that is disloyal to the Company or any of its
subsidiaries, or is inconsistent with the interests of the Company or
any of its subsidiaries;
(b) For a period of 24 months, Executive will not make any
statement or do any act that does or may cause any existing customer of
the Company or any of its subsidiaries to make use of the services or
purchase the products of any business competitive with the Company or
any of its subsidiaries;
(c) For a period of 24 months, Executive will not employ,
solicit for employment, or assist any other person not affiliated with
the Company in recruiting or hiring any person who is then, or within
the preceding three (3) month period was, an employee of the Company or
any of its subsidiaries.
(d) For the period set forth in section 3 hereof, Executive
will neither directly nor indirectly (as director, officer, partner,
sole proprietor, employee, manager, consultant, independent contractor,
advisor, or otherwise) engage in, own any services for, participate in
or be connected with any business or organization that engages in
competition with Anthem or its affiliates in the type of business and
geographic territory in which Anthem and its affiliates do business.
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8. Timing of Payments.
8.1. Consulting Services. Subject to section 9 hereof, consulting
payments shall begin upon the date of Termination as a result of a Change in
Control (without regard to any Disability of Executive). The total amount shall
be paid in bi-weekly payments, each of which shall be equal to the value of 12
months' Salary divided by the number of pay periods between the date of
Termination as a result of a Change in Control and October 31, 1998. 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.
8.2. Other. Subject to section 9 hereof, all other payments shall be
made in accordance with Executive's deferral election or if no election exists
in cash within 30 days of the date of Termination as a result of a Change in
Control.
9. 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.
10. Anthem Undertakings.
10.1. Anthem Guarantee. In the event the Successor to the Company does
not assume the obligations under this Agreement, Anthem Insurance Companies Inc.
shall guarantee the obligations of the Company under this Agreement. In the
event the Successor does assume such Agreement, but does not fulfill its
obligations under Section 6, Anthem Insurance Companies shall provide comparable
benefits under its plans or programs.
10.2. Acceleration. Anthem Insurance Companies Inc. shall vest all Long
Term Incentive compensation under Anthem plans and shall pay such compensation
pursuant to the plans and any applicable deferral agreements.
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.
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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.
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
amendments.
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,
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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: Daniel W. Kendall
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By:
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Signed:
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Printed: Frank C. Witthun
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Title: President and Chief Executive Officer
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ANTHEM INSURANCE COMPANIES, INC.
By:
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Printed: Patrick M. Sheridan
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Title: Executive Vice President and
Chief Financial Officer
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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:____________________________________
____________________________________
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