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Exhibit 10.15
YOUNG AMERICA CORPORATION
1997 MANAGEMENT RECOGNITION, TRANSITION AND
EQUITY BONUS PLAN
1. Establishment. On November 25, 1997, the Board of Directors ("Board")
of Young America Corporation, a Minnesota corporation ("Company"), approved this
1997 Management Recognition, Transition and Equity Bonus Plan ("Plan") for the
officers and certain key management employees as described herein. This Plan
shall be effective as of the Closing Date (as defined below).
2. Purpose. The purpose of this Plan is to advance the interests of the
Company and its stockholders by recognizing the valuable contribution made by
the officers and key management employees, facilitating the anticipated sale of
certain of the Company's shares by its current stockholders and facilitating the
anticipated purchase of equity in the Company by certain members of the senior
management of the Company. The Board expects the Plan to stimulate the efforts
of such officers and employees during the transition in stock ownership,
encourage such officers and employees to remain with the Company during the
transition, facilitate such equity purchase and contribute to the continued
success and growth of the business of the Company.
3. Definitions. When the following terms are used herein, they shall have
the following meanings:
"Applicable Release Effective Date" means: (i) with respect to any
Participant age forty (40) or over on the Closing Date, the date which is
seventeen (17) days after the date the Participant executes and delivers the
Agreement and Release; provided that any such Participant may not execute and
deliver the Agreement and Release until at least twenty-one (21) days after it
has first been presented to such Participant for consideration; and (ii) with
respect to any Participant under age forty (40) on the Closing Date, the date
which is seventeen (17) days after the date such Participant executes and
delivers the Agreement and Release.
"Base Salary" means the annual base salary of the Participant as of
October 7, 1997 and as reflected on Exhibit A opposite the Participant's name
under the column entitled "Annual Base Salary".
"Cause" means: (i) repeated neglect by the Participant of any of his
or her duties or his or her repeated failure, refusal or omission to carry out
lawful and reasonable orders, duties and responsibilities or comply with the
Company's employment policies and practices which, in the reasonable judgment of
the Company,
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are not cured within ten (10) days after the Participant's receipt of written
notice thereof from the Company; (ii) any act or acts of personal dishonesty by
the Participant which result in the personal enrichment of the Participant at
the expense of the Company; (iii) any willful and deliberate misconduct that is
injurious to the Company; or (iv) any criminal indictment, presentment, charge,
conviction or plea of guilty or nolo contendere of the Participant for a felony
crime, whether or not the Company is the victim of such offense.
"Certificate" means the Certificate attached hereto as Exhibit D.
"Closing Date" means the date on which the shareholders of the
Company sell or have redeemed substantially all of their capital stock of the
Company pursuant to that certain Recapitalization Agreement ("Recapitalization
Agreement") dated on or about November 25, 1997 by and between Young America
Corporation, Jay F. Ecklund, the John F. Ecklund 1995 Irrevocable Trust, the
Sheldon McKensie Ecklund 1995 Irrevocable Trust, the John F. Ecklund 1997
Irrevocable Trust, the Sheldon McKensie Ecklund 1997 Irrevocable Trust, the Jay
F. Ecklund 1997 Irrevocable Annuity Trust and BT Capital Partners, Inc.
"Disability" means a physical or mental condition by reason of an
injury, illness, disease or other condition which causes the Participant to fail
to render his or her normal, material services to the Company for a period of
ninety (90) days during any one hundred eighty (180) day period. The existence
or nonexistence of the Participant's Disability will be determined in good faith
by the Board in its sole and absolute discretion. For purposes of this Plan, a
Disability shall be deemed to have occurred as of the first day of such 180-day
period.
"Good Reason" shall mean the occurrence of any of the following
events (except for the occurrence of such an event in connection with the
termination or reassignment of the Participant's employment by the Company (i)
for Cause, (ii) due to the Participant's Disability, or (iii) due to the
Participant's death):
(a) A material adverse change in the Participant's status or
position including a material diminution in his/her duties or responsibilities
which are held by the Participant immediately prior to the Closing Date;
(b) A reduction of more than ten percent (10%) in the Participant's
Base Salary;
(c) A requirement that the Participant relocate to a principal place
of business that is more than 75 miles from the location of the Participant's
principal office immediately prior to the Closing Date; or
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(d) The failure by the Company to provide employee benefit plans,
programs, policies and practices (including, without limitation, retirement
plans and medical, dental, life and disability insurance coverage) to the
Participant and the Participant's family and dependents (if applicable) that
provide substantially similar benefits, in terms of aggregate monetary value, to
the Participant and the Participant's family and dependents (if applicable) as
the benefits provided by those plans, programs, policies and practices in effect
immediately prior to the Closing Date, unless all management personnel similarly
situated are likewise affected.
"Participant" means only a person specifically named on Exhibit A.
"Performance Period" means the period of time from and including the
Closing Date to 12-months thereafter.
"Retirement" means the date the Participant voluntarily terminates
his or her employment with the Company at or after age sixty-two (62) with the
approval of the Board.
"Senior Manager" means only a person specifically named on Exhibit
B.
4. Cash Bonuses, Time of Payments, Written Agreement.
4.1. Cash Bonuses.
(i) The Company will pay to each Participant a cash bonus
("Recognition Bonus") in the amount set forth on Exhibit A opposite the
Participant's name under the column entitled "Recognition Bonus" in two (2)
equal installments as set forth in Section 4.2; provided that the Participant
remains a full-time employee of the Company in good standing and meets all of
the requirements set forth in this Plan as of the payment dates specified in
Section 4.2. Notwithstanding the foregoing sentence, the Participant will remain
eligible for the Recognition Bonus if, prior to the payment dates provided in
Section 4.2, the Participant is terminated without Cause or terminates his or
her employment for Good Reason pursuant to Section 5.3.
(ii) The Company will pay to each Senior Manager a cash bonus
("Equity Bonus") in the amount set forth on Exhibit B opposite the Senior
Manager's name under the column entitled "Equity Bonus" in one installment on
the Closing Date; provided that (a) the Senior Manager remains a full-time
employee of the Company in good standing and meets all of the requirements set
forth in this Plan as of the Closing Date; (b) the Senior Manager invests all of
the Equity Bonus, net of all applicable withholding, in the purchase of common
stock of the Company on the Closing Date; and (c) the Senior Manager executes
and delivers to the Company the Certificate on or before the Closing Date..
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Hereinafter, the Recognition Bonus and the Equity Bonus shall be referred to
collectively as the "Cash Bonuses."
4.2. Time of Payments.
(i) Subject to Section 4.1, Section 5 and Section 6.3, the Company
shall pay the Recognition Bonus in cash as follows: (a) one-third of the
Recognition Bonus shall be paid on the Closing Date; and (b) two-thirds of the
Recognitition Bonus shall be paid to the Participant on the Participant's
Applicable Release Effective Date.
(ii) Subject to Section 4.1, Section 5 and Section 6.3, the Company
shall pay the Equity Bonus in cash on the Closing Date.
4.3. Written Documents. Notwithstanding any language in this Plan to the
contrary, (a) before becoming eligible to receive the two-thirds of the
Recognition Bonus referred to in Section 4.2(i)(b), a Participant must execute
and deliver to the Company a notarized copy of the "Agreement and Release"
attached to this Plan as Exhibit C, and (b) before becoming eligible to receive
an Equity Bonus, a Senior Manager must execute and deliver the Certificate. The
Company's obligation to pay the second installment of the Recognition Bonus and
the Equity Bonus is conditioned upon the Participant's delivery of an executed,
notarized copy of such Agreement and Release or the Certificate, as the case may
be. Failure of an employee to abide by this Section 4.3 shall result in the
complete forfeiture of any putative rights of said employee under this Plan with
respect to the benefit described in Section 4.2(i)(b) or Section 4.2(ii), as the
case may be.
4.4. Offset Right. The Company shall have the right, in addition to any
other remedy available at law or equity, to offset the amount of any loss, cost,
damage, liability or expense (including reasonable attorney's fees and expenses)
suffered or incurred by the Company or the Selling Stockholders in connection
with a breach of the representations, warranties and covenants made by the
Participant in the Agreement and Release against any Cash Bonuses payable
hereunder.
5. Termination of Employment.
5.1. Voluntary Termination. Nothing in this Plan shall prevent the
Participant from terminating his or her employment relationship at any time, for
any reason, or for no reason, except as otherwise provided by a written
employment agreement in effect between the Participant and the Company, in which
case such agreement shall govern; provided, a Participant who voluntarily
terminates his or her employment without Good Reason shall not receive any
Recognition Bonus for which he or she is otherwise eligible which is payable
after the date of such termination.
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5.2. Termination for Cause; Death; Disability.
(i) From and after the Closing Date and during the term of this
Plan, the Company shall have the right to terminate the Participant's employment
for Cause, by written notice to the Participant, specifying the basis for such
termination. This provision shall not, however, supersede the provisions of any
written employment agreement in effect between the Participant and the Company
at the time of any such termination by the Company.
(ii) In the event the Company terminates a Participant for Cause
pursuant to this Section 5.2, or in the event the Participant's employment is
terminated due to the Participant's death or Disability, and notwithstanding
anything to the contrary in this Plan, the Participant shall immediately cease
to be an eligible Participant under this Plan and shall not be entitled to
receive the Recognition Bonus installment described in Section 4.2(i)(b) which
is payable after the date of such termination, death or Disability.
5.3. Termination Without Cause or for Good Reason. From and after the
Closing Date and during the term of this Plan, the Company shall have the right
to terminate the Participant's employment immediately without Cause, at any
time. Upon the occurrence of such a termination without Cause, or upon the
voluntary termination of the Participant's employment by such Participant for
Good Reason, such Participant shall be entitled to receive the benefits provided
in Sectionu5.4. Such Participant shall evidence a voluntary termination for Good
Reason by written notice to the Company given within ten (10) days after the
date of the occurrence of the event that constitutes Good Reason. Such notice
shall identify the Participant and set forth in reasonable detail the facts and
circumstances claimed by the Participant to constitute Good Reason. Any notice
given by the Participant pursuant to this Section 5.3 shall be effective ten
(10) days after the date it is given by the Participant.
5.4. Benefits Upon Termination Under Section 5.3.
(i) In the event of the termination of the Participant's employment
pursuant to Section 5.3, the Company shall pay to the Participant his or her
remaining Recognition Bonus installment under the terms and conditions of this
Plan as if the Participant remained an employee in good standing with the
Company. Such installment shall continue to be subject to any applicable payroll
or other taxes required by law to be withheld as provided in Section 6.3 and to
the Company's offset rights as provided in Section 4.4.
(ii) Any terminated Participant shall not be required to mitigate
the amount of any payment provided for in this Section 5.4 by seeking other
employment or otherwise. The amount of any payment provided in this Section 5.4
shall not be
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reduced by any compensation earned by any terminated Participant as a result of
any employment by another employer.
6. Bonus Payments and Tax Issues.
6.1. Cash Bonuses - Time and Form of Payments. Each installment of the
Participant's Cash Bonuses shall be paid to the Participant in a lump sum cash
payment, net of all applicable withholdings, on the due date identified in
Section 4.2.
6.2. Nontransferability. Participants and beneficiaries shall not have the
right to assign, transfer, encumber or otherwise anticipate or dispose of the
payments to be made or their rights under this Plan, and the benefits provided
hereunder shall not be subject to seizure for payment of any debts or judgments
against any Participant or any beneficiary, without the Board's prior written
consent, which may be withheld or granted in its sole and absolute discretion.
6.3. Tax Withholding. In order to comply with all applicable federal or
state income, social security, payroll, withholding or other tax laws or
regulations, the Board may establish such policies as it deems appropriate with
respect to such laws and regulations, including without limitation, the
establishment of policies to ensure that all applicable federal or state income,
social security, payroll, withholding or other taxes, which are the sole and
absolute responsibility of the Participant, are withheld or collected from such
Participant.
7. Administration.
(i) The Board shall have the sole and absolute discretion to
administer this Plan and interpret and apply any of the provisions of this Plan.
(ii) The Board may correct any defect, supply any omission or
reconcile any inconsistency in the Plan in the manner and to the extent it shall
deem desirable to carry the Plan into effect.
8. Miscellaneous.
8.1. Effective Date. This Plan shall be deemed effective as of the Closing
Date and is contingent upon a successful closing of the transactions
contemplated by the Recapitalization Agreement. In the event such transactions
have not been consummated on or before December 31, 1997, or if the
Recapitalization Agreement is terminated, this Plan shall automatically
terminate and be of no further force and effect.
8.2. Headings. Headings are given to the sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in
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any way material or relevant to the construction or interpretation of the Plan
or any provision thereof.
8.3. Applicability to Successors. This Plan shall be binding upon and
inure to the benefit of the Company and each Participant, the successors and
assigns of the Company, and the beneficiaries, personal representatives and
heirs of each Participant. If the Company becomes a party to any merger,
consolidation or reorganization, this Plan shall remain in full force and effect
as an obligation of the Company or its successors in interest.
8.4. Employment Rights and Other Benefit Programs. The provisions of this
Plan shall not give any Participant any right to be retained in the employment
of the Company. In the absence of any specific agreement to the contrary, this
Plan shall not affect any right of the Company, or of any affiliate of the
Company, to terminate, with or without Cause, any Participant's employment at
any time. This Plan shall not replace any written employment agreement or any
written change in control agreement between the Company and any Participant, but
shall be considered a supplement thereto. This Plan is in addition to, and not
in lieu of, any other employee benefit plan or program in which any Participant
may be or become eligible to participate by reason of employment with the
Company. No compensation or benefit awarded to or realized by any Participant
under the Plan shall be included for the purpose of computing such Participant's
compensation under any compensation-based retirement, disability, or similar
plan of the Company unless required by law or otherwise provided by such other
plan.
8.5. No Trust or Fund Created. This Plan shall not create or be construed
to create a trust or separate fund of any kind or a fiduciary relationship
between the Company or any affiliate and the Participant or any other person. To
the extent that any person acquires a right to receive payments from the Company
or any affiliate pursuant to this Plan, such right shall be no greater than the
right of any unsecured general creditor of the Company or of any affiliate.
8.6. Governing Law. The validity, construction and effect of the Plan or
any payment payable under the Plan shall be determined in accordance with the
laws of the State of Minnesota, without giving regard to the choice of law
provisions thereof.
8.7. Severability. If any provision of the Plan is or becomes or is deemed
to be invalid, illegal or unenforceable in any jurisdiction, such provision
shall be construed or deemed amended to conform to applicable laws, or if it
cannot be so construed or deemed amended without, in the determination of the
Board, materially altering the purpose or intent of the Plan, such provision
shall be stricken as to such jurisdiction, and the remainder of the Plan shall
remain in full force and effect.
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8.8. Confidential Arbitration. The Company believes that for many business
disputes, there is a less expensive, more effective method of resolution than
the traditional lawsuit. Accordingly, the alternate dispute resolution
procedures set forth in this Section 8.8 shall apply to resolve any disputes
that may arise regarding the Plan.
(a) The Company, the Board and the relevant Participant will attempt
in good faith to resolve any and all controversies or claims arising out of or
relating to this Plan promptly by negotiations between the parties.
(b) If the matter has not been resolved within thirty (30) days of
the date written notice of the dispute is first given to the parties, the
parties will attempt in good faith to resolve the controversy or claim by
mediation administered by the American Arbitration Association ("AAA") under its
commercial mediation rules.
(c) If the matter has not been resolved pursuant to the aforesaid
mediation procedure within sixty (60) days of the commencement of such
procedure, such matter shall be resolved by binding arbitration in accordance
with the terms and conditions of this Section 8.8.
(i) This agreement to arbitrate shall continue in full force
and effect despite the expiration, rescission, or termination of this Plan. All
arbitration shall be undertaken pursuant to the Federal Arbitration Act. The
parties knowingly and voluntarily waive their rights to have their dispute tried
and adjudicated by a judge or jury. The arbitrator shall apply the law of the
State of Minnesota and the arbitration shall be held in Minneapolis, Minnesota.
Judgement upon the award rendered by the arbitrator may be entered in any court
of competent jurisdiction.
(ii) Any party may demand arbitration by sending written
notice to the other party. The arbitration and the selection of the arbitrator
shall be conducted in accordance with such rules as may be agreed upon by the
parties, or, failing agreement within thirty (30) days after arbitration is
demanded, under the commercial arbitration rules of the AAA, as such rules may
be modified by this Plan. Unless the parties agree otherwise, document discovery
and/or interrogatories shall be limited to directly relevant documents
concerning the Participant. The scope of informational depositions shall be
limited to information directly relevant to the Participant. Responses or
objections to a document request shall be served twenty (20) days after receipt
of the request. The arbitrator shall resolve any discovery disputes.
(iii) The arbitrator(s) shall have the authority to award
actual money damages (with interest on unpaid amounts from the date due),
temporary injunctive relief, and reasonable attorney's fees and expenses, but
the arbitrator(s) shall not have the authority to award exemplary or punitive
damages, and the parties expressly waive any claimed right to such damages. The
arbitration shall be of each party's individual claims only, and no claim of any
other party shall be subject to
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arbitration in such proceeding. The costs of arbitration shall be borne by the
parties in accordance with the award of the arbitrator. If a party fails to
proceed with arbitration, unsuccessfully challenges the arbitration award, or
fails to comply with the arbitration award, the other party is entitled to
costs, including reasonable attorney's fees, for having to compel arbitration or
defend or enforce the award. Except as otherwise required by law, the parties
and the arbitrator agree to maintain as confidential all information, documents
and other data of any kind or nature whatsoever obtained during the arbitration
process, including the fact that such arbitration is being undertaken and the
final award of the arbitrator.
(d) All deadlines specified in this Section 8.8 may be extended by
mutual written agreement of the parties.
(e) The procedures specified in this Section 8.8 shall be the sole
and exclusive procedures for the resolution of disputes between the parties
arising out of or relating to this Plan.
8.9. Notice. All notices, requests, demands, and all other communications
required or permitted by any party of the Plan to another party of the Plan
(including, without limitation, any notice of termination of employment) shall
be in writing and shall be deemed to have been duly given when delivered
personally or received by certified or registered mail, return receipt
requested, postage prepaid, at (i) in the case of the Participant, the address
included in the Participant's signed, notarized copy of the Agreement and
Release, or (ii) in the event a Participant does not returned a signed,
notarized copy of Exhibit B, the address of said person as reflected in the
Participant's W-4 form on file with the Company, or (iii) in the case of the
Company, directed to the attention of the Board at the Company's Young America,
Minnesota headquarters. A party hereto may change its address for purposes of
this Section 8.9 by giving fifteen (15) days' prior written notice to the other
party.
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IN WITNESS WHEREOF, the undersigned, the secretary of the Company,
certifies that this Plan was adopted and approved by the Board on November 25,
1997.
YOUNG AMERICA CORPORATION
By
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Thomas O. Moe, Secretary