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EXHIBIT (c)(11)
TRANSACTION AGREEMENT
This Agreement is made this 28th day of February, 1997, by and between
Acordia, Inc., a Delaware company (the "Company") and Xxxxxx X. Xxxxxx (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 provide incentives for the Executive to remain in the
employment of the Company and its Successors (as hereinafter defined); and
WHEREAS, the Company and the Executive have entered into an Employment
Agreement dated April 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 as the recipient of benefits in the event of the death or disability
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 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 ($225,004), plus increments thereon as of the time
of a Change in Control or 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 of Control,
(i) 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.
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.
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1.3 in the event of an inconsistency between this Agreement and the
Employment Agreement, this Agreement shall control.
1.4. No provision of this Agreement shall operate to reduce any amounts or
benefits payable under the Employment Agreement, standing alone or in aggregate.
2. Term of the Agreement. This Agreement shall expire on the earlier of (a)
December 31, 1997 or (b) the date on which the Company and Anthem insurance
Companies, Inc. publicly announce that the companies are no longer pursuing the
possible sale of the brokerage operations of the Company, 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. Prior Stock Awards. All Company 1992 Stock Compensation Plan awards will
fully vest in the event of a Change in Control.
4. Benefits.
4.1. Retirement Plan. Service under the Acordia Cash Balance Pension and
the Acordia, Inc. Supplemental Executive Retirement Plan shall cease as of the
date of a Termination as a result of a Change in Control.
4.2. Health, Dental and Other. In the event of a Termination as a result
of a Change in Control, the Company shall provide continued coverage of
Executive and his or her dependents under the Company's welfare plans for the
period for which severance is paid under the Employment Agreement or this
Agreement at an after tax cost to the Executive no greater than that incurred by
similarly situated employees 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 or the
Employment Agreement upon expiration of the severance period.
5. Retention Bonus.
5.1. Initial. If Executive remains in the employment of the Company or its
Successor on the date of the Change in Control (or is earlier terminated by the
Company other than for Cause as defined herein) Executive shall be paid
$130,000.
5.2. Subsequent. If Executive remains in the employment of the Company or
its Successor on the second anniversary of the date of the Change in Control,
Executive shall be paid $170,000. If, prior to the second anniversary of the
date of Change in Control, the Executive dies, becomes disabled, or is
terminated by the Company or its Successor other than for Cause, Executive shall
be paid the subsequent retention bonus referred to herein.
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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 shall not be affected by
this Agreement.
7. Timing of Payments.
7.1. Severance. Subject to Section 9 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, 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 Executive's death to the Executive's
Beneficiary (as designated in Attachment I).
7.2. Other. Subject to Section 8 hereof, all other payments shall be made
in accordance with Executive's deferral election, or if there is no such
election, 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.
9. Miscellaneous.
9.1. 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.
9.2. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana.
9.3. 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.
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9.4. 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.
9.5. Modifications. This Agreement may be modified or amended only by an
instrument in writing signed by both the Company or its Successors and
Executive.
9.6. 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.
9.7. 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.
9.8. 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.
9.9 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: Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxx
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Signed: /s/ Xxxxxx X. Xxxxxx Printed: Xxxxx X. Xxxx
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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
Acordia Deferred Compensation Program as my Beneficiary for purposes of this
Agreement. If I have not designated a beneficiary under the Acordia Deferred
Compensation Program, I hereby designate Estate as my Beneficiary.
Signed: /s/ Xxxxxx X. Xxxxxx
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Executive
Date: 3/7/97
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