-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J815bJdboalJ3BTeAuL6bD3jB77ehrlU0Wc2bpG4ONN1ggDlsYMusj5Kb/On/e88 U0hXfihx10KuXSzE3TEBuw== 0001224608-06-000032.txt : 20060809 0001224608-06-000032.hdr.sgml : 20060809 20060809163756 ACCESSION NUMBER: 0001224608-06-000032 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20060809 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060809 DATE AS OF CHANGE: 20060809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSECO INC CENTRAL INDEX KEY: 0001224608 STANDARD INDUSTRIAL CLASSIFICATION: ACCIDENT & HEALTH INSURANCE [6321] IRS NUMBER: 753108137 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31792 FILM NUMBER: 061018110 BUSINESS ADDRESS: STREET 1: 11825 N PENNSYLVANIA ST CITY: CARMEL STATE: IN ZIP: 46032 BUSINESS PHONE: 3178176100 MAIL ADDRESS: STREET 1: 11825 NORTH PENNSYLVANIA STREET CITY: CARMEL STATE: IN ZIP: 46032 8-K 1 cnc8k.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 ----------- Date of Report (Date of earliest event reported): August 9, 2006 CONSECO, INC. (Exact name of registrant as specified in its charter) Delaware 001-31792 75-3108137 - ---------------------- ---------------- -------------- (State or other (Commission (I.R.S. Employer jurisdiction of File Number) Identification No.) organization) 11825 North Pennsylvania Street Carmel, Indiana 46032 - -------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (317) 817-6100 ------------------------- (Registrant's telephone number, including area code) Not Applicable ---------------- (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01. Entry into a Material Definitive Agreement. See the descriptions set forth below in Item 5.02 regarding the employment agreements between Conseco, Inc. and each of C. James Prieur and James E. Hohmann. Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers. On August 9, 2006, Conseco, Inc. (the "Company") entered into an Employment Agreement (the "Agreement") with C. James Prieur to be its Chief Executive Officer for a term ending December 31, 2009. Mr. Prieur's employment is scheduled to commence on September 7, 2006. The Agreement provides for an annual salary of $900,000, a target annual bonus of not less than 125% of his salary (with a maximum of 200% of his target bonus) and a minimum bonus for 2006 equal to his target bonus, prorated for the number of days worked in 2006. Upon commencement of his employment, Mr. Prieur will be awarded (1) options to purchase 300,000 shares of Conseco common stock, with the options to vest in four equal annual installments beginning on the first anniversary of the date of grant, (2) 50,000 performance shares, with terms to be established by the Company's Human Resources and Compensation Committee and (3) as a sign on award, options to purchase 50,000 shares of Conseco common stock, vesting in full on the second anniversary of the date of grant. The exercise price of the options will be equal to the closing sales price on the date that Mr. Prieur commences employment and will expire in 10 years. Mr. Prieur shall be entitled to reimbursement (including a gross-up for taxes) for relocation expenses not to exceed $50,000, and the Company has agreed to reimburse Mr. Prieur for, or to provide at its expense, up to six months of temporary housing in an amount not to exceed $5,000 per month. The Agreement also includes a covenant not to compete which continues for one year after termination of employment. The Agreement also provides for Mr. Prieur to be added to the Conseco Board of Directors as of the date he commences employment. The Board has not yet determined the board committees on which Mr. Prieur will be asked to serve. A copy of the Agreement is included as Exhibit 10.23 to this Current Report on Form 8-K. Mr. Prieur, age 55, has been President and Chief Operating Officer of Sun Life Financial, Inc. and Chief Operating Officer of its principal subsidiary, Sun Life Assurance Company, since April 1999. Also on August 9, 2006, the Company entered into a revised Employment Agreement with James E. Hohmann. Under the terms of the revised agreement, Mr. Hohmann will serve as President and Chief Operating Officer of the Company, effective upon the commencement of Mr. Prieur's employment. Mr. Hohmann currently is Executive Vice President and Chief Administrative Officer of the Company and has been serving since May 23, 2006 as Interim President and Chief Executive Officer. His revised agreement provides for an annual salary of $600,000 and the grant of 10,000 shares of restricted stock, which shall vest on December 31, 2008. A copy of the revised agreement with Mr. Hohmann is included as Exhibit 10.19 to this Current Report on Form 8-K. Also attached as Exhibit 99.1 is the Company's press release dated August 9, 2006 regarding these changes. Item 9.01. Financial Statements and Exhibits. 10.19 Employment Agreement dated as of August 9, 2006 between Conseco, Inc. and James E. Hohmann. 10.23 Employment Agreement dated as of August 9, 2006 between Conseco, Inc. and C. James Prieur. 99.1 Press release of Conseco, Inc. issued August 9, 2006 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. CONSECO, INC. August 9, 2006 By: /s/ John R. Kline ------------------------ John R. Kline Senior Vice President and Chief Accounting Officer EX-10 2 hohmann.txt EXHIBIT 10.19 Exhibit 10.19 EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT, dated as of 9th day of August, 2006, is between Conseco, Inc., a Delaware corporation ("Company"), and James E. Hohmann ("Executive"). WHEREAS, the services of Executive and his managerial and professional experience are of value to the Company. WHEREAS, the Company desires to continue to have the benefit and advantage of the services of Executive for an extended period to assist the Company upon the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, 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 (the "Agreement") shall be September 7, 2006 (the "Effective Date"). Subject to the provisions for termination as provided in Section 10 hereof, the term of Executive's employment under this Agreement shall be the period beginning on the Effective Date and ending on December 31, 2008 (the "Term"). The Term shall not be automatically renewed and shall end upon any earlier termination of Executive's employment with the Company. 3. Duties. During the Term, Executive shall be engaged by the Company in the capacity of President and Chief Operating Officer of the Company. As such, he will be accountable for duties customarily associated with that position. Executive shall report to the Chief Executive Officer regarding the performance of his duties. 4. Extent of Services. During the Term, subject to the direction and control of the Chief Executive Officer of the Company and the Board of Directors of the Company (the "Board"), Executive shall have the power and authority commensurate with his executive status and necessary to perform his duties hereunder. Executive shall devote his entire employable time, attention and best efforts to the business of the Company and, during the Term, 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, subject to Section 9 hereof, this shall not be construed as preventing Executive from serving on boards of professional, community, civic, education, charitable and corporate organizations on which he presently serves or may choose to serve or 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 (to the extent not in violation of the noncompete listed in Section 9 hereof); provided, however, that corporate organizations shall be limited to those mutually agreed upon by Executive and the Company. 5. Compensation. During the Term: (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 executives. 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, subject to approval of the Board or the Compensation Committee thereof. (b) In addition to Base Salary, Executive will have an opportunity to earn a bonus each year as determined by the Board or the Compensation Committee thereof, with a target annual bonus equal to 100% of Executive's Base Salary (the "Target Bonus") and a maximum annual bonus of 200% of his Base Salary with respect to any calendar year, with such bonus payable at such time that other similar payments are made to other Company executives. For purposes of clarification, annual executive bonuses are generally paid in March of the year following the year with respect to which such bonuses are payable, if Executive remains employed with the Company through such date or as otherwise payable under the Company's severance policy for senior officers. Performance requirements for Target Bonuses will be based on financial and other objective targets that the Board reasonably believes are reasonably attainable at the time that they are set. (c) On the Effective Date of this Agreement, Executive will receive an award of 10,000 shares of restricted stock (the "Restricted Stock Grant"). One hundred percent (100%) of the Restricted Stock Grant will vest on December 31, 2008, subject to his continued employment hereunder until such date. Executive shall also be eligible to participate in and receive future grants under any stock option or equity-based program offered by the Company to executives of similar title and level of responsibility, subject to the discretion of the Board. 6. Fringe Benefits. During the Term: (a) Executive shall be entitled to participate in such existing executive 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 executive benefit plans or programs, or executive fringe benefits that it may adopt from time to time. (b) Executive shall be entitled to six weeks of vacation with pay each year and will not be eligible for any other paid-time-off program (other than paid holidays). (c) 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 2 presentation of an itemized account of such expenditures. The Company agrees to pay Executive an additional amount to cover the incremental additional income taxes incurred by Executive, if any, with respect to payment or reimbursement of any reasonable business expenses pursuant to this subsection (c). (d) In lieu of any insurance on the life of Executive offered by the Company pursuant to Section 6(a) hereof, the Company shall reimburse Executive for up to $5,000 per year for premiums on term life insurance policies on the life of Executive as in effect on the date hereof. 7. Disability. (a) If Executive shall become physically or mentally disabled during the Term to the extent that his ability to perform his duties and services hereunder is materially and adversely impaired, Executive's Base Salary, bonus and other compensation provided herein shall continue while he remains employed by the Company; provided, that if such disability (as determined in the Board's reasonable judgment, exercised in good faith) continues for at least three (3) consecutive months, the Company may terminate Executive's employment hereunder, in which case the Company immediately shall pay Executive cash payments equal to (i) his annual Base Salary as provided in Section 5(a) hereof to the extent earned but unpaid as of the date of termination ("Unpaid Salary"), (ii) the bonus payable pursuant to Section 5(b) for the fiscal year of the Company ending prior to the date of termination (to the extent earned based on performance under the goals and objectives of the applicable plan but not previously paid) ("Unpaid Bonus"), (iii) Executive's then accrued but unused vacation ("Unpaid Vacation") (the Unpaid Salary, Unpaid Bonus and Unpaid Vacation referred to sometimes together as the "Accrued Amounts"), (iv) a pro rata Target Bonus for the year in which the termination for Disability occurred, and (v) one times his Base Salary. All stock options, restricted stock and/or other awards held by Executive shall be treated in accordance with the applicable grant agreements or, in the case of equity award agreements granted prior to the Effective Date, as detailed in Executive's prior employment agreement dated November, 29, 2004. (b) No payments or vesting under this Section 7 will be made if such disability arose primarily from (a) chronic use of intoxicants, drugs or narcotics (other than drugs prescribed to Executive by a physician and used by Executive for their intended purpose for which they had been prescribed) or (b) intentionally self-inflicted injury or intentionally self-induced illness. 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 and its affiliates 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 that he shall not, at any time while he is employed by the Company or at any time thereafter, directly or indirectly, divulge or disclose for any purpose 3 whatsoever, any confidential information (whether or not specifically labeled or identified as "confidential information"), in any form or medium, that has been obtained by or disclosed to him as a result of his employment with the Company and which the Company or any of its affiliates 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 Executive, (b) is required to be disclosed by any law, regulation or order of any court or regulatory commission, department or agency, in which event Executive 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 Executive properly to perform his duties under this Agreement. Upon the termination of Executive's employment, Executive shall return such information (in whatever form) obtained from or belonging to the Company or any of its affiliates 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 and its affiliates are of a special and unusual character, with a unique value to the Company and its affiliates, the loss of which cannot adequately be compensated by damages or an action at law. In view of the unique value to the Company and its affiliates 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 set forth in Section 8 above, and as a material inducement to the Company to enter into this Agreement and to pay to Executive the compensation stated in Section 5 hereof, as well as any additional benefits stated herein, and other good and valuable consideration, Executive covenants and agrees that: (a) throughout the period Executive remains employed and for one year thereafter, Executive shall not, directly or indirectly, anywhere in the United States of America, (i) solicit or attempt to convert to other insurance carriers or other corporations, persons or other entities providing these same or similar products or services provided by the Company and its affiliates, any customers or policyholders of the Company or any of its affiliates or (ii) solicit for employment or knowingly employ any employee of the Company or any of its affiliates; (b) throughout the period Executive remains employed 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 that derives a non-incidental portion of its revenue from the business of selling or providing long-term care or health-related insurance products or services or (ii) in any manner compete with the Company or any of its affiliates with respect to long-term care or health-related insurance lines of business; provided, however, that if Executive resigns, Executive may serve as a consultant (other than with respect to matters relating to long-term care or health insurance products or services) for such companies that the Chief Executive Officer of the Company consents to (such consent shall not be unreasonably withheld where actual competition is not, in the Chief Executive Officer's sole judgment, deemed to be significant or meaningful) and provided further that in the event Executive 4 serves as such a consultant, all severance payments and other ongoing obligations of the Company under this Agreement shall cease; or (c) throughout the Term or, if later, the period ending on the first anniversary following the date Executive terminates employment during the Term, 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 that derives a non-incidental portion of its revenue from the business of selling or providing annuity, life, or accident insurance products or services or (ii) in any manner compete with the Company or any of its affiliates with respect to annuity, life or accident lines of business that the Company and its affiliates derive more than a non-incidental portion of their revenue from or with respect to which the Company and its affiliates have made a significant investment in; provided, however, that if Executive resigns during the Term, Executive may serve as a consultant (other than with respect to matters relating to long-term care or health insurance products or services) for such companies that the Chief Executive Officer of the Company consents to (such consent shall not be unreasonably withheld where actual competition is not, in the Chief Executive Officer's sole judgment, deemed to be significant or meaningful) and provided further that in the event Executive serves as such a consultant, all severance payments and other ongoing obligations of the Company under this Agreement shall cease. 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. During the Term: (a) Either the Company or Executive may terminate his employment at any time for any reason upon written notice to the other. The Company may terminate Executive's employment for Just Cause pursuant to Section 10(b) below or in a Control Termination pursuant to Section 10(c) below. Executive's employment shall also terminate (i) upon the death of Executive or (ii) after disability of Executive pursuant to Section 7 hereof. (b) The Company may terminate Executive's employment at any time for Just Cause. For purposes of this Agreement, "Just Cause" shall mean: (i) (A) a material breach by Executive of this Agreement, (B) a material breach of Executive's duty of loyalty to the Company or its affiliates, or (C) willful malfeasance or fraud or dishonesty of a substantial nature in performing Executive's services on behalf of the Company or its affiliates, which 5 in each case is willful and deliberate on Executive's part and committed in bad faith or without reasonable belief that such breach or action is in the best interests of the Company or its affiliates; (ii) Executive's use of alcohol or drugs (other than drugs prescribed to Executive by a physician and used by Executive for their intended purposes for which they had been prescribed) or other repeated conduct which materially and repeatedly interferes with the performance of his duties hereunder, which materially compromises the integrity or the reputation of the Company or its affiliates, or which results in other substantial economic harm to the Company or its affiliates; (iii) Executive's conviction by a court of law, admission that he is guilty, or entry of a plea of nolo contendere with regard to a felony or other crime involving moral turpitude; (iv) Executive's unscheduled absence from his employment duties other than as a result of illness or disability, for whatever cause, for a period of more than three (3) consecutive days, without consent from the Company prior to the expiration of the three (3) day period; (v) Executive's failure to take action or to abstain from taking action, as directed in writing by a member of the board or a higher ranking executive of the Company, where such failure continues after Executive has been given written notice of such failure and at least five (5) business days thereafter to cure such failure; or (vi) any intentional wrongful act or omission by Executive that results in the restatement of the Company's financial statements due to a violation of the Sarbanes-Oxley Act of 2002. No termination shall be deemed to be a termination by the Company for Just Cause if the termination is as a result of Executive refusing to act in a manner that would be a violation of applicable law. (c) The Company may terminate Executive's employment in a Control Termination. A "Control Termination" shall mean any termination by the Company (or its successor) of Executive's employment for any reason within six months in anticipation of or within two years following a Change in Control of the Company. The term "Change in Control" shall mean the occurrence of any of the following: (i) the acquisition (other than an acquisition in connection with a "Non-Control Transaction") 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 6 promulgated under the 1934 Act), directly or indirectly, of securities of the Company or its Ultimate Parent representing 51% or more of the combined voting power of the then outstanding securities of the Company or its Ultimate Parent entitled to vote generally with respect to the election of the board of directors of the Company or its Ultimate Parent; or (ii) as a result of or in connection with a tender or exchange offer or contest for election of directors, individual board members of the Company (identified as of the date of commencement of such tender or exchange offer, or the commencement of such election contest, as the case may be) cease to constitute at least a majority of the board of directors of the Company; or (iii) the consummation of a merger, consolidation or reorganization with or into the Company unless (x) the stockholders of the Company immediately before such transaction beneficially own, directly or indirectly, immediately following such transaction securities representing 51% or more of the combined voting power of the then outstanding securities entitled to vote generally with respect to the election of the board of directors of the Company (or its successor) or, if applicable, the Ultimate Parent and (y) individual board members of the Company (identified as of the date that a binding agreement providing for such transaction is signed) constitute at least a majority of the board of directors of the Company (or its successor) or, if applicable, the Ultimate Parent (a transaction to which clauses (x) and (y) apply, a "Non-Control Transaction"). For purposes of this Agreement, "Ultimate Parent" shall mean the parent corporation (or if there is more than one parent corporation, the ultimate parent corporation) that, following a transaction, directly or indirectly beneficially owns a majority of the voting power of the outstanding securities entitled to vote with respect to the election of the board of directors of the Company (or its successor). (d) At Executive's option, he may terminate employment with the Company "With Reason" provided one of more of the following conditions are met: (i) his role or duties have been materially diminished by changes in responsibilities or authority; (ii) Executive is required to report to anyone other than the Chief Executive Officer, the Board or a designated Committee thereof; (iii) Executive is required to relocate his primary office more than 25 miles from the Merchandise Mart in Chicago, Illinois, without Executive's consent, or (iv) there is a "Change in Control" of the company as defined in Section 10(c) and, following Executive's written request made prior to the Change in Control, the ultimate parent entity or entities directly or indirectly gaining control of a majority of the Company's Board or outstanding securities entitled to vote with respect to the Company's Board fails to affirm and guarantee the Company's current and future obligations under this Agreement. (e) Upon termination of Executive's employment with the Company for any reason (whether voluntary or involuntary), Executive shall be deemed to have voluntarily resigned from all positions that Executive may then hold with the Company and any of its 7 affiliates; provided that such deemed resignation shall not adversely affect Executive's rights to compensation or benefits under this Agreement and shall not affect the determination of whether Executive's termination was for Just Cause or With Reason. 11. Payments Following Termination. (a) In the event Executive's employment is terminated by the Company for Just Cause as so defined, or if Executive voluntarily resigns, then the Company immediately shall pay Executive a cash payment of his Base Salary as provided in Section 5(a) hereof that was earned but unpaid as of the date of termination. Any options or restricted stock held by Executive on the date of termination shall vest only through the date of termination according to the normal vesting schedule applicable to such options or restricted stock, and Executive shall not receive any accelerated or additional vesting of such stock or options on or after such date. (b) In the event Executive's employment is terminated by the death of Executive, then the Company shall pay Executive's estate (i) a lump sum of the remaining payments of Base Salary described in Section 5(a) that would have been payable to Executive through the date of death, (ii) a pro-rata portion of the Target Bonus for the year in which his death occurs plus the Target Bonus for the preceding year if his death occurs after year-end but before such bonuses are paid. Except as provided for in equity award agreements granted prior to the Effective Date (as modified by Executive's prior employment agreement dated November, 29, 2004) any options or restricted stock held by Executive on the date of termination shall vest only through the date of termination according to the normal vesting schedule applicable to such options or restricted stock. (c) In the event that Executive is terminated by the Company without Just Cause (and other than non-renewal, death, disability or a Control Termination) or by Executive With Reason, then the Company shall pay Executive (i) on a basis consistent with the timing of the Company's normal payroll processing, the remaining payments of Base Salary described in Section 5(a) that would have been payable to Executive through the date of his termination of employment, (ii) a pro-rata portion of the Target Bonus for the year in which his termination occurs plus the Target Bonus for the preceding year if his termination occurs after year-end but before such bonuses are paid, and (iv) twelve (12) months of his Base Salary plus Target Bonus (in the form of salary continuation on a pro-rata basis with or without medical and dental benefits, at Executive's election and cost). Except as provided for in equity award agreements, granted prior to the Effective Date (as modified by Executive's prior employment agreement dated November, 29, 2004) any options or restricted stock held by Executive on the date of termination shall vest only through the date of termination according to the normal vesting schedule applicable to such options or restricted stock. (d) In the event that Executive is terminated by the Company (or its successor) in a Control Termination as so defined, then the Company shall pay Executive (i) on a basis consistent with the timing of the Company's normal payroll processing, the 8 remaining payments of Base Salary described in Section 5(a) that would have been payable to Executive through the date of his termination of employment, (ii) a pro-rata portion of the Target Bonus for the year in which his termination occurs plus the Target Bonus for the preceding year if his termination occurs after year-end but before such bonuses are paid, and (iii) twenty-four (24) months of his Base Salary and Target Bonus (in the form of salary continuation on a pro-rata basis with or without medical and dental benefits, at Executive's election and cost). To the extent that Executive is terminated in a Control Termination that occurs in anticipation of a Change in Control, any options or restricted stock held by Executive shall fully vest, retroactive to the date of termination, upon the occurrence of the Change in Control. (e) Notwithstanding anything to the contrary, in the event that Executive's employment terminates, the Company shall pay to Executive, in accordance with its standard payroll practice, Executive's accrued vacation. (f) Notwithstanding anything to the contrary, payment of any post-termination moneys or benefits under this Agreement is conditioned upon the execution by Executive of a separation and release agreement, in a form that is consistent in all material respects with the provisions and protections set forth herein and reasonably acceptable to the Company and Executive, and the observation of such waiting or revocation periods, if any, before and after execution of the agreement by Executive as are required by law, such as, for example, the waiting or revocation periods required for a waiver and release to be effective with respect to claims under the Age Discrimination in Employment Act, provided that the Company delivers to Executive such agreement within seven days of the date of his termination. 12. Character of Termination Payments. The amounts payable to Executive upon any termination of his employment 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 and shall be the sole amount of severance pay to which Executive is entitled from the Company and its affiliates upon termination of his employment. 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. Representations of the Parties. (a) The Company represents and warrants to Executive that (i) this Agreement has been duly authorized, executed and delivered by the Company and constitutes valid and binding obligations of the Company; and (ii) the employment of Executive on the terms and conditions contained in this Agreement will not conflict with, result in a breach or violation of, constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to: (A) the certificate of formation, (B) the terms of any indenture, contract, lease, mortgage, deed of trust, note, loan agreement or other agreement, obligation, condition, covenant or 9 instrument to which the Company is a party or bound or to which its property is subject, or (C) any statute, law, rule, regulation, judgment, order or decree applicable to the Company, or any regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company. (b) Executive represents and warrants to the Company that: (i) this Agreement has been duly executed and delivered by Executive and constitutes a valid and binding obligation of Executive; and (ii) neither the execution of this Agreement by Executive nor his employment by the Company on the terms and conditions contained herein will conflict with, result in a breach or violation of, or constitute a default under any agreement, obligation, condition, covenant or instrument to which Executive is a party or bound or to which his property is subject, or any statute, law, rule, regulation, judgment, order or decree applicable to Executive of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over Executive or any of his property. 14. Arbitration of Disputes; Injunctive Relief. (a) Arbitration. Except as provided in subsection (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 Chicago, Illinois in accordance with the laws of the State of Illinois 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 Northern District of Illinois if the arbitration is in Chicago, Illinois. The arbitration shall be conducted in accordance with the rules of the American Arbitration Association, except with respect to the election 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. All reasonable costs and expenses (including fees and disbursements of counsel) incurred by Executive pursuant to this Section 14 shall be paid on behalf of or reimbursed to Executive promptly by the Company; provided, however, that in the event the Company prevails in such proceedings, Executive shall immediately repay all such amounts to the Company. (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. 10 15. 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 General Counsel, in the case of the Company. 16. 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. 17. Entire Agreement. Other than any equity award agreements entered into pursuant to the Conseco, Inc. 2003 Long-Term Equity Incentive Plan or any subsequent equity incentive plan, this instrument contains the entire agreement of the parties and, as of the Effective Date, supersedes all other obligations of the Company and its affiliates under other agreements or otherwise. The compensation and benefits to be paid under the terms of this Agreement are in lieu of all other compensation or benefits to which Executive is entitled from the Company and its affiliates. 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. 18. 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, Executive's estate, heirs and personal representatives) and, except for issues or matters as to which federal law is applicable, shall be construed in accordance with and governed by the laws of the State of Illinois. 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. 19. No Third Party Beneficiaries. The terms and provisions of this Agreement are intended solely for the benefit of each party hereto and their respective successors or permitted assigns, and it is not intended to confer third-party beneficiary rights upon any other person. 20. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. * * * * * 11 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written, effective as of the Effective Date. COMPANY: CONSECO, INC. /s/ R. Glenn Hilliard ------------------------------------- R. Glenn Hilliard Chairman of the Board EXECUTIVE: /s/ James E. Hohmann ------------------------------------- James E. Hohmann 12 EX-10 3 prieur.txt EXHIBIT 10.23 Exhibit 10.23 EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT, dated as of August 9, 2006, is between Conseco, Inc., a Delaware corporation ("Company"), and C. James Prieur ("Executive"). WHEREAS, the Company desires to employ Executive pursuant to an agreement embodying the terms of such employment (this "Agreement") and Executive desires to enter into this Agreement and to accept such employment, subject to this Agreement's terms and provisions. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, 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 the date set forth above (the "Effective Date"). Subject to the provisions for termination as provided in Section 8 hereof, the term of Executive's employment under this Agreement shall be the period beginning on September 7, 2006 (the "Commencement Date") and ending on December 31, 2009 (the "Term"). The Term shall not be automatically renewed and shall end upon any earlier termination of Executive's employment with the Company. 3. Duties. During the Term, Executive shall be engaged by the Company as its Chief Executive Officer, responsible for the overall management of the Company. During the Term, Executive shall report exclusively to the Company's Board of Directors (the "Board") regarding the performance of his duties. As of the Commencement Date, Executive shall be elected as a member of the Board. Such Board membership will be subject to election of shareholders at the Company's 2007 annual meeting, and periodically thereafter, in accordance with the Company's Board governance guidelines. 4. Extent of Services. During the Term, subject to the Board's direction and control, Executive shall have the power and authority commensurate with his executive status and necessary to perform his duties hereunder. Executive shall devote his reasonable best efforts to the Company's business and, shall not, without the Company's consent, be actively engaged in any other business activity, whether or not such activity is for gain, profit or other pecuniary advantage. However, Executive shall not be prohibited from serving on boards of professional, community, civic, education, charitable and business organizations on which he may choose to serve or 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 (to the extent not in violation of the non-compete provision in Section 12 hereof); provided, however, that business organizations shall be limited to those mutually agreed upon by Executive and the Company, and that the Board may subsequently determine, in good faith, 1 that service on one or more boards is not permissible under the terms of this Agreement because such service is not in the Company's best interests. 5. Compensation. During the Term: (a) Base Salary. As compensation for services hereunder rendered during the Term, Executive shall receive a base salary ("Base Salary") of Nine Hundred Thousand Dollars ($900,000) per year, payable in equal installments in accordance with the Company's standard payroll procedure for its salaried executives. Base Salary payments and other payments under this Agreement shall be subject to withholding of taxes and other appropriate and customary amounts. Executive shall be reviewed no less than annually for increases in his Base Salary, based upon his performance, subject to approval of the Board and/or the Human Resources and Compensation Committee of the Board (the "Compensation Committee"). (b) Annual Incentive. In addition to Base Salary, Executive will have an opportunity to earn a bonus each year as determined by the Board or the Compensation Committee thereof, with a target annual bonus equal to no less than 125% of Executive's Base Salary (the "Target Bonus") and a maximum annual bonus of 200% of the Target Bonus with respect to any calendar year, with such bonus payable at such time that similar payments are made to other Company executives, if Executive remains employed with the Company through such date or as otherwise payable under Section 7 or Section 9. Notwithstanding the above, the bonus for the 2009 operating period (if any) will be paid at the same time that similar payments are made to other Company executives (but not later than March 15 of the following year) provided Executive remains employed through the end of the Term. The Target Bonus will be based on financial and other objective targets that the Board or the Compensation Committee believes are reasonably attainable at the time it is set. The Company will pay Executive a guaranteed bonus for 2006 of not less than the target amount, prorated for the period of the year in which Executive is employed by the Company, payable at such time that similar bonus payments are made to other Company executives, if Executive remains employed with the Company through such date or as otherwise payable under Section 7 or Section 9. (c) Initial Equity Awards. On the Commencement Date, Executive shall receive: (i) An option to purchase 300,000 shares of common stock of the Company at the fair market value on the Commencement Date (based on the closing price as determined by the Committee), which shall vest in four equal annual installments with the first such installment to vest on the first anniversary of the Commencement Date, and (ii) 50,000 performance shares, which shall vest on terms and conditions to be determined by the Committee in writing (together, the "Initial Equity Awards"). The Initial Equity Awards shall be governed by the terms and conditions of the applicable award agreements, subject to Section 9 of this Agreement. 2 (d) Sign On Award. Executive shall receive an option to purchase 50,000 shares of common stock of the Company at the fair market value (based on the closing price as determined by the Committee) on the Commencement Date, which options shall vest in their entirety on the second anniversary of the Commencement Date ("Sign On Award"). The Sign On Award shall be governed by the terms and conditions of the applicable award agreement, subject to Section 9 of this Agreement. (e) Ongoing Equity Awards. Executive shall be eligible to participate in and receive future grants under any Company stock option or equity-based program, subject to the discretion of the Board or the Compensation Committee. (f) Unfunded Retirement Plan. The Company will consider in 2006 or thereafter, but shall not be obligated to adopt, an unfunded supplemental defined contribution arrangement for Executive, contributions to which may depend on performance and such other factors as the Company deems relevant. 6. Benefits. During the Term: (a) General. Executive shall be entitled to participate in such existing executive benefit plans and insurance programs offered by the Company, or which it may adopt from time to time, for its senior executive management 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 executive benefit plans or programs, or executive fringe benefits, that it may adopt from time to time. (b) Vacation. Executive shall be entitled to six (6) weeks of vacation with pay each year. (c) Expense Reimbursement. 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 in accordance with Company practices and procedures. (d) Relocation Assistance. Executive shall be entitled to reimbursement of reasonable relocation expenses for moving his family from Toronto, Canada to the Chicago, Illinois metropolitan area in accordance with the Company's current executive relocation policy, provided that these expenses shall be capped at $50,000. All expenses must be appropriately documented by Executive to the Company. In the event Executive's employment is terminated for Just Cause or if he terminates his employment other than for Good Reason prior to the first anniversary of the Effective Date, Executive agrees to repay such expenses to the Company. (e) Temporary Housing Reimbursement. The Company shall reimburse Executive for, or provide at its expense, up to six (6) months of temporary housing in the Chicago, Illinois metropolitan area, in an amount not to exceed $5,000 per month. 3 (f) Income Tax Gross-Up. Executive shall be entitled to a personal income tax gross-up on any federal, state and local taxable income arising from the benefits provided to him under Section 6(d) above. (g) Deferred Compensation. Executive shall be permitted to make elective contributions to any Company sponsored non-qualified deferred compensation plan. 7. Disability. (a) If Executive shall become physically or mentally disabled during the Term to the extent that his ability to perform his duties and services hereunder is materially and adversely impaired, Executive's Base Salary, bonus and other compensation provided herein shall continue while he remains employed by the Company; provided, that if such disability (as determined in the Board's reasonable judgment, exercised in good faith) continues for at least three (3) consecutive months, the Company may terminate Executive's employment hereunder, in which case the Company immediately shall pay Executive cash payments equal to (i) his annual Base Salary as provided in Section 5(a) hereof to the extent earned but unpaid as of the date of termination ("Unpaid Salary"), (ii) the bonus payable pursuant to Section 5(b) for the fiscal year of the Company ending prior to the date of termination (to the extent earned based on performance under the goals and objectives of the applicable plan but not previously paid) ("Unpaid Bonus"), (iii) Executive's then accrued but unused vacation ("Unpaid Vacation") (the Unpaid Salary, Unpaid Bonus and Unpaid Vacation referred to sometimes together as the "Accrued Amounts"), (iv) a pro rata Target Bonus for the year in which the termination for Disability occurred, and (v) one times his Base Salary. All stock options, restricted stock and/or other awards held by Executive shall be treated in accordance with the applicable grant agreements. (b) No payments or vesting under this Section 7 will be made if such disability arose primarily from (a) chronic use of intoxicants, drugs or narcotics (other than drugs prescribed to Executive by a physician and used by Executive for their intended purpose for which they had been prescribed) or (b) intentionally self-inflicted injury or intentionally self-induced illness. 8. Termination. During the Term: (a) Either the Company or Executive may terminate his employment at any time for any reason upon written notice to the other. In addition, the Company may terminate Executive's employment for Just Cause pursuant to Section 8(b) below or in a Control Termination pursuant to Section 8(c) below. Executive may terminate his employment for Good Reason pursuant to Section 8(d) below. Executive's employment shall also terminate (i) upon the death of Executive or (ii) after disability of Executive pursuant to Section 7 hereof. (b) Just Cause. The Company may terminate Executive's employment at any time for Just Cause. For purposes of this Agreement, "Just Cause" shall mean: (i) (A) a material breach by Executive of this Agreement, (B) a material breach of Executive's duty of loyalty to the Company or its affiliates, or 4 (C) Executive's willful malfeasance or fraud or dishonesty of a substantial nature in performing his duties on behalf of the Company or its affiliates; (ii) Executive's use of alcohol or drugs (other than drugs used by Executive for their intended purposes as prescribed by a physician) or other repeated conduct, which (a) materially and repeatedly interferes with the performance of his duties hereunder, (b) materially compromises the integrity or the reputation of the Company or its affiliates, or (c) results in other substantial economic harm to the Company or its affiliates; (iii) Executive's conviction by a court of law, admission in a court of law that he is guilty, or entry of a plea of nolo contendere with regard to (a) any felony, or (b) any crime which materially and adversely impacts the Company's financial condition or reputation; (iv) Executive's unscheduled absence from his employment duties for whatever reason, other than as a result of illness or disability, for a period of more than three (3) consecutive days, without the Company's consent; (v) Executive's failure to comply with any legal and proper directive by the Company's Board or a Committee thereof either in writing or reflected in minutes of a meeting of such Board or Committee, where such failure continues after Executive has been given written notice of such failure and at least five (5) business days thereafter to cure such failure; or (vi) any intentional wrongful act or omission by Executive that results in the restatement of the Company's financial statements due to a violation of the Sarbanes-Oxley Act of 2002. No termination shall be deemed to be a termination by the Company for Just Cause if the termination is as a result of Executive refusing to act in a manner that would be a violation of applicable law, or where Executive takes reasonable actions in good faith as directed by a resolution of the Board or of a Committee thereof. (c) The Company may terminate Executive's employment in a Control Termination. A "Control Termination" shall mean any termination by the Executive for Good Reason or any termination by the Company (or its successor) of Executive's employment for any reason other than for Just Cause, death or Disability, in either case within six (6) months prior to and in anticipation of, or within 24 months following, a Change in Control of the Company. For purposes of this Agreement, the following terms shall have the meanings ascribed to them: "Change in Control" means the occurrence of any of the following: (i) the acquisition (other than an acquisition in connection with a "Non-Control Transaction") by any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended 5 (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 or its Ultimate Parent representing 51% or more of the combined voting power of the then outstanding securities of the Company or its Ultimate Parent entitled to vote generally with respect to the election of the board of directors of the Company or its Ultimate Parent; (ii) as a result of or in connection with a tender or exchange offer or contest for election of directors, individual board members of the Company or of the Ultimate Parent (identified as of the date of commencement of such tender or exchange offer, or the commencement of such election contest, as the case may be) cease to constitute at least a majority of the board of directors of the Company or, if applicable, of the Ultimate Parent; or (iii) the consummation of a merger, consolidation or reorganization with or into the Company or the Ultimate Parent unless (x) the stockholders of the Company immediately before such transaction beneficially own, directly or indirectly, immediately following such transaction securities representing 51% or more of the combined voting power of the then outstanding securities entitled to vote generally with respect to the election of the board of directors of the Company (or its successor) or, if applicable, the Ultimate Parent and (y) individual board members of the Company (identified as of the date that a binding agreement providing for such transaction is signed) constitute at least a majority of the board of directors of the Company or, if applicable, the Ultimate Parent (or its successor) or, if applicable, the Ultimate Parent (a transaction to which clauses (x) and (y) apply, a "Non-Control Transaction"). "Ultimate Parent" means the parent corporation (or if there is more than one parent corporation, the ultimate parent corporation) that, directly or indirectly, beneficially owns a majority of the voting power of the outstanding securities entitled to vote with respect to the election of the board of directors of the Company (or its successor). (d) Executive may terminate his employment at any time with Good Reason. For purposes of this Agreement, "Good Reason" shall mean the occurrence of any of the following during the Term: (i) any material diminution in the nature or scope of Executive's authority, duties or responsibilities (other than as a result of a going private transaction), including being required to report to someone other than the Board; (ii) Executive no longer reports directly to the Board; (iii) requiring Executive to relocate to more than within 50 miles of his then current offices (excluding any locations within 50 miles of Chicago, Illinois or Carmel, Indiana) without Executive's consent; (iv) any reduction in Executive's Base Salary or Target Bonus opportunity without Executive's consent; 6 (v) any material breach of any provision of this Agreement by the Company which is not remedied by the Company within thirty (30) days after receipt of written notice from Executive specifying such breach; or (vi) after a Change in Control occurs and, following Executive's written request made prior to the Change in Control, the then Ultimate Parent fails to affirm and guarantee the Company's current and future obligations under this Agreement. (e) Upon termination of Executive's employment with the Company for any reason (whether voluntary or involuntary), Executive shall be deemed to have voluntarily resigned from all positions that Executive may then hold with the Company and any of its affiliates; provided that such deemed resignation shall not adversely affect Executive's rights to compensation or benefits under this Agreement and shall not affect the determination of whether Executive's termination was for Just Cause. 9. Payments Following Termination. (a) Just Cause. In the event Executive's employment is terminated by the Company for Just Cause, or if Executive resigns other than for Good Reason, then the Company shall pay Executive a cash payment equal to his Accrued Amounts within 5 days of the date of termination ("Termination Date"). No bonus for the year of termination will be earned or paid to Executive. All stock options, restricted stock and/or other incentive awards held by Executive shall be treated in accordance with the applicable grant agreements. (b) Death. In the event Executive's employment is terminated by Executive's death, then the Company shall pay Executive's estate, as soon as practicable, (i) a cash payment equal to one times Executive's Base Salary, and (ii) the Accrued Amounts. No bonus for the year of termination will be earned or paid to Executive's estate. All stock options, restricted stock and/or other incentive awards held by Executive shall be treated in accordance with the applicable grant agreements. (c) Without Cause/Good Reason. In the event that Executive is terminated by the Company without Just Cause, or that Executive's employment is terminated by the Executive for Good Reason (other than pursuant to Section 7 or in a Control Termination) the Company shall pay Executive the sum of Executive's (i) Accrued Amounts, (ii) a Target Bonus (prorated for the partial year period ending on the date of termination), (iii) a cash payment equal to the sum of Executive's (x) annual Base Salary, and (y) Target Bonus (all such amount referred to together as the "Aggregate Severance Amount"). One twelfth (1/12) of the Aggregate Severance Amount shall be paid to executive on the 15th day of each month for a period of 12 months commencing during the first month immediately following the month in which Executive is terminated, provided that (1) Executive does not violate any of the provisions of Sections 11 or 12 of this Agreement (in which event any such payments may be immediately suspended by the Company), and (2) the timing of such payments shall remain subject to delay or modification in accordance with Section 9(e) below. In addition, Executive and his family shall be entitled to continued participation in all medical, health and life insurance plans at the same benefit level at which he and his family were participating on the date of 7 termination ("Welfare Benefits") until the earliest of (A) 12 months after the date of termination, (B) the date upon which Executive attains 65 years of age; or (C) the date, or dates, Executive receives substantially similar coverage and benefits under the plans and programs of a subsequent employer (such coverage and benefits to be determined on a coverage-by-coverage, or benefit-by-benefit, basis). All stock options, restricted stock and/or other incentive awards held by Executive shall be treated in accordance with the applicable grant agreements. (d) Control Termination. In the event that Executive's employment terminates in a Control Termination, the Company shall pay Executive, in a cash lump sum within 5 days of the Termination Date, (i) the Accrued Amounts (ii) Executive's Target Bonus (prorated for the partial year period ending on the date of his termination of employment), (iii) a payment equal to two times the sum of Executive's (A) Base Salary, and (B) Target Bonus. In addition, Executive and his family shall be entitled to continued Welfare Benefits until the earliest of (A) 24 months after the date of termination, (B) the date upon which Executive attains 65 years of age; or (C) the date, or dates, Executive receives substantially similar coverage and benefits under the plans and programs of a subsequent employer (such coverage and benefits to be determined on a coverage by coverage, or benefit by benefit basis). All stock options, restricted stock and/or other awards held by Executive shall be treated in accordance with the applicable grant agreements. (e) IRC Section 409A. Notwithstanding anything herein to the contrary, the Company may delay or modify any payment due to Executive hereunder to the minimum extent necessary to avoid the imposition of a 20% penalty tax and interest relating to a failure to comply with Section 409A of the Internal Revenue Code of 1986, as amended from time to time. 10. Character of Termination Payments. The amounts payable to Executive hereunder upon any termination of his employment 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 and shall be the sole amount of severance pay to which Executive is entitled from the Company and its affiliates upon termination of his employment. 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. 11. 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 and its affiliates 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 herein, Executive covenants and agrees that he shall not, at any time while he is employed by the Company or at any time thereafter, directly or indirectly, divulge or disclose for any purpose whatsoever, any confidential information (whether or not specifically labeled or identified as "confidential information"), in any form or medium, that has been 8 obtained by or disclosed to him as a result of his employment with the Company and which the Company or any of its affiliates 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 Executive, (b) is required to be disclosed by any law, regulation or order of any court or regulatory commission, department or agency, in which event Executive 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 Executive properly to perform his duties under this Agreement. Upon the termination of Executive's employment, Executive shall return such information (in whatever form) obtained from or belonging to the Company or any of its affiliates that he may have in his possession or control. 12. Covenants Against Competition and Solicitation. Executive acknowledges that the services he is to render to the Company and its affiliates are of a special and unusual character, with a unique value to the Company and its affiliates, the loss of which cannot adequately be compensated by damages or an action at law. In view of the unique value to the Company and its affiliates 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 set forth in Section 11 above, and as a material inducement to the Company to enter into this Agreement and to pay to Executive the compensation and benefits stated in this Agreement and otherwise, and other good and valuable consideration, Executive covenants and agrees that throughout the period Executive remains employed or compensated hereunder (other than pursuant to Section 9) 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 that derives a non-incidental portion of its revenue from the business of selling or providing annuity, life, accident or health insurance products or services in the United States; (ii) in any manner compete with the Company or any of its affiliates with respect to lines of business that the Company and its affiliates derive more than a non-incidental portion of their revenue from or with respect to which the Company and its affiliates have made a significant investment in; (iii) solicit or attempt to convert any customers or policyholders of the Company to other insurance carriers or other corporations, persons or other entities providing these same or similar products or services provided by the Company and its affiliates, or (iv) solicit for employment or employ any employee of the Company or any of its affiliates. Should any particular covenant or provision of this Section 12 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. 13. Litigation Support, Mutual Non-Disparagement. (a) Litigation Support. Executive agrees to cooperate with the Company or any affiliate during the Term and thereafter (including following Executive's termination of 9 employment for any reason), by making himself reasonably available to testify on behalf of the Company or any affiliate in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and to assist the Company, or any affiliate, in any such action, suit, or proceeding, by providing information and meeting and consulting with the Board or its representatives or counsel, or representatives or counsel to the Company, or any affiliate as requested; provided, however that the same does not materially interfere with his then current professional activities. The Company agrees to reimburse Executive, on an after-tax basis, for all expenses actually incurred in connection with his provision of testimony or assistance. (b) Mutual Non-Disparagement. The Executive agrees that, during the Term and thereafter (including following Executive's termination of employment for any reason) he will not make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage the Company or any affiliate or their respective officers, directors, employees, advisors, businesses or reputations. The Company agrees that, during the Term and thereafter (including following Executive's termination of employment for any reason) the Company will not make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may directly or indirectly, disparage Executive or his business or reputation. Notwithstanding the foregoing, nothing in this Agreement shall preclude either Executive or the Company from making truthful statements or disclosures that are required by applicable law, regulation, or legal process. 14. Representations of the Parties. (a) The Company represents and warrants to Executive that (i) this Agreement has been duly authorized, executed and delivered by the Company and constitutes valid and binding obligations of the Company; and (ii) the employment of Executive on the terms and conditions contained in this Agreement will not conflict with, result in a breach or violation of, constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to: (A) the certificate of formation, (B) the terms of any indenture, contract, lease, mortgage, deed of trust, note, loan agreement or other agreement, obligation, condition, covenant or instrument to which the Company is a party or bound or to which its property is subject, or (C) any statute, law, rule, regulation, judgment, order or decree applicable to the Company, or any regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company. (b) Executive represents and warrants to the Company that: (i) this Agreement has been duly executed and delivered by Executive and constitutes a valid and binding obligation of Executive; and (ii) neither the execution of this Agreement by Executive nor his employment by the Company on the terms and conditions contained herein will conflict with, result in a breach or violation of, or constitute a default under any agreement, obligation, condition, covenant or instrument to which Executive is a party or bound or to which his property is subject, or any statute, law, rule, regulation, judgment, order or decree applicable to Executive of any court, regulatory body, administrative 10 agency, governmental body, arbitrator or other authority having jurisdiction over Executive or any of his property. 15. Arbitration of Disputes; Injunctive Relief; D & O Coverage. (a) Arbitration. Except as provided in subsection (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 Chicago, Illinois in accordance with the laws of the State of Illinois 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 Northern District of Illinois if the arbitration is in Chicago, Illinois. The arbitration shall be conducted in accordance with the rules of the American Arbitration Association, except with respect to the election 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. All reasonable costs and expenses (including fees and disbursements of counsel) incurred by Executive pursuant to this Section 15 shall be paid on behalf of or reimbursed to Executive promptly by the Company; provided, however, that in the event the Company prevails in such proceedings, Executive shall immediately repay all such amounts to the Company. (b) Injunctive Relief. Executive acknowledges that a breach or threatened breach by Executive of Sections 11 or 12 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 Sections 11 or 12 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. (c) Liability Insurance. The Company agrees to continue and maintain a directors and officers' liability insurance policy covering Executive to the extent the Company provides such coverage for its other executive officers. 16. 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 the General Counsel of the Company, in the case of the Company. 17. 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 11 may be severed from the Agreement, and the remaining provisions of the Agreement shall continue to be binding and effective. 18. Entire Agreement. Other than any equity award agreements entered into pursuant to the Conseco, Inc. 2003 Long-Term Equity Incentive Plan, as amended, or any subsequent equity award plan, this instrument contains the entire agreement of the parties and, as of the Effective Date, supersedes all other obligations of the Company and its affiliates to Executive under other agreements or otherwise. The compensation and benefits to be paid under the terms of this Agreement are in lieu of all other compensation or benefits to which Executive is entitled from the Company and its affiliates. 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. 19. 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, Executive's estate, heirs and personal representatives) and, except for issues or matters as to which federal law is applicable, shall be construed in accordance with and governed by the laws of the State of Illinois. 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. 20. No Third Party Beneficiaries. The terms and provisions of this Agreement are intended solely for the benefit of each party hereto and their respective successors or permitted assigns, and it is not intended to confer third-party beneficiary rights upon any other person. 21. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 12 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written, effective as of the Effective Date. CONSECO, INC. /s/ R. Glenn Hilliard ------------------------- By: R. Glenn Hilliard Its: Chairman of the Board EXECUTIVE: /s/ C. James Prieur ------------------------- C. James Prieur EX-99 4 release.txt EXHIBIT 99.1 Exhibit 99.l NEWS For Release Immediate Contacts (News Media) Tony Zehnder, EVP Corporate Communications 317.817.4409 (Investors) Lowell Short, SVP, Investor Relations 317.817.2893 Conseco names C. James Prieur as Chief Executive Officer, James E. Hohmann as President and Chief Operating Officer Carmel, Ind., August 9, 2006: Conseco, Inc. (NYSE:CNO) today announced that C. James Prieur has been named chief executive officer of Conseco, effective September 7, 2006. Prieur will also join Conseco's board of directors. Conseco Chairman R. Glenn Hilliard said, "The board of directors was unanimous in its selection of Jim as chief executive officer, following an extensive internal and external search. He is an extremely talented and experienced leader, and we are delighted to have him join us as chief executive officer." Mr. Prieur joins Conseco from Sun Life Financial, where he was the president and chief operating officer. He replaces former CEO William S. Kirsch, who resigned in May. "Jim has an impressive record of success in growing revenues and earnings; building and running large and complex insurance businesses; and a wealth of operating and investment management experience. We are impressed with his deep knowledge of the insurance business, his passion and drive for results, and the adaptability he has displayed in leading businesses through very complex challenges," Hilliard said. "I am deeply honored to have been chosen by the Board and I am excited by the challenge and opportunity to work with Conseco associates. I believe that the company is poised to succeed," Prieur said. "Jim Hohmann's contribution as interim CEO has been outstanding, and I am looking forward to teaming up with him." Conseco also announced the appointment of James E. Hohmann as president and chief operating officer of Conseco. "The board wishes to thank Jim for the stability, guidance, and progress he provided as interim CEO," Hilliard said. "We were fortunate to have his leadership during the transition, and we are delighted that he is going to lead the company in his new role as president and chief operating officer." "I am very proud of the progress that Conseco has made," Hohmann said. "I am excited about the opportunities ahead for this company and with this new position, and I look forward to working closely with Jim Prieur." - more - Conseco (2) August 9, 2006 "Conseco is a significantly transformed company that has made great strides over the past three years," Hilliard said. "The appointments of Jim Prieur and Jim Hohmann give Conseco a powerful leadership combination, one that uniquely positions us for success within the industry," Hilliard added. Prieur had been with Sun Life Financial since 1979. He began his career in equity and portfolio management, rising to vice president of investments for Canada in 1988, and then vice president of investments for the U.S. in 1992. In 1997 he was named senior vice president and general manager for all U.S. operations, and became corporate president and chief operating officer in 1999. Prieur holds a BA from College Militaire Royal de St. Jean, Quebec, and an MBA from the University of Western Ontario. Hohmann has been with Conseco since December 2004. Prior to becoming interim CEO, he served as executive vice president and chief administrative officer of the company. Before joining Conseco, he served as president and CEO of XL Life and Annuity. At XL, he was responsible for creation of XL Capital's U.S.-based life insurance platform and related businesses. Prior to his tenure at XL, he was president, financial institutions, for Zurich Kemper Life, and before that, was managing partner of the Tillinghast Life Insurance Practice in Chicago for Towers Perrin. He holds a BA from Northwestern University, and an MBA from the University of Chicago. Conseco, Inc.'s insurance companies help protect working American families and seniors from financial adversity: Medicare supplement, long-term care, cancer, heart/stroke and accident policies protect people against major unplanned expenses; annuities and life insurance products help people plan for their financial futures. For more information, visit Conseco's web site at www.conseco.com. - # # # # - -----END PRIVACY-ENHANCED MESSAGE-----