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EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into between Western
National Corporation, a Delaware corporation ("Company"), and Xxxx X. Xxxx
("Executive") to be effective as of the Effective Time as hereinafter defined.
WHEREAS, Company and Executive entered into an Employment Agreement dated
February 8, 1994, an Amendment to Employment Agreement dated December 2, 1994,
and a further Amendment to Employment Agreement dated May 14, 1997 (the
"February 8, 1994 Employment Agreement").
WHEREAS, contemporaneously herewith, American General Corporation, which
presently owns certain of the stock of Company, and a subsidiary of American
General Corporation, have entered into an Agreement and Plan of Merger ("Merger
Agreement") with Company pursuant to which American General Corporation shall
acquire all or substantially all of the stock of Company through merger (the
"Merger").
WHEREAS, it is an important element of American General Corporation's
decision to acquire the stock of Company through such merger that Executive
remain employed with Company and provide his personal services to Company in
connection with the operation of Company's business, the creation and
development of Company's products and services, and the marketing of Company's
products and services for at least three years from the date of such
acquisition.
WHEREAS, during the three year Term of this Agreement, Company or AGC (as
such term is herein defined) shall disclose to Executive, or place Executive in
a position to have access to or develop, trade secrets or confidential
information of Company or AGC or their customers or clients; and/or shall
entrust Executive with business opportunities of Company or AGC; and/or shall
place Executive in a position to develop business good will on behalf of
Company or AGC, and there is a need and desire on the part of Company and AGC
and Executive to specify the parties' rights and obligations with respect to
the ownership and protection of such information, opportunities and goodwill.
WHEREAS, Company is desirous of employing Executive pursuant to the terms
and conditions and for the consideration set forth in this Agreement, and
Executive is desirous of continuing in the employ of Company pursuant to such
terms and conditions and for such consideration, subject to the condition
subsequent that the contemplated Merger shall be consummated.
WHEREAS, contemporaneously herewith, Executive and American General
Corporation shall also enter into a Severance Agreement ("Severance
Agreement"). The terms and conditions of such Severance Agreement are
incorporated herein by reference.
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NOW, THEREFORE, for and in consideration of the mutual promises,
covenants, and obligations contained herein, Company and Executive agree as
follows:
1. Employment and Duties:
1.1. Because of the important nature of Executive's personal services with
respect to the operation of Company's business, the creation and development of
Company's products and services, and the marketing of Company's products and
services, Company agrees to employ Executive, and Executive agrees to be
employed by Company, beginning as of forty-eight hours after the Effective Time
as defined below and continuing thereafter for a Term of three (3) years (the
"Term"), subject to the terms and conditions of this Agreement.
1.2. Commencing as of forty-eight hours after the Effective Time, Company
shall employ Executive in a senior executive or officer capacity with Company
or one of its significant subsidiaries with duties consonant with senior
executive status, but Company may assign Executive to different executive
positions and modify Executive's duties and responsibilities. Company or AGC
may also assign Executive to a position in which he performs services for other
of American General Corporation's subsidiaries or affiliates. Moreover, Company
may assign this Agreement to American General Corporation or any affiliates of
American General Corporation (American General Corporation and any of its
affiliates to which this Agreement is assigned or for whom Executive may
provide services are cumulatively referred to herein as "AGC").
1.3. Executive agrees to serve in the assigned position and to perform
diligently and to the best of Executive's abilities the duties and services
appertaining to such position as determined by Company, as well as such
additional or different duties and services appropriate to such position which
Executive from time to time may be reasonably directed to perform by Company.
Executive shall at all times comply with and be subject to such policies and
procedures as Company or AGC may establish from time to time. Executive shall,
during the period of Executive's employment by Company, devote Executive's full
business time, attention, energy, and best efforts to the business and affairs
of Company. For purposes of this Agreement, full business time shall mean the
normal work week for individuals in comparable executive positions with
Company. Executive may not engage, directly or indirectly, in any other
business, investment, or activity that interferes with Executive's performance
of Executive's duties hereunder, is contrary to the interests of Company or
AGC, or requires any significant portion of Executive's business time.
1.4. Executive acknowledges and agrees that at all times during the
employment relationship Executive owes fiduciary duties to Company and AGC,
including but not limited to the fiduciary duties of the highest loyalty,
fidelity and allegiance to act at all times in the best interests of Company
and AGC, to make full disclosure to Company of all information that pertains to
Company's or AGC's business and interests, to do no act which would injure
Company's or AGC's business, its interests, or its reputation, and to refrain
from using for Executive's own benefit or for the benefit of others any
information or opportunities pertaining to Company's or AGC's business or
interests that are entrusted to Executive or that he learned while employed by
Company or AGC. Executive acknowledges and agrees that upon termination of the
employment relationship, Executive
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shall continue to refrain from using for his own benefit or the benefit of
others any information or opportunities pertaining to Company's or AGC's
business or interests that were entrusted to Executive during the employment
relationship or that he learned while employed by Company or AGC. Executive
agrees that while employed by Company or AGC and thereafter he shall not
knowingly take any action which interferes with the external relationships
between Company or AGC and third parties.
1.5. It is agreed that any direct or indirect interest in, connection
with, or benefit from any outside activities, particularly commercial
activities, which interest might in any way adversely affect Company or AGC, or
any of their affiliates, involves a possible conflict of interest. In keeping
with Executive's fiduciary duties to Company and AGC, Executive agrees that
during the employment relationship Executive shall not knowingly become
involved in a conflict of interest with Company or AGC or their affiliates, or
upon discovery thereof, allow such a conflict to continue. Moreover, Executive
agrees that Executive shall disclose to Company's or AGC's President any facts
which might involve such a conflict of interest that has not been approved by
Company's or AGC's President. Company and Executive recognize that it is
impossible to provide an exhaustive list of actions or interests which
constitute a "conflict of interest." Moreover, Company and Executive recognize
there are many borderline situations. In some instances, full disclosure of
facts by Executive to Company's or AGC's President may be all that is necessary
to enable Company or AGC or their affiliates to protect its interests. In
others, if no improper motivation appears to exist and the interests of Company
or AGC or their affiliates have not suffered, prompt elimination of the
outside interest will suffice. In still others, it may be necessary for Company
to terminate the employment relationship. Company and Executive agree that
Company's determination as to whether a conflict of interest exists shall be
conclusive. Company reserves the right to take such action as, in its judgment,
will end the conflict.
2. Compensation and Benefits:
2.1. As compensation for services rendered under this Agreement, Executive
shall receive a base salary of Three Hundred Thousand ($300,000) per year
("Base Annual Salary"), payable in semi-monthly installments in accordance with
Company's or AGC's standard payroll practice for its salaried employees.
Executive's Base Annual Salary may be increased from time to time based upon
his performance. The amounts of any such salary increases shall be approved by
the Personnel Committee of the Board of Directors of American General
Corporation.
2.2. The parties recognize that Company will pay Executive his performance
bonus for the calendar year 1997 prior to the consummation of the Merger. In
addition to Base Annual Salary, Executive shall receive for the calendar years
1998, 1999 and 2000, an annual performance bonus in such amount as may be
determined by the Personnel Committee of the Board of Directors of American
General Corporation in its sole discretion for each year during the Term of
this Agreement. Such annual bonus shall be paid in the March/April time frame
of the following year with the first such payment in the March/April time frame
of 1999 for the calendar year 1998. It is understood and agreed that the amount
of any such bonus shall be determined based upon a consideration of both (i)
the progress and success of the Company as a whole, and (ii) the personal
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performance and contributions made to the success of the Company by Executive.
Finally, it is understood and agreed that there may be years in which the
Personnel Committee determines that no bonus shall be paid.
2.3. In the event that, in connection with the Merger, the acceleration of
the vesting of Executive's stock options or restricted stock in Company, or any
payment, award or distribution under the February 8, 1994 Employment Agreement,
or any payment, award or distribution under this Agreement to or for the
benefit of Executive (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code or any interest or penalties with
respect to such excise tax (such excise tax, together with any such interest or
penalties, are hereinafter collectively referred to as the "Excise Tax"),
Company shall pay to Executive 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 any Excise
Tax imposed on any Gross-up Payment, Executive retains an amount of the
Gross-up Payment equal to the Excise Tax imposed upon the Payments. Company and
Executive shall make an initial determination as to whether a Gross-up Payment
is required and the amount of any such Gross-up Payment. Executive shall notify
Company immediately in writing of any claim by the Internal Revenue Service
which, if successful, would require Company to make a Gross-up Payment (or a
Gross-up Payment in excess of that, if any, initially determined by Company and
Executive) within ten days of the receipt of such claim. Company shall notify
Executive in writing at least ten days prior to the due date of any response
required with respect to such claim if it plans to contest the claim. If
Company decides to contest such claim, Executive shall cooperate fully with
Company in such action; provided, however, Company shall bear and pay directly
or indirectly all costs and expenses (including additional interest and
penalties) incurred in connection with such action and shall indemnify and hold
Executive harmless, on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result of
Company's action. If, as a result of Company's action with respect to a claim,
Executive receives a refund of any amount paid by Company with respect to such
claim, Executive shall promptly pay such refund to Company. If Company fails to
timely notify Executive whether it will contest such claim or Company
determines not to contest such claim, then Company shall immediately pay to
Executive the portion of such claim, if any, which it has not previously paid
to Executive.
2.4. While employed by Company, Executive shall be allowed to participate,
on the same basis generally as other executives of Company, in all general
executive benefit plans and programs, including improvements or modifications
of the same, which on the effective date or thereafter are made available by
Company to other of Company's comparable executives. Such benefits plans, and
programs may include, without limitation, medical, health, and dental care,
life insurance, disability protection, and pension plans. Nothing in this
Agreement is to be construed or interpreted to provide greater rights,
participation, coverage, or benefits under such benefit plans or programs than
provided to similarly situated executives pursuant to the terms and conditions
of such benefit plans and programs.
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2.5. Company shall not by reason of this Article 2 be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing, any
of its medical, health, dental, insurance, disability or other benefit plans or
programs, so long as such actions are similarly applicable to covered employees
generally. Unless specifically provided for in a written plan document adopted
by the Board of Directors of either Company or AGC, none of the benefits or
arrangements described in this Article 2 shall be secured or funded in any
way, and each shall instead constitute an unfunded and unsecured promise to
pay money in the future exclusively from the general assets of Company or AGC.
2.6. Company may withhold from any compensation, benefits, or amounts
payable under this Agreement all federal, state, city, or other taxes as may be
required pursuant to any law or governmental regulation or ruling.
3. Termination of employment prior to expiration of Term and effects of such
termination:
3.1. [A] Notwithstanding any other provisions of this Agreement, Company
or AGC shall have the right to terminate Executive's employment under this
Agreement at any time prior to the expiration of the Term for cause upon the
determination by Company's Board of Directors or American General Corporation's
Executive Termination Review Committee that cause exists for the termination of
the employment relationship. As used in this Section 3.1, the term cause shall
mean [1] misuse, misappropriation or embezzlement by Executive of funds or
property belonging to Company or AGC, or his use of alcohol or drugs which
interferes with the performance of his duties hereunder or which compromises
the integrity and reputation of Company or AGC, their employees, or their
products or services; [2] Executive's conviction by a court of law, or
admission that he is guilty, of a felony or other crime involving moral
turpitude; [3] Executive's absence from his employment other than as a result
of a disability as defined in Section 3.3 hereof, for whatever cause, for a
period of more than one (1) month, without prior written consent from Company;
[4] Executive becomes incompetent or is reasonably unable to undertake and
discharge the duties and responsibilities of his position, other than as a
result of a disability as defined in Section 3.3 hereof; or [5] Executive's
breach of any provisions of this Agreement, or his gross negligence, willful
malfeasance or fraud or dishonesty in performance of his services on behalf of
Company or AGC pursuant to this Agreement. It is expressly acknowledged and
agreed that the decision as to whether cause exists for termination of the
employment relationship by Company or AGC is delegated to Company's Board of
Directors or American General Corporation's Executive Termination Review
Committee for determination, which decision shall be made in good faith.
[B] Upon a termination of the employment relationship for cause by Company
or AGC prior to expiration of the Term pursuant to this Section, Executive
shall be entitled to receive as a full and final settlement of all obligations
of Company and AGC hereunder his pro rata Base Annual Salary through the date
of such termination, but any and all other compensation to which Executive is
entitled under this Agreement and any and all future benefits for which
Executive is eligible under this Agreement shall cease and terminate, including
but not limited to, Executive shall not be entitled to any bonuses or other
incentive compensation, if any, not yet paid to Executive at the date of such
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termination. Executive shall not be entitled to any severance payment.
Executive's rights under this Section are Executive's sole and exclusive rights
against Company and AGC, and Company's or AGC's sole and exclusive liability to
Executive under this Agreement, in contract, tort, or otherwise, for any
termination for cause of the employment relationship by Company or AGC.
Executive covenants not to lodge any claim, demand, or cause of action against
Company or AGC based on termination for cause of the employment relationship
for any monies allegedly due under this Agreement other than those specified in
this Section. If Executive breaches this covenant, Company or AGC shall be
entitled to recover from Executive all sums expended by Company or AGC
(including costs and attorneys fees) in connection with such suit, claim,
demand, or cause of action.
3.2. The employment relationship under this Agreement shall terminate
automatically upon Executive's death. Upon a termination of the employment
relationship prior to expiration of the Term because of Executive's death,
Executive's administrators, heirs or legatees shall be entitled to receive
Executive's then-current Base Annual Salary as if Executive's employment (which
shall cease on the date of such death) had continued for the full Term of this
Agreement. Company may, at its option, pay such Base Annual Salary in semi-
monthly installments or in a lump sum discounted to present value at the
discount rate then available to Company through its lenders. Executive's
administrators, heirs or legatees shall also be entitled to any individual
bonuses or any individual incentive compensation awarded but not yet paid to
Executive at the date of such termination but Executive's administrators, heirs
or legatees shall not be entitled to any future individual bonuses or any
individual incentive compensation payments not yet awarded (whether or not
allegedly accrued) as of the date of such termination.
3.3. The employment relationship under this Agreement shall terminate
automatically upon Executive becoming permanently and totally unable to perform
Executive's duties for Company or AGC as a result of any medically determinable
physical or mental impairment as supported by a written medical opinion to the
foregoing effect by a physician selected by Company or AGC. Upon such
termination of the employment relationship, Executive shall be paid his pro
rata Base Annual Salary through the date of such termination and Executive
shall thereafter be paid sixty (60%) of his then-current Base Annual Salary on
a semi-monthly basis through the Term of this Agreement as if the employment
relationship had not terminated, reduced by any disability benefits he may
receive under Company's or AGC's disability benefit plans. Executive shall also
be entitled to any individual bonuses or any individual incentive compensation
awarded but not yet paid to Executive at the date of such termination but
Executive shall not be entitled to any future individual bonuses or any
individual incentive compensation payments not yet awarded (whether or not
allegedly accrued) as of the date of such termination. For purposes of this
Section, disability shall not include disabilities arising from (a) chronic use
of intoxicants, drugs or narcotics, (b) intentionally self-inflicted injury or
intentionally self-induced sickness, or (c) a proven unlawful act or enterprise
on the part of Executive.
3.4. [A] Notwithstanding any other provisions of this Agreement, Company
or AGC shall have the right to terminate Executive's employment under this
Agreement at any time prior to the expiration of the Term for any other reason
whatsoever, including termination without cause, in the sole discretion of
Company's Board of Directors or American General Corporation's Executive
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Termination Review Committee. Any termination of the employment relationship by
Company or AGC prior to the expiration of the Term other than a termination
under Section 3.1 for cause shall be deemed to be a termination without cause
pursuant to this Section 3.4.
[B] If Company terminates the employment relationship without cause
pursuant to this Section 3.4, Executive's post-employment non-competition
obligation specified in Section 6.1(i) shall extend only to the date upon which
the Term of this Agreement would have otherwise expired.
[C] Upon termination of the employment relationship by Company or AGC
prior to expiration of the Term pursuant to this Section 3.4, Executive shall
be entitled, in consideration of Executive's continuing obligations hereunder
after such termination (including, without limitation, Executive's
non-competition obligations), to receive his then-current Base Annual Salary as
if Executive's employment (which shall cease on the date of such termination)
had continued for the full Term of this Agreement. Company may, at its option,
pay such Base Annual Salary in semi-monthly installments or in a lump sum
discounted to present value at the discount rate then available to Company
through its lenders. Provided that Executive complies with his continuing
obligations hereunder after such termination, Executive shall also be entitled
to performance bonuses for each of the calendar years 1998, 1999 and 2000 as
follows: As to the bonus for calendar year 1998, if such termination of
employment occurs before the Personnel Committee awards a bonus for calendar
year 1998, the bonus for calendar year 1998 shall be equal to the bonus paid by
Company to Executive for the calendar year 1997. As to the bonus for calendar
year 1999, if such termination of employment occurs before the Personnel
Committee awards a bonus for calendar year 1999, the bonus for calendar year
1999 shall be equal to the average of the bonuses paid by Company to Executive
for calendar years 1997 and 1998. As to the bonus for calendar year 2000, if
such termination of the employment relationship occurs at any time prior to the
end of the Term, the bonus for calendar year 2000 shall be equal to the average
of the bonuses paid by Company to Executive for the calendar years 1997, 1998
and 1999.
[D] Executive shall not be under any duty or obligation to seek or accept
other employment following such termination of the employment relationship and,
subject to Executive complying with his continuing obligations (including
non-competition obligations), the amounts due Executive hereunder shall not be
reduced or suspended if Executive accepts subsequent employment. Executive's
rights under this Section 3.4 are Executive's sole and exclusive rights against
Company or AGC, and Company's and AGC's sole and exclusive liability to
Executive under this Agreement, in contract, tort, or otherwise, for such
termination of the employment relationship by Company or AGC. Executive
covenants not to lodge any claim, demand, or cause of action against Company or
AGC based on such termination of the employment relationship by Company or AGC
for any monies allegedly due under this Agreement other than those specified in
this Section 3.4. If Executive breaches this covenant, Company or AGC shall be
entitled to recover from Executive all sums expended by Company or AGC
(including costs and attorneys fees) in connection with such suit, claim,
demand, or cause of action.
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3.5. [A] Executive shall have the right to terminate the employment
relationship during its Term only for cause, which shall consist only of a
material breach by Company (or AGC if this Agreement is assigned to AGC) of any
material provision of this Agreement which remains uncorrected for thirty (30)
days following written notice of such breach by Executive to Company (or AGC if
this Agreement is assigned to AGC).
[B] If Executive terminates the employment relationship for cause pursuant
to this Section 3.5, Executive's post-employment non-competition obligation
specified in Article 6.1(i) shall extend only to date upon which the Term of
this Agreement would have otherwise expired.
[C] Upon termination of the employment relationship by Executive for
cause prior to expiration of the Term pursuant to this Section 3.5, Executive
shall be entitled, in consideration of Executive's continuing obligations
hereunder after such termination (including, without limitation, Executive's
non-competition obligations) to receive his Base Annual Salary as if
Executive's employment (which shall cease on the date of such termination) had
continued for the full Term of this Agreement. Company may, at its option, pay
such Base Annual Salary in semi-monthly installments or in a lump sum
discounted to present value at the discount rate then available to Company
through its lenders. Executive shall be entitled to bonuses or other incentive
compensation, if any, awarded but not yet paid as of the date of such
termination. Provided that Executive complies with his continuing obligations
hereunder after such termination, Executive shall also be entitled to
performance bonuses for each of the calendar years 1998, 1999 and 2000, even if
no such bonus had been awarded as of the date of such termination, as follows:
As to the bonus for calendar year 1998, if such termination of employment
occurs before the Personnel Committee awards a bonus for calendar year 1998,
the bonus for calendar year 1998 shall be equal to the bonus paid by Company to
Executive for the calendar year 1997. As to the bonus for calendar year 1999,
if such termination of employment occurs before the Personnel Committee awards
a bonus for calendar year 1999, the bonus for calendar year 1999 shall be equal
to the average of the bonuses paid by Company to Executive for calendar years
1997 and 1998. As to the bonus for calendar year 2000, if such termination of
the employment relationship occurs at any time prior to the end of the Term,
the bonus for calendar year 2000 shall be equal to the average of the bonuses
paid by Company to Executive for the calendar years 1997, 1998 and 1999.
[D] Executive shall not be under any duty or obligation to seek or accept
other employment following such termination of the employment relationship and,
subject to Executive complying with his continuing obligations (including
non-competition obligations), the amounts due Executive hereunder shall not be
reduced or suspended if Executive accepts subsequent employment. Executive's
rights under this Section 3.5 are Executive's sole and exclusive rights against
Company or AGC, and Company's and AGC's sole and exclusive liability to
Executive under this Agreement, in contract, tort, or otherwise, for any
actions or inactions giving rise to such termination of the employment
relationship for cause by Executive. Executive covenants not to lodge any
claim, demand, or cause of action against Company or AGC based on such
termination of the employment relationship for cause by Executive for any
monies allegedly due under this Agreement other than those specified in this
Section 3.5. If Executive breaches this covenant, Company or AGC shall be
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entitled to recover from Executive all sums expended by Company or AGC
(including costs and attorneys fees) in connection with such suit, claim,
demand, or cause of action.
3.6. Termination of the employment relationship shall not terminate those
obligations imposed by this Agreement which are continuing in nature,
including, without limitation, Executive's continuing obligations of
confidence, Executive's continuing obligations with respect to business
opportunities that had been entrusted to Executive by Company or AGC during the
employment relationship, and Executive's obligations under Articles 5 and 6.
4. Continuation of Employment beyond Term; Termination and Effects of
Termination:
4.1. Should Executive remain employed by Company or AGC beyond the
expiration of the Term, such employment shall automatically convert to an
at-will relationship terminable at any time by either Company or AGC or
Executive for any reason whatsoever, with or without cause. Upon such
termination of the employment relationship by either Company or AGC or
Executive for any reason whatsoever, all future compensation to which Executive
is entitled and all future benefits for which Executive is eligible shall cease
and terminate. Executive shall be entitled to pro rata salary through the date
of such termination. Executive shall also be entitled to bonuses or other
incentive compensation, if any, awarded but not yet paid as of the date of such
termination, but Executive shall not be entitled to any future individual
bonuses or any individual incentive compensation payments not yet awarded
(whether or not allegedly accrued) as of the date of such termination.
5. Ownership and Protection of Information; Copyrights:
5.1. All information, ideas, concepts, improvements, discoveries, and
inventions, whether patentable or not, and all expressions of ideas, which are
created, conceived, made, developed or acquired by Executive, individually or
in conjunction with others, during Executive's employment by Company or AGC
(whether during business hours or otherwise and whether on Company's or AGC's
premises or otherwise), whether tangible or intangible, which relate to
Company's or AGC's business, products or services (including, without
limitation, all such information relating to corporate opportunities, insurance
or annuity products, research, financial and sales data, pricing and trading
terms, evaluations, opinions, interpretations, acquisition prospects, the
identity of customers or their requirements, the identity of key contacts
within the customer's organizations or within the organization of acquisition
prospects, or marketing and merchandising techniques, prospective names, and
marks) shall be disclosed to Company or AGC. Executive acknowledges that he has
heretofore disclosed all such information, ideas, concepts, improvements,
discoveries, and inventions, as well as all expressions of ideas, to Company.
5.2. All such information, ideas, concepts, improvements, discoveries, and
inventions identified in Section 5.1 are and shall be the sole and exclusive
property of Company or AGC if this Agreement has been assigned to AGC.
Moreover, if, during Executive's employment by Company or AGC, Executive
creates any work of authorship fixed in any tangible medium of expression which
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is the subject matter of copyright (such as videotapes, written presentations,
or acquisitions, computer programs, E-mail, voicemail, electronic databases,
drawings, maps, architectural renditions, models, manuals, brochures, or the
like) relating to Company's or AGC's business, products, or services, whether
such work is created solely by Executive or jointly with others (whether
during business hours or otherwise and whether on Company's or AGC's premises
or otherwise), Company or AGC, if this Agreement has been assigned to AGC,
shall be deemed the author of such work if the work is prepared by Executive
in the scope of Executive's employment; or, if the work is not prepared by
Executive within the scope of Executive's employment but is specially ordered
by Company or AGC as a contribution to a collective work, as a part of a
motion picture or other audiovisual work, as a translation, as a supplementary
work, as a compilation, or as an instructional text, then the work shall be
considered to be work made for hire and Company or AGC, as the case may be,
shall be the author of the work. If such work relating to Company's or AGC's
business, products, or services is neither prepared by Executive within the
scope of Executive's employment nor a work specially ordered that is deemed to
be a work made for hire, then Executive hereby agrees to assign, and by these
presents does assign, to Company or AGC, as the case may be, all of
Executive's worldwide right, title, and interest in and to such work and all
rights of copyright therein. Additionally, all documents drawings, memoranda,
notes, records, files, correspondence, manuals, models, specifications,
computer programs, E-mail, voice mail, electronic databases, maps and all
other writings or materials of any type embodying any of such information,
ideas, concepts, improvements, discoveries, inventions and/or copyrightable
expressions are and shall be the sole and exclusive property of Company or AGC.
Executive acknowledges that Company is the owner of all such information,
ideas, concepts, improvements, discoveries, inventions and/or copyrightable
expressions that he heretofore created, conceived, made, developed or acquired
while employed by Company.
5.3. Executive will not, at any time during or after Executive's
employment by Company or AGC, make any unauthorized disclosure of any
confidential business information or trade secrets of Company or AGC, or make
any use thereof, except in the carrying out of Executive's employment
responsibilities hereunder. As a result of Executive's employment by Company or
AGC, Executive shall also from time to time have access to, or knowledge of,
confidential business information or trade secrets of third parties, such as
customers, suppliers, partners, joint venturers, and the like, of Company or
AGC. Executive also agrees to preserve and protect the confidentiality of such
third party confidential information and trade secrets to the same extent, and
on the same basis, as Company's confidential business information and trade
secrets. Upon termination of the employment relationship for any reason,
Executive promptly shall deliver to Company or AGC all documents and things
containing Company or AGC's trade secrets or confidential information.
Executive may disclose those aspects of Company's or AGC's confidential
information as Executive has received the written advice of counsel that such
disclosure thereof is necessary under applicable federal, state, local, or
foreign law or other regulations applicable to Executive (including, without
limitation, any confidential information that Executive is legally compelled to
disclose as a result of depositions, interrogatories, request for documents,
subpoenas, civil investigative demands, or similar processes), provided,
however, that Executive has first provided Company or AGC with prompt prior
written notice of such requirement so that Company or AGC may seek a protective
order or other appropriate remedy and/or waive compliance with the terms of
this Agreement. In the
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event that such protective order or other remedy is not obtained, or that
Company or AGC does not waive compliance with the provisions hereof, Executive
agrees to furnish only that portion of Company's or AGC's confidential
information which Executive is advised in writing by his counsel is legally
required to be disclosed and to exercise all reasonable efforts to obtain
assurance that confidential treatment will be accorded such confidential
information.
5.4. Both during the period of Executive's employment by Company or AGC
and thereafter, Executive shall assist Company or AGC and their nominees, at
any time, in the protection of Company's and AGC's worldwide right, title, and
interest in and to information, ideas, concepts, improvements, discoveries, and
inventions, and its copyrighted works, including without limitation, the
execution of all formal assignment documents requested by Company or AGC or
their nominees and the execution of all lawful oaths and applications for
applications for patents and registration of copyright in the United States and
foreign countries.
5.5. Executive acknowledges that money damages would not be sufficient
remedy for any breach of this Article 5 by Executive, and Company or AGC shall
be entitled to enforce the provisions of this Article 5 by terminating any
payments then owing to Executive under this Agreement and/or to specific
performance and injunctive relief as remedies for such breach or any threatened
breach. Such remedies shall not be deemed the exclusive remedies for a breach
of this Article 5, but shall be in addition to all remedies available at law or
in equity to Company or AGC, including the recovery of damages from Executive
and his agents involved in such breach.
6. Non-Competition and Non-Solicitation Obligations:
6.1. As part of the consideration for the compensation and benefits to be
paid to Executive hereunder; to protect the trade secrets and confidential
information of Company or AGC or their subsidiaries or affiliates that have
been and will in the future be disclosed or entrusted to Executive, the
business good will of Company or AGC or their subsidiaries or affiliates that
has been and will in the future be developed in Executive, or the business
opportunities that have been and will in the future be disclosed or entrusted
to Executive by Company or AGC or their subsidiaries or affiliates; and as an
additional incentive for Company and AGC to enter into this Agreement,
Executive agrees to the non-competition obligations hereunder: Executive shall
not, anywhere in the United States or any other country in which Company (or
the AGC company for whom Executive may be working at the time of the
termination of the employment relationship) is offering financial services as
of the date of the termination of the employment relationship, directly or
indirectly for himself or for others, (i) in any manner compete with Company or
any subsidiary or affiliate of AGC by whom Executive was employed at any time
during the twelve months preceding the termination of the employment
relationship, (ii) solicit or attempt to convert to other financial service
companies providing the same or similar products or services provided by
Company or AGC, any customers or policyholders of Company or AGC; or (iii)
solicit for employment or employ any employee of Company or AGC. Except as
provided in Article 8, these obligations owed by Executive to Company and AGC
shall extend throughout the Term of this Agreement and, except as otherwise
provided in Sections 3.4 or 3.5, for a period of two (2) years following
termination of the employment relationship for whatever reason.
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12
6.2. Executive understands that the foregoing restrictions may limit
Executive's ability to engage in certain businesses in the areas specified
above during the period provided for above, but acknowledges that Executive
will receive sufficiently high remuneration and other benefits under this
Agreement to justify such restriction. Executive acknowledges that money
damages would not be sufficient remedy for any breach of this Article 6 by
Executive, and Company or AGC shall be entitled to enforce the provisions of
this Article 6 by terminating any payments then owing to Executive under this
Agreement and/or to specific performance and injunctive relief as remedies for
such breach or any threatened breach. Such remedies shall not be deemed the
exclusive remedies for a breach of this Article 6, but shall be in addition to
all remedies available at law or in equity to Company or AGC, including,
without limitation, the recovery of damages from Executive and Executive's
agents involved in such breach.
6.3. It is expressly understood and agreed that Company and Executive
consider the restrictions contained in this Article 6 to be reasonable and
necessary to protect the trade secrets and confidential information of Company
or AGC or their subsidiaries or affiliates, the business good will of Company
or AGC or their subsidiaries or affiliates developed in Executive, and/or the
business opportunities disclosed or entrusted to Executive by Company or AGC or
their subsidiaries or affiliates. Nevertheless, if any of the aforesaid
restrictions are found to be unreasonable, or overly broad as to geographic
area or time, or otherwise unenforceable, the parties intend for the
restrictions therein set forth to be modified so as to be reasonable and
enforceable and, as so modified, to be fully enforced.
6.4. These duties and obligations of Executive specified in this Article 6
are not exclusive. Executive owes Company and AGC the duties and obligations
agreed to elsewhere in this Agreement and as are imposed by the law, e.g., the
duty to refrain from tortiously interfering with Company's and AGC's
contractual and business relationships with others.
7. Condition Subsequent, Effective Time, and Termination of February 8, 1994
Employment Agreement with Company:
7.1. Notwithstanding any provision in this Agreement to the contrary, it
is a condition subsequent to the execution and delivery of this Agreement that
the Merger, as such term is defined in the Merger Agreement, must be
consummated. If the Merger Agreement is terminated without consummation of the
Merger, then this Agreement shall be of no further force and effect and shall
be void ab initio.
7.2. This Agreement shall be effective as of forty-eight (48) hours after
the Effective Time of the Merger, which term shall have the same meaning as
assigned to such term in the Merger Agreement.
7.3. Executive waives any claim he may have against Company under the
February 8, 1994 Employment Agreement, including but not limited to claims for
future salary, control termination payments, severance allowance, or bonuses.
As of forty-eight hours after the Effective Time, any and all prior or existing
employment agreements between Executive and Company shall
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13
be canceled and terminated, including the February 8, 1994 Employment
Agreement, and are replaced and superseded by this Agreement and the
accompanying Severance Agreement.
8. Conversion of employment relationship to at-will and release of certain
duties and obligations upon a Change of Control as specified in Severance
Agreement:
8.1. Upon the occurrence of a Change of Control as specified in the
Severance Agreement, the employment relationship under this Agreement shall
immediately automatically convert to an at-will relationship terminable by
either Company or AGC or Executive at any time for any reason whatsoever, with
or without cause, and Executive is released from his post-employment
obligations specified in Article 6. The economic effect of any subsequent
termination of the employment relationship by Company or AGC without cause
shall be governed by Section 4.1. The economic effect of a subsequent
termination of the employment relationship by virtue of Executive's death or
disability shall continue to be governed by Sections 3.2 or 3.3, respectively,
through the remainder of what was the Term of the Agreement. The economic
effect of a subsequent termination of the employment relationship for cause by
Company or AGC shall continue to be governed by Section 3.1. The economic
effect of any subsequent termination of the employment relationship by
Executive for any reason shall be governed by Section 4.1. In all cases,
Executive shall also be entitled to the benefits of the Severance Agreement, if
applicable; however, in no event is it intended that a termination of the
employment relationship following a Change of Control will result in Executive
receiving both post-employment payments under this Agreement and under the
severance Agreement. If at the time of a Change of Control of American General
Corporation it owns none of the stock of Company and this Agreement has not
been assigned to American General Corporation, this Section 8.1 shall have no
application.
9. Miscellaneous:
9.1. For purposes of this Agreement the terms "affiliates" or "affiliated"
means an entity who directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with AGC or Company.
9.2. American General Corporation shall be a third party beneficiary of
Executive's obligations under this Agreement and is delegated certain authority
under this Agreement. Prior to this Agreement taking effect as specified in
Section 7.2, Company and Executive shall not amend this Agreement without the
express, prior written consent of American General Corporation.
9.3. For purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been duly
given when personally delivered or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
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14
If to Company, to: Western National Corporation
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
With a copy to: American General Corporation
0000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Corporate Secretary
If to Executive, to Xxxx X. Xxxx
0000 Xxxxxxxx
Xxxxxxx, Xxxxx 00000
Either Company or AGC or Executive may furnish a change of address to the other
in writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
9.4. No failure by either party hereto at any time to give notice of any
breach by the other party of, or to require compliance with, any condition or
provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
9.5. (a) Except for equitable relief as specified in Section 9.6, all
claims, demands, causes of action, disputes, controversies, and other matters
in question arising out of or relating to this Agreement, any provision
hereof, the alleged breach thereof, or in any way relating to the subject
matter of this Agreement involving Executive, Company, AGC and/or their
respective representatives, even though some or all of such claims allegedly
are extra-contractual in nature, whether such claims sound in contract, tort,
or otherwise, at law or in equity, under state or federal law, whether provided
by statute or the common law, for damages or any other relief, shall be
resolved by binding arbitration pursuant to the Federal Arbitration Act in
accordance with the Employment Dispute Resolution Rules then in effect with the
American Arbitration Association. The arbitration proceeding shall be conducted
in Houston, Texas. This agreement to arbitrate shall be enforceable in either
federal or state court.
(b) The enforcement of this agreement to arbitrate and all procedural
aspects of this agreement to arbitrate, including but not limited to, the
construction and interpretation of this agreement to arbitrate, the issues
subject to arbitration (i.e., arbitrability), the scope of the arbitrable
issues, allegations of waiver, delay or defenses to arbitrability, and the
rules governing the conduct of the arbitration, shall be governed by and
construed pursuant to the Federal Arbitration Act and shall be decided by the
arbitrators. In deciding the substance of any such claims, the arbitrators
shall apply the substantive laws of the State of Texas (excluding Texas
choice-of-law principles that might call for the application of some other
state's law); provided, however, it is expressly agreed that the arbitrators
shall have no authority to award treble, exemplary, or punitive damages under
any circumstances regardless of whether such damages may be available under
Texas law, the parties
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15
hereby waiving their right, if any, to recover treble, exemplary, or punitive
damages in connection with any such claims. If any party to this Agreement
institutes arbitration to enforce the terms of this Agreement, the party who
prevails in such arbitration, whether plaintiff or defendant, in addition to
the remedy or relief obtained in such arbitration proceeding shall be entitled
to recover its, his, or her expenses incurred in connection with such
arbitration proceeding, including, without limitation, arbitrators and
attorneys fees, and the arbitrators are authorized to so award such costs and
fees.
(c) The arbitration may be initiated by any party by providing to the
other parties a written notice of arbitration specifying the claims. Within 30
days of the notice of initiation of the arbitration procedure, (1) Executive
shall denominate one arbitrator and (2) Company (together with AGC, if
appropriate) shall denominate one arbitrator. The two arbitrators shall select
a third arbitrator failing agreement on which within 60 days of the original
notice, either Executive or Company (or AGC, or both Company and AGC, as
applicable) shall apply to the Senior Active United States District Judge for
the Southern District of Texas, who shall appoint a third arbitrator. While the
third arbitrator shall be neutral, the two party-appointed arbitrators are not
required to be neutral and it shall not be grounds for removal of either of the
two party-appointed arbitrators or for vacating the arbitrators' award that
either of such arbitrators has past or present minimal relationships with the
party that appointed such arbitrator. Evident partiality on the part of an
arbitrator exists only where the circumstances are such that a reasonable
person would have to conclude there in fact existed actual bias and a mere
appearance or impression of bias will not constitute evident partiality or
otherwise disqualify an arbitrator.
(d) The three arbitrators shall by majority vote resolve all disputes
between the parties. There shall be no transcript of the hearing before the
arbitrators. The arbitrators' decision shall be in writing, but shall be as
brief as possible. The arbitrators shall not assign the reasons for their
decision. The arbitrators shall certify in their award that they have
faithfully applied the terms and conditions of this Agreement and that no part
of their award includes any amount for exemplary or punitive damages. All
proceedings conducted hereunder and the decision of the arbitrators shall be
kept confidential by the parties, e.g., the arbitrators' award shall not be
released to the press or published in any of the various arbitration reporters.
Judgment upon any award rendered in any such arbitration proceeding may be
entered by any federal or state court having jurisdiction.
9.6. In the event of a breach or threatened breach by Executive of any of
the covenants set forth in Sections 5 and 6 hereof, Company or AGC shall be
entitled to seek equitable relief, including an injunction, in any court of
proper jurisdiction to maintain the status quo pending the resolution of the
dispute by binding arbitration as provided above. With respect to any such
action, Executive hereby irrevocably submits to the non-exclusive jurisdiction
of any Federal or State court sitting in the City of Houston, Texas, and agrees
that process in any such action shall be valid and effective for all purposes
if served upon in accordance with the notice provisions of Section 9.3 hereof.
9.7. This Agreement shall be binding upon and inure to the benefit of
Company and any other person, association, or entity which may hereafter
acquire or succeed to all or substantially all of the business or assets of
Company by any means whether direct or indirect, by purchase, merger,
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16
consolidation, or otherwise. Executive's rights and obligations under this
Agreement are personal and such rights, benefits, and obligations of Executive
shall not be voluntarily or involuntarily assigned, alienated, or transferred,
whether by operation of law or otherwise, without the prior written consent of
Company.
9.8. It is a desire and intent of the parties that the terms, provisions,
covenants and remedies contained in this Agreement shall be enforceable to the
fullest extent permitted by law. If any such term, provision, covenant, or
remedy of this Agreement or the application thereof to any person, association,
or entity or circumstances shall, to any extent, be construed to be invalid or
unenforceable in whole or in part, then such term, provision, covenant, or
remedy shall be construed in a manner so as to permit its enforceability under
the applicable law to the fullest extent permitted by law. In any case, the
remaining provisions of this Agreement or the application thereof to any
person, association, or entity or circumstances other than those to which they
have been held invalid or unenforceable, shall remain in full force and effect.
9.9. Each party to this Agreement acknowledges that no representation,
inducement, promise, or agreement, oral or written, has been made by either
party with respect to such subject matters, which is not embodied herein, and
that no agreement, statement, or promise relating to the employment of
Executive by Company or AGC that is not contained in this Agreement shall be
valid or binding. Except as provided in written company policies promulgated by
Company or AGC dealing with issues such as securities trading, business ethics,
governmental affairs and political contributions, consulting fees, commissions
or other payments, compliance with law, investments and outside business
interests as officers and executives, reporting responsibilities, and
administrative compliance, and the written benefits, plans, and programs, if
any, applicable to Executive, this Agreement and the accompanying Severance
Agreement constitute the entire agreement of the parties with regard to such
subject matters, and contains all of the covenants, promises, representations,
warranties, and agreements between the parties with respect to Executive's
employment relationship with Company or AGC and the term and termination of
such relationship, and replaces and merges previous agreements and discussions
pertaining to the employment relationship between Company or AGC and Executive.
Any modification of this Agreement will be effective only if it is in writing
and signed by each party whose rights hereunder are affected thereby.
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17
IN WITNESS WHEREOF, Company and Executive have duly executed this
Agreement in multiple originals to be effective as provided herein.
WESTERN NATIONAL CORPORATION
By: /S/ XXXXXXX X. XXXXX
Name: Xxxxxxx X. Xxxxx
Title: Vice Chairman
This 11th day of September, 1997
/S/ XXXX X . XXXX
XXXX X. XXXX
This 11th day of September, 1997
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