CONSECO INC
EX-10.1.11
<DOCUMENT>
<TYPE>EX-10.1.11
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>EX-10.1.11
<TEXT>

                              EMPLOYMENT AGREEMENT

                  EMPLOYMENT AGREEMENT, dated as of the 11th day of August,
2000, between CONSECO, INC., an Indiana corporation (hereinafter called the
"Company"), and David K. Herzog (hereinafter called "Executive").

                                    RECITALS

         WHEREAS, the services of Executive, and his managerial and professional
experience, are of great value to the Company;

         WHEREAS, the Company deems it to be essential for it to have the
benefit and advantage of the services of the Executive for an extended period;
and

         NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, the parties agree as follows:

         1. Employment. The Company hereby employs Executive and Executive
hereby accepts employment upon the terms and conditions hereinafter set forth.

         2. Term. The effective date of this Agreement shall be September 1,
2000. Subject to the provisions for termination as provided in Section 10
hereof, the term of this Agreement shall be the period beginning September 1,
2000, and ending December 31, 2003, and it shall be automatically renewed for
successive two (2) year periods on January 1, 2004 and each succeeding January 1
unless either party elects not to renew this Agreement by serving written notice
of such intention not to renew on the other party at least 180 days prior to
such January 1. If such an election is made, this Agreement shall remain in full
force and effect for the remaining original term ending December 31, 2003 or, if
this Agreement has been renewed, the remainder of the renewal period relating to
the last such renewal, subject to the provisions for termination as provided in
Section 10 hereof. The Basic Employment Period as used in this Agreement shall
mean the original term ending December 31, 2003 or, if this Agreement has been
renewed, the 2-year period relating to the last renewal.

         3. Duties. Executive is engaged by the Company in an executive capacity
as its chief legal officer. Executive shall report to the Chief Executive
Officer regarding the performance of his duties and shall be subject to the
direction and control of the Board of Directors of the Company (sometimes
referred to herein as the "Board") and the Chief Executive Officer. Executive's
position with the Company shall be Executive Vice President, General Counsel and
Secretary, and such other positions as may be determined from time to time by
the Board.

         4. Extent of Services. Executive, subject to the direction and control
of the Chief Executive Officer and the Board, shall have the power and authority
commensurate with his executive status and necessary to perform his duties
hereunder. The Company agrees to provide to Executive such assistance and work
accommodations as are suitable to the character of his positions

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with the Company and adequate for the performance of his duties. Executive
shall devote his entire employable time, attention and best efforts to the
business of the Company, and shall not, without the consent of the Company,
during the term of this Agreement be actively engaged in any other business
activity, whether or not such business activity is pursued for gain, profit or
other pecuniary advantage; but this shall not be construed as preventing
Executive from investing his assets in such form or manner as will not require
any services on the part of Executive in the operation of the affairs of the
companies in which such investments are made. For purposes of this Agreement,
full-time employment shall be the normal work week for individuals in comparable
executive positions with the Company.

         5. Compensation.

            (a) As compensation for services hereunder rendered during the term
         hereof, Executive shall receive a base salary ("Base Salary") of Six
         Hundred Thousand Dollars ($600,000) per year payable in equal
         installments in accordance with the Company's payroll procedure for its
         salaried employees. Salary payments and other payments under this
         Agreement shall be subject to withholding of taxes and other
         appropriate and customary amounts. Executive may receive increases in
         his Base Salary from time to time, based upon his performance in his
         executive and management capacity. The amounts of any such salary
         increases shall be approved by the Board or the Compensation Committee
         of the Board upon the recommendation of the Chief Executive Officer.

            (b) In addition to Base Salary, Executive may receive such other
         bonuses or incentive compensation as the Compensation Committee or the
         Board may approve from time to time, upon the recommendation of the
         Chief Executive Officer not in excess of $600,000 with respect to any
         calendar year; provided, that Executive shall receive a cash bonus of
         at least Eighty-Two Thousand Six Hundred Fifty Dollars ($82,650) for
         the period from September 1 through December 31 of 2000 and Two Hundred
         Fifty Thousand Dollars ($250,000) with respect to the 2001 calendar
         year (or a pro rata portion thereof, based on the portion of the
         respective period worked, for any part of a period worked).

            (c) Executive shall also receive a signing bonus of Two Hundred
         Fifty Thousand Dollars ($250,000), payable on the first salary payment
         date following the commencement of employment. If Executive voluntarily
         terminates his employment with the Company prior to September 1, 2002,
         he will immediately pay the Company a pro rata portion of such signing
         bonus (based on the portion of the 2-year period ending September 1,
         2002 after the date of such termination of employment).

         6. Fringe Benefits.

            (a) Executive shall be entitled to participate in such existing
         employee benefit plans and insurance programs offered by the Company,
         or which it may adopt form time to time, for its executive management
         or supervisory personnel generally, in accordance with the eligibility
         requirements for participation therein. Nothing herein shall be
         construed so as to prevent the Company from modifying or terminating
         any employee benefit plans or programs, or employee fringe benefits, it
         may adopt from time to time.


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            (b) During the term of this Agreement, the Company shall pay
         Executive a monthly automobile allowance in the amount of Six Hundred
         Dollars ($600), and the Company shall pay directly or shall reimburse
         Executive for the cost of fuel that he incurs in using his automobile.

            (c) Executive shall be entitled to four (4) weeks vacation with pay
         for each year during the term hereof.

            (d) Executive may incur reasonable expenses for promoting the
         Company's business, including expenses for entertainment, travel, and
         similar items. The Company shall reimburse Executive for all such
         reasonable expenses upon Executive's periodic presentation of an
         itemized account of such expenditures.

            (e) The Company shall, upon periodic presentation of satisfactory
         evidence and to a maximum of Ten Thousand Dollars ($10,000) per each
         year of this Agreement, reimburse Executive for reasonable medical
         expenses incurred by Executive and his dependents which are not
         otherwise covered by health insurance provided to Executive under
         Section 6(a).

            (f) During the term of this Agreement, the Company shall at its
         expense maintain a term life insurance policy or policies on the life
         of Executive in the face amount of Five Hundred Thousand Dollars
         ($500,000), payable to such beneficiaries as Executive may designate.

            (g) The Company shall grant to Executive, a non-qualified stock
         option to purchase One Hundred Thousand (100,000) shares of common
         stock at the fair market value per share of common stock on September
         1, 2000. Such stock option shall become exercisable in three increments
         of one-third of the shares covered on September 1 of each of 2001, 2002
         and 2003, and shall have scheduled expiration date of September 1,
         2010.

         7. Disability. If Executive shall become physically or mentally
disabled during the term of this Agreement to the extent that his ability to
perform his duties and services hereunder is materially and adversely impaired,
his salary, bonus and other compensation provided herein shall continue while he
remains employed by the Company; provided, that if such disability (as confirmed
by competent medical evidence) continues for at least nine (9) consecutive
months, the Company may terminate Executive's employment hereunder in which case
the Company shall immediately pay Executive a lump sum payment equal to
one-quarter of the sum of his annual salary and bonus with respect to the most
recent fiscal year then ended and, provided further, that no such lump sum
payment shall be required if such disability arises primarily from: (a) chronic
depressive use of intoxicants, drugs or narcotics, or (b) intentionally
self-inflicted injury or intentionally self-induced sickness; or (c) a proven
unlawful act or enterprise on the part of Executive.

         8. Disclosure of Information. Executive acknowledges that in and as a
result of his employment with the Company, he has been and will be making use
of, acquiring and/or adding to confidential information of the Company of a
special and unique nature and value. As a material inducement to the Company to
enter into this Agreement and to pay to Executive the compensation stated in
Section 5, as well as any additional benefits stated herein, Executive covenants
and agrees

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that he shall not, at any time during or following the term of his employment,
directly or indirectly, divulge or disclose for any purpose whatsoever, any
confidential information that has been obtained by or disclosed to him as a
result of his employment with the Company, except to the extent that such
confidential information (a) becomes a matter of public record or is published
in a newspaper, magazine or other periodical available to the general public,
other than as a result of any act or omission of Executive, (b) is required to
be disclosed by any law, regulation or order of any court or regulatory
commission, department or agency, provided that Executive gives prompt notice of
such requirement to the Company to enable the Company to seek an appropriate
protective order or confidential treatment, or (c) is necessary to perform
properly Executive's duties under this Agreement. Upon the termination of this
Agreement, Executive shall return all materials obtained from or belonging to
the Company which he may have in his possession or control.

         9. Covenants Against Competition and Solicitation. Executive
acknowledges that the services he is to render to the Company are of a special
and unusual character, with a unique value to the Company, the loss of which
cannot adequately be compensated by damages or an action at law. In view of the
unique value to the Company of the services of Executive for which the Company
has contracted hereunder, because of the confidential information to be obtained
by, or disclosed to, Executive as hereinabove set forth, and as a material
inducement to the Company to enter into this Agreement and to pay to Executive
the compensation stated in Section 5, as well as any additional benefits stated
herein, and other good and valuable consideration, Executive covenants and
agrees that throughout the period Executive remains employed hereunder and for
one year thereafter, Executive shall not, directly or indirectly, anywhere in
the United States of America (i) render any services, as an agent, independent
contractor, consultant or otherwise, or become employed or compensated by, any
other corporation, person or entity engaged in the business of selling or
providing life, accident or health insurance products or services; (ii) render
any services, as an agent, independent contractor, consultant or otherwise, or
become employed or compensated by, any other corporation, person or entity
engaged in the business of selling or providing any lending or other financial
products or services that are competitive with the lending or other financial
products or services sold or provided by the Company or its subsidiaries, (iii)
in any manner compete with the Company or any of its subsidiaries; (iv) solicit
or attempt to convert to other insurance carriers, finance companies or other
corporations, persons or other entities providing these same or similar products
or services provided by the Company and its subsidiaries, any customers or
policyholders of the Company, or any of its subsidiaries; or (v) solicit for
employment or employ any employee of the Company or any of its subsidiaries. The
covenants of Executive in this Section 9 shall be void and unenforceable in the
event of a Control Termination of this Agreement as defined in Section 10 below.
Should any particular covenant or provision of this Section 9 be held
unreasonable or contrary to public policy for any reason, including, without
limitation, the time period, geographical area, or scope of activity covered by
any restrictive covenant or provision, the Company and Executive acknowledge and
agree that such covenant or provision shall automatically be deemed modified
such that the contested covenant or provision shall have the closest effect
permitted by applicable law to the original form and shall be given effect and
enforced as so modified to whatever extent would be reasonable and enforceable
under applicable law.

         10. Termination.

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            (a) Either the Company or Executive may terminate this Agreement at
         any time for any reason upon written notice to the other. This
         Agreement shall also terminate upon (i) the death of Executive or (ii)
         termination by the Company pursuant to Section 7.

            (b) In the event this Agreement is terminated by the Company and
         such termination is not pursuant to the last sentence of (a) above or
         for "just cause" as defined in (f) below and does not constitute a
         Control Termination as defined in (e) below, Executive shall be
         entitled to receive Executive's Base Salary, as determined pursuant to
         Section 5(a) hereof, for the remainder of the Basic Employment Period
         and all other unpaid amounts previously accrued or awarded pursuant to
         any other provision of this Agreement.

            (c) In the event this Agreement is terminated by the death of
         Executive, is terminated by the Company for "just cause" as defined in
         (f) below, or is terminated by Executive and such termination does not
         constitute a Control Termination as defined in (e) below, Executive
         shall be entitled to receive Executive's Base Salary as provided in
         Section 5(a) accrued but unpaid as of the date of termination, and all
         other unpaid amounts previously accrued or awarded pursuant to any
         other provision of this Agreement.

            (d) In the event of a Control Termination as defined in (e) below,
         Executive shall be entitled to receive a lump sum payment not later
         than 60 days following such Control Termination equal to the sum of (i)
         the amount of Executive's Base Salary, as determined pursuant to
         Section 5(a) hereof, that would have been paid for the remainder of the
         Basic Employment Period, (ii) the amount of bonus that would have been
         paid to Executive with respect to the remainder of the Basic Employment
         Period at the same annual rate of bonus that was paid to Executive (or,
         if not yet paid, accrued by the Company for payment) with respect to
         the last calendar year prior to the year in which the related "change
         in control" of the Company, as defined in (e) below occurs, and (iii)
         all other unpaid amounts previously accrued or awarded pursuant to any
         other provision of this Agreement.

            (e) The term "Control Termination" as used herein shall mean (A)
         termination of this Agreement by the Company in anticipation of or not
         later than two years following a "change in control" of the Company (as
         defined below), or (B) termination of this Agreement by Executive
         following "change in control" of the Company (as defined below) upon
         the occurrence of any of the following events:

                (i) a significant reduction in the nature or scope of
            Executive's authorities or duties from those in existence
            immediately prior to the change in control, a reduction in his total
            compensation from that in existence immediately prior to the change
            in control or a breach by the Company of any other provision of this
            Agreement; or

                (ii) the reasonable determination by Executive that, as a result
            of a change in circumstances significantly affecting his position,
            he is unable to exercise Executive's authorities, powers, functions
            or duties in existence immediately prior to the change in control,
            or

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                (iii) the Company's principal executive offices are moved
            outside the geographic area comprised of Marion County, Indiana, and
            the seven contiguous counties or Executive is required to work at a
            location other than the Company's principal executive offices.

The term "change in control" shall mean a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934 (the "Act")
if such Item 6(e) were applicable to the Company as such Item is in effect on
May 26, 1999; provided that, without limitation,

            (x) such a change in control shall be deemed to have occurred if and
         when (A) except as provided in (y) below, any "person" (as such term is
         used in Sections 13(d) and 14(d) of the Act) is or becomes a
         "beneficial owner" (as such term is defined in Rule 13d-3 promulgated
         under the Act), directly or indirectly, of securities of the Company
         representing 25% or more of the combined voting power of the Company's
         then outstanding securities entitled to vote with respect to the
         election of its Board of Directors or (B) as the result of a tender
         offer, merger, consolidation, sale of assets, or contest for election
         of directors, or any combination of the foregoing transactions or
         events, individuals who, as of the date hereof, constitute the Board of
         Directors of the Company (the "Incumbent Board") cease to constitute at
         least a majority of such Board; provided, however, that any individual
         who becomes a director of the Company subsequent to the date hereof
         whose election was approved by a vote of at least a majority of the
         directors then comprising the Incumbent Board, shall be deemed to have
         been a member of the Incumbent Board; and provided further, that no
         individual who was initially elected as a director of the Company as a
         result of an actual or threatened election contest, as such terms are
         used in Rule 14a-11 of Regulation 14A promulgated under the Act, or any
         other actual or threatened solicitation of proxies or consents by or on
         behalf of any person other than the Board of Directors shall be deemed
         to have been a member of the Incumbent Board, or (C) any
         reorganization, merger or consolidation or the issuance of shares of
         common stock of the Company in connection therewith unless immediately
         after any such reorganization, merger or consolidation (i) more than
         60% of the then outstanding shares of common stock of the corporation
         surviving or resulting from such reorganization, merger or
         consolidation and more than 60% of the combined voting power of the
         then outstanding securities of such corporation entitled to vote
         generally in the election of directors are then beneficially owned,
         directly or indirectly, by all or substantially all of the individuals
         or entities who were the beneficial owners, respectively, of the
         outstanding shares of common stock of the Company and the outstanding
         voting securities of the Company immediately prior to such
         reorganization, merger or consolidation and in substantially the same
         proportions relative to each other as their ownership, immediately
         prior to such reorganization, merger or consolidation, of the
         outstanding shares of common stock of the Company and the outstanding
         voting securities of the Company, as the case may be, and (ii) at least
         a majority of the members of the board of directors of the corporation
         surviving or resulting from such reorganization, merger or
         consolidation were members of the Board of Directors of the Company at
         the time of the execution of the initial agreement or action of the
         Board of Directors providing for such


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         reorganization, merger or consolidation or issuance of shares of common
         stock of the Company, and

            (y) no change of control shall be deemed to have occurred if and
         when any such person becomes, with the approval of the Board of
         Directors of the Company, the beneficial owner of securities of the
         Company representing 25% or more but less than 50% of the combined
         voting power of the Company's then outstanding securities entitled to
         vote with respect to the election of its Board of Directors and in
         connection therewith represents, and at all times continues to
         represent, in a filing, as amended, with the Securities and Exchange
         Commission on Schedule 13D or Schedule 13G (or any successor Schedule
         thereto) that "such person has acquired such securities for investment
         and not with the purpose nor with the effect of changing or influencing
         the control of the Company, nor in connection with or as a participant
         in any transaction having such purpose or effect", or words of
         comparable meaning and import. The designation by any such person, with
         the approval of the Board of Directors of the Company, of one or more
         individuals to serve as a member of, or observer at meetings of, the
         Company's Board of Directors, shall not be considered "changing or
         influencing the control of the Company" within the meaning of the
         immediately preceding clause (B), so long as such individuals do not
         constitute at any time more than one-quarter of the total number of
         directors serving on such Board.

Upon the occurrence of a change in control, the Company shall promptly notify
Executive in writing of the occurrence of such event (such notice, the "Change
in Control Notice"). If the Change in Control Notice is not given within 10 days
after the occurrence of a change in control the period specified in clause
(e)(A) of this Section 10 shall be extended until the second anniversary of the
date such Change in Control Notice is given.

            (f) For purposes of this Agreement "just cause" shall mean:

                (i) a material breach by Executive of this Agreement, the
            commission of gross negligence, or willful malfeasance or fraud or
            dishonesty of a substantial nature in performing Executive's
            services on behalf of the Company, which is in each case (A) willful
            and deliberate on Executive's part and committed in bad faith or
            without reasonable belief that such breach is in the best interests
            of the Company and (B) not remedied by Executive in a reasonable
            period of time after receipt of written notice from the Company
            specifying such breach;

                (ii) Executive's breach of any provisions of this Agreement, or
            his use of alcohol or drugs which interferes with the performance of
            his duties hereunder or which compromises the integrity and
            reputation of the Company, its employees, and products;

                (iii) Executive's conviction by a court of law, or admission
            that he is guilty, of a felony or other crime involving moral
            turpitude; or



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                (iv) Executive's absence from his employment other than as a
            result of Section 7 hereof, for whatever cause, for a period of more
            than one (1) month, without prior written consent from the Company.

         11. Tax Indemnity Payments.

            (a) Anything in this Agreement to the contrary notwithstanding, in
         the event it shall be determined that any payment or distribution by
         the Company or its affiliated companies to or for the benefit of
         Executive, whether paid or payable or distributed or distributable
         pursuant to the terms of the Agreement or otherwise but determined
         without regard to any additional payments required under this Section
         11 (a "Payment"), would be subject to the excise tax imposed by Section
         4999 of the Internal Revenue Code of 1986 (as amended the "Code"), or
         any successor provision (collectively, "Section 4999"), or any interest
         or penalties are incurred by Executive with respect to such excise tax
         (such excise tax, together with any such interest and penalties, are
         hereinafter collectively referred to as the "Excise Tax"), then
         Executive shall be entitled to receive an additional payment (a
         "Gross-Up Payment") in an amount such that after payment by Executive
         of all taxes (including any interest or penalties imposed with respect
         to such taxes), including, without limitation, any Federal, state or
         local income and employment taxes and Excise Tax (and any interest and
         penalties imposed with respect to any such taxes) imposed upon the
         Gross-Up Payment, Executive retains an amount of the Gross-Up Payment
         equal to the Excise Tax imposed upon the Payments.

            (b) Subject to the provisions of Section 11(c), all determinations
         required to be made under this Section 11, including whether and when a
         Gross-Up Payment is required and the amount of such Gross-Up Payment
         and the assumptions to be utilized in arriving at such determination,
         shall be made by the Company's public accounting firm (the "Accounting
         Firm") which shall provide detailed supporting calculations both to the
         Company and Executive within fifteen (15) business days of the receipt
         of notice from Executive that there has been a Payment, or such earlier
         time as is requested by the Company. In the event that the Accounting
         Firm is serving as accountant or auditor for the individual, entity or
         group effecting the Change in Control, Executive may appoint another
         nationally recognized public accounting firm to make the determinations
         required hereunder (which accounting firm shall then be referred to as
         the Accounting Firm hereunder). All fees and expenses of the Accounting
         Firm shall be borne solely by the Company. Any Gross-Up Payment, as
         determined pursuant to this Section 11, shall be paid by the Company to
         Executive within five (5) days of the receipt of the Accounting Firm's
         determination. If the Accounting Firm determines that no Excise Tax is
         payable by Executive, it shall furnish Executive with a written opinion
         that failure to report the Excise Tax on Executive's applicable federal
         income tax return would not result in the imposition of a negligence or
         similar penalty. Any determination by the Accounting Firm shall be
         binding upon the Company and Executive. As a result of the uncertainty
         in the application of Section 4999 at the time of the initial
         determination by the Accounting Firm hereunder, it is possible that
         Gross-Up Payments which will not have been made by the Company should
         have been made by the Company ("Underpayment"), consistent with the
         calculations required to be made hereunder. In the event that the
         Company exhausts its remedies pursuant to Section 11(c)


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         and Executive thereafter is required to make a payment of any Excise
         Tax, the Accounting Firm shall determine the amount of the Underpayment
         that has occurred and any such Underpayment shall be promptly paid by
         the Company to or for the benefit of Executive.

            (c) Executive shall notify the Company in writing of any claim by
         the Internal Revenue Service that, if successful, would require a
         payment by the Company, or a change in the amount of the payment by the
         Company of, the Gross-Up Payment. Such notification shall be given as
         soon as practicable after Executive is informed in writing of such
         claim and shall apprise the Company of the nature of such claim and the
         date on which such claim is requested to be paid; provided that the
         failure to give any notice pursuant to this Section 11(c) shall not
         impair Executive's rights under this Section 11 except to the extent
         the Company is materially prejudiced thereby. Executive shall not pay
         such claim prior to the expiration of the 30-day period following the
         date on which Executive gives such notice to the Company (or such
         shorter period ending on the date that any payment of taxes with
         respect to such claim is due). If the Company notifies Executive in
         writing prior to the expiration of such period that it desires to
         contest such claim, Executive shall:

                (1) give the Company any information reasonably requested by the
            Company relating to such claim,

                (2) take such action in connection with contesting such claim as
            the Company shall reasonably request in writing from time to time,
            including, without limitation, accepting legal representation with
            respect to such claim by an attorney reasonably selected by the
            Company,

                (3) cooperate with the Company in good faith in order
            effectively to contest such claim, and

                (4) permit the Company to participate in any proceedings
            relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income, employment or other tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 11(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct Executive to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided further, that if the Company directs Executive
to pay such claim and sue for a refund, the Company shall advance the amount of
such payment to Executive on an interest-free


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basis and shall indemnify and hold Executive harmless, on an after-tax basis,
from any Excise Tax or income, employment or other tax (including interest or
penalties with respect to any such taxes) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and provided
further, that any extension of the statute of limitations relating to payment of
taxes for the taxable year of Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.

            (d) If, after the receipt by Executive of an amount advanced by the
         Company pursuant to Section 11(c), Executive becomes entitled to
         receive, and receives, any refund with respect to such claim, Executive
         shall (subject to the Company's complying with the requirements of
         Section 11(c)) promptly pay to the Company the amount of such refund
         (together with any interest paid or credited thereon after taxes
         applicable thereto). If, after the receipt by Executive of an amount
         advanced by the Company pursuant to Section 11(c), a determination is
         made that Executive shall not be entitled to any refund with respect to
         such claim and the Company does not notify Executive in writing of its
         intent to contest such denial of refund prior to the expiration of
         thirty (30) days after such determination, then such advance shall be
         forgiven and shall not be required to be repaid and the amount of such
         advance shall offset, to the extent thereof, the amount of Gross-Up
         Payment required to be paid.

         12. Character of Termination Payments. The amounts payable to Executive
upon any termination of this Agreement shall be considered severance pay in
consideration of past services rendered on behalf of the Company and his
continued service from the date hereof to the date he becomes entitled to such
payments. Executive shall have no duty to mitigate his damages by seeking other
employment and, should Executive actually receive compensation from any such
other employment, the payments required hereunder shall not be reduced or offset
by any such other compensation.

         13. Arbitration of Disputes; Injunctive Relief.

            (a) Except as provided in paragraph (b) below, any controversy or
         claim arising out of or relating to this Agreement or the breach
         thereof, shall be settled by binding arbitration in the City of
         Indianapolis, Indiana, in accordance with the laws of the State of
         Indiana by three arbitrators, one of whom shall be appointed by the
         Company, one by Executive and the third of whom shall be appointed by
         the first two arbitrators. If the first two arbitrators cannot agree on
         the appointment of a third arbitrator, then the third arbitrator shall
         be appointed by the Chief Judge of the United States District Court for
         the Southern District of Indiana. The arbitration shall be conducted in
         accordance with the rules of the American Arbitration Association,
         except with respect to the selection of arbitrators which shall be as
         provided in this Section. Judgment upon the award rendered by the
         arbitrators may be entered in any court having jurisdiction thereof. In
         the event that it shall be necessary or desirable for Executive to
         retain legal counsel and/or incur other costs and expenses in

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         connection with the enforcement of any and all of his rights under this
         Agreement, the Company shall pay (or Executive shall be entitled to
         recover from the Company, as the case may be) his reasonable attorneys'
         fees and costs and expenses in connection with the enforcement of any
         arbitration award in court, regardless of the final outcome, unless the
         arbitrators shall determine that under the circumstances recovery by
         Executive of all or a part of any such fees and costs and expenses
         would be unjust.


            (b) Executive acknowledges that a breach or threatened breach by
         Executive of Sections 8 or 9 of this Agreement will give rise to
         irreparable injury to the Company and that money damages will not be
         adequate relief for such injury. Notwithstanding paragraph (a) above,
         the Company and Executive agree that the Company may seek and obtain
         injunctive relief, including, without limitation, temporary restraining
         orders, preliminary injunctions and/or permanent injunctions, in a
         court of proper jurisdiction to restrain or prohibit a breach or
         threatened breach of Section 8 or 9 of this Agreement. Nothing herein
         shall be construed as prohibiting the Company from pursuing any other
         remedies available to the Company for such breach or threatened breach,
         including the recovery of damages from Executive.

         14. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered mail to
his residence, in the case of Executive, or to the business office of its Chief
Executive Officer, in the case of the Company.

         15. Waiver of Breach and Severability. The waiver by either party of a
breach of any provision of this Agreement by the other party shall not operate
or be construed as a waiver of any subsequent breach by either party. In the
event any provision of this Agreement is found to be invalid or unenforceable,
it may be severed from the Agreement and the remaining provisions of the
Agreement shall continue to be binding and effective.

         16. Entire Agreement. This instrument contains the entire agreement of
the parties and supersedes all prior agreements between them. This agreement may
not be changed orally, but only by an instrument in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.

         17. Binding Agreement and Governing Law; Assignment Limited. This
Agreement shall be binding upon and shall inure to the benefit of the parties
and their lawful successors in interest and shall be construed in accordance
with and governed by the laws of the State of Indiana. This Agreement is
personal to each of the parties hereto, and neither party may assign nor
delegate any of its rights or obligations hereunder without the prior written
consent of the other.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                                            CONSECO, INC.


                                            By:  /S/ Gary C. Wendt
                                                 -------------------------------
                                                 Gary C. Wendt
                                                 Chairman of the Board


                                       11

<PAGE>
                                            "Company"


                                            By:  /S/ David K. Herzog
                                                 -------------------------------
                                                 David K. Herzog
                                                 "Executive"



                                       12

</TEXT>
</DOCUMENT>
