Exhibit 10.1.38
AMENDED EMPLOYMENT AGREEMENT
This AMENDED EMPLOYMENT AGREEMENT, dated as of the 1st day of June,
2002, is between CONSECO, INC., an Indiana corporation ("Company"), and Xxxxxxx
X. Xxxx ("Employee").
RECITALS
A. The services of Employee, and his managerial and professional
experience, are of great value to the Company.
B. The parties previously entered into an Employment Agreement as of
September 10, 2001, and desire to replace that Employment Agreement with this
Agreement.
AGREEMENT
In consideration of the foregoing and the mutual covenants contained
herein, the parties agree as follows:
1. Employment. The Company hereby employs Employee and Employee hereby
accepts employment upon the terms and conditions hereinafter set forth. The
Employment Agreement between the parties dated as of September 10, 2001, is
hereby cancelled and of no further effect.
2. Term. The effective date of this Agreement shall be June 1, 2002.
Subject to the provisions for termination as provided in Section 10 hereof and
to any extension to which the parties may hereafter agree, the term of this
Agreement shall be the period beginning June 1, 2002, and ending July 31, 2005.
3. Duties. Employee is engaged by the Company in the capacity of
President and Chief Operating Officer and, unless and until the Company appoints
a new Chief Financial Officer, as Acting Chief Financial Officer. Employee 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.
4. Extent of Services. Subject to the direction and control of the
Chief Executive Officer and the Board, Executive shall have the power and
authority commensurate with his officer status and necessary to perform his
duties hereunder. The Company agrees to provide to Employee such assistance and
work accommodations as are suitable to the character of his positions with the
Company and adequate for the performance of his duties. Employee shall devote
his entire employable time, attention and best efforts to the business of the
Company, and during the term of his Agreement shall not, without the consent of
the Company, be actively engaged in any other business activity, whether or not
such business activity is pursued for gain, profit or other pecuniary advantage;
provided, however, that this shall not be construed as preventing Employee from
serving on boards of professional, community, civic, education, charitable and
corporate organizations on which he presently serves or may choose to serve
(including in particular the Children's Hospital board) or investing his assets
in such form or
manner as will not require any services on the part of Employee in the operation
of the affairs of the companies in which such investments are made; and provided
further that Employee may continue to serve on the board of Demoulas
Supermarkets, Inc., provided that such service does not interfere with the
performance of his duties under this Agreement. For purposes of this Agreement,
full-time employment shall be the normal work week for individuals in comparable
officer positions with the Company.
5. Compensation.
(a) As compensation for services hereunder rendered during the term
hereof, Employee shall receive a base salary ("Base Salary") of Seven
Hundred Fifty Thousand Dollars ($750,000) 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. Employee and the Company shall
review the Base Salary on or before January 31 of each year during the
term hereof, and Employee may receive increases in his Base Salary
from time to time, based upon his performance, upon the recommendation
of the Chief Executive Officer and subject to approval of the
Compensation Committee of the Board.
(b) In addition to Base Salary, Employee may receive such bonuses
or other incentive compensation as the Compensation Committee or the
Board may approve from time to time upon the recommendation of the
Chief Executive Officer, with a target equal to one times Employee's
Base Salary (the "Target Bonus") but not in excess of two times his
Base Salary with respect to any calendar year.
(c) On September 17, 2001, the Company issued to Employee 50,000
shares of Restricted Stock (the "Initial Restricted Stock"). The
restrictions on the Initial Restricted Stock shall lapse as to 20% of
the shares on September 17, 2002 and as to 40% of the shares on each
of September 17, 2003 and September 17, 2004; provided, however, that
the restrictions shall lapse earlier upon a "change in control" of the
Company (as defined in Section 10), in the event this Agreement is
terminated by the Company and such termination is not for "just cause"
(as defined in Section 10), upon the death of Employee, or upon a
termination of this Agreement by the Company pursuant to Section 7.
Dividends, if any, on the Initial Restricted Stock will be paid to
Employee as compensation during the restriction period. The Restricted
Stock Agreement between Employee and the Company dated as of September
10, 2001, remains in effect.
(d) The Company previously granted to Employee a non-qualified
stock option (the "Initial Option") to purchase Three Hundred Fifty
Thousand (350,000) shares of common stock at a price equal to the
average of the high and low trading prices on September 17, 2001.
One-fifth of the shares underlying the Initial Option shall vest on
March 31, 2002. The remaining four-fifths shall vest in four
increments of 70,000 shares each on September 17 in each of the years
2003, 2004, 2005, and 2006 and have a scheduled expiration date
(assuming continued employment) on September 10, 2011; provided,
however, that the Initial Option shall vest in full upon a change in
control of the Company as defined in the Non-Qualified Stock Option
Agreement between Employee and the Company dated as of September 17,
2001, upon the death of Employee or upon a termination of this
Agreement by the Company pursuant to Section 7.
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(e) The Company shall provide to Employee, and shall cause its
subsidiary, Bankers Life and Casualty Company, to guarantee payment
of, a nonqualified supplemental retirement benefit (the "Supplemental
Retirement Benefit"). The Supplemental Retirement Benefit shall
provide for annual payments in an amount equal to Five Hundred
Thousand Dollars ($500,000) per year commencing February 9, 2013, and
continuing until the later of the death of Employee or his spouse,
Xxxxx XxXxxxxxxxx Xxxx, payable as Employee or, if Employee is
deceased, Xxxxx XxXxxxxxxxx Xxxx shall direct. The Supplemental
Retirement Benefit shall not be reduced, suspended, or otherwise
affected as a result of any termination of Employee's employment under
this Agreement.
(f) On each July 1 during the term of this Agreement, the Company
shall (i) award Employee shares of the Company's common stock having a
value based on the closing sale price on the date of the award of not
less than Five Hundred Thousand Dollars ($500,000), subject to
restrictions ("Additional Restricted Stock"), with the restrictions to
lapse as to 20% of the Restricted Stock on the anniversary of the
award each year over a five (5) year period, including after
termination of Employee's employment other than for "just cause" (as
defined in Section 10), provided Employee is not engaged in any of the
activities specified in Section 9(i) through 9(v), and (ii) award
Employee options to purchase One Hundred Fifty Thousand (150,000)
shares of the Company's common stock at the average of the high and
low sale prices on the date of each such grant, such options to vest
20% per year on the anniversary of the award over a five (5) year
period, including after termination of Employee's employment other
than for "just cause" (as defined in Section 10), provided Employee is
not engaged in any of the activities specified in Section 9(i) through
9(v). Dividends, if any, on the Additional Restricted Stock will be
paid to Employee as compensation during the restriction period.
(g) During each November during the term of this Agreement, the
Company shall award Employee options to purchase a minimum of One
Hundred Thousand (100,000) shares of the Company's common stock at the
average of the high and low sale prices on the date of each such
grant, such options to vest 20% per year on the anniversary of the
award over a five (5) year period, subject to continuing employment,
and to terminate, again subject to continuing employment, on the tenth
anniversary of the date of the grant in each case.
(h) Upon the satisfactory completion, as determined by the
Company's Chief Executive Officer in his sole discretion, of (i) the
restructuring of the Company's bank-loan obligations, and (ii) the
Company's exchange offer for its outstanding public debt, the Company
shall award Employee Three Hundred Fifty Thousand (350,000) shares of
the Company's common stock.
(i) The Company shall pay Employee a supplemental bonus
("Supplemental Bonus") as follows: (A) One Million Five Hundred
Thousand Dollars ($1,500,000) on June 30, 2004, and (B) Two Million
Five Hundred Thousand Dollars ($2,500,000) on March 31, 2005, provided
Employee remains employed pursuant to this Agreement on such dates. In
the event of a Control Termination (as defined in Section 10) before
one or both of such amounts is/are paid, the Company shall pay
Employee the unpaid amount(s), net of applicable taxes, within ten
(10) days after such Control Termination occurs.
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(j) The Company shall pay Employee a signing bonus of One Hundred
Thousand Dollars ($100,000).
6. Fringe Benefits.
(a) Employee shall be entitled to participate in such existing
employee benefit plans and insurance programs offered by the Company,
or which it may adopt from 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,
that it may adopt from time to time. Subject to availability and so
long as the Company maintains aircraft for corporate use, Employee
shall be entitled to use the Company's aircraft on the same terms as
the Company's Chief Executive Officer.
(b) During the term of this Agreement, the Company shall pay
Employee a monthly automobile allowance in the amount of Six Hundred
Dollars ($600), and the Company shall pay directly or shall reimburse
Employee for the cost of fuel that he incurs in using his automobile.
(c) Employee shall be entitled to four (4) weeks vacation with pay
for each year during the term hereof.
(d) Employee may incur reasonable expenses for promoting the
Company's business, including expenses for entertainment, travel, and
similar items. The Company shall reimburse Employee for all such
reasonable expenses upon Employee's periodic presentation of an
itemized account of such expenditures.
(e) During the term of this Agreement, the Company shall at its
expense maintain a term life insurance policy or policies on the life
of Employee in the face amount of One Million Five Hundred Thousand
Dollars ($1,500,000), payable to such beneficiaries as Employee may
designate. Employee may, at his expense, purchase additional insurance
at the time the Company purchases said policy or policies. In the
event Employee is terminated for any reason, Employee shall have the
right, at his expense, to begin paying the premiums required to
continue such insurance coverage from and after the date of his
termination.
(f) The Company shall reimburse Employee for reasonable rent paid
for lodging in Indiana from September 2001 through December 31, 2002.
(g) The Company shall, upon periodic presentation of satisfactory
evidence and to a maximum of Ten Thousand Dollars ($10,000) per year
of this Agreement, reimburse Employee for reasonable medical expenses
incurred by Employee and his dependents which are not otherwise
covered by health insurance provided to Employee under Section 6(a).
7. Disability. If Employee 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
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is materially and adversely impaired, his Base 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 Employee's employment hereunder, in which case the Company shall
promptly pay Employee a lump sum payment equal to one and one-half times his
annual Base Salary for the most recent fiscal year then ended, less applicable
taxes, 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.
8. Disclosure of Information. Employee 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 Employee the compensation stated in
Section 5, as well as any additional benefits stated herein, Employee covenants
and agrees 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 and which the Company has
taken appropriate steps to safeguard, 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 Employee, (b) is required to be
disclosed by any law, regulation or order of any court or regulatory commission,
department or agency, in which event Employee shall give prompt notice of such
requirement to the Company to enable the Company to seek an appropriate
protective order or confidential treatment, or (c) must be disclosed to enable
Employee properly to perform his duties under this Agreement, in which event
Employee shall give prompt notice of such requirement to the Company to enable
the Company to seek an appropriate protective order or confidential treatment.
Upon the termination of this Agreement, Employee 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. Employee
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 Employee for which the Company
has contracted hereunder, because of the confidential information to be obtained
by, or disclosed to, Employee as set forth above, and as a material inducement
to the Company to enter into this Agreement and to pay to Employee the
compensation stated in Section 5, as well as any additional benefits stated
herein, and other good and valuable consideration, Employee covenants and agrees
that throughout the period Employee remains employed hereunder and for one year
thereafter, Employee 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 that derives a non-incidental portion of its
revenue from 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 that derives a
non-incidental portion of its revenue from the business of selling or
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providing any of the following financial services: the sale of certificates of
deposit, mutual funds, and fixed and variable annuities, debt consolidation, and
home equity, home improvement, manufactured housing, real estate mortgage and
automobile loans, (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 the
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 Employee in this Section 9
shall be void and unenforceable in the event of (i) a termination by the Company
other than for "just cause," or (ii) 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
Employee 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.
(a) Either the Company or Employee may terminate this Agreement at
any time for any reason upon written notice to the other. The Company
may terminate this Agreement for "just cause" as defined in (e) below
upon written notice to Employee. This Agreement shall also terminate
upon (i) the death of Employee or (ii) termination by the Company
after disability of Employee pursuant to Section 7.
(b) In the event that this Agreement is terminated by the Company
and such termination is not pursuant to the last sentence of (a)
above, a Control Termination as defined in (e) below, or for "just
cause" as defined in (f) below, then (i) Employee shall be entitled to
receive all unpaid amounts previously accrued or awarded pursuant to
any other provision of this Agreement; (ii) the award of Initial
Restricted Stock referenced in Section 5(c) shall fully vest as of the
termination date, and (iii) Employee shall be entitled to receive a
lump sum payment equal to the greater of (A) one and one-half times
his Base Salary for the most recent fiscal year then ended, or (B)
$4,000,000 multiplied by a fraction, the numerator of which is equal
to the number of months from June 1, 2002, until the date of
termination of this Agreement, and the denominator of which is 34,
less applicable taxes in either case.
(c) In the event this Agreement is terminated by the death of
Employee, then the Company shall promptly pay Employee's estate a lump
sum payment equal to his annual Base Salary for the most recent fiscal
year then ended, less applicable taxes, and all other unpaid amounts
previously accrued or awarded pursuant to any other provision of this
Agreement.
(d) In the event this Agreement is terminated by Employee and such
termination does not constitute a Control Termination as defined in
(e) below, Employee shall be
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entitled to receive Employee'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.
(e) The term "Control Termination" as used herein shall mean (A)
termination of this Agreement by the Company for any reason other than
(x) death, (y) disability under Section 7, or (z) for "just cause" 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 Employee following a "change in control" of the Company
(as defined below) upon the occurrence of any of the following events:
(i) a significant change not involving a promotion or increase
in the nature or scope of Employee'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 Employee that, as a
result of a change in circumstances significantly affecting his
position, he is unable to exercise Employee's authorities, powers,
functions or duties in existence immediately prior to the change in
control.
The term "change in control" shall mean the acquisition by any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")) of
"beneficial ownership" (as such term is defined in Rule 13d-3
promulgated under the 1934 Act), directly or indirectly, of securities
of the Company representing 51% or more of the combined voting power
of the then outstanding securities of the Company entitled to vote
with respect to the election of the Company's Board of Directors.
Upon the occurrence of a change in control, the Company shall promptly
notify Employee 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 (d)(A) of this Section 10 shall
be extended until the second anniversary of the date such Change in
Control Notice is given.
In the event of a Control Termination of this Agreement, then (a)
Employee shall be entitled to receive (i) all unpaid amounts
previously accrued or awarded pursuant to any other provision of this
Agreement, and (ii) a lump sum payment equal to the sum of (x) two
times his Base Salary then in effect, and (y) his bonus, if any, for
the most recent fiscal year, and (b) all options and restricted stock
previously granted or awarded to Employee shall fully vest as of the
termination date.
(f) For purposes of this Agreement "just cause" shall mean:
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(i) a material breach by Employee of this Agreement or willful
malfeasance or fraud or dishonesty of a substantial nature in
performing Employee's services on behalf of the Company, which in
any case is willful and deliberate on Employee's part and committed
in bad faith or without reasonable belief that such breach or
action is in the best interests of the Company;
(ii) Employee's 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, or
products;
(iii) Employee's conviction by a court of law, or admission
that he is guilty, of a felony or other crime involving moral
turpitude; or
(iv) Employee'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 consent from the Company.
In the event this Agreement is terminated by the Company for "just
cause" as so defined, then (A) Employee shall be entitled to receive
his Base Salary as provided in Section 5(a) accrued but unpaid as of
the date of termination; (B) no restrictions that remain as to any
shares of the Initial Restricted Stock shall lapse after the date of
termination, and Employee shall forfeit any still-restricted shares to
the Company; (C) no restrictions that remain as to any shares of
Additional Restricted Stock shall lapse after the date of termination,
and Employee shall forfeit any still-restricted shares to the Company;
and (D) no option (including, but not limited to, the Initial Option
and any options awarded pursuant to Section 5(f) or 5(g) hereof)
previously awarded but not yet vested shall vest after the date of
termination, and all previously awarded, vested options shall
terminate unless exercised on the date of termination.
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
Employee, 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 Code or any successor provision (collectively,
"Section 4999"), or any interest or penalties are incurred by Employee
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 Employee shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by Employee 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, Employee retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
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(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 Employee within fifteen (15) business days of the
receipt of notice from Employee 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, Employee
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 Employee 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 Employee, it shall
furnish Employee with a written opinion that failure to report the
Excise Tax on Employee'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 Employee. 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) and Employee 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
Employee.
(c) Employee 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 Employee 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 Employee's rights under this Section 11 except to the
extent the Company is materially prejudiced thereby. Employee shall
not pay such claim prior to the expiration of the 30-day period
following the date on which Employee 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 Employee
in writing prior to the expiration of such period that it desires to
contest such claim, Employee shall:
(1) give the Company any information reasonably requested by
the Company relating to such claim,
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(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
Employee 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
Employee to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and Employee 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 Employee to pay such claim and xxx for a refund, the Company
shall advance the amount of such payment to Employee on an
interest-free basis and shall indemnify and hold Employee 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 Employee 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 Employee 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 Employee of an amount advanced by the
Company pursuant to Section 11(c), Employee becomes entitled to
receive, and receives, any refund with respect to such claim, Employee
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 Employee of an amount
advanced by the Company pursuant to Section 11(c), a determination is
made that Employee shall not be entitled to any refund with respect to
such claim and the Company does not notify Employee 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
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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 Employee
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. Employee shall have no duty to mitigate his damages by seeking other
employment and, should Employee 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 Employee, 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 Employee to retain legal counsel and/or incur other
costs and expenses in connection with the enforcement of any and all
of his rights under this Agreement, the Company shall pay (or Employee
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 Employee of all or a part of any such fees
and costs and expenses would be unjust.
(b) Employee acknowledges that a breach or threatened breach by
Employee 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 Employee 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 Employee.
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 Employee, or to the business office of its General
Counsel, in the case of the Company.
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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 (including, without limitation,
Employee's estate, heirs and personal representatives) 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 or
delegate any of its rights or obligations hereunder without the prior written
consent of the other.
The parties have executed this Agreement as of the date first above
written.
CONSECO, INC.
By: /s/ Xxxx X. Xxxxx
-----------------------------
Xxxx X. Xxxxx
Chairman of the Board
"Company"
/s/ Xxxxxxx X. Xxxx
------------------------------
Xxxxxxx X. Xxxx
"Employee"
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