Employment Agreement between Conseco, Inc. and John R. Kline (as Senior Vice President and Chief Accounting Officer)

Summary

This agreement is between Conseco, Inc. and John R. Kline, hiring him as Senior Vice President and Chief Accounting Officer from July 15, 2002, to July 14, 2004. Mr. Kline will receive a base salary of $275,000 per year, a signing bonus, potential stock options, and other benefits. He must devote full-time efforts to the company and keep company information confidential. The agreement outlines conditions for termination, disability, and repayment of the signing bonus if he leaves early.

EX-10.10 7 c82126exv10w10.txt EMPLOYMENT AGREEMENT WITH JOHN R. KLINE Exhibit 10.10 EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT, dated as of the 15th day of July, 2002, as amended and restated as of September 5, 2002, is between CONSECO, INC., an Indiana corporation ("Company"), and John R. Kline ("Employee"). RECITALS A. The services of Employee, and his managerial and professional experience, are of value to the Company. B. The Company desires to have the benefit of the Employee's services for an extended period. 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. 2. Term. The effective date of this Agreement shall be July 15, 2002. Subject to the provisions for termination in Sections 7 and 10, the term of this Agreement shall be the period beginning July 15, 2002, and ending July 14, 2004. 3. Duties. Employee is engaged by the Company in the capacity of Senior Vice President and Chief Accounting Officer. Employee shall report to the Chief Financial Officer regarding the performance of his duties and shall be subject to the direction and control of the Board of Directors of the Company ("Board"). 4. Extent of Services. Employee, subject to the direction and control of the Chief Financial Officer and the Board, 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 shall not, without the consent of the Company, during the term of his Agreement be actively engaged in any other business activity, whether or not such business activity is pursued for gain, profit or other pecuniary advantage; but this shall not be construed as preventing Employee 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 Employee in the operation of the affairs of the companies in which such investments are made. For purposes of this Agreement, full-time employment shall be the normal work week for individuals in comparable officer positions with the Company. 5. Compensation. (a) As compensation for services rendered during the term hereof, Employee shall receive a base salary ("Base Salary") of Two Hundred Seventy-Five Thousand Dollars ($275,000) 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 may receive increases in his Base Salary based upon his performance. (b) In addition to Base Salary, Employee may receive such other bonuses, incentive compensation, and option awards as the Company may approve from time to time based on his performance. (c) Subject to the approval of the Compensation Committee of the Company's Board of Directors, the Company shall grant to Employee a non-qualified stock option under the Company's 1997 Non-Qualified Stock Option Plan to purchase 25,000 shares of Conseco common stock at an exercise price equal to the average of the high and low sales prices of Conseco common stock on the date of the grant, such option to vest in five equal annual installments commencing on the first anniversary of the date of grant and to terminate (to the extent not previously exercised) ten years after the date of grant, subject to continued employment from the date of grant to the vesting or termination date, as the case may be. (d) Employee shall also receive a signing bonus of Eight Hundred Sixty-Five Thousand Dollars ($865,000). If Employee voluntarily terminates his employment with the Company prior to July 14, 2004, he will immediately pay the Company a pro rata portion of such signing bonus (based on the portion of the 2-year period ending July 14, 2004, remaining after the date of such voluntary termination of employment). 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 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. (b) Employee shall be entitled to four (4) weeks vacation with pay for each year during the term hereof. 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 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 immediately pay Employee a lump sum payment equal to one-quarter of the sum of his annual Base Salary and bonus with respect to the most recent fiscal year then ended and, provided further, that no such lump sum payment shall be required if such disability 2 arises primarily from: (a) chronic 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. The Company acknowledges and affirms Employee's right to indemnification in accordance with, and subject to the terms of, Article 7 of the Company's Amended and Restated Bylaws. 10. Termination. (a) Either the Company or Employee may terminate this Agreement at any time for any reason upon written notice to the other. This Agreement shall also terminate upon (i) the death of 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 or for "just cause" as defined in (d) below, then Employee shall be entitled to receive (x) his Base Salary and the Company-paid portion of his health and welfare benefits, less applicable taxes, for eighteen (18) months after such termination, reduced by any compensation that Employee earns from other employment during such 18-month period, and (y) any other unpaid amounts previously accrued or awarded pursuant to any other provision of this Agreement. The payments specified in this Section 10(b) shall be in lieu of any other severance benefits to which Employee may otherwise be entitled. (c) In the event that this Agreement is terminated (i) by the Company for "just cause" as defined in (d) below, (ii) by Employee, or (iii) upon the death of Employee, Employee or his estate shall be entitled to receive Employee's Base Salary as provided in Section 5(a) 3 accrued but unpaid as of the date of termination, and any other unpaid amounts previously accrued or awarded pursuant to any other provision of this Agreement. (d) For purposes of this Agreement, "just cause" shall mean: (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 is in any case willful and deliberate on Employee's part and committed in bad faith or without reasonable belief that such breach 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, and 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. 11. 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. 12. 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. The Company shall pay the costs and expenses associated with the arbitration proceeding. 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. 4 (b) Employee acknowledges that a breach or threatened breach by Employee of Section 8 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 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. 13. 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. 14. 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. 15. 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. 16. 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 nor delegate any of its rights or obligations hereunder without the prior written consent of the other. IN WITNESS WHEREOF, the parties have executed this Agreement as of July 15, 2002. CONSECO, INC. By:/s/ William J. Shea --------------------------------- William J. Shea, President "Company" /s/ John R. Kline ---------------------------------- John R. Kline "Employee" 5