Exhibit 10.15
Employment
Agreement
THIS EMPLOYMENT AGREEMENT
(“Agreement”) is by and between Horace Mann Service
Corporation, an Illinois corporation, headquartered in Springfield,
Illinois (“Company”) and Steve Cardinal
(“Executive”).
WHEREAS, it is in the best interest
of the Company and Executive that the terms and conditions of
Executive’s services be formally set forth.
NOW, THEREFORE, in consideration of
the promises and the mutual covenants and agreements set forth
below, the parties hereby acknowledge and agree as
follows:
1. Employment Title and Duties;
Reporting Relationship. During the Employment Term, as defined below,
Executive shall serve in the position of Executive Vice President,
Chief Marketing Officer reporting to the President and Chief
Executive Officer of the Company. Executive shall have such duties
and authority as shall be determined from time to time by the
President & Chief Executive Officer. Executive’s
principal place of employment shall be Springfield, Illinois, or
such other location as the parties mutually agree.
2.
Term. Unless terminated by either
party as provided in Paragraph 7 below, Executive shall be employed
by the Company for a period commencing upon on December 1,
2008 and ending on the third (3 rd ) anniversary thereof (the
“Employment Term”), on the terms and subject to the
conditions set forth in this Agreement; provided, however, that
commencing with such third (3 rd ) anniversary and on each
anniversary thereof (each, an “Extension Date”), the
Employment Term shall be automatically extended for an additional
one-year period (“Extended Employment Term”), unless
the Company or Executive provides the other party hereto with sixty
(60) days’ prior written notice before the expiration of
the then current Employment Term, that the Employment Term shall
not be so extended. Any such Extended Employment Term is also
subject to termination as provided in Paragraph 7.
3. Compensation.
The Company agrees to provide
Executive with the following compensation for all services rendered
by Executive under this Agreement.
3.1 Base Salary.
During the Employment Term, the
Company shall initially pay Executive a base salary at an
annualized rate of Three Hundred Eighty Thousand Dollars and No
Cents ($380,000.00), payable in regular installments in accordance
with the Company’s usual payment practices. Executive will be
eligible for increases in Executive’s base salary, if any, as
may be determined from time to time in accordance with the
Company’s Salary Administration Policy and in the sole
discretion of the Board. Executive’s annual base salary, as
in effect from time to time, is hereinafter referred to as the
“Base Salary.”
3.2 Annual Incentive
Plan. Beginning with the
2009 performance period, Executive shall be eligible to receive an
annual incentive award (“Annual Incentive Award”)
pursuant to the Amended and Restated 2002 Incentive Compensation
Plan, as amended from time to time (including any successor plan,
the “Incentive Compensation Plan”). Executive’s
Target Bonus Opportunity (as hereafter defined) for the 2009
performance period will be 50% of base salary. The Annual Incentive
Award, if any, for a fiscal year shall be payable in the year
following the year to which it relates, no later than
March 15. Further, if the Target Bonus Opportunity is
adjusted
-1-
downward, Executive’s opportunity shall be
no lower than any other Company Executive Vice President. Executive
must be employed by the Company on the date of payment in order to
receive any payment of the Annual Incentive, unless otherwise
provided in Section 7.
3.3 Long-Term Incentive
Plan. During the
Employment Term and beginning with the 2009-2010 performance
period, Executive will be eligible to participate in the long-term
incentive program (LTIP) pursuant to the Incentive Compensation
Plan, as amended from time to time. Executive’s target
opportunity for the 2009-2010 performance period will be Five
Hundred Thousand Dollars and No Cents ($500,000.00).
3.4 Sign-on award.
(a) Equity.
Upon approval of the Board,
Executive will receive an award of restricted stock units valued at
Fifty Thousand Dollars and No cents ($50,000.00) and an award of
stock options valued at Four Hundred Fifty Thousand Dollars and No
cents ($450,000.00). Executive’s right to the restricted
stock units and stock options shall vest in accordance with the
following schedule: 25% upon the date of the Award, 25% on the
first (1st) anniversary of the date of the Award, 25% on the
second (2nd) anniversary of the date of the Award, and 25% on
the third (3rd) anniversary of the date of the Award. The
restricted stock units and options shall be governed in accordance
with separate applicable agreements and shall be subject to the
terms of the Incentive Compensation Plan pursuant to which they are
granted. In the event that the Board fails to approve a grant of
restricted stock units and stock options by December 31, 2008,
Executive shall be eligible to receive a total payment up to the
gross amount of Five Hundred Thousand Dollars and No Cents
($500,000.00) payable in equal gross amounts of One Hundred and
Twenty-Five Thousand ($125,000.00) on or before December 31,
2008, December 31, 2009, December 31, 2010 and
December 31, 2011, if Executive remains employed on such
dates, subject to Paragraph 7.3(c)(vi).
(b) Cash. The Company will pay Executive a gross cash
sign-on bonus of Eighteen Thousand Dollars and No Cents
($18,000.00). This amount will be paid on the next available
payroll period following the effective date of this Agreement. It
is not eligible compensation under the Incentive Compensation Plan
or any other employee benefit plan.
3.5. Deductions and
Withholding . The Company
may withhold from any amounts payable under this Agreement such
Federal, state and local taxes and other amounts as may be required
to be withheld pursuant to any applicable law or
regulation.
3.6. Relocation
Expenses. Executive shall
be eligible to participate in the Company’s Relocation
Program, as amended from time to time. The Company and Executive
have agreed to additional relocation benefits which are attached
and incorporated into this Agreement as Exhibit A, which is to be
read in conjunction with the Horace Mann Relocation
Policy.
3.7. Benefits.
During the Employment Term,
Executive shall be entitled to participate in the Company’s
employee benefit plans (other than annual bonus, change in control
and incentive plans as defined herein) as in effect from time to
time, on the same basis as those benefits are generally made
available to other senior executives of the Company.
3.8 Retention Bonus.
Executive will receive a Retention
Bonus which shall be One Hundred Thousand Dollars and No Cents
($100,000.00). The Retention Bonus is payable in 2009, on or before
March 15, 2009, so long as Executive’s employment with
the Company is not
-2-
terminated voluntarily by Executive or
terminated for Cause as defined in Section 7 herein prior to
that date.
4. Change in Control
Agreement. The parties
acknowledge that Executive and the Company are parties to a Change
in Control Agreement that provides severance benefits in specified
circumstances following a change in control of the Company (the
“Change in Control Agreement”).
5. Extent of Services.
During the Employment Term,
Executive will devote Executive’s full business time and best
efforts to the Company’s business, and the active performance
of Executive’s duties hereunder and will not engage in any
other business, profession or occupation for compensation or
otherwise which would conflict, interfere with or diminish
Executive’s performance of such services for the Company,
either directly or indirectly, without the prior written consent of
the Board; provided that nothing herein shall preclude Executive,
subject to the prior written approval of the Board, from accepting
appointment to or continuing to serve on the boards of directors
of, or to hold any other offices or positions in or with respect
to, other companies, organizations or entities; provided in each
case, and in the aggregate, that such activities do not materially
conflict, interfere with or diminish the performance of
Executive’s services to the Company hereunder.
6. Reimbursement of Business
Expenses. During the
Employment Term, reasonable business expenses incurred by Executive
in the performance of Executive’s duties hereunder shall be
reimbursed by the Company in accordance with Company
policies.
7. Termination of Employment
Agreement and Compensation Upon Termination.
7.1 Executive’s Employment Term may be
terminated as follows, provided that during the sixty (60) day
notice period provided in 7(b) and (d) below, the Company may
assign Executive different duties or no duties, as long as the
Company complies with its financial obligations under this
Agreement during that period. Such termination of employment shall
constitute the termination of the Employment Term and all of the
Company’s obligations to the Executive by the Company, except
as specifically provided in this Agreement.
(a) By the Company immediately for
Cause (as hereinafter defined).
(b) By the Company upon sixty
(60) days written notice without Cause.
(c) Automatically, without the
action of either party, upon the death of Executive.
(d) Voluntarily by Executive upon
sixty (60) days written notice.
(e) By Executive, upon existence of
Good Reason (as hereinafter defined).
(f) Upon Executive’s
termination following a Change of Control (as described in the
Change of Control Agreement Section 4 above).
(g) By either party upon a
determination of Total Disability (as hereinafter defined) of
Executive.
7.2 Definitions of “Cause,” “Good
Reason,” and “Total Disability”.
-3-
(a) Cause.
“Cause” shall mean serious, willful misconduct by the
Executive such as, for example, the commission by the Executive of
a Felony arising from specific conduct of the Executive that
reasonably relates to his qualification or ability (personal or
professional) to perform his duties to the Group or a perpetration
by the Executive of a common law Fraud against the Group.
Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have
been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than two-thirds of the entire
membership of the Board at a meeting of the Board called and held
for the purpose of considering his or her termination for Cause
(after reasonable notice to the Executive and an opportunity for
the Executive, together with the Executive’s counsel, to be
heard before the Board). The resolution of the Board shall contain
a finding that in the good faith opinion of the Board the Executive
was guilty of conduct constitutes “Cause” as defined
above and specifying the particulars thereof in detail.
Notwithstanding the foregoing, the Executive shall have the right
to contest his or her termination for Cause.
(b) Good Reason. “Good
Reason” shall mean any of the following events:
(i) any material diminution in
Executive’s duties or responsibilities to the Company, or a
requirement that Executive report to someone other than the
President and Chief Executive Officer of the Company;
(ii) any required relocation of
Executive from Springfield, Illinois, to another site more than
fifty (50) miles away;
(iii) a diminution in
Executive’s annual Base Salary of more than ten percent
(10%) below Executive’s then current Base Salary;
or
(iv) a material diminution in
Executive’s potential annual Incentive Award Target
Opportunity (“Target Bonus Opportunity”). For purposes
of this sub-paragraph, a material diminution is defined as a
reduction of 10% or more below the Target Bonus Opportunity from
the prior year under the Horace Mann Incentive Compensation Program
(or such similar program as may replace the Incentive Compensation
Program). For example, if in the prior year the Target Bonus
Opportunity was 50%, a reduction of the Target Bonus Opportunity to
39% or below, would be a material diminution.
(v) notwithstanding the preceding,
Good Reason shall not be deemed to exist until and unless Executive
provides written notice to the Company within ninety (90) days
after the initial existence of one of the above conditions and the
Company is provided thirty (30) days to remedy the condition
and fails to do so.
(c) “ Total Disability
” shall mean that if by reason of accident or illness of
Executive, Executive is unable to substantially perform his
employment duties, and is expected to be in such condition for
periods totaling six (6) months (whether or not consecutive)
during any period of twelve (12) months. The determination of
whether a Total Disability exists or has occurred shall be based on
the determination of a physician mutually acceptable to the Company
and Executive.
7.3 Compensation Upon
Termination . If
Executive’s employment hereunder is terminated in accordance
with the provisions of Section 7.1 hereof, the Company will be
obligated
-4-
to provide to Executive compensation and
benefits, in lieu of any severance under any severance plan that
the Company may then have in effect and subject to setoff for any
amounts owed by Executive to the Company or any affiliate of the
Company by reason of any contract, agreement, promissory note,
advance, failure to return Company property or loan document, as
detailed below. Unless otherwise provided, amounts payable under
this section will be paid as soon as practicable and in accordance
with pay out dates specified in applicable plans.
(a) Upon Termination for death or
Total Disability. If Executive’s employment hereunder is
terminated by reason of his death or Total Disability (except with
respect to 7.3(a)(v) below), under Sections 7.1 (c) or
(g) hereof, the Company will provide to Executive or
Executive’s estate or beneficiaries:
(i) any accrued Base Salary and
Annual Incentive payments earned on a pro-rata basis as of the date
of termination;
(ii) reimbursement for expenses
incurred by him prior to the date of termination that are subject
to reimbursement pursuant to this Agreement (the “Accrued
Reimbursable Expenses”);
(iii) vesting in Executive’s
benefit in the Horace Mann Nonqualified Supplemental Money Purchase
Pension Plan;
(iv) full vesting for all earned but
unvested equity and incentive compensation (including restricted
stock units, options, and long term incentive program awards) held
by Executive;
(v) upon Executive’s
termination by reason of death, a lump sum equal to six
(6) months of Executive’s then current Base
Salary.
(b) Upon Termination by Company
for Cause or Voluntarily by Executive. If Executive’s
employment is terminated by the Company for Cause or if Executive
voluntarily terminates his employment with the Company under
Sections 7.1 (a) or (d) , the Company will:
(i) pay Executive any accrued Base
Salary; and
(ii) pay Executive the Accrued
Reimbursable Expenses (as defined in (a) above).
(c) Upon Termination by the
Company without Cause or upon a Good Reason Termination. If
Executive’s employment is terminated by the Company without
Cause or upon a Good Reason Termination under Sections 7.1
(b) or (e) , the Company will:
(i) pay Executive any accrued Base
Salary and Annual Incentive payments earned on a pro-rata basis as
of the date of termination;
(ii) pay Executive the Accrued
Reimbursable Expenses (as defined in (a) above);
(iii) pay an amount equal to two
(2) times Executive’s then current Base Salary; if such
termination occurs during the initial three year Employment Term or
an amount equal to the
-5-
Executive’s current Base Salary if such
Termination occurs during an Extended Employment Term. Such payment
will be made in a lump sum within 30 days after
termination;
(iv) pay (directly to the provider)
for a period of up to 18 months after the date of termination any
premiums for group medical or dental coverage for Executive and/or
Executive’s eligible dependents, provided Executive timely
elects and maintains such coverage in accordance with the
Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”) and satisfies all other eligibility
requirements under COBRA;
(v) fully vest Executive in
Executive’s benefit in the Horace Mann Nonqualified
Supplemental Money Purchase Pension Plan.
(vi) fully vest Executive in all
earned but unvested equity and incentive compensation (including
restricted stock units, options, and long term incentive program
awards) and the remainder of any alternative cash payments due
under Paragraph 3.4 which have not yet been paid.
(vii) make payment for
transportation of household goods to a city other than
