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
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