CONSECO, INC.
(DATE)
(Name) Conseco, Inc.
11825 N. Pennsylvania Street
Carmel, IN 46032
Re: Grant of Non-Qualified Stock Option
Dear _______:
Conseco, Inc., a Delaware corporation (the "Company"), is pleased to
advise you that, pursuant to the Company's 2003 Amended and Restated Long-Term
Incentive Plan (the "Plan"), the Company has granted to you an option (the
"Option") to acquire shares of the Company's common stock, par value $.01 per
share ("Common Stock"), as set forth below, subject to the terms and conditions
of the Plan and the terms and conditions set forth herein.
The Option is not intended to be an "incentive stock option" within
the meaning of Section 422 of the Code. Any capitalized terms used herein and
not defined herein have the meaning set forth in the Plan.
1. Option.
(a) Term. Subject to the terms and conditions set forth herein, the
Company hereby grants you (or such other persons as permitted by paragraph 5) an
Option to purchase the Option Shares at the exercise price per Option Share set
forth on the signature page of this letter agreement (the "Exercise Price"),
payable upon exercise as set forth in paragraph 1(b) below. The Option shall
expire at the close of business on (_______________) (the "Expiration Date"),
which is the tenth anniversary of the date of grant set forth on the signature
page of this letter agreement (the "Grant Date"), subject to earlier expiration
as provided in paragraph 2(c) below should your employment with the Company or a
Subsidiary terminate. The Exercise Price and the number and kind of shares of
Common Stock or other property for which the Option may be exercised shall be
subject to adjustment as provided in the Plan.
(b) Payment of Option Price. Subject to paragraph 2 below, the Option
may be exercised in whole or in part upon payment of an amount (the "Option
Price") equal to the product of (i) the Exercise Price and (ii) the number of
Option Shares to be acquired. Payment of the Option Price shall be made by one
or more of the following means:
(i) in cash (including check, bank draft, money order or wire
transfer of immediately available funds);
(ii) if permitted by the Company on the date of exercise, by
delivery of outstanding shares of Common Stock owned by you (and not
subject to any substantial
risk of forfeiture) for at least six months with a Fair Market Value on the
date of exercise equal to the Option Price;
(iii) by means of any cashless exercise procedures approved by
the Committee and as may be in effect on the date of exercise; or
(iv) by any combination of the foregoing.
2. Exercisability/Vesting and Expiration.
(a) Normal Vesting. The Option granted hereunder may be exercised only
to the extent it has become vested, as indicated by the Vesting Dates of Option
Shares set forth on the signature page of this letter agreement.
(b) Normal Expiration. In no event shall any part of the Option be
exercisable after the Expiration Date.
(c) Effect on Vesting and Expiration of Employment Termination. Except
as expressly set forth in any written agreement between you and the Company or a
Subsidiary (whether entered into prior to or after the date of this letter
agreement) and notwithstanding paragraphs 2(a) and (b) above, the following
special vesting and expiration rules shall apply if your employment with the
Company terminates prior to the Option becoming fully vested and/or prior to the
Expiration Date:
(i) Termination Other than for Cause. If your employment is
terminated by the Company or a Subsidiary for any reason other than Cause,
death or Disability, (A) any portion of the Option that was exercisable on
the date of such termination shall remain exercisable until the ninetieth
(90th) day immediately following such termination, but in no event after
the Expiration Date of the Option, and such portion of the Option shall
expire and be forfeited on the ninetieth (90th) day immediately following
such termination and (B) any portion of the Option that was not exercisable
on the date of such termination shall be forfeited immediately upon such
termination.
(ii) Termination for Cause. If your employment is terminated by
the Company or a Subsidiary for Cause, any portion of the Option that had
not been exercised prior to the date of such termination shall be forfeited
immediately upon such termination.
(iii) Termination Due to Death or Disability. If your employment
is terminated by the Company or a Subsidiary due to your death or
Disability, (A) any
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portion of the Option that was exercisable on the date of such termination
shall remain exercisable until twelve (12) months after such termination,
but in no event after the Expiration Date of the Option, and such portion
of the Option shall expire and be forfeited on the first anniversary of the
date of such termination, whether or not then exercisable and (B) any
portion of the Option that was not exercisable on the date of such
termination shall be forfeited immediately upon such termination.
(iv) Change in Control. In the event that your employment is
terminated by the Company without Cause or by you for Good Reason within 24
months after a Change in Control has occurred, the Option shall become
vested and fully exercisable as to all of the Option Shares.
3. Procedure for Exercise. Except as expressly set forth in any
written agreement between you and the Company or a Subsidiary (whether entered
into prior to or after the date of this letter agreement), you may exercise all
or any portion of the Option, to the extent it has vested and is exercisable, at
any time and from time to time prior to the earlier of the Expiration Date or
the date specified in paragraph 2 above, by delivering written notice to the
Company in the form attached hereto as Exhibit A, together with payment of the
Option Price in accordance with the provisions of paragraph 1(b) above. The
Option may not be exercised for a fraction of an Option Share.
4. Withholding of Taxes.
(a) Participant Election. If permitted by the Company, you may elect
to deliver shares of Common Stock (or have the Company withhold Option Shares
acquired upon exercise of the Option) to satisfy, in whole or in part, the
amount the Company is required to withhold for taxes in connection with the
exercise of the Option. Such election must be made on or before the date the
amount of tax to be withheld is determined. Once made, the election shall be
irrevocable. The Fair Market Value of the shares to be withheld or delivered
will be the Fair Market Value as of the date the amount of tax to be withheld is
determined.
(b) Company Requirement. The Company, to the extent permitted or
required by law, shall have the right to deduct from any payment of any kind
(including salary or bonus) otherwise due to you, an amount equal to any
federal, state or local taxes of any kind required by law to be withheld with
respect to the delivery of Option Shares under this letter agreement.
5. Transferability of Option. You may transfer the Option granted
hereunder only by will or the laws of descent and distribution or to any of your
Family Members by gift or a qualified domestic relations order as defined by the
Code. Unless the context requires otherwise, references herein to you are deemed
to include any permitted transferee under this paragraph 5. The Option may be
exercised only by you; by your Family Member if such person has acquired the
Option by gift or qualified domestic relations order; by the executor or
administrator of the
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estate of any of the foregoing or any person to whom the Option is transferred
by will or the laws of descent and distribution; or by the guardian or
representative of any of the foregoing.
6. Conformity with Plan. This letter agreement and the Option are
intended to conform in all respects with, and are subject to all applicable
provisions of, the Plan (which is incorporated herein by reference).
Inconsistencies between this letter agreement and the Plan shall be resolved in
accordance with the terms of the Plan. By executing and returning the enclosed
copy of this letter agreement, you acknowledge your receipt of this letter
agreement and the Plan and agree to be bound by all of the terms of this letter
agreement and the Plan.
7. Rights of Participants. Nothing in this letter agreement shall
interfere with or limit in any way the right of the Company to terminate your
employment or other performance of services at any time, nor confer upon you any
right to continue in the employ or as a director or officer of, or in the
performance of other services for, the Company or a Subsidiary for any period of
time, or to continue your present (or any other) rate of compensation or level
of responsibility. Nothing in this letter agreement shall confer upon you any
right to be selected again as a Plan participant, and nothing in the Plan or
this letter agreement shall provide for any adjustment to the number of Option
Shares subject to the Option upon the occurrence of subsequent events except as
provided in the Plan.
8. Certain Definitions. For the purposes of this letter agreement, the
following terms have the meanings set forth below:
"Cause" means the occurrence of one or more of the following events,
as determined by the Committee:
(i) commission of (x) a felony or (y) any crime or offense lesser
than a felony involving the property of the Company or a Subsidiary; or
(ii) conduct that has caused demonstrable and serious injury to
the Company of subsidiary, monetary or otherwise; or
(iii) willful refusal to perform or substantial disregard of
duties properly assigned; or
(iv) breach of duty of loyalty to the Company or a Subsidiary or
other act of fraud or dishonesty with respect to the Company or a
Subsidiary.
"Change in Control" means the occurrence of any of the following
events:
(i) the acquisition (other than an acquisition in connection with
a "Non-Control Transaction" (as defined below)) by any "person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act) of
"beneficial ownership" (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act), directly or indirectly, of securities of the
Company
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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").
"Disability" means that, solely because of injury or sickness, you are
either: (i) unable to perform all the material duties of the occupation that you
routinely performed just prior to the date the Disability begins; or (ii) unable
to earn 80% or more of your annual salary in effect just prior to the date the
Disability begins.
"Family Member" has the meaning given to such term in General
Instructions A.1(a)(5) to Form S-8 under the Securities Act of 1933, as amended,
and any successor thereto.
"Good Reason" means (i) any material diminution in the nature or scope
of your authority, duties or responsibilities from those you had as of the date
immediately preceding the Change in Control, (ii) requiring your relocation to a
location more than 50 miles from your primary location of employment immediately
preceding the Change in Control without your consent or (iii) any reduction in
your base salary or target bonus opportunity without your consent.
"Option Shares" means (i) all shares of Common Stock issued or
issuable upon the exercise of the Option and (ii) all shares of Common Stock
issued with respect to the Common Stock referred to in clause (i) above by way
of stock dividend or stock split or in connection with any conversion, merger,
consolidation or recapitalization or other reorganization affecting the Common
Stock.
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"Subsidiary" means a corporation or other entity of which outstanding
shares or ownership interests representing 50% or more of the combined voting
power of such corporation or other entity entitled to elect the management
thereof, or such lesser percentage as may be approved by the Committee, are
owned directly or indirectly by the Company.
"Ultimate Parent" means 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).
9. Successors and Assigns. Except as otherwise expressly provided
herein, all covenants and agreements contained in this letter agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and permitted assigns of the parties hereto whether so
expressed or not.
10. Severability. Whenever possible, each provision of this letter
agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this letter agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this letter agreement.
11. Counterparts. This letter agreement may be executed simultaneously
in two or more counterparts, each of which shall constitute an original, but all
of which taken together shall constitute one and the same letter agreement.
12. Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
13. Governing Law. THE VALIDITY, CONSTRUCTION, INTERPRETATION,
ADMINISTRATION AND EFFECT OF THE PLAN, AND OF ITS RULES AND REGULATIONS, AND
RIGHTS RELATING TO THE PLAN AND TO THIS LETTER AGREEMENT, SHALL BE GOVERNED BY
THE SUBSTANTIVE LAWS, BUT NOT THE CHOICE OF LAW RULES, OF THE STATE OF DELAWARE.
14. Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this letter agreement shall
be in writing and shall be deemed to have been given when (i) delivered
personally, (ii) mailed by certified or registered mail, return receipt
requested and postage prepaid, (iii) sent by facsimile or (iv) sent by reputable
overnight courier, to the recipient. Such notices, demands and other
communications shall be sent to you at the address specified in this letter
agreement and to the Company at 11825 N. Pennsylvania Street, P.O. Box 1911
(46082), Carmel, Indiana 46032, Attn: Karl Kindig, or to such other address or
to the attention of such other person as the recipient party has specified by
prior written notice to the sending party.
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15. Entire Agreement. This letter agreement, any written agreement
between you and the Company or a Subsidiary to the extent contemplated by
paragraph 2(c) hereof, and the terms of the Plan constitute the entire
understanding between you and the Company, and supersede all other agreements,
whether written or oral, with respect to your acquisition of the Option Shares.
* * * * *
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Signature Page to Stock Option Award Agreement
Number of Option Shares:
Date of Grant:
Exercise Price per Option Share: $
Vesting Dates of Option Shares:
Expiration Date of All Option Shares:
Please execute the extra copy of this letter agreement in the
space below and return it to the Company to confirm your understanding and
acceptance of the agreements contained in this letter agreement.
Very truly yours,
CONSECO, INC.
By:
----------------------------------------
Name:
Title:
Enclosures: Extra copy of this letter agreement
Copy of the Plan
The undersigned hereby acknowledges having read this letter
agreement and the Plan and hereby agrees to be bound by all provisions set forth
herein and in the Plan.
OPTIONEE
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EXHIBIT A
Form of Letter to be Used to Exercise Stock Option
_______________ ____, ______Date
Conseco, Inc.
11825 North Pennsylvania Street
Carmel, IN 46032
Attention:
I wish to exercise the stock option granted on ( date ) and evidenced
by a Stock Option Award Agreement dated as of that date, to acquire shares of
Common Stock of Conseco, Inc., at an option price of $_______ per share. In
accordance with the provisions of paragraph 1 of the Stock Option Award
Agreement, I wish to make payment of the exercise price (please check all that
apply):
|_| in cash
|_| if permitted by the Company, by delivery of shares of
Common Stock held by me
|_| by means of any cashless exercise procedures approved
by the Committee and as may be in effect on the date
hereof
Please issue these shares in the following name:
- ------------------------
Name
- ------------------------
Address
Very truly yours,
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Signature
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Typed or Printed Name
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Social Security Number
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