Exhibit 10.13
TRANSITION, RETIREMENT AND RELEASE AGREEMENT
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This TRANSITION, RETIREMENT AND RELEASE AGREEMENT (this "Agreement") is
made and entered into by and between Horace Mann Service Corporation ("Horace
Mann"), an Illinois corporation, and George J. Zock ("Zock") to provide an
orderly and amicable arrangement with respect to Zock's performance of
transitional duties preliminary to his retirement from Horace Mann.
In consideration for the mutual promises provided herein, the parties
hereby agree as follows:
1) Change of Current Duties; Conditions While Performing Consulting Duties;
Retirement Date
a) Zock shall cease his current duties, salary, responsibilities, title
and office as Executive Vice President effective on December 31, 2003.
i) On or about each of December 15, 2003 and December 31, 2003,
Zock will receive a gross salary payment of Twelve Thousand
Eighty Three and 50/100 Dollars ($12,083.50) and continue to be
eligible for normal employee benefits.
ii) From January 1, 2004 until his Retirement Date as such term is
defined in Paragraph 1.C. below, (such period referred to herein
as the "Consulting Period") Zock shall remain employed on the
payroll of Horace Mann paid at a salary rate of Fourteen
Thousand One Hundred Twenty Eight and no/100 Dollars
($14,128.00) per month which will be paid in semi-monthly
installments in the amount of Seven Thousand Sixty Four and
no/100 Dollars ($7,064.00 per pay) in accordance with Horace
Mann's payroll practices.
iii) Zock shall be eligible for bonus consideration for his service
in 2003, calculated using 2003 salary earnings, and otherwise in
accordance with the terms of the Annual Incentive Program for
Officers as detailed in Exhibit A, if any is payable in 2004.
iv) Prior to his Retirement Date, Zock shall be eligible to continue
participation in the Long Term Incentive Plan ("LTIP"), as such
may be amended from time to time. Further, Zock will be eligible
for payment in 2005 of two-thirds (2/3) of the LTIP bonus
payment for the 2002-2004 measurement period which will be
calculated based on two thirds (2/3) of the achieved performance
results multiplied by the target opportunity as detailed on
Exhibit B, as such may be amended from time to time.
v) All stock option awards previously granted will continue to vest
as detailed in the specific Stock Option Agreements applicable
to him which have been issued prior to December 31, 2003.
vi) Zock shall be eligible to remove any freestanding office
furniture in his office, to include desk, chairs, coffee table,
and couch. In addition, Zock is eligible to take the laptop
computer, docking station, monitor, keyboard and mouse assigned
to him, provided that all Horace Mann proprietary, confidential
and the like information and software is removed from the
computer. The removal of such is Zock's responsibility and at
his cost and will be done at a mutually agreeable time and
manner.
vii) Horace Mann continue to pay for Zock's membership to the Sangamo
Club through Zock's Retirement Date.
viii) Other than the payments provided for in paragraph 1(a)(ii), Zock
shall not be eligible for any bonus consideration, vacation or
vacation pay, stock option awards or any other remuneration or
compensation during the Consulting Period. During the Consulting
Period, Zock shall otherwise remain eligible for benefits
available under the Horace Mann Benefit Programs consistent with
a salary rate of Fourteen Thousand One Hundred Twenty Eight and
no/100 Dollars ($14,128.00) per month.
b) During the Consulting Period, Zock shall, at the discretion of the
President and Chief Executive Officer ("CEO") of Horace Mann, perform
limited consulting responsibilities ("Consulting Duties") as assigned
and deemed appropriate by such CEO with such responsibilities being
performed at mutually agreeable locations. It is expected such duties
will focus primarily on transitional advice relating to matters in
which Zock participated while actively employed. Zock's good faith
performance of such duties to the best of his abilities shall
constitute compliance with this requirement. Any reasonable and
necessary business expenses incurred in connection with such
Consulting Duties assigned shall be reimbursed in accordance with
Horace Mann's normal expense reimbursement policies. During the
Consulting Period, Zock shall owe Horace Mann the same duty of loyalty
owed to Horace Mann by an officer of Horace Mann, and he shall not
engage in any competing business or other activities that are
detrimental to the interests or welfare of Horace Mann. Provided,
however, Zock may, with the advance written approval of the CEO of
Horace Mann, consult, become employed by, or act as an independent
contractor for business entities whose interests do not directly
conflict with those of Horace Mann.
c) Zock will retire from Horace Mann on November 15, 2005 (such date
referred to herein as "Retirement Date") and he will complete all
documents necessary to effectuate such retirement. Zock states that
this retirement is voluntary; that he understands that his employment
(and this Agreement) with Horace Mann shall cease on his Retirement
Date (or upon his death); that he shall not accrue any further
benefits thereafter; nor shall he be eligible for any other salary
payments after such date. Zock shall be eligible for retirement
benefits and other benefits in effect at his Retirement Date and due
to him under Horace Mann's benefit plans attributable to service prior
to his Retirement Date, including any applicable death benefits.
Provided, however, he acknowledges that he is not eligible for any
severance payments.
2) Releases and Covenants Not To Sue.
a) Zock, for himself, his agents, legal representatives, assigns, heirs,
distributees, devisees, legatees, administrators, personal
representatives and executors (the "Releasing Parties"), hereby
releases and forever discharges Horace Mann, its present or past
parent corporations, subsidiaries, divisions and affiliates, or
related companies, successors or assigns, and their respective present
or past officers, trustees, directors, employees and agents of each of
them (the "Released Parties"), from any and all claims, demands,
actions, liabilities and other claims for relief and remuneration
whatsoever, whether known or unknown arising or which could have
arisen up to and including the date of his execution of this
Agreement, including, without limitation, those arising out of or
relating to Zock's employment and cessation of employment, his change
in employment duties, consulting status and his retirement from Horace
Mann on or before November 15, 2005, and any claims arising under
Title VII of the Civil Rights Act of 1964 (as amended by the Civil
Rights Act of 1991), the Americans With Disabilities Act, the
Rehabilitation Act of 1973, the Equal Pay Act, the Fair Labor
Standards Act, the Older Workers Benefits Protection Act, the Age
Discrimination in Employment Act, the Illinois Human Rights Act, the
Illinois Wage Payment
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and Collection Act, the Employee Retirement Income Security Act
("ERISA"), as such acts have been amended, or any other federal,
state, or local statute, law, ordinance, regulation, code or executive
order, any tort or contract claims, and any of the claims, matters and
issues which could have been asserted by Zock against Horace Mann,
provided that the Releasing Parties do not release potential claims
arising under ERISA to any benefits to which Zock is entitled in
accordance with the Horace Mann Benefit Programs by virtue of his
employment with Horace Mann prior to his Retirement Date.
b) Zock further agrees not to assert any claim, suit or other legal
proceeding against the Released Parties, in any court, based on any
events, whether known or unknown, which are the subject of the release
contained in section A. of this Paragraph 2. Zock further agrees that
if any entity or person shall bring any claim that has been released
in section A. of this Paragraph 2 on his behalf, he shall not accept
any recovery or remedy with respect to any such claim.
3) Confidentiality.
a) Except as required by law, Zock agrees not to discuss, divulge,
publicize, publish or use any information he received or used in the
course of his employment with Horace Mann which is not publicly
available. Zock further agrees not to disclose, divulge, publicize or
publish the terms of this Agreement or the facts or circumstances that
led to this Agreement, except to his counsel, spouse or financial
advisor, or as required by law, or as required to enforce the terms of
this Agreement. In addition, Zock will require his spouse, current or
any future attorneys or professional tax preparers or other financial
advisor, or their employees, as a condition of discussing this
Agreement or any of the matters described in the Agreement with them
to execute a Confidentiality Acknowledgment in a form attached hereto
as Exhibit C and to send a copy of such form in a confidential
envelope to Ann Caparros, Esq., General Counsel, (or her successor)
Horace Mann Service Corporation, 1 Horace Mann Plaza, Springfield,
Illinois 62715-0001. Zock shall instruct his present or future
attorney, spouse, tax preparer or other financial advisor, as the case
may be, that they are subject to the same requirements.
b) Zock further agrees that if he is subpoenaed to testify or produce
documents or any other information relating in any way to the subject
matter of this Agreement, or if he is otherwise in a position in which
he feels he is required by law to make a disclosure otherwise
prohibited by Paragraph 3., he or his attorneys shall immediately
notify Horace Mann in care of Ann M. Caparros, Esq., General Counsel
(or her successor), at Horace Mann Service Corporation, 1 Horace Mann
Plaza, Springfield, Illinois 62715-0001, by telephone (217.788.5757)
and in writing of this fact and before he complies with any such
subpoena or otherwise make such disclosure in order to permit Horace
Mann to take steps to protect its interests in this regard. In
addition, Zock will cooperate with Horace Mann in all reasonable
respects necessary to effectuate a motion to quash any subpoena or
production request in this regard, and to cooperate with Horace Mann's
opposition to such disclosure. Zock's reasonable costs, expenses and
attorney's fees in this regard shall be paid by Horace Mann, but
provided, further, that no such costs, fees or expenses shall be
committed or expended without Horace Mann's express written approval.
If after following the procedures set forth in this paragraph, Zock
nevertheless is compelled by court order or otherwise required by law
to testify or produce documents. Zock's compliance shall not
constitute or be construed as a breach of this Agreement.
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c) Zock further agrees and understands that if he fails to comply with
the requirements of Paragraph 3 of this Agreement, Horace Mann shall
be entitled to cease all further payments or benefits which would
otherwise be due to Zock under this Agreement, as well as any other
remedy for breach of this Agreement, as permitted by law.
4) No Reinstatement; No Reapplication. Zock waives any rights to reinstatement
or re-employment with Horace Mann or any related entity after the
completion of the Consulting Period. He further agrees not to reapply for
employment to such entities in the future. Horace Mann and its affiliates
shall not be required to consider any application for employment or
re-employment by Zock.
5) Return of Horace Mann Materials and Property. Zock hereby acknowledges that
at the conclusion of the Consulting Period, he will return or destroy all
Horace Mann materials and property, including all intellectual property to
Horace Mann. Zock further agrees not to make or keep any copies, electronic
or paper, of any Horace Mann documents or other intellectual property.
6) Voluntary Agreement; Legal Counsel; 21 Day Consideration Period. Zock
acknowledges and states that he has read this Agreement; that he has had
opportunity to, and has been advised orally and in writing hereby, to
consult with legal counsel prior to executing this Agreement, that he
understands the legal effect and binding nature of this Agreement; and that
he is acting voluntarily and with full knowledge of his actions in
executing this Agreement. Further, Zock acknowledges and states that he has
been given at least 21 days to fully consider entering into this Agreement
before its execution.
7) Revocation. This Agreement may be revoked by Zock within seven (7) days
following his execution of this Agreement, in which case this Agreement
shall not become effective or enforceable and all terms within the
Agreement shall become null and void. If not revoked during this seven (7)
day revocation period, this Agreement shall be and remain in full force and
effect.
8) Assignment. This Agreement shall not be assigned by Zock, but it is binding
upon and shall inure to the benefit of Horace Mann and its successors and
assigns.
9) Governing Law; Disputes. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Illinois, without
giving effect to its conflict or choice of law provisions. Any action
brought to enforce this Agreement shall be brought in a state or federal
court of competent jurisdiction located in Springfield, Illinois. All
parties agree that if any action is brought to enforce this Agreement in a
state or federal court outside of Illinois, that all parties hereby consent
to a transfer to a court located in Springfield, Illinois.
10) Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by Zock and Horace Mann. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. This Agreement
shall be enforced in accordance with its terms and shall not be construed
against either party.
11) Counterparts. This Agreement may be executed in two counterparts, each of
which shall be deemed to be an original but both of which together will
constitute one and the same instrument.
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12) Withholding. Horace Mann shall withhold benefits otherwise due or payable
hereunder in order to comply with any federal, state, local or other income
or other tax laws requiring withholding with respect to compensation and
benefits provided to Zock pursuant to this Agreement.
13) Entire Agreement; Termination of Prior Agreements. This Agreement contains
the entire agreement between the parties hereto with respect to the
transactions contemplated hereby and supersedes, terminates and discharges
all previous oral and written agreements relating to the subject matters
herein, including the Severance Agreement between himself, Horace Mann
Educators Corporation and Horace Mann Service Corporation which was
effective December 27, 1991 ("Severance Agreement") attached as Exhibit D.
Zock hereby acknowledges and agrees to sign an amendment terminating the
Severance Agreement in accordance with the terms of the Severance
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date written below.
HORACE MANN SERVICE CORPORATION
Dated: December 31, 2003 By: /s/ Valerie A. Chrisman
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Name: Valerie A. Chrisman
Title: Senior Vice President -
Employee and Corporate Services
GEORGE J. ZOCK
Dated: December 31, 2003 By: /s/ George J. Zock
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Name: George J. Zock,
Title: Executive Vice President
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Exhibit A
CLIENT, FINANCIAL & INFORMATION TECHNOLOGY SERVICES
PERFORMANCE MEASURES
FOR THE ANNUAL INCENTIVE PLAN
2003
MEASURE WEIGHTING
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Corporate Performance Measures 50%
Business Measurements Roll-Up 50%
Property and Casualty 15%
Life/Annuity 20%
Marketing 15%
No awards greater than target will be paid unless threshold EPS is achieved
($1.24).
George Zock - 50% Bonus Opportunity
Exhibit B.1
Participant: George Zock
Three year cash award opportunity at target: $540,000
Three year stock option opportunity: 110,000 option shares
Threshold Target Maximum
% $$ % $$ % $$
2002 Actual 9% $ 48,600 9% $ 48,600 9% $ 48,600
2003 Opportunity 15% $ 81,000 30% $ 162,000 60% $ 324,000
2004 Opportunity 25% $ 135,000 50% $ 270,000 100% $ 540,000
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Total 2003-2004 49% $ 264,600 89% $ 480,600 169% $ 912,600
2002-2004 Stock Option Performance 9,900 vested shares at $20.80 per
Vesting: share
2002-2004 Long Term Incentive Plan -
3-year performance period
Cash payment made in 2005 after the end of the performance period
Must be employed at the end of the performance period to receive payment
Exceptions for retirement, death, and disability
Exhibit B.2
CORPORATE PERFORMANCE MEASURES
FOR THE LONG TERM INCENTIVE PLAN 2002-2004
Measure Weight 2002 (20% Vesting) 2003 (30% Vesting) 2004 (50% Vesting)
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Thres. Target Max. Thres. Target Max. Thres. Target Max.
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GAAP Operating EPS/(1)(2)/ 50% $ 1.10 $ 1.20 $ 1.40 $ 1.24 $ 1.34 $ 1.53/(3)/ $ 1.44 $ 1.53 $ 1.72/(3)/
Net Income ROAE/(2)/ 50% 10.0% 11.0% 12.5% 11.0% 12.0% 13.0% 12.0% 12.5% 13.5%
Note: Threshold payout is at 50%. Target payout is at 100%. Maximum payout is at
200%.
/(1)/ 2002 threshold-target-max consistent with AIP levels. 2003 and 2004
targets 15% annual increases (rounded) from 2002 target. 2003 and 2004
ranges around target consistent with 2002.
/(2)/ Excludes any change in DOLI charges from 12/31/01 level ($2.7 million
after tax), and any release of escrowed NC auto premiums.
/(3)/ Adjusted from original measures for the impact of share dilution created
by the 2002 recapitalization of the company.
2002 Actual
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December Percent of Weighted
Measure Weight Actual Target Result
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GAAP Operating EPS/(1)(2)/ 50% $ 1.18 90.00% 45.00%
Net Income ROAE/(2)/ 50% 2.4% 0.00% 00.00%
Total 100% 45.00%
2002 Target Opportunity 20% 9.00%
EXHIBIT C
CONFIDENTIALITY ACKNOWLEDGMENT
The undersigned has received a copy of, seen or discussed matters leading
to the Transition, Retirement and Release Agreement between George J. Zock and
Horace Mann Service Corporation (hereinafter "the Agreement"). Except as
required by law, the undersigned hereby agrees that he/she will not disclose any
of the terms or conditions of the Agreement or any of the matters described in
the Agreement to any person or entity who is not a party to the Agreement or
this Confidentiality Acknowledgment.
The undersigned further agrees that if subpoenaed, requested or noticed to
testify or produce documents relating in any way to the subject matter of the
Agreement, before he/she complies he/she shall notify Horace Mann Service
Corporation, c/o Ann M. Caparros, Esq., General Counsel, 1 Horace Mann Plaza,
Springfield, Illinois 62715-0001 (217/788-5757) (or her successor), of the
return date, time and location before complying with such subpoena, request or
notice.
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[Name]
Title:
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Date:
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