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EXHIBIT (c)(13)
TRANSACTION AGREEMENT
This Agreement is made this 17th day of March, 1997, by and between
Acordia, Inc., a Delaware company (the "Company") and Michael B. Henning (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 by providing
for consulting services by the Executive; and
WHEREAS, the Company and the Executive have entered into an Employment
Agreement dated January 1, 1994, (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
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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 at the time of execution of
this Agreement.
"Salary" shall mean an annual base salary existing at the time
of execution of this Agreement ($190,008), expressed in monthly increments, 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
accepts a position at Anthem, or a Successor, it shall be deemed to be
comparable for the purposes of this Agreement.
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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 sections 3 and 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. 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. Services and Compensation of Executive. In the event of a Termination as a
result of a Change in Control, in lieu of payments as provided in Section 9 of
the Employment Agreement, and any other severance, Executive shall be paid, in
addition to the amounts referenced in Section 4 hereof, compensation under this
Agreement for services as an employee/consultant. Executive shall receive
consulting compensation of $223,000 until January 31, 2000. Executive shall be
available until January 31, 2000, to provide consulting services reasonably
requested by such Company, Anthem, or a Successor. Subject to the obligations
under Section 6, this provision shall not be construed to preclude Executive
from accepting full time employment elsewhere.
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
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shall be in an amount at least equal to the full "target" level amount for the
year.
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. 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. 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 January 31, 2000.
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 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 period of coverage under this section.
5.3. Retiree Medical/Life. 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 February 1, 2000. For
purposes of determining the cost of retiree medical/life benefits to Executive,
Executive shall be credited with service to January 31, 2000.
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 for all the periods of
employment, and, in the event of a Termination as a result
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of a Change in Control, for a one year period following the later of (i)
termination of Executive's consulting services, or (ii) January 31, 2000. In
return for the extension of the additional one year covenant not to compete, in
connection with a Termination as a result of a Change in Control, Executive
shall be paid $450,000 following his termination of consulting services, as set
forth in Section 7.2 hereof. If Executive is employed by Anthem, the terms
"Company" and "Assigned Subsidiary" in those provisions shall refer to Anthem,
as applicable.
7. Timing of Payments.
7.1. Consulting Services. Subject to Section 8 hereof, consulting
payments under Section 3 hereof, shall begin upon the date of Termination as a
result of a Change in Control and shall continue to be paid ratably in bi-weekly
installments, over the term of the consulting services (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.
7.2. Non-Compete. Subject to Section 8 and 11.8 hereof, the payments
provided for in Section 6 hereof shall be paid ratably in bi-weekly installments
over the period beginning February 1, 2000, and ending on January 31, 2001
(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.
7.3. Other. Subject to Section 8 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.
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 benefits under its plans or programs.
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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
(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. If (a) is applicable, excise taxes deducted pursuant to
paragraph (a) will be paid directly to the Internal Revenue Service.
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
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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. Entire Agreement; Modifications; and Conditions. This Agreement
constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes all prior agreements, oral and written, between the
Company or Anthem Insurance Companies Inc. and Executive. This Agreement may be
modified or amended only by an instrument in writing signed by both the Company
or Anthem Insurance Companies Inc. and Executive.
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.
a. Suspension of Non-Compete Payments. Executive acknowledges
that the payments made pursuant to Section 6 hereof are made on condition that
the Executive observes the restrictions incorporated therein. If the Company,
Anthem, or a Successor, as applicable, determines that Executive has breached
any of those restrictions, that entity shall give notice to the Executive which
notice shall (i) state in detail the basis of the determination and (ii) state
that payments under Section 6 shall be suspended within 30 days of the date of
the notice unless Executive shall demonstrate that the breach has been cured. If
Executive fails to so demonstrate, the payments shall be suspended. In the event
payments are suspended and it is later determined by a court of competent
jurisdiction that there was no breach, Executive shall receive all of the
payments plus interest determined at the applicable federal rate. Notice shall
be given to Executive in writing at the following address, or such other address
as Executive shall provide in writing to the Company:
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Michael B. Henning
12322 Brookshire Parkway
Carmel, Indiana 46033
b. General. 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.
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IN WITNESS WHEREOF, the parties have executed this Agreement.
EXECUTIVE ACORDIA, INC.
Name: Michael B. Henning
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
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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