Exhibit 10.3
HORACE MANN NONQUALIFIED SUPPLEMENTAL
MONEY PURCHASE PENSION PLAN
HORACE MANN NONQUALIFIED SUPPLEMENTAL
MONEY PURCHASE PENSION PLAN
ARTICLE I.
ESTABLISHMENT AND PURPOSE OF PLAN
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1.1 Plan Establishment. Horace Mann Service Corporation hereby
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establishes the Horace Mann Nonqualified Supplemental Money Purchase Pension
Plan (the "Plan") effective April 1, 2002.
1.2 Purpose of Plan. The purpose of the Plan is to provide supplemental
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retirement benefits to certain executives and other key employees of Horace Mann
Service Corporation who are members of a select group of management or highly
compensated employees of Horace Mann Service Corporation within the meaning of
Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. The Plan is designed to
provide certain benefits not available under the HMSC Money Purchase Pension
Plan, a qualified plan under Section 401(a) of the Code, due to limitations
imposed by the Code. Previously such benefits were provided as the "NQMPPP
Feature" of the Horace Mann Executive Supplemental Employee Retirement Plan (the
"ESERP"). The ESERP was frozen effective March 31, 2002. For those participants
in the ESERP on March 31, 2002 who are also Participants in the Plan on April 1,
2002, the benefit under the ESERP represented by the value of the participant's
NQMPPP Feature account (a memorandum account) as of March 31, 2002, has been
transferred to the Plan as provided under the ESERP and as referenced hereunder.
ARTICLE II.
DEFINITIONS
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The following terms shall have the following meanings when used herein:
2.1 Account means a memorandum account maintained by the Committee for
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each Participant for bookkeeping purpose only, to which is credited, if
applicable, the Prior Plan Benefit as of April 1, 2002 and the annual Company
Contribution, and which is adjusted annually to reflect the Investment Return.
2.2 Beneficiary means the individual, individuals, trust or estate
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designated by the Participant on the beneficiary designation form provided to
the Participant (with only the last such beneficiary designation to be
effective), but if the Participant has made no effective beneficiary designation
as of the date of the Participant's death, then Beneficiary shall mean the
beneficiary of the Participant's accrued benefit under the HMSC MPPP.
2.3 Code means the Internal Revenue Code of 1986 as from time to time
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amended.
2.4 Committee means the Committee appointed by HMSC for the purpose of
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administering the Plan.
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2.5 Company or HMSC means Horace Mann Service Corporation and any
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successor thereto.
2.6 Company Contribution means the amount credited to a Participant's
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Account under the provisions of section 3.1 or 3.2, whichever applicable.
2.7 Compensation means compensation as defined in the HMSC MPPP except not
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subject to any limitation imposed under Section 401(a)(17) of the Code.
2.8 Eligible Participant means a Participant who is an employee of HMSC
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and who has not been designated by HMSC as ineligible to be credited with a
Company Contribution for a particular Year.
2.9 ERISA means the Employee Retirement Income Security Act of 1974 as
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from time to time amended
2.10 Excess Compensation means the excess of Compensation over compensation
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as defined in the HMSC MPPP.
2.11 HMEC means Horace Mann Educators Corporation, the parent company of
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HMSC.
2.12 HMSC MPPP means the HMSC Money Purchase Pension Plan as currently in
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effect and as from time to time amended.
2.13 Investment Return means the positive or negative rate of return
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(taking into account earnings, gains and losses) applicable during the relevant
period hereunder to those assets of the HMSC MPPP which represent contributions
made to the HMSC MPPP prior to July 1, 2002 (as adjusted for earnings, gains and
losses).
2.14 Participant means an employee of HMSC (a) whose Compensation exceeds
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the maximum amount of compensation allowable to be taken into account by a
qualified plan under Section 401(a)(17) of the Code, (b) who is a member of a
select group of management or highly compensated employees of HMSC, and (c) who
has been designated by HMSC as a participant in the Plan. Participant also
includes a former employee of HMSC for whom an account is maintained under the
Plan and a current employee of HMSC who is not currently an Eligible Participant
but for whom an account is maintained under the Plan.
2.15 Plan means the Horace Mann Nonqualified Supplemental Money Purchase
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Pension Plan as set forth herein and as from time to time amended.
2.16 Plan Year or Year means the 12-month period beginning each January 1
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and ending each succeeding December 31.
2.17 Prior Plan Benefit means the benefit of a Participant under the Horace
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Mann Executive Supplemental Employee Retirement Plan ("ESERP") represented by
the Participant's "NQMPPP Feature account" which benefit was transferred to the
Plan pursuant to the provisions of the ESERP and credited to the Participant's
Account in the Plan as of April 1, 2002.
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2.18 Years of Vesting Service at any particular time means the same number
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of years of vesting service credited to the Participant at such time under the
provisions of the HMSC MPPP.
ARTICLE III.
COMPANY CONTRIBUTIONS AND INVESTMENT RETURN
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3.1 Company Contributions for Eligible Participants With 5 or More Years
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of Vesting Service as of April 1, 2002. As of the last day of each Plan Year the
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Committee will credit to the Account of each Participant who (a) is an Eligible
Participant as of such day, and (b) as of April 1, 2002 had 5 or more Years of
Vesting Service, an amount equal to a percentage of the Participant's Excess
Compensation for such Plan Year as determined under the following schedule:
Vesting Service Completed by Amount of Employer's
Participant Contribution
5 years but less than 15 years 6%
15 years or more 7%
Notwithstanding the preceding provisions of this section 3.1, if a
Participant terminates employment prior to the last day of the Plan Year and (a)
the Participant was an Eligible Participant immediately prior to such
Participant's termination of employment, and (b) the Participant had 5 or more
Years of Vesting Service as of April 1, 2002, then the Committee will credit to
the Account of the Participant as of the date of the Participant's termination
of employment a percentage of the Participant's Excess Compensation for such
Plan Year, if any, determined in accordance with the preceding schedule under
this section 3.1.
3.2 Company Contributions for Eligible Participants With Less Than 5 Years
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of Vesting Service as of April 1, 2002. As of the last day of each Plan Year the
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Committee will credit to the Account of each Participant who (a) is an Eligible
Participant as of such day, or if a Participant terminated employment during the
Plan Year then was an Eligible Participant immediately prior to such termination
of employment, and (b) as of April 1, 2002 had less than 5 Years of Vesting
Service, an amount equal to 5% of the Participant's Excess Compensation for such
Plan Year. Notwithstanding the preceding sentence of this section 3.2, if a
Participant terminates employment prior to the last day of the Plan Year and (a)
the Participant was an Eligible Participant immediately prior to such
Participant's termination of employment, and (b) the Participant had less than 5
Years of Vesting Service as of April 1, 2002, then the Committee will credit to
the Account of the Participant as of the date of the Participant's termination
of employment an amount equal to 5% of the Participant's Excess Compensation for
such Plan Year, if any.
3.3 Adjustments to Accounts for Investment Return. As of the last day of
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each Plan Year, or if a Participant terminates employment during the Plan Year
then as of the date of
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the Participant's termination of employment, a Participant's Account shall be
adjusted to reflect the Investment Return applicable to the Participant's
Account for the Plan Year as determined by the Committee. The Investment Return
with respect to amounts credited to an Account as of the first day of a Plan
Year and as of the last day of a Plan Year shall be credited as an annual
return. The Investment Return with respect to amounts credited to a
Participant's Account for only a portion of the Plan Year shall be determined
based only upon such portion of the Plan Year.
ARTICLE IV.
DETERMINATION OF BENEFIT
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4.1 Vesting. A Participant who is fully vested under the provisions of the
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HMSC MPPP at any particular time shall also be fully vested at such time in such
Participant's benefit under the Plan.
4.2 Amount of Benefit. The amount of the benefit of a Participant who is
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fully vested hereunder shall be equal to the amount credited to the
Participant's Account as of the date of the Participant's termination of
employment after all credits and adjustments to the Participant's Account to be
made under the provisions of Article III have been made.
ARTICLE V.
PAYMENT OF BENEFIT
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5.1 Time of Payment of Benefit. A fully vested Participant's benefit
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hereunder as determined under section 4.2 will be paid to the Participant no
later than ninety (90) days following the Participant's termination of
employment with the Company.
5.2 Method of Payment of Benefit. A Participant's benefit hereunder will be
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paid in the form of a lump sum cash payment.
5.3 Death of Participant. In the event of a fully vested Participant's
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termination of employment on account of the Participant's death, the benefit
that would have been paid to the Participant hereunder had the Participant not
died but terminated employment on the date of the Participant's death will be
paid to the Participant's Beneficiary. In the event of the death of a fully
vested Participant after the Participant's termination of employment and prior
to the payment to the Participant of the Participant's benefit hereunder, the
benefit that would otherwise have been paid to the Participant hereunder will be
paid to the Participant's Beneficiary.
5.4 Special Rule Upon Change of Control. If the Plan is terminated and not
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replaced as a result of a Change of Control of Horace Mann Educators Corporation
(the parent company of HMSC), or as a result of a divestiture of HMSC by Horace
Mann Educators Corporation, every Participant will receive a lump sum payment of
his or her benefit determined hereunder as of the date of the termination of the
Plan after all credits and adjustments to the
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Participant's Accounts to be made under the provisions of Article III, if any,
have been made. All such payments will be made in a reasonable period after the
triggering event has occurred.
A Change of Control shall be deemed to have occurred if (a) there shall be
consummated (1) any consolidation or merger of HMEC in which HMEC is not the
continuing or surviving corporation, or pursuant to which shares of HMEC's
common stock would be converted into cash, securities or other property, other
than a merger of HMEC in which no HMEC shareholder's ownership percentage in the
surviving corporation immediately after the merger is less than such
shareholder's ownership percentage in HMEC immediately prior to such merger by
ten percent (10%) or more, or (2) any sale, lease exchange or other transfer (in
one transaction or a series of related transactions) of all, or substantially
all of the assets of HMEC; (b) the shareholders of HMEC approve any plan or
proposal for the liquidation or dissolution of HMEC which is a part of a sale of
assets, merger, or reorganization of HMEC or other similar transaction; (c) any
"person" as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), is or becomes, directly
or indirectly, the "beneficial owner," as defined in Rule 13d-3 under the
Exchange Act, of securities of HMEC that represent 51 % or more of the combined
voting power of HMEC's then outstanding securities; or (d) a majority of the
members of HMEC's Board of Directors are persons who are then serving on the
Board of Directors without having been elected by the Board of Directors or
having been nominated by HMEC for election by its shareholders.
ARTICLE VI.
ADMINISTRATION
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6.1 Committee Authority. The Committee is the Plan Administrator of the
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Plan. The Committee is authorized to establish rules and procedures as it deems
advisable or necessary for the administration of the Plan. The Committee has the
sole and absolute discretion to construe and interpret the Plan. In the
administration of the Plan the Committee may, from time to time, (a) delegate
its duties, (b) employ agents and delegate to them such duties as it sees fit,
and (c) consult with legal counsel.
6.2 Claims Procedure. If a Participant believes he or she is being denied a
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benefit to which he or she is entitled under the Plan, the Participant may file
a written request for such benefit with the Committee setting forth his or her
claim. Upon receipt of the claim, the Committee shall advise the Participant
that a reply will be forthcoming within ninety (90) days and shall deliver such
reply within such period, unless Committee extends the reply period for an
additional ninety (90) days for reasonable cause. If the claim is denied in
whole or in part, the Committee shall so advise the Participant in writing
setting forth: (a) the specific reason or reasons for such denial; (b) the
specific reference to pertinent provisions of the Plan on which such denial is
based; (c) a description of any additional material or information necessary for
the Participant to perfect his or her claim and an explanation why such material
or such information is necessary; and (d) appropriate information as to the
steps to be taken if the Participant wishes to submit the claim for review. Any
request for review must be submitted in writing by the Participant to the
Committee in care of the Committee at its principal place of business within
sixty (60) days after the receipt by the Participant of the denial of the
Participant's claim. The
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Participant or his or her duly authorized representative may, but need not,
review the pertinent documents and submit issues and comments in writing for
consideration by the Committee. If the Participant does not request a review of
the Committee's determination within such sixty (60) day period, the Participant
shall be barred and estopped from challenging the Committee's determination.
Within sixty (60) days after the Committee's receipt of a request for review, it
will review its determination. After considering all materials presented by the
Participant, the Committee will render a written opinion, written in a manner
calculated to be understood by the Participant, setting forth the specific
reasons for the decision and containing specific references to the pertinent
provisions of the Plan on which the decision is based. If special circumstances
require that the sixty (60) day time period be extended, the Committee will so
notify the Participant and will render the decision as soon as possible, but no
later than one hundred twenty (120) days after receipt of the request for
review.
ARTICLE VII.
MISCELLANEOUS
7.1 Amendment or Termination. The Company reserves the right to amend or
terminate the Plan when, in the sole opinion of the Company, such amendment or
termination is advisable. Any such amendment or termination shall be made
pursuant to a resolution of the board of directors of the Company and shall be
effective as of the date of such resolution.
7.2 No Contract of Employment. Nothing contained in this Plan will confer
upon any Participant the right to be retained in the service of the Company nor
limit the right of the Company to discharge or otherwise deal with Participants
without regard to the existence of the Plan.
7.3 Unfunded. The Plan at all times shall be entirely unfunded and no
provision shall at any time be made with respect to segregating any assets of
the Company for payment of any benefits hereunder. The Plan does not have a
trust or trust fund arrangement. No Participant or Beneficiary or any other
person shall have any interest in any particular assets of the Company by reason
of the right to receive a benefit under the Plan and any such Participant or
Beneficiary or other person shall have only the rights of a general unsecured
creditor of the Company with respect to any rights under the Plan. Nothing
contained in the Plan shall constitute a guaranty by the Company or any other
entity or person that the assets of the Company will be sufficient to pay any
benefit hereunder.
7.4 Nonalienation of Benefits. No benefit payable under the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or charge prior to actual receipt thereof by the payee; and
any attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber
or charge prior to such receipt shall be void; and the Company shall not be
liable in any manner for or subject to the debts, contracts, liabilities,
engagements or torts of any person entitled to any benefit under the Plan.
7.5 Taxes. The Company will cause taxes (including, but not limited to,
employment taxes or federal or state income taxes) to be withheld from amounts
paid hereunder as required
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by law. A Participant should seek the advice of a tax consultant or financial
advisor regarding his or her personal tax situation.
7.6 No Trust Relationship. Nothing contained herein and no actions taken
pursuant to the Plan shall create or be construed to create a trust of any kind
or a fiduciary relationship between the Company and any Participant. The Company
shall not be considered a trustee by reason of any provision of this Plan.
7.7 Corporate Successors. The Plan shall not be automatically terminated by
a transfer or sale of assets of the Company or by the merger or consolidation of
the Company into or with any other corporation or other entity, but the Plan
shall be continued after such sale, merger or consolidation only if and to the
extent that the transferee, purchaser or successor entity agrees to continue the
Plan. In the event the Plan is not continued by the transferee, purchaser or
successor entity, then the Plan shall terminate subject to the provisions of
section 5.4.
7.8 Governing Law. The Plan is established under and will be construed
according to the laws of the State of Illinois, to the extent that such laws are
not preempted by ERISA, and regulations thereunder.
7.9 Invalidity of Certain Provisions. If any provision of this Plan shall
be held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof and the Plan shall be construed and enforced
as if such provisions, to the extent invalid or unenforceable, had not been
included.
7.10 Limitations on Liability and Indemnification. Notwithstanding any of
the preceding provisions of the Plan, neither the Company, Plan Administrator,
nor any individual acting as an employee or agent of the Company or as a member
of the Pension Committee shall be liable to any Participant, former Participant,
surviving spouse or any other person for any claim, loss, liability or expense
incurred in connection with the Plan. Further, the Company shall indemnify and
hold harmless each member of the Committee, the Plan Administrator, and each
officer and employee of the Company to whom are delegated duties,
responsibilities and authority with respect to the Plan against all claims,
liabilities, fines and penalties, and all expenses reasonably incurred by or
imposed upon such person (including but not limited to reasonable attorney fees)
which are not the result of intentional acts knowingly in violations of the Plan
or the law.
7.11 Headings. The headings of articles are included solely for convenience
of reference, and if there is any conflict between such headings and the text of
this Plan, the text shall control.
Executed effective as of April 1, 2002.
HORACE MANN SERVICE CORPORATION
By: /s/ Kathryn E. Karr
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Plan Administrator
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