EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of the 11th day of August,
2000, between CONSECO, INC., an Indiana corporation (hereinafter called the
"Company"), and David K. Herzog (hereinafter called "Executive").
RECITALS
WHEREAS, the services of Executive, and his managerial and professional
experience, are of great value to the Company;
WHEREAS, the Company deems it to be essential for it to have the
benefit and advantage of the services of the Executive for an extended period;
and
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, the parties agree as follows:
1. Employment. The Company hereby employs Executive and Executive
hereby accepts employment upon the terms and conditions hereinafter set forth.
2. Term. The effective date of this Agreement shall be September 1,
2000. Subject to the provisions for termination as provided in Section 10
hereof, the term of this Agreement shall be the period beginning September 1,
2000, and ending December 31, 2003, and it shall be automatically renewed for
successive two (2) year periods on January 1, 2004 and each succeeding January 1
unless either party elects not to renew this Agreement by serving written notice
of such intention not to renew on the other party at least 180 days prior to
such January 1. If such an election is made, this Agreement shall remain in full
force and effect for the remaining original term ending December 31, 2003 or, if
this Agreement has been renewed, the remainder of the renewal period relating to
the last such renewal, subject to the provisions for termination as provided in
Section 10 hereof. The Basic Employment Period as used in this Agreement shall
mean the original term ending December 31, 2003 or, if this Agreement has been
renewed, the 2-year period relating to the last renewal.
3. Duties. Executive is engaged by the Company in an executive capacity
as its chief legal officer. Executive shall report to the Chief Executive
Officer regarding the performance of his duties and shall be subject to the
direction and control of the Board of Directors of the Company (sometimes
referred to herein as the "Board") and the Chief Executive Officer. Executive's
position with the Company shall be Executive Vice President, General Counsel and
Secretary, and such other positions as may be determined from time to time by
the Board.
4. Extent of Services. Executive, subject to the direction and control
of the Chief Executive Officer and the Board, shall have the power and authority
commensurate with his executive status and necessary to perform his duties
hereunder. The Company agrees to provide to Executive such assistance and work
accommodations as are suitable to the character of his positions
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with the Company and adequate for the performance of his duties. Executive
shall devote his entire employable time, attention and best efforts to the
business of the Company, and shall not, without the consent of the Company,
during the term of this Agreement be actively engaged in any other business
activity, whether or not such business activity is pursued for gain, profit or
other pecuniary advantage; but this shall not be construed as preventing
Executive from investing his assets in such form or manner as will not require
any services on the part of Executive in the operation of the affairs of the
companies in which such investments are made. For purposes of this Agreement,
full-time employment shall be the normal work week for individuals in comparable
executive positions with the Company.
5. Compensation.
(a) As compensation for services hereunder rendered during the term
hereof, Executive shall receive a base salary ("Base Salary") of Six
Hundred Thousand Dollars ($600,000) per year payable in equal
installments in accordance with the Company's payroll procedure for its
salaried employees. Salary payments and other payments under this
Agreement shall be subject to withholding of taxes and other
appropriate and customary amounts. Executive may receive increases in
his Base Salary from time to time, based upon his performance in his
executive and management capacity. The amounts of any such salary
increases shall be approved by the Board or the Compensation Committee
of the Board upon the recommendation of the Chief Executive Officer.
(b) In addition to Base Salary, Executive may receive such other
bonuses or incentive compensation as the Compensation Committee or the
Board may approve from time to time, upon the recommendation of the
Chief Executive Officer not in excess of $600,000 with respect to any
calendar year; provided, that Executive shall receive a cash bonus of
at least Eighty-Two Thousand Six Hundred Fifty Dollars ($82,650) for
the period from September 1 through December 31 of 2000 and Two Hundred
Fifty Thousand Dollars ($250,000) with respect to the 2001 calendar
year (or a pro rata portion thereof, based on the portion of the
respective period worked, for any part of a period worked).
(c) Executive shall also receive a signing bonus of Two Hundred
Fifty Thousand Dollars ($250,000), payable on the first salary payment
date following the commencement of employment. If Executive voluntarily
terminates his employment with the Company prior to September 1, 2002,
he will immediately pay the Company a pro rata portion of such signing
bonus (based on the portion of the 2-year period ending September 1,
2002 after the date of such termination of employment).
6. Fringe Benefits.
(a) Executive shall be entitled to participate in such existing
employee benefit plans and insurance programs offered by the Company,
or which it may adopt form time to time, for its executive management
or supervisory personnel generally, in accordance with the eligibility
requirements for participation therein. Nothing herein shall be
construed so as to prevent the Company from modifying or terminating
any employee benefit plans or programs, or employee fringe benefits, it
may adopt from time to time.
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(b) During the term of this Agreement, the Company shall pay
Executive a monthly automobile allowance in the amount of Six Hundred
Dollars ($600), and the Company shall pay directly or shall reimburse
Executive for the cost of fuel that he incurs in using his automobile.
(c) Executive shall be entitled to four (4) weeks vacation with pay
for each year during the term hereof.
(d) Executive may incur reasonable expenses for promoting the
Company's business, including expenses for entertainment, travel, and
similar items. The Company shall reimburse Executive for all such
reasonable expenses upon Executive's periodic presentation of an
itemized account of such expenditures.
(e) The Company shall, upon periodic presentation of satisfactory
evidence and to a maximum of Ten Thousand Dollars ($10,000) per each
year of this Agreement, reimburse Executive for reasonable medical
expenses incurred by Executive and his dependents which are not
otherwise covered by health insurance provided to Executive under
Section 6(a).
(f) During the term of this Agreement, the Company shall at its
expense maintain a term life insurance policy or policies on the life
of Executive in the face amount of Five Hundred Thousand Dollars
($500,000), payable to such beneficiaries as Executive may designate.
(g) The Company shall grant to Executive, a non-qualified stock
option to purchase One Hundred Thousand (100,000) shares of common
stock at the fair market value per share of common stock on September
1, 2000. Such stock option shall become exercisable in three increments
of one-third of the shares covered on September 1 of each of 2001, 2002
and 2003, and shall have scheduled expiration date of September 1,
2010.
7. Disability. If Executive shall become physically or mentally
disabled during the term of this Agreement to the extent that his ability to
perform his duties and services hereunder is materially and adversely impaired,
his salary, bonus and other compensation provided herein shall continue while he
remains employed by the Company; provided, that if such disability (as confirmed
by competent medical evidence) continues for at least nine (9) consecutive
months, the Company may terminate Executive's employment hereunder in which case
the Company shall immediately pay Executive a lump sum payment equal to
one-quarter of the sum of his annual salary and bonus with respect to the most
recent fiscal year then ended and, provided further, that no such lump sum
payment shall be required if such disability arises primarily from: (a) chronic
depressive use of intoxicants, drugs or narcotics, or (b) intentionally
self-inflicted injury or intentionally self-induced sickness; or (c) a proven
unlawful act or enterprise on the part of Executive.
8. Disclosure of Information. Executive acknowledges that in and as a
result of his employment with the Company, he has been and will be making use
of, acquiring and/or adding to confidential information of the Company of a
special and unique nature and value. As a material inducement to the Company to
enter into this Agreement and to pay to Executive the compensation stated in
Section 5, as well as any additional benefits stated herein, Executive covenants
and agrees
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that he shall not, at any time during or following the term of his employment,
directly or indirectly, divulge or disclose for any purpose whatsoever, any
confidential information that has been obtained by or disclosed to him as a
result of his employment with the Company, except to the extent that such
confidential information (a) becomes a matter of public record or is published
in a newspaper, magazine or other periodical available to the general public,
other than as a result of any act or omission of Executive, (b) is required to
be disclosed by any law, regulation or order of any court or regulatory
commission, department or agency, provided that Executive gives prompt notice of
such requirement to the Company to enable the Company to seek an appropriate
protective order or confidential treatment, or (c) is necessary to perform
properly Executive's duties under this Agreement. Upon the termination of this
Agreement, Executive shall return all materials obtained from or belonging to
the Company which he may have in his possession or control.
9. Covenants Against Competition and Solicitation. Executive
acknowledges that the services he is to render to the Company are of a special
and unusual character, with a unique value to the Company, the loss of which
cannot adequately be compensated by damages or an action at law. In view of the
unique value to the Company of the services of Executive for which the Company
has contracted hereunder, because of the confidential information to be obtained
by, or disclosed to, Executive as hereinabove set forth, and as a material
inducement to the Company to enter into this Agreement and to pay to Executive
the compensation stated in Section 5, as well as any additional benefits stated
herein, and other good and valuable consideration, Executive covenants and
agrees that throughout the period Executive remains employed hereunder and for
one year thereafter, Executive shall not, directly or indirectly, anywhere in
the United States of America (i) render any services, as an agent, independent
contractor, consultant or otherwise, or become employed or compensated by, any
other corporation, person or entity engaged in the business of selling or
providing life, accident or health insurance products or services; (ii) render
any services, as an agent, independent contractor, consultant or otherwise, or
become employed or compensated by, any other corporation, person or entity
engaged in the business of selling or providing any lending or other financial
products or services that are competitive with the lending or other financial
products or services sold or provided by the Company or its subsidiaries, (iii)
in any manner compete with the Company or any of its subsidiaries; (iv) solicit
or attempt to convert to other insurance carriers, finance companies or other
corporations, persons or other entities providing these same or similar products
or services provided by the Company and its subsidiaries, any customers or
policyholders of the Company, or any of its subsidiaries; or (v) solicit for
employment or employ any employee of the Company or any of its subsidiaries. The
covenants of Executive in this Section 9 shall be void and unenforceable in the
event of a Control Termination of this Agreement as defined in Section 10 below.
Should any particular covenant or provision of this Section 9 be held
unreasonable or contrary to public policy for any reason, including, without
limitation, the time period, geographical area, or scope of activity covered by
any restrictive covenant or provision, the Company and Executive acknowledge and
agree that such covenant or provision shall automatically be deemed modified
such that the contested covenant or provision shall have the closest effect
permitted by applicable law to the original form and shall be given effect and
enforced as so modified to whatever extent would be reasonable and enforceable
under applicable law.
10. Termination.
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(a) Either the Company or Executive may terminate this Agreement at
any time for any reason upon written notice to the other. This
Agreement shall also terminate upon (i) the death of Executive or (ii)
termination by the Company pursuant to Section 7.
(b) In the event this Agreement is terminated by the Company and
such termination is not pursuant to the last sentence of (a) above or
for "just cause" as defined in (f) below and does not constitute a
Control Termination as defined in (e) below, Executive shall be
entitled to receive Executive's Base Salary, as determined pursuant to
Section 5(a) hereof, for the remainder of the Basic Employment Period
and all other unpaid amounts previously accrued or awarded pursuant to
any other provision of this Agreement.
(c) In the event this Agreement is terminated by the death of
Executive, is terminated by the Company for "just cause" as defined in
(f) below, or is terminated by Executive and such termination does not
constitute a Control Termination as defined in (e) below, Executive
shall be entitled to receive Executive's Base Salary as provided in
Section 5(a) accrued but unpaid as of the date of termination, and all
other unpaid amounts previously accrued or awarded pursuant to any
other provision of this Agreement.
(d) In the event of a Control Termination as defined in (e) below,
Executive shall be entitled to receive a lump sum payment not later
than 60 days following such Control Termination equal to the sum of (i)
the amount of Executive's Base Salary, as determined pursuant to
Section 5(a) hereof, that would have been paid for the remainder of the
Basic Employment Period, (ii) the amount of bonus that would have been
paid to Executive with respect to the remainder of the Basic Employment
Period at the same annual rate of bonus that was paid to Executive (or,
if not yet paid, accrued by the Company for payment) with respect to
the last calendar year prior to the year in which the related "change
in control" of the Company, as defined in (e) below occurs, and (iii)
all other unpaid amounts previously accrued or awarded pursuant to any
other provision of this Agreement.
(e) The term "Control Termination" as used herein shall mean (A)
termination of this Agreement by the Company in anticipation of or not
later than two years following a "change in control" of the Company (as
defined below), or (B) termination of this Agreement by Executive
following "change in control" of the Company (as defined below) upon
the occurrence of any of the following events:
(i) a significant reduction in the nature or scope of
Executive's authorities or duties from those in existence
immediately prior to the change in control, a reduction in his total
compensation from that in existence immediately prior to the change
in control or a breach by the Company of any other provision of this
Agreement; or
(ii) the reasonable determination by Executive that, as a result
of a change in circumstances significantly affecting his position,
he is unable to exercise Executive's authorities, powers, functions
or duties in existence immediately prior to the change in control,
or
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(iii) the Company's principal executive offices are moved
outside the geographic area comprised of Marion County, Indiana, and
the seven contiguous counties or Executive is required to work at a
location other than the Company's principal executive offices.
The term "change in control" shall mean a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934 (the "Act")
if such Item 6(e) were applicable to the Company as such Item is in effect on
May 26, 1999; provided that, without limitation,
(x) such a change in control shall be deemed to have occurred if and
when (A) except as provided in (y) below, any "person" (as such term is
used in Sections 13(d) and 14(d) of the Act) is or becomes a
"beneficial owner" (as such term is defined in Rule 13d-3 promulgated
under the Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's
then outstanding securities entitled to vote with respect to the
election of its Board of Directors or (B) as the result of a tender
offer, merger, consolidation, sale of assets, or contest for election
of directors, or any combination of the foregoing transactions or
events, individuals who, as of the date hereof, constitute the Board of
Directors of the Company (the "Incumbent Board") cease to constitute at
least a majority of such Board; provided, however, that any individual
who becomes a director of the Company subsequent to the date hereof
whose election was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board, shall be deemed to have
been a member of the Incumbent Board; and provided further, that no
individual who was initially elected as a director of the Company as a
result of an actual or threatened election contest, as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Act, or any
other actual or threatened solicitation of proxies or consents by or on
behalf of any person other than the Board of Directors shall be deemed
to have been a member of the Incumbent Board, or (C) any
reorganization, merger or consolidation or the issuance of shares of
common stock of the Company in connection therewith unless immediately
after any such reorganization, merger or consolidation (i) more than
60% of the then outstanding shares of common stock of the corporation
surviving or resulting from such reorganization, merger or
consolidation and more than 60% of the combined voting power of the
then outstanding securities of such corporation entitled to vote
generally in the election of directors are then beneficially owned,
directly or indirectly, by all or substantially all of the individuals
or entities who were the beneficial owners, respectively, of the
outstanding shares of common stock of the Company and the outstanding
voting securities of the Company immediately prior to such
reorganization, merger or consolidation and in substantially the same
proportions relative to each other as their ownership, immediately
prior to such reorganization, merger or consolidation, of the
outstanding shares of common stock of the Company and the outstanding
voting securities of the Company, as the case may be, and (ii) at least
a majority of the members of the board of directors of the corporation
surviving or resulting from such reorganization, merger or
consolidation were members of the Board of Directors of the Company at
the time of the execution of the initial agreement or action of the
Board of Directors providing for such
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reorganization, merger or consolidation or issuance of shares of common
stock of the Company, and
(y) no change of control shall be deemed to have occurred if and
when any such person becomes, with the approval of the Board of
Directors of the Company, the beneficial owner of securities of the
Company representing 25% or more but less than 50% of the combined
voting power of the Company's then outstanding securities entitled to
vote with respect to the election of its Board of Directors and in
connection therewith represents, and at all times continues to
represent, in a filing, as amended, with the Securities and Exchange
Commission on Schedule 13D or Schedule 13G (or any successor Schedule
thereto) that "such person has acquired such securities for investment
and not with the purpose nor with the effect of changing or influencing
the control of the Company, nor in connection with or as a participant
in any transaction having such purpose or effect", or words of
comparable meaning and import. The designation by any such person, with
the approval of the Board of Directors of the Company, of one or more
individuals to serve as a member of, or observer at meetings of, the
Company's Board of Directors, shall not be considered "changing or
influencing the control of the Company" within the meaning of the
immediately preceding clause (B), so long as such individuals do not
constitute at any time more than one-quarter of the total number of
directors serving on such Board.
Upon the occurrence of a change in control, the Company shall promptly notify
Executive in writing of the occurrence of such event (such notice, the "Change
in Control Notice"). If the Change in Control Notice is not given within 10 days
after the occurrence of a change in control the period specified in clause
(e)(A) of this Section 10 shall be extended until the second anniversary of the
date such Change in Control Notice is given.
(f) For purposes of this Agreement "just cause" shall mean:
(i) a material breach by Executive of this Agreement, the
commission of gross negligence, or willful malfeasance or fraud or
dishonesty of a substantial nature in performing Executive's
services on behalf of the Company, which is in each case (A) willful
and deliberate on Executive's part and committed in bad faith or
without reasonable belief that such breach is in the best interests
of the Company and (B) not remedied by Executive in a reasonable
period of time after receipt of written notice from the Company
specifying such breach;
(ii) Executive's breach of any provisions of this Agreement, or
his use of alcohol or drugs which interferes with the performance of
his duties hereunder or which compromises the integrity and
reputation of the Company, its employees, and products;
(iii) Executive's conviction by a court of law, or admission
that he is guilty, of a felony or other crime involving moral
turpitude; or
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(iv) Executive's absence from his employment other than as a
result of Section 7 hereof, for whatever cause, for a period of more
than one (1) month, without prior written consent from the Company.
11. Tax Indemnity Payments.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by
the Company or its affiliated companies to or for the benefit of
Executive, whether paid or payable or distributed or distributable
pursuant to the terms of the Agreement or otherwise but determined
without regard to any additional payments required under this Section
11 (a "Payment"), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986 (as amended the "Code"), or
any successor provision (collectively, "Section 4999"), or any interest
or penalties are incurred by Executive with respect to such excise tax
(such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then
Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by Executive
of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any Federal, state or
local income and employment taxes and Excise Tax (and any interest and
penalties imposed with respect to any such taxes) imposed upon the
Gross-Up Payment, Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 11(c), all determinations
required to be made under this Section 11, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination,
shall be made by the Company's public accounting firm (the "Accounting
Firm") which shall provide detailed supporting calculations both to the
Company and Executive within fifteen (15) business days of the receipt
of notice from Executive that there has been a Payment, or such earlier
time as is requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity or
group effecting the Change in Control, Executive may appoint another
nationally recognized public accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as
the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 11, shall be paid by the Company to
Executive within five (5) days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is
payable by Executive, it shall furnish Executive with a written opinion
that failure to report the Excise Tax on Executive's applicable federal
income tax return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm shall be
binding upon the Company and Executive. As a result of the uncertainty
in the application of Section 4999 at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should
have been made by the Company ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 11(c)
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and Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by
the Company to or for the benefit of Executive.
(c) Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require a
payment by the Company, or a change in the amount of the payment by the
Company of, the Gross-Up Payment. Such notification shall be given as
soon as practicable after Executive is informed in writing of such
claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid; provided that the
failure to give any notice pursuant to this Section 11(c) shall not
impair Executive's rights under this Section 11 except to the extent
the Company is materially prejudiced thereby. Executive shall not pay
such claim prior to the expiration of the 30-day period following the
date on which Executive gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies Executive in
writing prior to the expiration of such period that it desires to
contest such claim, Executive shall:
(1) give the Company any information reasonably requested by the
Company relating to such claim,
(2) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(3) cooperate with the Company in good faith in order
effectively to contest such claim, and
(4) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income, employment or other tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 11(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct Executive to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided further, that if the Company directs Executive
to pay such claim and sue for a refund, the Company shall advance the amount of
such payment to Executive on an interest-free
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basis and shall indemnify and hold Executive harmless, on an after-tax basis,
from any Excise Tax or income, employment or other tax (including interest or
penalties with respect to any such taxes) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and provided
further, that any extension of the statute of limitations relating to payment of
taxes for the taxable year of Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by Executive of an amount advanced by the
Company pursuant to Section 11(c), Executive becomes entitled to
receive, and receives, any refund with respect to such claim, Executive
shall (subject to the Company's complying with the requirements of
Section 11(c)) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by Executive of an amount
advanced by the Company pursuant to Section 11(c), a determination is
made that Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify Executive in writing of its
intent to contest such denial of refund prior to the expiration of
thirty (30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
12. Character of Termination Payments. The amounts payable to Executive
upon any termination of this Agreement shall be considered severance pay in
consideration of past services rendered on behalf of the Company and his
continued service from the date hereof to the date he becomes entitled to such
payments. Executive shall have no duty to mitigate his damages by seeking other
employment and, should Executive actually receive compensation from any such
other employment, the payments required hereunder shall not be reduced or offset
by any such other compensation.
13. Arbitration of Disputes; Injunctive Relief.
(a) Except as provided in paragraph (b) below, any controversy or
claim arising out of or relating to this Agreement or the breach
thereof, shall be settled by binding arbitration in the City of
Indianapolis, Indiana, in accordance with the laws of the State of
Indiana by three arbitrators, one of whom shall be appointed by the
Company, one by Executive and the third of whom shall be appointed by
the first two arbitrators. If the first two arbitrators cannot agree on
the appointment of a third arbitrator, then the third arbitrator shall
be appointed by the Chief Judge of the United States District Court for
the Southern District of Indiana. The arbitration shall be conducted in
accordance with the rules of the American Arbitration Association,
except with respect to the selection of arbitrators which shall be as
provided in this Section. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. In
the event that it shall be necessary or desirable for Executive to
retain legal counsel and/or incur other costs and expenses in
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connection with the enforcement of any and all of his rights under this
Agreement, the Company shall pay (or Executive shall be entitled to
recover from the Company, as the case may be) his reasonable attorneys'
fees and costs and expenses in connection with the enforcement of any
arbitration award in court, regardless of the final outcome, unless the
arbitrators shall determine that under the circumstances recovery by
Executive of all or a part of any such fees and costs and expenses
would be unjust.
(b) Executive acknowledges that a breach or threatened breach by
Executive of Sections 8 or 9 of this Agreement will give rise to
irreparable injury to the Company and that money damages will not be
adequate relief for such injury. Notwithstanding paragraph (a) above,
the Company and Executive agree that the Company may seek and obtain
injunctive relief, including, without limitation, temporary restraining
orders, preliminary injunctions and/or permanent injunctions, in a
court of proper jurisdiction to restrain or prohibit a breach or
threatened breach of Section 8 or 9 of this Agreement. Nothing herein
shall be construed as prohibiting the Company from pursuing any other
remedies available to the Company for such breach or threatened breach,
including the recovery of damages from Executive.
14. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered mail to
his residence, in the case of Executive, or to the business office of its Chief
Executive Officer, in the case of the Company.
15. Waiver of Breach and Severability. The waiver by either party of a
breach of any provision of this Agreement by the other party shall not operate
or be construed as a waiver of any subsequent breach by either party. In the
event any provision of this Agreement is found to be invalid or unenforceable,
it may be severed from the Agreement and the remaining provisions of the
Agreement shall continue to be binding and effective.
16. Entire Agreement. This instrument contains the entire agreement of
the parties and supersedes all prior agreements between them. This agreement may
not be changed orally, but only by an instrument in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
17. Binding Agreement and Governing Law; Assignment Limited. This
Agreement shall be binding upon and shall inure to the benefit of the parties
and their lawful successors in interest and shall be construed in accordance
with and governed by the laws of the State of Indiana. This Agreement is
personal to each of the parties hereto, and neither party may assign nor
delegate any of its rights or obligations hereunder without the prior written
consent of the other.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CONSECO, INC.
By: /S/ Gary C. Wendt
-------------------------------
Gary C. Wendt
Chairman of the Board
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<PAGE>
"Company"
By: /S/ David K. Herzog
-------------------------------
David K. Herzog
"Executive"
12
