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EXHIBIT 10.10
EXECUTION COPY
TERMINATION AGREEMENT
TERMINATION AGREEMENT ("Agreement"), dated as of the 10th day of
February 1997, between WESTERN NATIONAL CORPORATION, a Delaware corporation
("Company"), and Xxxxxxx X. Xxxxx (hereinafter called "Executive").
RECITALS
WHEREAS, Executive is employed by Company in an executive or managerial
capacity; and
WHEREAS, Company desires to provide Executive with certain payments in
the event Executive's employment is terminated following the occurrence of
certain events as specified herein;
PROVISIONS
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, the parties agree as follows:
1. TERM. This Agreement shall terminate upon the first to occur of (i)
Executive reaching the normal retirement age for executive officers of
the Company as in effect from time to time; (ii) the payment to
Executive of the Termination Amount contemplated by Section 3 hereof;
(iii) the termination of Executive's employment other than as a result
of a Control Termination as defined herein; or (iv) February 10, 1999.
2. CONTROL TERMINATION.
(a) The term "Control Termination" as used herein shall mean the
occurrence during the term of this Agreement of (a) termination
of Executive's employment by the Company in anticipation of or
following a "change in control" of the Company (as defined
below), or (b) termination of Executive's employment by Executive
following a "change in control" of the Company (as defined below)
upon the occurrence of any of the following events:
(i) significant change in the nature or scope of Executive's
authorities or duties from in effect prior to a "change in
control", a reduction in his total compensation from that
in effect prior to a "change in control", or a breach by
the Company of any other provision of this Agreement; or
(ii) reasonable determination by Executive that, as a result of
a change in circumstances significantly affecting his
position, he is unable to exercise the authorities,
powers, function or duties attached to his position as in
effect prior to the "change in control"; or
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(iii) the location of Executive's principal place of employment
is moved outside the standard metropolitan statistical
geographic area in which it was located immediately prior
to the "change in control"; or
(iv) any reduction in benefit or bonus payment levels from
those in effect prior to a "change in control" shall be
implemented.
(b) 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") as revised effective
January 20, 1987, or, if Item 6(e) is no longer in effect, any
regulations issued by the Securities and Exchange Commission
pursuant to the Act which serve similar purposes; PROVIDED THAT,
without limitation,
(x) such a "change in control" shall be deemed to have
occurred if and when either (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 were members of
the Board of Directors of the Company immediately prior to
any such transaction or event shall not constitute a
majority of the Board of Directors following such
transaction or event, and
(y) no "change in 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 a single individual 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 this
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paragraph, so long as such individual does not constitute
at any time more than one-third of the total number of
directors serving on such Board. Notwithstanding the
foregoing, any action taken or omitted to be taken by
American General Corporation, a Texas corporation ("AG")
or its majority controlled subsidiaries in accordance with
and during the term of the Shareholder's Agreement, as
amended, between the Company and AG, including, but not
limited to, the acquisition of up to an aggregate 79% of
the shares of Common Stock of the Company from time to
time outstanding, and the designation by AG of not more
than two individuals as directors of the Company (so long
as such two individuals do not constitute more than
one-third of the entire board), shall not constitute a
"change in control" hereunder; provided that the
acquisition by any person other than AG or a majority
controlled subsidiary of AG of securities representing
more than 25% of the outstanding voting securities of the
Company shall not be deemed to be an action taken or not
taken by AG or a majority controlled subsidiary of AG
within the meaning of this Section.
3. CONTROL TERMINATION. In the event of a Control Termination of this
Agreement, Executive shall be paid a lump sum severance allowance (the
"Termination Amount") in an amount which is equal to salary payments for
24 calendar months at the higher of (x) the rate of base salary that was
in effect at the date of such Control Termination; or (y) the rate of
base salary that was in effect for the calendar year preceding the year
in which the "change in control" resulting in such Control Termination
occurred.
The Company shall be entitle to withhold all such taxes or other
amounts as may be required in accordance with applicable law from the
payment provided for in this Section.
4. TAX INDEMNITY PAYMENTS. To the extent that any payments made to
Executive pursuant to Sections 3 or 6 constitute an "excess parachute
payment", as such term is defined in Section 280G(b)(1) of the Internal
Revenue Code, as amended (the "Code"), or any successor Code section
providing for analogous treatment, the Company shall pay to Executive an
amount equal to (x) divided by (y), where (x) is the aggregate dollar
amount of excise taxes Executive becomes obligated to pay on such
"excess parachute payments" pursuant to Section 4999 of the Code or any
successor Code section providing for analogous treatment, and (y) is
1-[.2 + the maximum federal income tax rate for single individuals
applicable for the year in which Executive receives the payment provided
under this Section]; it being the intent of this Section that if
Executive incurs any such excise tax, the payments to him shall be
grossed up in full for such excise tax, so that the amount he retains
after paying all federal income taxes due with respect to payments to
him under this Agreement is the same as what he would have retained if
Section 280G of the Code had not been applicable.
5. OPTION VESTING. In the event of a Control Termination of this
Agreement, all outstanding options held by Executive immediately prior
to such Control Termination to
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purchase shares of Company common stock under the Company Stock Option
Plan shall thereupon become 100% vested in Executive.
6. CHARACTER OF TERMINATION PAYMENTS. All amounts payable to Executive
upon any Control Termination 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.
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7. ARBITRATION OF DISPUTES. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof shall be settled by
arbitration in the state and country where the principal executive
offices of the Company are then located, by three arbitrators, one of
whom shall be appointed by the first two arbitrators. If the first two
arbitrators cannot agree on the appointment of a third arbitrator, the
third arbitrator shall be appointed by the Chief Judge of the United
States District Court for the District which includes such county where
the Company's principal executive offices are located. 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.
8. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by telephone
facsimile transmission, personal or overnight couriers, or registered
mail, with confirmation of receipt, to his principal residence as shown
in the Company's employment records, in the case of Executive, or to its
principal executive offices to the attention of its chief legal officer,
in the case of the Company.
9. 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.
10. ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties and supersedes all prior agreements, whether written or
oral, 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.
11. BINDING AGREEMENT; GOVERNING LAW. 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 Texas.
12. ASSIGNMENT. This Agreement is a personal services contract of
Executive and he may not assign or delegate any of his rights or
obligations hereunder without the prior written consent of the Company.
13. HEADINGS. The headings in this Agreement are for convenience only
and shall not be used to interpret or construe its provisions.
14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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15. NO CONTRACT OF EMPLOYMENT. This Agreement does not and shall not be
construed as a contract of employment, or as obligating the Company to
employ Executive for any period of time. Executive acknowledges that he
is an employee at will of the Company and that the Company retains the
unilateral right to terminate Executive's employment at any time, with
or without cause.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
WESTERN NATIONAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
President
Xxxxxxx X. Xxxxx
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
Executive
