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Exhibit
10.1
TRANSITION
AGREEMENT
THIS TRANSITION AGREEMENT
(“Agreement”), is entered into this 4
th day of March, 2005, by and between EDUCATORS
MUTUAL LIFE INSURANCE COMPANY, a Pennsylvania mutual life and
health insurance corporation (“EML” or “the
Company”), and ALEX T. SCHNEEBACHER, President and CEO of the
Company (“Schneebacher” or
“Employee”).
Background
A. EML is in the process of
pursuing a strategic realignment of the Company’s business
operations, including demutualization, merger and/or acquisition
transactions. A Letter of Intent defining the proposed
transaction(s) was executed on or about January 17, 2005
(“Letter of Intent”). The parties intend this
Transition Agreement to be executed pursuant to execution of the
Letter of Intent.
B. Schneebacher, a long-term
employee of the Company, currently serves as its President and
Chief Executive Officer. He intends to retire from employment with
EML within ninety (90) days of completion of the proposed
transaction(s).
C. EML wishes to retain
Schneebacher’s services throughout the course of the
transaction as defined by the Letter of Intent and is willing to
provide Schneebacher with incentives to induce him to remain
employed by EML for a defined period.
D. EML also wishes to protect
itself, its affiliates and subsidiaries within its Market Area
(defined at Section 8 below) and therefore seeks to place
certain restrictions upon Schneebacher’s activities after his
employment with EML concludes.
E. Schneebacher wishes to
remain employed by EML throughout the course of the transaction and
for up to ninety (90) days thereafter, and is willing to
accept these benefits and obligations in consideration for the
mutual benefits and obligations described in this
Agreement.
Agreement
NOW, THEREFORE , in
consideration of the mutual covenants contained herein, and
intending to be legally bound hereby, the parties agree as
follows:
1. Transition .
The parties agree that Schneebacher will continue as an employee of
the Company throughout the course of the transaction defined by the
Letter of Intent, and for up to ninety (90) days beyond that
time (the “Transition Period”) at the sole discretion
of the EML Board of Directors. The Transition Period will commence
immediately upon execution and final approval of the Agreement by
the parties. For the duration of the Transition Period,
Schneebacher will retain his current position or another position
of comparable or more senior status and responsibility, as
determined within the EML Board of Directors’ reasonable
discretion. Also for the duration of the Transition Period, the
compensation and benefits paid to Schneebacher during active
employment will not be less than the compensation and benefits paid
to him at the commencement of the Transition Period. Assuming
Schneebacher remains employed until expiration of the Transition
Period, he will receive the compensation and benefits described at
Section 4 hereof; provided, however, that if Schneebacher
remains employed through expiration of the Transition Period and
EML does not consummate the conversion from a mutual company to a
stock company, this Agreement shall be null and void.
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2. Duties .
During the Transition Period, Schneebacher will manage EML and IBSi
toward consolidation into a new core business and will cooperate
fully in the anticipated transaction as set forth in the Letter of
Intent and as pursued by the Company. Schneebacher will also work
with leadership of the new business partner(s) to build a strategic
plan and develop proforma financials for the newly consolidated
entities. Schneebacher will further perform such duties as are
assigned to him from time to time by the EML Board of
Directors.
3. Participation
. Schneebacher may participate in the Subscription Rights
Offering of any public offering pursuant to demutualization of the
Company.
4. Employee Discharge
Without Cause . The EML Board of Directors retains the
right, in its sole discretion, to discharge Schneebacher without
cause during the Transition Period, subject to the following
provisions of this Section 4:
4.1. If the Employee is
discharged without cause during the Transition Period, he will
receive compensation (less required withholdings) in an amount
equivalent to the salary he would have received had he remained
employed for an additional thirty (30) months (The
“Retirement Transition Period”), except as otherwise
qualified by the provisions of Section 4.8 hereof.
4.2. The compensation
described in Section 4.1 will be paid in arrears in monthly
installments based on the salary that the Employee would have
received for each such monthly period had he remained employed by
the Company.
4.3. During the Retirement
Transition Period, and continuing through the end of the month in
which Employee attains age 65, the Employee will be eligible to
receive
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health insurance benefits
substantially equivalent to those health insurance benefits
received by the Employee prior to termination of his employment.
The Company will contribute Two Hundred Ninety One Dollars and
Seventy-Two Cents ($291.72) per month toward the Employee’s
health insurance premiums, and the Employee will be responsible for
any balance exceeding the monthly amount paid by the Company. The
continued health coverage provided under this Section 4.3 will
be provided concurrently with any obligation the Company has to
provide continued coverage under COBRA.
4.4. Upon completion of the
anticipated transaction, EML may pay a bonus to the Employee for
satisfactory performance, at the sole discretion of EML’s
Board of Directors, in an amount to be determined in accordance
with Section 4.7 hereof.
4.5. During the month
following the month the Employee attains age 65 (the
“Commencement Date”), the Employee shall receive a lump
sum of One Hundred Ten Thousand Five Hundred Eighteen Dollars and
Twenty-Seven Cents ($110,518.27) representing the value of a life
annuity based on (i) the monthly pension benefit the Employee
would have been entitled to receive under the Company’s
Defined Benefit Pension Plan if he had remained employed by the
Company until the end of the Retirement Transition Period and been
paid at the same rate of annual salary and bonus as was in effect
as of his termination from employment, and if such monthly pension
benefit commenced as of the Commencement Date and was paid in the
form of an annuity for the Employee’s life, minus
(ii) the monthly pension benefit the Employee would be
entitled to receive under such Plan based on his actual date of
termination from employment and if such monthly pension benefit
commenced as of th
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