SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to _____________________
Commission file number 1-7981
American General Corporation
(Exact name of registrant as specified in its articles of incorporation)
Texas 74-0483432
(State of Incorporation) (I.R.S. Employer
Identification No.)
2929 Allen Parkway, Houston, Texas 77019-2155
(Address of principal executive offices) (Zip Code)
(713) 522-1111
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X . No .
As of April 30, 2000, there were 248,393,147 shares (excluding shares held in
treasury and by a subsidiary) of American General's Common Stock outstanding.
INDEX TO FORM 10-Q
Page
Part I. FINANCIAL INFORMATION.
Item 1. Financial Statements.
Consolidated Income Statement for the three
months ended March 31, 2000 and 1999 ............. 2
Consolidated Balance Sheet at March 31, 2000 and
December 31, 1999 ................................ 3
Consolidated Statements of Shareholders' Equity and
Comprehensive Income for the three months ended
March 31, 2000 and 1999 .......................... 4
Consolidated Condensed Statement of Cash Flows for
the three months ended March 31, 2000 and 1999 ... 5
Notes to Consolidated Financial Statements ......... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations .............. 11
Part II. OTHER INFORMATION.
Item 1. Legal Proceedings .................................. 24
Item 3. Quantitative and Qualitative Disclosures
about Market Risk .................................. 24
Item 6. Exhibits and Reports on Form 8-K ................... 24
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
AMERICAN GENERAL CORPORATION
Consolidated Income Statement
(Unaudited)
(In millions, except per share data)
Three Months Ended
March 31,
2000 1999
Revenues
Premiums and other considerations ................ $ 993 $ 924
Net investment income ............................ 1,330 1,285
Finance charges .................................. 391 357
Realized investment losses ....................... (51) (2)
Other ............................................ 74 56
Total revenues ............................... 2,737 2,620
Benefits and expenses
Insurance and annuity benefits ................... 1,384 1,313
Operating expenses ............................... 396 392
Commissions ...................................... 317 278
Change in deferred policy acquisition costs and
cost of insurance purchased ..................... (116) (86)
Provision for finance receivable losses .......... 49 52
Goodwill amortization ............................ 12 12
Interest expense
Corporate ....................................... 54 44
Consumer Finance ................................ 163 138
Total benefits and expenses .................. 2,259 2,143
Earnings
Income before income tax expense ................. 478 477
Income tax expense ............................... 168 168
Income before net dividends on preferred
securities of subsidiaries ...................... 310 309
Net dividends on preferred securities
of subsidiaries ................................. 25 22
Net income ................................... $ 285 $ 287
Net income per share
Basic ........................................... $ 1.14 $ 1.14
Diluted ......................................... $ 1.12 $ 1.11
Item 1. Financial Statements (continued).
AMERICAN GENERAL CORPORATION
Consolidated Balance Sheet
(Unaudited)
(In millions)
March 31, December 31,
2000 1999
Assets
Investments
Fixed maturity securities (amortized cost:
$63,428; $62,375) ........................ $ 61,794 $ 60,625
Mortgage loans on real estate .............. 3,667 3,686
Equity securities (cost: $303; $299) ....... 357 339
Policy loans ............................... 2,377 2,375
Investment real estate ..................... 220 222
Other long-term investments ................ 513 412
Short-term investments ..................... 1,855 676
Total investments ...................... 70,783 68,335
Cash ........................................ 240 294
Assets held in separate accounts ............ 26,495 24,097
Finance receivables, net .................... 10,744 10,634
Deferred policy acquisition costs ........... 5,175 4,980
Cost of insurance purchased ................. 1,134 1,170
Goodwill .................................... 1,493 1,501
Other assets ................................ 5,703 4,436
Total assets ........................... $121,767 $115,447
Liabilities
Insurance and annuity liabilities ........... $ 66,659 $ 66,401
Liabilities related to separate accounts .... 26,495 24,097
Debt (short-term)
Corporate ($2,049; $1,932) ................. 3,237 3,120
Consumer Finance ($4,569; $4,489) .......... 10,271 10,206
Income tax liabilities ...................... 996 833
Other liabilities ........................... 5,574 2,446
Total liabilities ...................... 113,232 107,103
Redeemable equity
Company-obligated mandatorily redeemable
preferred securities of subsidiaries
holding solely company subordinated notes
Non-convertible .......................... 1,675 1,675
Convertible .............................. 250 249
Total redeemable equity ................ 1,925 1,924
Shareholders' equity
Convertible preferred stock (shares issued
and outstanding: 0, 2.3) .................... - 85
Common stock (shares issued: 269.3, 269.3;
outstanding: 248.7, 248.1) ................. 936 962
Retained earnings ........................... 7,907 7,732
Accumulated other comprehensive income (loss) (1,181) (1,278)
Cost of treasury stock ...................... (1,052) (1,081)
Total shareholders' equity ............. 6,610 6,420
Total liabilities and equity ........... $121,767 $115,447
Item 1. Financial Statements (continued).
AMERICAN GENERAL CORPORATION
Consolidated Statements of Shareholders' Equity and Comprehensive Income
(Unaudited)
(In millions, except per share data)
Three Months Ended
March 31,
Shareholders' Equity 2000 1999
Convertible preferred stock
Balance at beginning of period .................. $ 85 $ 85
Conversion ...................................... (85) -
Balance at end of period ........................ - 85
Common stock
Balance at beginning of period .................. 962 939
Issuance of treasury shares ..................... (26) (18)
Balance at end of period ........................ 936 921
Retained earnings
Balance at beginning of period .................. 7,732 7,007
Net income ...................................... 285 287
Cash dividends (per share)
Preferred ($.64; $.64) ......................... (1) (1)
Common ($.44; $.40) ............................ (109) (100)
Balance at end of period ........................ 7,907 7,193
Accumulated other comprehensive income (loss)
Balance at beginning of period................... (1,278) 1,599
Change in net unrealized gains (losses)
on securities .................................. 97 (568)
Balance at end of period ........................ (1,181) 1,031
Cost of treasury stock
Balance at beginning of period .................. (1,081) (759)
Issuance for preferred stock conversion ......... 99 -
Issuance under employee benefit plans and other . 23 34
Share repurchases ............................... (93) (104)
Balance at end of period ........................ (1,052) (829)
Total shareholders' equity .................... $ 6,610 $ 8,401
Comprehensive Income
Net income ....................................... $ 285 $ 287
Change in net unrealized gains (losses)
on securities
Fair value of fixed maturity securities ......... 116 (1,304)
Deferred policy acquisition costs and cost of
insurance purchased ............................ 18 424
Deferred income taxes ........................... (47) 311
Change in fixed maturity securities ............. 87 (569)
Change in equity securities and other ........... 10 1
Total ......................................... 97 (568)
Comprehensive income (loss) ...................... $ 382 $ (281)
Item 1. Financial Statements (continued).
AMERICAN GENERAL CORPORATION
Consolidated Condensed Statement of Cash Flows
(Unaudited)
(In millions)
Three Months Ended
March 31,
2000 1999
Operating activities
Net cash provided by operating activities ... $ 629 $ 612
Investing activities
Investment purchases .............................. (4,550) (5,591)
Investment dispositions and repayments ............ 3,485 4,170
Finance receivable originations and purchases ..... (1,505) (1,452)
Finance receivable principal payments received .... 1,333 1,248
Net increase in short-term investments ............ (1,179) (594)
Other, net ........................................ (48) (49)
Net cash used for investing activities ...... (2,464) (2,268)
Financing activities
Retirement Services and Life Insurance
Policyholder account deposits ................... 1,770 1,444
Policyholder account withdrawals ................ (1,712) (1,082)
Net policyholder account deposits ............ 58 362
Short-term collateralized financings ............ 1,698 1,133
Total Retirement Services and Life Insurance.. 1,756 1,495
Consumer Finance
Net increase (decrease) in short-term debt ...... 80 (179)
Long-term debt issuances ........................ 379 315
Long-term debt redemptions ...................... (396) (26)
Total Consumer Finance ....................... 63 110
Corporate
Net increase in short-term debt ................. 117 103
Long-term debt issuance ......................... - 148
Common stock repurchases ........................ (90) (94)
Dividends on common and preferred stock ......... (110) (101)
Other, net ...................................... 45 (125)
Total Corporate .............................. (38) (69)
Net cash provided by financing activities ... 1,781 1,536
Net decrease in cash ............................... (54) (120)
Cash at beginning of period ........................ 294 341
Cash at end of period .............................. $ 240 $ 221
Supplemental disclosure of cash flow information:
Cash paid (received) during the period for
Income taxes .................................... $ 36 $ (44)
Interest
Corporate ...................................... 60 45
Consumer Finance ............................... 195 155
Dividends on preferred securities of
subsidiaries ................................... 18 14
Item 1. Financial Statements (continued).
AMERICAN GENERAL CORPORATION
Notes to Consolidated Financial Statements
March 31, 2000
(In millions, except per share data)
1. Accounting Policies. The accompanying unaudited consolidated financial
statements of American General Corporation (American General) and its
subsidiaries (collectively, the company or we) have been prepared in
accordance with generally accepted accounting principles for interim
periods. In the opinion of management, these statements include all
adjustments that are necessary for a fair presentation of the company's
consolidated financial position at March 31, 2000, and the consolidated
results of operations, shareholders' equity, comprehensive income, and
cash flows for the three months ended March 31, 2000 and 1999.
2. Future Accounting Standard. In June 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards (SFAS)
133, "Accounting for Derivative Instruments and Hedging Activities," which
requires all derivative instruments to be recognized at fair value in the
balance sheet. Changes in the fair value of a derivative instrument will
be reported as earnings or other comprehensive income, depending upon the
intended use of the derivative instrument. We will adopt SFAS 133 on
January 1, 2001. We do not expect adoption to have a material impact on
the company's results of operations and financial position.
3. Calculation of Earnings Per Share. We calculate basic and diluted
earnings per share as follows:
Three Months Ended
March 31,
2000 1999
Net income ......................... $ 285 $ 287
Net dividends on convertible
preferred stock ................... - (1)
Basic earnings ..................... 285 286
Net dividends on dilutive securities
Convertible preferred securities
of subsidiary ................... 3 3
Convertible preferred stock ...... - 1
Diluted earnings ................... $ 288 $ 290
Average basic shares outstanding ... 248.9 251.4
Dilutive securities
Convertible preferred securities
of subsidiary ................... 6.1 6.1
Convertible preferred stock ...... - 2.3
Stock options .................... 1.4 1.5
Restricted stock ................. .6 .4
Average diluted shares outstanding
assuming dilution ................ 257.0 261.7
Net income per share
Basic ............................. $ 1.14 $ 1.14
Diluted ........................... $ 1.12 $ 1.11
Item 1. Financial Statements (continued).
4. Investing Activities. Cash flows related to investing activities were
as follows:
Dispositions and
Purchases Repayments
Three Months Ended Three Months Ended
March 31, March 31,
2000 1999 2000 1999
Fixed maturity securities $4,340 $5,348 $3,345 $4,032
Mortgage loans 85 58 105 77
Equity securities 10 6 10 19
Other 115 179 25 42
Total $4,550 $5,591 $3,485 $4,170
5. Derivative Financial Instruments. Derivative financial instruments did
not have a material effect on net investment income, interest expense,
or net income during the three months ended March 31, 2000 or 1999.
Significant activity related to derivative financial instruments during
the three months ended March 31, 2000 was as follows:
During first quarter 2000, we purchased call swaptions with notional
amounts of $1.8 billion, while swaptions with notional amounts of $10.6
billion expired. Swaptions, which are options to enter into interest
rate swap agreements, limit the company's exposure to reduced spreads
between investment yields and interest rates credited to policyholders
should interest rates decrease or increase significantly over prolonged
periods. Call and put swaptions with notional amounts of $7.1 billion
and $855 million, respectively, average strike rates of 5.1% and 9.5%,
respectively, and total premium paid of $2 million and $.3 million,
respectively, were outstanding at March 31, 2000. These swaptions expire
throughout 2000.
Should the strike rates remain below market rates (for call swaptions)
and above market rates (for put swaptions), the swaptions will expire and
the company's exposure would be limited to the premiums paid.
6. Dollar Rolls. We use dollar roll agreements as part of our strategy to
increase investment income. Dollar rolls are agreements to sell
mortgage-backed securities and repurchase substantially the same
securities at a specified price and date in the future. We account for
dollar rolls as short-term collateralized financings and include the
repurchase obligation in other liabilities. At March 31, 2000, the
company had $1.7 billion of outstanding dollar roll agreements. The
average amount outstanding and the weighted-average interest rate on
the short-term collateralized borrowings for the three months ended
March 31, 2000 were $1.6 billion and 5.5%, respectively.
7. Redemption of Preferred Stock. On March 1, 2000, we redeemed all
outstanding shares of our mandatorily convertible preferred stock.
Holders received .8264 share of our common stock for each share of
preferred stock redeemed. In total, we issued 1.9 million shares of
common stock.
Item 1. Financial Statements (continued).
8. Legal Proceedings.
The company is party to various lawsuits and proceedings, including the
following:
1) In the mid-1990s, one of our subsidiaries, American General
Financial Center (renamed A.G. Financial Service Center, Inc.)
(Financial Service Center), provided financing for satellite dishes
sold by independent unaffiliated dealers. On May 18, 1999, the
Chancery Court of the First Judicial District of Jones County,
Mississippi in a case captioned Clayton D. Smith, et al. v. Delta
TV Corporation, Don Acy, US Electronics, American General Financial
Center, Civil Action No. 96-0254 (the Clayton Smith matter),
rendered a judgment awarding approximately $500,000 in compensatory
damages and $167 million in punitive damages against Financial
Service Center. The lawsuit was filed on November 15, 1996, by 29
individuals who had each purchased a satellite dish. Financial
Service Center, together with certain other American General
companies, currently are named as defendants in other pending cases
involving the financing of satellite dishes.
In August 1999, Financial Service Center filed a voluntary petition
to reorganize under Chapter 11 of the United States Bankruptcy Code
with the United States Bankruptcy Court for the Southern District
of Indiana. The decision to reorganize was necessitated by the
judgment rendered against Financial Service Center by the
Mississippi state court. The filing for reorganization under
Chapter 11 is limited to Financial Service Center and was intended
to provide a fair and orderly process for managing the claims
against Financial Service Center.
In January 2000, settlement agreements were entered into in
connection with the Clayton Smith matter and other pending cases
relating to satellite dish financing. Accordingly, we recorded a
charge of $57 million ($36 million aftertax) in fourth quarter 1999
to cover the proposed settlements and other litigation. Resolution
of the satellite dish litigation within the recorded charge is
dependent upon a number of factors, including obtaining the
bankruptcy court's approval of Financial Service Center's plan of
reorganization. If court approvals are obtained and appeals are not
taken, we expect that the settlements will be final in third quarter
2000.
2) Prior to our acquisition of USLIFE Corporation, one of its
subsidiaries entered the workers' compensation reinsurance business
in 1997. We discontinued writing new workers' compensation
reinsurance business in 1998. Our largest contract was a quota
share reinsurance agreement with Superior National Insurance Group,
Inc. and its affiliates (collectively, Superior National),
effective May 1, 1998. On November 29, 1999, we initiated an
arbitration proceeding to rescind this contract from its inception,
based in part on misrepresentations and nondisclosures which we
believe were made by Superior National. On March 3, 2000, the
California Department of Insurance ordered seizure of certain of
Superior National's insurance subsidiaries as a result of their
financial condition. On April 26, 2000, Superior National Insurance
Item 1. Financial Statements (continued).
Group, Inc. filed a voluntary petition to reorganize under Chapter
11 of the United States Bankruptcy Code with the United States
Bankruptcy Court for the Central District of California.
We do not believe that the action of the California Department of
Insurance or the bankruptcy filing will prevent the company from
ultimately arbitrating its claim for recission, and we plan to fully
pursue all remedies through the arbitration process. Although we
believe, based on the advice of counsel, that the company will
succeed in rescinding the contract, risks and uncertainties remain
with respect to the ultimate outcome. In the unlikely event the
company does not prevail in the arbitration, we do not expect the
additional aftertax losses from our workers' compensation business
to exceed $85 million. We believe that any ultimate loss related
to our workers' compensation business will not have a material
adverse effect on our results of operations and financial position.
3) Certain companies acquired by American General Life and Accident
Insurance Company (collectively, AGLA), a subsidiary of the company,
previously issued small face-amount life insurance policies known
as industrial life insurance, which were similar to products sold
by other life insurance companies. Although AGLA ceased writing
industrial life insurance more than twenty years ago, recent legal
actions have been brought challenging certain pricing practices in
this business.
On December 10, 1999, a class action was filed by Leola McNeil
against AGLA, Leola McNeil v. American General Life and Accident
Insurance Company et al., Civil Action No. 3-99-1157 (M.D. TN 1999),
principally challenging AGLA's pricing practices with respect to
certain minority purchasers of industrial life insurance and seeking
compensatory and punitive damages and injunctive relief. On
April 27, 2000, the Florida Treasurer and Insurance Commissioner
issued a cease and desist order to AGLA, In the Matter of American
General Life and Accident Insurance Company, Case No. 348600-00-C,
requiring AGLA to cease collecting a portion of premiums from
Florida minority policyholders and to submit a corrective action
plan to the Florida Department of Insurance. Prior to that date,
AGLA had taken action to cease collecting a portion of the premiums
on its industrial life policies from the affected minority
policyholders nationwide. AGLA is engaged in efforts designed to
resolve these matters expeditiously. We believe that any ultimate
loss relating to these matters will not have a material adverse
effect on American General's financial position. However, it is
possible that the outcome of these matters or other future
proceedings could have a material adverse effect on the company's
results of operations for a given period.
The company is also party to various other lawsuits and proceedings
arising in the ordinary course of business. These lawsuits and
proceedings include certain class action claims and claims filed by
individuals who excluded themselves from market conduct settlements
relating to life insurance pricing and sales practices. In addition,
many of these claims arise in jurisdictions, such as Alabama and
Mississippi, that permit damage awards disproportionate to the actual
economic damages alleged to have been incurred. Based upon information
Item 1. Financial Statements (continued).
presently available, we believe that the total amounts that will
ultimately be paid, if any, arising from these lawsuits and proceedings
will not have a material adverse effect on the company's results of
operations and financial position. However, it should be noted that the
frequency of large damage awards, including large punitive damage awards
that bear little or no relation to actual economic damages incurred by
plaintiffs in some jurisdictions, continues to create the potential for
an unpredictable judgment in any given suit.
9. Tax Return Examinations. American General and the majority of its
subsidiaries file a consolidated Federal income tax return. The Internal
Revenue Service (IRS) has completed examinations of our tax returns
through 1988. The IRS is currently examining our tax returns for 1989
through 1996. Although the final outcome of any issues raised is
uncertain, we believe that the ultimate liability, including interest,
will not exceed amounts recorded in the financial statements.
10. Division Results. We report our financial results in three business
divisions, as well as a category for corporate operations. Results of
each division include earnings from its business operations and earnings
on the amount of equity we consider necessary to support its business.
Corporate operations include corporate capital costs and other income or
expenses not allocated to the business divisions. Goodwill amortization,
net realized investment gains (losses), and non-recurring items are also
excluded from divisions results, consistent with the manner in which we
review and evaluate the divisions. Division earnings information was as
follows:
Income
Revenues Before Taxes Net Income
Three Months Three Months Three Months
Ended Ended Ended
March 31, March 31, March 31,
2000 1999 2000 1999 2000 1999
Retirement Services $ 983 $ 845 $ 243 $ 211 $ 162 $ 142
Life Insurance 1,352 1,356 284 265 187 173
Consumer Finance 463 421 92 82 59 53
Total divisions 2,798 2,622 619 558 408 368
Corporate operations (10) - (78) (67) (53) (45)
Goodwill amortization (12) (12) (12) (12)
Net dividends on
preferred securities
of subsidiaries (25) (22)
Operating earnings 318 289
Realized investment
losses (51) (2) (51) (2) (33) (2)
Total $2,737 $2,620 $ 478 $ 477 $ 285 $ 287
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
This item presents specific comments on material changes to our consolidated
results of operations, capital resources, and liquidity for the periods
reflected in the interim financial statements filed with this report. This
analysis should be read in conjunction with the consolidated financial
statements and related notes on pages 2 through 10 of this Quarterly Report
on Form 10-Q. Amounts in the tables are in millions, except per share data.
OVERVIEW
The company is a diversified financial services organization with over $120
billion of assets and $20 billion of annual revenues and deposits. We are
a leading provider of retirement services, life insurance, consumer loans, and
investments to 12 million customers.
Our financial highlights for first quarter 2000 were as follows:
Three Months Ended
March 31,
2000 1999
Revenues and deposits $ 5,514 $ 4,735
Earnings
Operating earnings 318 289
Net income 285 287
Earnings per share
Operating earnings 1.25 1.11
Net income 1.12 1.11
Assets* 123,061 107,301
Shareholders' equity*
Total 7,825 7,392
Per share 31.61 29.20
Operating return on equity 16.20% 15.46%
*Excludes fair value adjustment under SFAS 115.
Revenues and deposits increased $779 million, or 16%, for the three months
ended March 31, 2000, compared to the same period in 1999, due to higher fixed
and variable deposits in our retirement services and life insurance divisions.
Operating earnings increased 10% due to increases in earnings in our
retirement services division (up 14%), life insurance division (up 8%), and
consumer finance division (up 11%). Operating earnings per share increased
13%, compared to the 10% increase in operating earnings, as a result of the
decline in average shares outstanding due to the repurchase of 6.2 million
shares of our common stock in the last twelve months.
Net income decreased $2 million, or 1%, due to a $31 million aftertax increase
in realized losses on sales of securities, reflecting our ongoing management
of the investment portfolio to maximize its relative value and to optimize the
company's tax position. The $433 million increase in shareholders' equity
reflects $1.1 billion in net income over the last twelve months, partially
offset by dividends paid to our shareholders of $415 million and share
repurchases of $414 million.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued).
BUSINESS DIVISIONS
We manage our business operations through three divisions retirement
services, life insurance, and consumer finance based on products and
services offered. Results of each of our business division's operations are
discussed below.
Retirement Services
Our retirement services division results were as follows:
Three Months Ended
March 31,
2000 1999
Fixed margin $ 243 $ 230
Variable margin 74 48
Total margin 317 278
Other revenue 16 7
Net revenue 333 285
Operating expenses 82 71
Other, net* 8 3
Pretax earnings 243 211
Income taxes 81 69
Division earnings $ 162 $ 142
*Primarily commissions and change in DPAC/CIP.
Earnings. Retirement services earnings are a function of the level of our
managed assets, fixed and variable margin, and operating expenses. Division
earnings increased 14%, or $20 million, for the three months ended March 31,
2000 compared to the same period in 1999. The increase was due to a 22%
increase in managed assets that resulted in increased total margin, which more
than offset higher operating expenses.
Assets and Deposits. Investments and separate account assets grew 7% and 48%,
respectively, from March 31, 1999 to March 31, 2000, contributing to the
increases in our fixed and variable margins. Assets and deposits were as
follows:
Three Months Ended
March 31,
2000 1999
Assets
Investments* $42,561 $39,668
Separate accounts 23,606 15,973
Premiums and deposits
Fixed 1,337 1,055
Variable 887 780
Mutual funds 271 20
Surrender ratios
Fixed 9.87% 6.93%
Variable 5.91 5.27
*Excludes fair value adjustment under SFAS 115.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued).
Total premiums and deposits increased 35%, from $1.9 billion in first quarter
1999 to $2.5 billion in first quarter 2000. The 27% increase in fixed
premiums and deposits resulted from our strong sales of fixed annuities
through financial institutions. Variable deposit growth of 14% reflects our
ability to meet continued consumer interest in equity-based products through
group retirement plans. Mutual fund deposit growth of $251 million reflects
our recent introduction of this product to meet customer demand for mutual
funds without an annuity wrapper. Changes in the surrender ratios resulted
from more aggressive management of interest spreads, more policies without
surrender protection, and increased competition.
Fixed Margin. Fixed margin, the difference between net investment income on
general account investments and interest credited to policyholders' fixed
accounts, increased 6% in the first quarter of 2000 compared to 1999. Fixed
investment spread measures this difference in terms of interest rates. Net
investment income and the components of fixed investment spread were as
follows:
Three Months Ended
March 31,
2000 1999
Net investment income $ 775 $ 716
Investment yield 7.70% 7.66%
Average crediting rate 5.35 5.38
Fixed investment spread 2.35% 2.28%
The $13 million increase in the fixed investment margin was largely due to a
higher level of invested assets and the resulting 8% increase in net
investment income. Investment yield, average crediting rate, and fixed
investment spread were relatively flat for the three months ended March 31,
2000 compared to the same period in 1999.
Variable Margin. Our variable margin includes mortality and expense risk fees
and asset management fees. The increase in these fees of $26 million, or 54%,
for the first three months of 2000, compared to the same period of 1999, was
driven by a 48% growth in separate account assets. Our variable fee rate
increased 8 basis points for first quarter 2000 due to more favorable revenue-
sharing agreements with third-party asset managers.
Operating Expenses. Operating expenses increased $11 million for the three
months ended March 31, 2000, compared to the same period in 1999, primarily
due to increased personnel costs for our expanded sales force and $2 million
of operating expenses for a mutual fund group that we purchased in first
quarter 2000. The ratio of operating expenses to average assets improved to
.48% for first quarter 2000 from .49% for first quarter 1999.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued).
Life Insurance
Our life insurance division results were as follows:
Three Months Ended
March 31,
2000 1999
Premiums and other considerations $ 757 $ 759
Net investment income 544 555
Other income 51 42
Total revenues 1,352 1,356
Insurance and annuity benefits 707 733
Operating expenses 167 172
Other expenses* 194 186
Total expenses 1,068 1,091
Pretax earnings 284 265
Income taxes 97 92
Division earnings $ 187 $ 173
*Primarily commissions and change in DPAC/CIP.
Earnings. The division's profitability is driven by asset growth, investment
spread, mortality, and operating expenses. Earnings increased 8% for the
three months ended March 31, 2000 compared to the same period in 1999. The
increase resulted from a 6% growth in separate and general account reserves
and a 10% increase in insurance in force, due to growth in existing business
as well as new ventures, and reduced operating expenses.
Sales, Deposits, and Premiums. Sales represent annualized premiums for new
products issued, while deposits represent funds we receive for interest-
sensitive insurance and annuities. Sales and premiums and deposits of the
life insurance division were as follows:
Three Months Ended
March 31,
2000 1999
Premiums and deposits
Life insurance $ 864 $ 819
Annuities 236 149
Other 146 170
Sales
Life insurance 174 164
Annuities 236 143
Life insurance sales and premiums and deposits for first quarter 2000
increased 6% over first quarter 1999 due to increasing sales of variable
products, universal life, and term insurance, offset by lower corporate market
sales. Annuity sales increased 65% in the first three months of 2000,
compared to the same period of 1999, while premiums and deposits increased
58%. These increases were due to strong sales of variable annuities through
our financial institution channel. Other premiums and deposits, which include
primarily our accident and health, and property and casualty business,
declined 14% for first quarter 2000 compared to first quarter 1999 due to our
de-emphasis of these lines of business.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued).
Investment Spread. Investment results and interest crediting rates were as
follows:
Three Months Ended
March 31,
2000 1999
Assets
Investments* $28,597 $27,527
Separate accounts 2,890 1,517
Insurance and annuity liabilities 26,085 25,895
Investment yield 8.03% 8.35%
Average crediting rate 5.82 5.92
Investment spread 2.21% 2.43%
*Excludes fair value adjustment under SFAS 115.
Net investment income and the investment yield decreased during the first
three months of 2000, compared to the same period of 1999, due to lower income
from securities called before their maturity dates and lower market rates on
new and reinvested funds. These decreases were partially offset by our
reduction of crediting rates on interest-sensitive products, as well as the
increase in invested assets.
Mortality and Persistency. Death claims and premium termination rates were
as follows:
Three Months Ended
March 31,
2000 1999
Death claims $ 259 $ 250
Death claims per $1,000 in force 3.76 3.66
Premium termination rate 12.15% 12.42%
Death claims per $1,000 of in force increased in first quarter 2000, compared
to the same period in 1999, due to the increasing average age of the in force
business. The lower premium termination rate for 2000 reflects higher than
normal terminations in our career agency lines during 1999. Mortality and
persistency experience during first quarter 2000 reflected normal fluctuations
and remained within our pricing assumptions.
Expenses. Operating expenses decreased $5 million, or 3%, for the first three
months of 2000 compared to the same period in 1999. Reductions in salary-
related and technology costs more than offset costs to market new products.
The ratio of operating expenses to direct premiums and deposits improved to
13.25% in 2000 compared to 15.09% in 1999.
Other expenses, which consist of commissions and the change in DPAC and CIP,
increased $8 million, or 4%, in first quarter 2000 compared to first quarter
1999. Commissions increased period over period due to the higher level of
sales in first quarter 2000. Deferrals of commissions and certain operating
expenses, as well as the related amortization of previously-capitalized DPAC
and CIP, increased in first quarter 2000 compared to the same period in 1999.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued).
Consumer Finance
Our consumer finance division results were as follows:
Three Months Ended
March 31,
2000 1999
Finance margin $ 228 $ 219
Other income 72 64
Net revenue 300 283
Provision for finance
receivable losses 49 52
Operating expenses 128 123
Other expenses* 31 26
Pretax earnings 92 82
Income taxes 33 29
Division earnings $ 59 $ 53
*Primarily insurance benefits
Earnings. Division earnings are a function of the amount and mix of finance
receivables, interest spread, credit quality, and operating expenses.
Earnings increased 11% for the three months ended March 31, 2000, compared to
the same period in 1999, due to a 14% increase in average receivables,
improved credit quality, and the benefits of operating efficiencies, partially
offset by lower interest spread.
Finance Receivables. The mix of finance receivables at quarter end was as
follows:
March 31,
2000 1999
Real estate loans $ 7,232 $6,069
Non-real estate loans 2,521 2,475
Retail sales finance 1,360 1,261
Total finance receivables 11,113 9,805
Allowance for losses (369) (384)
Finance receivables, net $10,744 $9,421
Average finance receivables $11,058 $9,721
We increased our finance receivables portfolio by $1.3 billion during the last
twelve months. Average finance receivables in the first three months of 2000,
compared to the same period in 1999, increased 14% due to higher loan
production and acquisitions of real estate loan portfolios. Over the last
twelve months, we generated $6.4 billion of loans in our branch offices and
purchased $1.6 billion of real estate loans, while $6.5 billion of loans were
repaid. We increased the percentage of real estate loans in the portfolio to
65% at March 31, 2000, compared to 62% at March 31, 1999. During first
quarter 2000, we completed the sale of $27 million of fully-reserved
receivables, resulting in a pretax gain of $1 million. The allowance for
finance receivable losses decreased $15 million from the prior year period,
primarily due to the sale of these receivables.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued).
Finance Margin. Finance margin is the difference between the finance charges
we charge our customers and interest expense on the debt required to fund
finance receivables. Interest spread measures this difference in terms of
interest rates. Finance margin and the components of interest spread were as
follows:
Three Months Ended
March 31,
2000 1999
Finance charges $ 391 $ 357
Interest expense 163 138
Finance margin $ 228 $ 219
Yield on finance receivables 14.19% 14.85%
Borrowing cost 6.42 6.22
Interest spread 7.77% 8.63%
From prior year-to-date, finance charges increased 9% due to the increases in
our average finance receivables, partially offset by the decline in yield on
the receivables. The decline in yield reflected the increased proportion of
real estate loans in our portfolio. Interest expense increased due to
increases in average debt outstanding and higher borrowing costs. Interest
spread decreased in 2000 due to the combined effect of the decline in yield
and the increase in our borrowing cost.
Credit Quality. Net charge-off and delinquency ratios reflect the quality of
our receivables portfolio, the success of our collection efforts, and general
economic conditions. Credit quality information was as follows:
Three Months Ended
March 31,
2000 1999
Charge offs $ 49 $ 52
Delinquencies 355 378
Allowance for losses 369 384
Ratios
Charge-off 1.76% 2.14%
Delinquency 3.05 3.65
Allowance 3.32 3.92
Charge-off coverage 1.90x 1.85x
Risk-adjusted yield 12.43% 12.71%
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued).
The decrease in the charge-off ratio for the first three months of 2000,
compared to the same period in 1999, reflects our continuing focus on credit
quality, including the increased percentage of loans secured by real estate.
The decreases in delinquencies and the delinquency ratio at March 31, 2000,
compared to March 31, 1999, were due to continued improvement in credit
quality and the sale of $27 million of fully-reserved receivables in first
quarter 2000.
The allowance for finance receivable losses is maintained at an amount that
we believe is adequate to absorb anticipated credit losses in our existing
portfolio. The allowance as a percentage of finance receivables has continued
to decline, reflecting the improved credit quality and portfolio mix, while
the charge-off coverage ratio has increased to 1.9 times annual charge offs.
Risk-adjusted yield represents the yield on finance receivables less the
charge-off ratio. Although risk-adjusted yield declined, the decrease is less
than the decline in yield on finance receivables due to the improvement in the
charge-off ratio.
Operating Expenses. Operating expenses as a percentage of average finance
receivables for the first three months of 2000 improved to 4.57% from 5.06%
for the same period of 1999. This decrease reflects a 14% increase in average
finance receivables compared to a 3% increase in operating expenses.
Operating expenses increased due to higher salary-related and technology
costs, partially offset by lower litigation expenses.
INVESTMENTS
Our invested assets consist primarily of fixed maturity securities, mortgage
loans on real estate, and policy loans.
Fair Value of Securities. At March 31, 2000, the market value of our fixed
maturity securities was 97.4% of amortized cost compared to 97.2% of amortized
cost at December 31, 1999. A slight decline in market interest rates during
first quarter 2000 reduced the negative fair value adjustment on our fixed
maturity securities portfolio by $116 million, with a related $87 million
positive adjustment to shareholders' equity. The components of the fair value
adjustment at March 31, 2000 and December 31, 1999, and the first quarter
change, were as follows:
March 31, December 31,
2000 1999 Change
Fair value adjustment to fixed
maturity securities $(1,634) $(1,750) $ 116
Related increase in DPAC/CIP 365 347 18
Related decrease in deferred
income taxes 448 495 (47)
Valuation allowance on deferred
tax asset (381) (381) -
Net unrealized losses
Fixed maturity securities (1,202) (1,289) 87
Other 21 11 10
Net unrealized losses
on securities $(1,181) $(1,278) $ 97
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued).
Fixed Maturity Securities. At March 31, 2000, our fixed maturity securities
investment portfolio consisted of $46.5 billion of corporate bonds, $13.1
billion of mortgage-backed securities, and $2.1 billion of bonds issued by
governmental agencies. The average credit rating of the portfolio was A at
March 31, 2000 and A+ at December 31, 1999. Average ratings by category at
March 31, 2000 were as follows:
March 31, Average Credit
2000 % Rating
Investment grade $45,387 74% A
Mortgage-backed 13,075 21 AAA
Below investment grade 3,332 5 BB-
Total fixed maturity securities $61,794 100% A
Investment income from our below investment grade securities was $90 million
(9.9% yield) for the three months ended March 31, 2000 and $85 million (9.9%
yield) for the same period in 1999. Realized investment losses on below
investment grade securities were $35 million in first quarter 2000 and $15
million in first quarter 1999.
Non-performing bonds were less than 0.1% of total fixed maturity securities
at March 31, 2000 and December 31, 1999. We classify bonds as non-performing
when the payment of interest is sufficiently uncertain as to preclude accrual
of interest.
Mortgage Loans. Mortgage loans on real estate, consisting primarily of loans
on office and retail properties, represented 5% of our invested assets at
March 31, 2000 and December 31, 1999. Mortgage loan statistics at March 31,
2000 and December 31, 1999 were as follows:
March 31, December 31,
2000 1999
Mortgage loans $ 3,692 $ 3,712
Allowance for losses (25) (26)
Mortgage loans, net $ 3,667 $ 3,686
Yield on total mortgage loans 8.3% 8.3%
Yield on restructured loans 7.8 7.8
Percentage of mortgage loans
Restructured 1.7 1.7
Delinquent (60+ days) .6 .6
Watch list loans .7 .9
Allowance for losses .7 .7
Assets Under Management. Assets under management, which include invested
assets, separate account assets, finance receivables, and mutual funds,
increased to $115 billion at March 31, 2000 from $97 billion at March 31,
1999. The 18% increase over the prior year primarily related to growth in
invested assets and separate account assets. Our acquisition of the North
America Funds, a family of 16 sub-advised mutual funds, in first quarter 2000
increased mutual funds under management by $1.1 billion to $2.5 billion.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued).
CAPITAL RESOURCES
Corporate Capital. The level of our corporate capital is determined primarily
by the required equity of our business divisions. The mix of corporate
capital between debt and equity is influenced by our overall corporate
strategy and structure. Our target capital structure consists of 25%
corporate debt, 15% redeemable equity, and 60% shareholders' equity. The
amount and mix of our corporate capital at March 31, 2000 and December 31,
1999 were as follows:
March 31, December 31,
2000 1999
Corporate capital* $12,987 $12,768
Corporate debt 24.9% 24.4%
Redeemable equity 14.8 15.1
Shareholders' equity 60.3 60.5
*Excludes fair value adjustment under SFAS 115.
Shareholders' Equity. On March 1, 2000, we redeemed all outstanding shares
of our mandatorily convertible preferred stock, with a stated value of $85
million. Holders received .8264 share of our common stock for each share of
preferred stock redeemed, for a total of 1.9 million common shares.
We use share repurchases as a means of maintaining our target capital
structure. We repurchased 1.7 million shares for $93 million in first quarter
2000. Since 1987, American General has repurchased 124.3 million common
shares for an aggregate cost of $3.3 billion. Our future repurchase activity
will be based on the company's corporate development activities, capital
management strategy, and fluctuations in our common stock price.
Retirement Services and Life Insurance. The amount of statutory equity
required to support the business of our retirement services and life insurance
companies is principally a function of four factors: (1) quality of assets
invested to support insurance and annuity reserves, (2) mortality and other
insurance-related risks, (3) interest-rate risk resulting from potential
mismatching of asset and liability durations, and (4) general business risks.
Each of these items is a key factor in the National Association of Insurance
Commissioners' risk-based capital (RBC) formula, used to evaluate the adequacy
of a life insurance company's statutory equity.
We manage the statutory equity of our principal retirement services and life
insurance companies to a target of 2.5 times the Company Action Level RBC (or
5.0 times the Authorized Control Level RBC). We adjust dividends from, or
contributions to, these companies to maintain this target. At March 31, 2000,
our principal retirement services and life insurance companies had statutory
equity in a range of 2.1 to 3.4 times the Company Action Level RBC, with a
weighted-average of 2.6 times.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued).
Consumer Finance. The capital of our consumer finance division varies
directly with the level of its finance receivables. This capital, totaling
$11.8 billion at March 31, 2000, consisted of $1.5 billion of equity and $10.3
billion of consumer finance debt, which was not guaranteed by American
General.
The capital mix of consumer finance debt and equity is based upon maintaining
leverage at a level that supports cost-effective funding. The consumer
finance division's target ratio of debt to tangible net worth, a standard
measure of financial risk in the consumer finance industry, is currently 7.5
to 1. The ratio equaled the target at March 31, 2000 and was 7.6 to 1 at
December 31, 1999.
LIQUIDITY
Our overall liquidity is based on cash flows from the business divisions and
our ability to borrow in both the long-term and short-term markets at
competitive rates. At March 31, 2000, we had committed and unused credit
facilities of $5.6 billion, substantially all of which were to support the
company's commercial paper borrowings. We believe that our overall sources
of liquidity will continue to be sufficient to satisfy our foreseeable
financial obligations.
Corporate Operations. The primary sources of cash for corporate operations
include net dividends from our business divisions and the proceeds from
issuances of debt and redeemable equity. Corporate operations use cash to pay
dividends to shareholders, to pay aftertax interest on corporate debt and
dividends on preferred securities, to repurchase common stock, and to pay
other corporate expenses. We expect to fund future acquisitions and
maturities of debt and preferred securities through external sources, while
maintaining our capital structure.
Net dividends received from our business divisions were as follows:
Three Months Ended
March 31,
2000 1999
Dividends received
Retirement Services $ 70 $ 42
Life Insurance 123 83
Consumer Finance 27 41
Total received 220 166
Contributions paid
Life Insurance 22 179
Net dividends received (paid) $ 198 $ (13)
The 1999 net dividends included contributions of $179 million to fund the
payment of market conduct litigation costs.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued).
Retirement Services. Principal sources of cash for our retirement services
division were as follows:
Three Months Ended
March 31,
2000 1999
Cash from operating activities $ 505 $ 504
Fixed policyholder account deposits,
net of withdrawals 72 292
Variable account deposits, net of
withdrawals 787 655
Mutual fund deposits, net of withdrawals 200 (11)
Short-term collateralized financings 1,024 953
The increase in net variable account and mutual fund deposits and decline in
net fixed policyholder account deposits quarter over quarter were a result of
policyholders continuing to seek higher returns in equity-based investments,
as well as new variable product introductions. Because the investment risk
on variable accounts and mutual fund products lies predominately with the
policyholder, deposits and withdrawals related to separate accounts and mutual
funds are not included in the company's cash flow statement. The increase in
cash from short-term collateralized financings relates to the company's
expanded use of dollar rolls as part of our investment strategy.
The division's major use of cash was the net purchase of investments necessary
to support increases in insurance and annuity liabilities. The division also
paid dividends of $70 million to the parent in first quarter 2000.
Life Insurance. Principal sources of cash for our life insurance division
were as follows:
Three Months Ended
March 31,
2000 1999
Cash from operating activities $ 39 $ 7
Fixed policyholder account deposits,
net of withdrawals (14) 70
Variable account deposits, net of
withdrawals 219 114
Short-term collateralized financings 674 180
The $84 million decline in net fixed policyholder account deposits and the
increase in net variable account deposits in first quarter 2000, compared to
1999, resulted from policyholders seeking higher returns from equity-based
investments and new variable product introductions. The increase in short-
term collateralized financings relates to our expanded use of dollar rolls.
The division's major use of cash was the net purchase of investments necessary
to support increases in insurance and annuity liabilities. In first quarter
2000, the division paid net dividends to the parent of $101 million.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued).
Consumer Finance. Principal sources of cash for our consumer finance division
were as follows:
Three Months Ended
March 31,
2000 1999
Cash from operating activities $ 192 $ 158
Increase in debt 63 110
Net cash provided by operating activities increased $34 million in first
quarter 2000 compared to first quarter 1999 due to the increase in finance
charges from higher average net receivables. Cash generated by borrowings
decreased in 2000, compared to the same period in 1999, due to lower growth
in finance receivables in 2000.
The division's major use of cash was to fund finance receivables growth. Net
cash used to fund finance receivables was $172 million in first quarter 2000,
compared to $204 million in first quarter 1999. In first quarter 2000, the
division paid dividends to the parent of $27 million.
FORWARD-LOOKING STATEMENTS
All statements, trend analyses, and other information contained herein
relative to markets for our products and trends in our operations or financial
results, as well as other statements including words such as "anticipate,"
"believe," "plan," "estimate," "expect," "intend," and other similar
expressions, constitute forward-looking statements under the Private
Securities Litigation Reform Act of 1995. We have made these forward-looking
statements based upon our current expectations and beliefs concerning future
developments and their potential effects on the company. There can be no
assurance that future developments affecting the company will be those we
anticipated. Actual results may differ materially from those included in the
forward-looking statements.
These forward-looking statements involve risks and uncertainties including,
but not limited to, the following: (1) changes in general economic conditions,
including the performance of financial markets and interest rates; (2)
customer responsiveness to both products and distribution channels; (3)
competitive, regulatory, or tax changes that affect the cost of, or demand
for, our products; (4) our ability to secure necessary regulatory approvals;
(5) adverse litigation or arbitration results, or resolution of litigation or
arbitration; and (6) the formation of strategic alliances or business
combinations among our competitors or business partners. Investors are also
directed to other risks and uncertainties discussed in documents we filed with
the Securities and Exchange Commission. We undertake no obligation to update
or revise any forward-looking information, whether as a result of new
information, future developments, or otherwise.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Refer to Note 8 of Notes to Consolidated Financial Statements included in Part
I of this Form 10-Q for the quarter ended March 31, 2000.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
American General's exposure to market risk is primarily related to changes in
interest rates. Quantitative and qualitative disclosures about our market
risk resulting from changes in interest rates are included in the section
titled "Asset/Liability Management" of Management's Discussion and Analysis
in our 1999 Annual Report to Shareholders. There have been no material
changes in such risks or our asset/liability management program during the
quarter ended March 31, 2000. Refer to Note 5 of Notes to Consolidated
Financial Statements included in Part I of this Form 10-Q for the quarter
ended March 31, 2000 for a discussion of significant derivative financial
instrument activity during the quarter.
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits.
Exhibit 3 Amended and Restated Bylaws of American General
Exhibit 10.1 Second Amendment to Employment Agreement between American
General and Robert M. Devlin
Exhibit 10.2 Second Amendment to Supplemental Executive Retirement
Agreement between American General and Robert M. Devlin
Exhibit 10.3 Form of Employment Agreement between American General and
each of the following executive officers: Frederick W.
Geissinger, John A. Graf, Rodney O. Martin Jr. and
Richard W. Scott
Exhibit 10.4 Form of Supplemental Executive Retirement Agreement
between American General and each of the following
executive officers: Frederick W. Geissinger and Rodney
O. Martin Jr.
Exhibit 10.5 Form of Supplemental Executive Retirement Agreement
between American General and each of the following
executive officers: John A. Graf and Richard W. Scott
Exhibit 11 Computation of Earnings per Share (included in Note 3 of
Notes to Consolidated Financial Statements)
Exhibit 12 Computation of Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends
Exhibit 27 Financial Data Schedule
b. Reports on Form 8-K.
None.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on May 15, 2000.
AMERICAN GENERAL CORPORATION
(Registrant)
By: NICHOLAS R. RASMUSSEN
Nicholas R. Rasmussen
Executive Vice President, Chief Financial Officer
and Treasurer
(Duly Authorized Officer and Principal Financial Officer)
EXHIBIT INDEX
Exhibit
3 Amended and Restated Bylaws of American General
10.1 Second Amendment to Employment Agreement between American
General and Robert M. Devlin
10.2 Second Amendment to Supplemental Executive Retirement
Agreement between American General and Robert M. Devlin
10.3 Form of Employment Agreement between American General and
each of the following executive officers: Frederick W.
Geissinger, John A. Graf, Rodney O. Martin Jr. and
Richard W. Scott
10.4 Form of Supplemental Executive Retirement Agreement
between American General and each of the following
executive officers: Frederick W. Geissinger and Rodney
O. Martin Jr.
10.5 Form of Supplemental Executive Retirement Agreement
between American General and each of the following
executive officers: John A. Graf and Richard W. Scott
11 Computation of Earnings per Share (included in Note 3 of
Notes to Consolidated Financial Statements)
12 Computation of Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends
27 Financial Data Schedule
<PAGE>
Amended and Restated Bylaws
(as of April 27, 2000)
of
American General Corporation
Houston, Texas
[Logo of American General appears here]
<PAGE>
AMENDED AND RESTATED BYLAWS
OF
AMERICAN GENERAL CORPORATION
ARTICLE I.
Capital Stock
SECTION 1. Certificates for Shares. The
certificates for shares of the capital stock
of the company shall be in such form as
shall be approved by the board of directors.
The certificates shall be signed by the
chairman of the board or president, and also
by the secretary, and may be sealed with the
seal of the company or a facsimile thereof.
Where any such certificate is countersigned
by a transfer agent, or registered by a
registrar, either of which is other than the
company itself or an employee of the
company, the signatures of the chairman of
the board or president and of the secretary
may be facsimiles. The certificates shall be
consecutively numbered and shall be entered
on the stock records of the company as they
are issued, and each shall exhibit the
holder's name and the number of shares.
SECTION 2. Transfer of Shares. The shares
of stock of the company shall be
transferable only on the stock records of
the company by the registered holders
thereof in person or by their duly
authorized attorneys or legal
representatives, upon surrender of
certificates representing such shares duly
endorsed or in proper form for transfer,
with appropriate evidence of authority to
transfer, and cancellation thereof.
SECTION 3. Fixing of Record Date; Closing
of Transfer Books. For the purpose of
determining shareholders entitled to notice
of or to vote at any meeting of
shareholders, or any adjournment thereof, or
entitled to receive payment of any dividend,
or for any other proper purpose, the board
of directors may fix in advance a date as
the record date for any such determination
of shareholders, such date in any case to be
not more than fifty (50) days and, in case
of a meeting of shareholders, not less than
ten (10) days prior to the date on which the
particular action requiring such
determination of shareholders is to be
taken. In lieu of fixing a record date, the
board of directors may provide that the
stock transfer books of the company shall be
closed for a stated period not to exceed, in
any case, fifty (50) days. If the stock
transfer books shall be closed for the
purpose of determining shareholders entitled
to notice of or to vote at a meeting of
shareholders, such books shall be closed for
at least ten (10) days immediately preceding
such meeting. If the stock transfer books
are not closed and no record date is fixed
for the determination of shareholders
entitled to notice of or to vote at a
meeting of shareholders, or shareholders
entitled to receive payment of a dividend,
the date on which the notice of the meeting
is mailed or the date on which the
resolution of the board of directors
declaring such dividend is adopted, as the
case may be, shall be the record date for
such determination of shareholders.
When a determination of shareholders
entitled to vote at any meeting of
shareholders has been made as provided
herein, such determination shall apply to
any adjournment of the meeting except
<PAGE>
where the determination has been made
through the closing of stock transfer
books and the stated period of closing
has expired.
SECTION 4. Registered Shareholders. The
company shall be entitled to treat the
holder of record of any share or shares of
stock as the holder in fact thereof, and
accordingly shall not be bound to recognize
any equitable or other claim to or interest
in such share or shares on the part of any
other person or entity, whether or not it
shall have express or other notice thereof,
except as expressly provided by the laws of
the State of Texas.
SECTION 5. Lost, Destroyed, or Stolen
Stock Certificates. No certificate for
shares of stock in the company shall be
issued in place of any certificate alleged
to have been lost, destroyed, or stolen
except on production of evidence
satisfactory to the board of directors, or
such person or persons as it may designate,
of such loss, destruction, or theft, and, if
the board of directors so requires, upon the
furnishing of an indemnity bond in such
amount (but not to exceed twice the
then-market value of the shares represented
by the certificate) and with such terms and
such surety or sureties as the board of
directors may, in its discretion, require.
SECTION 6. Regulations. The board of
directors shall have the power and authority
to make all such rules and regulations to
the extent permitted by law, the articles of
incorporation, and these bylaws, as it may
deem expedient concerning the issue,
transfer, registration, or replacement of
certificates for shares of the capital stock
of the company.
ARTICLE II.
Shareholders
SECTION 1. Annual Meeting. The annual
meeting of the shareholders shall be held at
such hour as shall be designated by the
board of directors either (i) on the last
business day of April of each year, or (ii)
on such other date, not more than thirteen
(13) months after the last preceding annual
meeting, as the board of directors shall
designate, for the purpose of electing
directors and for the transaction of such
other business as may properly be brought
before the meeting.
SECTION 2. Special Meetings. A special
meeting of shareholders for any purpose or
purposes may be called at any time by the
chairman of the board, the president, or a
majority of the board of directors, and
shall be called by the chairman of the
board, the president, or the secretary upon
the written request therefor, stating the
purpose or purposes of the meeting,
delivered to such officer, signed by the
holders of at least ten percent (10%) of the
issued and outstanding shares entitled to
vote at such meeting. Only such business as
shall be stated or indicated in the notice
of the meeting shall be transacted at any
such special meeting of shareholders.
SECTION 3. Place. The annual meeting of
shareholders may be held at any place as may
be designated in the call of the meeting.
Meetings of shareholders shall be held at
the principal office of the company unless
another place is designated for a meeting in
the manner provided herein.
<PAGE>
SECTION 4. Notice. Written or printed
notice stating the place, day, and hour of
each meeting of shareholders, and in case of
a special meeting the purpose or purposes
for which the meeting is called, shall be
delivered not less than ten (10) nor more
than fifty (50) days before the date of the
meeting, either personally or by mail, by or
at the direction of the officer calling the
meeting, to each shareholder of record
entitled to vote at such meeting.
SECTION 5. Quorum. Except as may be
otherwise provided by law or the articles of
incorporation, no meeting of shareholders
shall elect directors, or transact other
business of the company, unless there shall
be present, in person or by proxy, a quorum,
which is defined as the holders of a
majority of the issued and outstanding
shares of capital stock of the company
entitled to vote at the meeting, and the act
of a majority of the shares represented at
any meeting at which a quorum is present
shall be the act of the meeting. The
shareholders present at any meeting, though
less than a quorum, may adjourn the meeting,
and any business may be transacted at the
adjourned meeting that could have been
transacted at the original meeting. No
notice of adjournment, other than the
announcement at the meeting, need be given.
SECTION 6. Proxies. At any meeting of
shareholders, a shareholder may vote either
in person or by proxy executed in writing by
the shareholder or by his duly authorized
attorney-in-fact. Such proxies shall be
filed with the secretary of the company
before or at the time of the meeting. No
proxy shall be valid after eleven (11)
months from the date of its execution unless
otherwise provided in the proxy. Each proxy
shall be revocable unless it is expressly
provided therein that the proxy shall be
irrevocable or unless it is otherwise made
irrevocable by law.
SECTION 7. Voting of Shares. Each
outstanding share of a class of stock
entitled to vote upon a matter submitted to
a vote at a meeting of shareholders shall be
entitled to one vote on such matter. Votes
for directors, and upon demand of any
shareholder votes upon any question before a
meeting, shall be by ballot.
SECTION 8. Presiding Officer and
Secretary. The chairman of the board, or in
his absence the president, shall preside at
each meeting of shareholders. In the absence
of both, a chairman selected by the board of
directors from among the directors present
shall preside. The records of each meeting
shall be kept by the secretary, or in his
absence an assistant secretary, or in the
absence of both, a person appointed by the
chairman of the meeting.
SECTION 9. List of Shareholders. A
complete list of shareholders entitled to
vote at each shareholders' meeting, arranged
in alphabetical order, with the address of
each and number of shares of each class and
series of stock held by each, shall be
prepared by the secretary and filed at the
registered office of the company, and shall
be subject to inspection by any shareholder
during usual business hours for a period of
ten (10) days prior to such meeting. It
shall be produced at such meeting and shall
at all times during such meeting be subject
to inspection by any shareholder.
SECTION 10. Inspectors of Election. The
chairman of each meeting of shareholders
shall appoint a committee to act as
inspectors of election. Such committee shall
report to the meeting the number of shares
of each class and series of stock, and of
all classes, represented by proxy and shall
prepare a list showing the total number of
shares of each class and series of stock,
and of all classes,
<PAGE>
represented either in person or by proxy.
The inspectors of election shall oversee
the vote of the shareholders for the election
of directors and for any other matters that are
put to a vote of shareholders at the meeting;
receive a ballot evidencing votes cast by the
proxy committee; judge the qualifications of
shareholders voting; collect, count, and
report the results of ballots cast by any
shareholders voting in person; and perform
such other duties as may be required by the
chairman of the meeting or the shareholders.
SECTION 11. Nature of Business at
Meetings of Shareholders. No business may be
transacted at an annual meeting of
shareholders, other than business that is
either (a) specified in the notice of
meeting (or any supplement thereto) given by
or at the direction of the board of
directors (or any duly authorized committee
thereof), (b) otherwise properly brought
before the annual meeting by or at the
direction of the board of directors (or any
duly authorized committee thereof) or (c)
otherwise properly brought before the annual
meeting by a shareholder of the company (i)
who is a shareholder of record on the date
of the giving of the notice provided for in
this Section 11 and on the record date for
the determination of shareholders entitled
to vote at such annual meeting and (ii) who
complies with the notice procedures set
forth in this Section 11.
In addition to any other applicable
requirements, for business to be properly
brought before an annual meeting by a
shareholder, such shareholder must have
given timely notice thereof in proper
written form to the Secretary of the
company.
To be timely, a shareholder's notice to
the Secretary must be delivered to or mailed
and received at the principal executive
offices of the company not less than one
hundred and twenty (120) days nor more than
one hundred and fifty (150) days prior to
the anniversary date of the immediately
preceding annual meeting of shareholders;
provided, however, that in the event that
the annual meeting is called for a date that
is not within thirty (30) days before or
after such anniversary date, notice by the
shareholder in order to be timely must be so
received not later than the close of
business on the tenth (10th) day following
the day on which such notice of the date of
the annual meeting was mailed or such public
disclosure of the date of the annual meeting
was made, whichever first occurs.
To be in proper written form, a
shareholder's notice to the Secretary must
set forth as to each matter such shareholder
proposes to bring before the annual meeting
(i) a brief description of the business
desired to be brought before the annual
meeting and the reasons for conducting such
business at the annual meeting, (ii) the
name and record address of such shareholder,
(iii) the class or series and number of
shares of capital stock of the company which
are owned beneficially or of record by such
shareholder, (iv) a description of all
arrangements or understandings between such
shareholder and any other person or persons
(including their names) in connection with
the proposal of such business by such
shareholder and any material interest of
such shareholder in such business and (v) a
representation that such shareholder intends
to appear in person or by proxy at the
annual meeting to bring such business before
the meeting.
No business shall be conducted at the
annual meeting of shareholders except
business brought before the annual meeting
in accordance with the procedures set forth
in this Section 11; provided, however, that,
once business has been properly brought
before the annual meeting in accordance with
such procedures, nothing in this Section 11
shall be deemed to preclude discussion by
any shareholder
<PAGE>
of any such business. If the Chairman of an
annual meeting determines that business was not
properly brought before the annual meeting in
accordance with the foregoing procedures, the
Chairman shall declare to the meeting that the
business was not properly brought before the
meeting and such business shall not be transacted.
ARTICLE III.
Board of Directors
SECTION 1. Number, Term of Office,
Nomination, Vacancy and Removal. The
business affairs and property of the company
shall be managed and controlled by the board
of directors, and, subject to the
restrictions imposed by law, by the articles
of incorporation, or by these bylaws, the
board of directors may exercise all of the
powers of the company.
(a) Number. Subject to the rights of
holders of any class or series of
stock having a preference over the
Common Stock of the company as to
dividends or upon liquidation to
elect additional directors under
specified circumstances, the
number of the directors of the
company shall be fixed from time
to time by the board of directors
but shall not be fewer than three
(3) nor more than twenty-five
(25). Within these limits, the
number of directors may be
increased or decreased (provided
that any decrease does not shorten
the term of any incumbent
director) from time to time by
resolution of the board of
directors. Directors must be
shareholders, but they need not be
residents of the State of Texas.
(b) Election and Terms. Subject to the
rights of holders of any class or
series of stock having a
preference over the Common Stock
of the company as to dividends or
upon liquidation to elect
additional directors under
specified circumstances, directors
shall be elected at the annual
meeting of the shareholders. Each
director shall serve until the
next annual meeting and until his
successor shall have been elected
and qualified, or until his
earlier death, resignation, or
removal; provided, however, that
the term of any director who is
also an officer of the company or
of any subsidiary of the company
shall simultaneously terminate
when that director ceases, for
whatever reason, to be an officer
of the company or of any
subsidiary of the company, unless
the board of directors, in its
discretion and upon resolution
adopted by a majority of the
remaining directors then in
office, waives the applicability
hereof.
(c) Nomination of Directors. Only
persons who are nominated in
accordance with the following
procedures shall be eligible for
election as directors of the
company, except as may be
otherwise provided in the
Certificate of Incorporation with
respect to the right of holders of
preferred stock of the company to
nominate and elect a specified
number of directors in certain
circumstances. Nominations of
persons for election to the board
of directors may be made at any
annual meeting of shareholders, or
at any special meeting of
shareholders called for the
purpose of electing directors, (a)
by or at the direction of the
board of directors (or any duly
authorized committee thereof) or
(b) by any shareholder of the
company (i) who is a shareholder
of record on the date
<PAGE>
of the giving of the notice provided
for in this Section 1(c) and on the
record date for the determination
of shareholders entitled to vote
at such meeting and (ii) who
complies with the notice
procedures set forth in this
Section 1(c).
In addition to any other
applicable requirements, for a
nomination to be made by a
shareholder, such shareholder must
have given timely notice thereof
in proper written form to the
Secretary of the company.
To be timely, a shareholder's
notice to the Secretary must be
delivered to or mailed and
received at the principal
executive offices of the company
(a) in the case of an annual
meeting, not less than one hundred
and twenty (120) days nor more
than one hundred fifty (150) days
prior to the anniversary date of
the immediately preceding annual
meeting of shareholders; provided,
however, that in the event that
the annual meeting is called for a
date that is not within thirty
(30) days before or after such
anniversary date, notice by the
shareholder in order to be timely
must be so received not later than
the close of business on the tenth
(10th) day following the day on
which such notice of the date of
the annual meeting was mailed or
such public disclosure of the date
of the annual meeting was made,
whichever first occurs; and (b) in
the case of a special meeting of
shareholders called for the
purpose of electing directors, not
later than the close of business
on the tenth (10th) day following
the day on which notice of the
date of the special meeting was
mailed or public disclosure of the
date of the special meeting was
made, whichever first occurs.
To be in proper written form, a
shareholder's notice to the
Secretary must set forth (a) as to
each person whom the shareholder
proposes to nominate for election
as a director (i) the name, age,
business address and residence
address of the person, (ii) the
principal occupation or employment
of the person, (iii) the class or
series and number of shares of
capital stock of the company which
are owned beneficially or of
record by the person and (iv) any
other information relating to the
person that would be required to
be disclosed in a proxy statement
or other filings required to be
made in connection with
solicitations of proxies for
election of directors pursuant to
Section 14 of the Securities
Exchange Act of 1934, as amended
(the "Exchange Act"), and the
rules and regulations promulgated
thereunder; and (b) as to the
shareholder giving the notice (i)
the name and record address of
such shareholder, (ii) the class
or series and number of shares of
capital stock of the company which
are owned beneficially or of
record by such shareholder, (iii)
a description of all arrangements
or understandings between such
shareholder and each proposed
nominee and any other person or
persons (including their names)
pursuant to which the
nomination(s) are to be made by
such shareholder, (iv) a
representation that such
shareholder intends to appear in
person or by proxy at the meeting
to nominate the persons named in
its notice and (v) any other
information relating to such
shareholder that would be required
to be disclosed in a proxy
statement or other filings
required to be made in connection
with solicitations of proxies for
election of directors pursuant to
Section 14 of the Exchange Act and
the rules and regulations
promulgated thereunder. Such
notice must be accompanied by
<PAGE>
a written consent of each proposed
nominee to being named as a
nominee and to serve as a director
if elected.
No person shall be eligible for
election as a director of the
company unless nominated in
accordance with the procedures set
forth in this Section 1(c). If the
Chairman of the meeting determines
that a nomination was not made in
accordance with the foregoing
procedures, the Chairman shall
declare to the meeting that the
nomination was defective and such
defective nomination shall be
disregarded.
(d) Vacancies. Subject to the rights
of the holders of any class or
series of stock having a
preference over the Common Stock
of the company as to dividends or
upon liquidation to elect
directors under specified
circumstances, any vacancies on
the board of directors resulting
from death, resignation,
retirement, disqualification,
removal from office or other cause
shall be filled by the affirmative
vote of a majority of the
remaining directors then in
office, even though less than a
quorum of the board of directors.
Any director so elected by the
board of directors to fill a
vacancy shall hold office for the
remainder of the full term of the
director whose departure from the
board created the vacancy. A
directorship to be filled by
reason of an increase in the
number of directors by action of
the board of directors (within the
limits set forth in paragraph (a)
of Section 1 of this article) may
be filled by the board of
directors for a term of office
continuing only until the next
election at an annual meeting or
at a special meeting of
shareholders called for that
purpose; provided, however, that
the board of directors shall not
fill more than two such
directorships during the period
between two successive annual
meetings of shareholders.
(e) Removal. Subject to the rights of
any class or series of stock
having a preference over the
Common Stock of the company as to
dividends or upon liquidation to
elect directors under specified
circumstances, any director may be
removed from office, with or
without cause, only by the
affirmative vote of the holders of
at least seventy-five percent
(75%) of the combined voting power
of the then outstanding shares of
all classes of stock of the
company entitled to vote generally
in the election of directors,
voting together as a single class.
SECTION 2. Annual Meeting. Each newly
elected board of directors shall hold its
first meeting immediately following the
annual meeting of shareholders each year,
for the purposes of organization, the
election of a chairman of the board from
among their number, the election of officers
of the company, and the transaction of such
other business as may properly come before
such meeting, and no notice of such meeting
shall be necessary.
SECTION 3. Regular Meetings. In
addition to the annual meeting of the board
of directors, four (4) regular meetings
shall be held in each year at the time and
place designated by the chairman of the
board, for the purpose of transacting any
business within the powers of the board.
Notice of such regular meetings shall be
given as provided herein.
SECTION 4. Special Meetings. A special
meeting of the board of directors shall be
held whenever called by the chief executive
officer or by the secretary on the written
request of any five (5) of the directors,
and at such time and place as may be
specified in the notice thereof. Such
notice, or any waiver pursuant to Article
VII, Section 6 hereof, need not state the
purpose or purposes of such meeting.
SECTION 5. Notice. The secretary shall
give notice to each director of each regular
and special meeting in person or by mail or
by any form of telecommunication, at least
twenty-four (24) hours before the meeting.
The attendance of a director at any meeting
shall constitute a waiver of notice of such
meeting, except where a director attends a
meeting for the express purpose of objecting
to the transaction of any business on the
grounds that the meeting has not been
lawfully called or convened.
SECTION 6. Quorum. A majority of the
directors in office shall constitute a
quorum for the transaction of business, but
if at any meeting of the board of directors
there is less than a quorum present, a
majority of those present or any director
solely present may adjourn the meeting from
time to time without further notice. The act
of a majority of the directors present at a
meeting at which a quorum is in attendance
shall be the act of the board of directors,
unless the act of a greater number is
required by law, the articles of
incorporation, or these bylaws.
SECTION 7. Chairman of the Board. The
chairman of the board shall preside at all
meetings of the shareholders and of the
board of directors; shall have authority to
execute all legal instruments necessary for
the transaction of the company's business;
may sign certificates for shares of capital
stock of the company; may be designated as
chief executive officer as provided in these
bylaws; and shall have such other
responsibilities and powers as may be
prescribed in these bylaws or from time to
time by the board of directors. If he is not
designated as chief executive officer, the
chairman of the board shall have such powers
and perform such duties as maybe delegated
to him by the chief executive officer, and
shall be vested with all the powers and
authorized to perform all the duties of the
chief executive officer in his absence or
inability to act.
SECTION 8. Order of Business and
Officers at Meetings. At meetings of the
board of directors, business shall be
transacted in such order as the board may
determine from time to time. At all meetings
of the board of directors, the chairman of
the board shall preside, and in the absence
of the chairman of the board, a chairman
shall be chosen by the board of directors
from among the directors present. The
secretary of the company shall act as
secretary of all meetings of the board of
directors, or in the absence of the
secretary an assistant secretary shall so
act; or in the absence of both, the
presiding officer shall appoint any person
to act as secretary of the meeting.
SECTION 9. Compensation. Directors
shall not receive any stated salary for
their service as directors, but by
resolution of the board of directors an
annual retainer may be paid and a fixed sum
and expenses of attendance, if any, may be
allowed for attendance at any meeting of the
board of directors; provided that nothing
contained herein shall be construed to
preclude any director from serving the
company in any other capacity and receiving
compensation therefor.
<PAGE>
SECTION 10. Presumption of Assent. A
director of the company who is present at a
meeting of the board of directors at which
action on any company matter is taken shall
be presumed to have assented to the action
unless his dissent shall be entered in the
minutes of the meeting or unless he shall
file his written dissent to such action with
the person acting as secretary of the
meeting before the adjournment thereof or
shall forward such dissent by registered
mail to the secretary of the company
immediately after the adjournment of the
meeting. Such right to dissent shall not
apply to a director who voted in favor of
such action.
SECTION 11. Retirement. No director of
the company shall stand for reelection as a
director following his seventieth birthday
with the exception of any person who shall
serve, or has served, as chief executive
officer of the company at any time, who
shall not be prevented by this provision
from standing for reelection as a director
for five years after retirement from the
position of chief executive officer, or
until the annual meeting following the
attainment of age seventy-five, whichever
shall first occur. Any director who is also
an officer, other than the chief executive
officer, of the company or an officer of any
subsidiary of the company shall retire as
provided in Section 1 of this article.
ARTICLE IV.
Committees of the Board of Directors
SECTION 1. Executive Committee. The
board of directors, acting by resolution
adopted by a majority of the full board of
directors, may elect from among its members
an executive committee of not fewer than
three (3) nor more than ten (10) members,
which committee shall have and may exercise
all of the authority of the board of
directors in the business and affairs of the
company except where action of the full
board of directors is specified by law. The
chief executive officer shall be a member of
the executive committee and shall be
chairman of such committee. The executive
committee shall meet at such times and
places as may be fixed by the committee, or
on the call of the chief executive officer,
at such times and places as may be
designated in the call of such meetings. The
executive committee shall maintain a record
of its proceedings and shall report to each
regular meeting of the board of directors a
summary of the actions taken by such
committee since the last regular meeting of
the board of directors.
SECTION 2. Audit Committee. The
following shall be the charter of the audit
committee:
(a) Membership. The board of
directors, acting by resolution
adopted by a majority of the full
board of directors, may elect from
among its members an audit
committee of not fewer than three
(3) nor more than ten (10)
members, none of whom shall be an
officer of the company or any of
its subsidiaries, or have any
relationship to the company or any
of its subsidiaries that, in the
opinion of the board of directors,
would interfere with the exercise
of independent judgment as a
committee member.
<PAGE>
The chairman of the committee shall be
elected by a majority of the full board
of directors at the time the
committee is elected or at such
time as it becomes necessary to
elect a new chairman because of
the chairman's death, resignation
or removal. Each member of the
committee shall be financially
literate, or shall undertake to
become financially literate within
a reasonable period of time after
being elected to the committee,
and at least one member shall have
accounting or related financial
management expertise, as these
qualifications are determined in
the opinion of the board of
directors.
(b) Process. The audit committee shall
meet at such times and places as
may be fixed by the committee, or
on the call of its chairman, at
such times and places as may be
designated in the call of such
meetings. The committee shall also
meet promptly upon the request of
the company's principal outside
auditors. The committee shall
maintain a record of its
proceedings and shall report to
the board of directors a summary
of its activities not less
frequently than twice each fiscal
year, along with such
recommendations as the committee
deems appropriate.
(c) Responsibilities. The audit
committee shall have the following
powers and duties:
(1) subject to confirmation by the board of
directors, to select, evaluate and, where
appropriate, replace the principal outside
auditors (or to nominate the principal
outside auditors to be proposed for
shareholder approval in any proxy
statement);
(2) to discuss with the principal
outside auditors that the
outside auditors are
ultimately accountable to the
board of directors and the
audit committee;
(3) to review at regular
intervals audit arrangements
for the company and its
subsidiaries and the reports
to be rendered;
(4) to review in advance the plan
and scope of the audit of the
company and its subsidiaries
to be performed by the
principal outside auditors
and the related estimate of
fees, and to recommend such
audit plan, scope, and fee
estimate for board approval;
(5) to review non-audit services
and fees of the company's
principal outside auditors,
giving appropriate
consideration to the possible
effect on the auditors'
independence of each
non-audit service provided;
(6) to ensure that the principal
outside auditors submit to
the committee at least
annually a formal written
statement delineating all
relationships between the
principal outside auditors
and the company, and to
review with the principal
outside auditors any
disclosed relationships or
services that may impact the
objectivity and independence
of the outside auditors for
the purpose of recommending,
as necessary, that the board
of directors take appropriate
action
<PAGE>
to satisfy itself of
the outside auditors'
independence;
(7) to review periodically with
the company's principal
outside auditors the
accounting principles and
policies of the company,
including any matters
required to be discussed by
Statement on Auditing
Standards No. 61, as it may
be amended or supplemented;
(8) to review periodically with
the company's principal
outside auditors such matters
relating to the internal
auditing systems and
procedures and the internal
accounting controls of the
company and its subsidiaries
as the committee or the board
of directors may determine to
be necessary or desirable;
(9) to review periodically the
coordination between the
company's principal outside
auditors and the company's
internal audit staff, and to
review with the company's
principal outside auditors,
upon completion of their
audit, their findings and
recommendations and the
responses of the company's
management to such findings
and recommendations;
(10) to review and discuss with
management the company's
audited financial statements;
(11) to recommend to the board of
directors that the audited
financial statements
presented to the audit
committee be included in the
company's annual report on
Form 10-K;
(12) to periodically review the
company's corporate
responsibility program and
receive information and
assurances from management as
to its effectiveness;
(13) to conduct from time to time,
or cause to be conducted,
such investigations or
inquiries relating to the
committee's responsibilities,
including accounting or audit
matters, as the facts
presented to the committee
warrant and as the committee
may deem necessary or
appropriate in the interest
of the company and its
shareholders;
(14) to confer with and direct the
officers of the company to
the extent necessary to
exercise the committee's
powers and to carry out its
duties;
(15) to meet with representatives
of any outside auditors of
the company and/or its
internal audit staff in the
absence of management,
whenever the committee deems
such to be appropriate; and
(16) to perform such additional duties as
may be assigned to the committee by the
board of directors.
<PAGE>
SECTION 3. Personnel Committee. The
board of directors, acting by resolution
adopted by a majority of the full board of
directors, may elect from among its members
a personnel committee of not fewer than
three (3) nor more than ten (10) members,
none of whom shall be an officer of the
company or of any of its subsidiaries during
the time of service on this committee. The
chairman of the committee shall be elected
by a majority of the full board of directors
at the time the committee is elected or at
such time as it becomes necessary to elect a
new chairman because of the chairman's death
or resignation. The committee shall meet at
such times and places as may be fixed by the
committee, or on the call of its chairman,
at such times and places as may be
designated in the call of such meetings. The
committee shall maintain a record of its
proceedings and shall report to each regular
meeting of the board of directors a summary
of the actions taken by the committee since
the last regular meeting of the board of
directors.
The personnel committee shall have the
following powers and duties:
(a) to review the relationship of the
contribution of key officers and
employees to the company's
performance and prospects;
(b) to review and approve and
recommend to the board of
directors for approval or
ratification the annual salary of
any officer of the company or of a
subsidiary of the company whose
annual salary is or will be of an
amount which will place him or her
among the twenty-five most highly
salaried officers in the group;
(c) to review and approve or ratify
the annual salary of any officer
or employee of the company or of a
subsidiary of the company whose
annual salary is or will be of an
amount which will place him or her
among the second twenty-five most
highly salaried officers in the
group;
(d) to review and approve incentive
compensation and other employee
benefit programs;
(e) to review key personnel issues;
and
(f) to perform such additional duties
as may be assigned to the
committee by the board of
directors.
SECTION 4. Other Committees. In
addition to the executive, audit, and
personnel committees, the board of directors
may, by resolution adopted by a majority of
the full board of directors, elect from
among its own members such other committees
as it shall deem to be appropriate, each of
which shall have and may exercise that
authority of the board of directors which
shall have been delegated to it in the
resolution creating such committee, except
as may be prohibited by law.
SECTION 5. Term of Office and Committee
Size. The term of office of each member of
any committee shall be the period designated
by the board of directors, but shall not be
longer than one year and until his successor
shall be elected, unless such member shall
be removed by the board of directors, as
provided in this section, or the committee
is dissolved by the board of directors. A
<PAGE>
member of any committee may be removed
during the period between annual meetings by
action of the majority of the full board of
directors at any regular or special meeting.
The membership of any committee elected by
the board of directors may be increased or
decreased during the period between annual
meetings, subject to any limitations of this
article, by action of the majority of the
full board of directors at any regular or
special meeting.
SECTION 6. Quorum. A majority of the
members of any committee shall constitute a
quorum for the transaction of business. The
act of the majority of the members present
at a meeting at which a quorum is present
shall be the act of the committee.
SECTION 7. Responsibility. The
designation of any committee and the
delegation thereto of authority shall not
operate to relieve the board of directors,
or any member thereof, of any responsibility
imposed upon it or him by law.
SECTION 8. Vacancies. The board of
directors may fill all vacancies in any
committee.
ARTICLE V.
Officers
SECTION 1. Titles and Term of Office.
The board of directors at its annual meeting
shall elect officers of the company as
follows: a chief executive officer, a
president and a secretary. The board of
directors may also elect one or more vice
chairmen. The board of directors or the
executive committee may elect other
officers, including one or more executive
vice presidents, senior vice presidents,
vice presidents, a general counsel, a
controller, a general auditor, and other
officers and assistant officers as the board
of directors or the executive committee
deems necessary. Each officer shall hold
office for the term for which he is elected
and until his successor shall have been duly
elected and qualified, or until his death,
resignation, or removal in the manner
hereinafter provided. One person may hold
more than one office except that the
president shall not also hold the office of
secretary. The chief executive officer shall
be a director of the company, but no other
officer need be a director.
SECTION 2. Removal. Any officer who may
be elected only by the board of directors
may be removed only by the board of
directors. Any officer who may be elected by
either the board of directors or the
executive committee may be removed by either
the board of directors or the executive
committee. Removal of any officer may occur
whenever in the judgment of the board of
directors or the executive committee, as the
case may be, the best interests of the
company will be served thereby, but such
removal shall be without prejudice to the
contract rights, if any, of the person so
removed. Election of an officer shall not of
itself create contract rights.
SECTION 3. Vacancies. A vacancy in the
office of any officer may be filled for the
unexpired portion of the term by the board
of directors.
<PAGE>
SECTION 4. Chief Executive Officer. The
board of directors shall designate either
the chairman of the board or the president
to be the chief executive officer of the
company. All other officers of the company
shall be subordinate to the chief executive
officer and shall report to him as he may
direct. The chief executive officer shall
have responsibility for the general
management and direction of the business of
the company and for the execution of all
orders and resolutions of the board of
directors. In addition to the powers
prescribed in these bylaws, he shall have
all of the powers usually vested in the
chief executive officer of a corporation and
such other powers as may be prescribed from
time to time by the board of directors. He
may delegate any of his powers and duties to
any other officer with such limitations as
he may deem proper.
SECTION 5. President. In the absence of
the chairman of the board, the president
shall preside at all meetings of the
shareholders; shall have authority to
execute all legal instruments necessary for
the transaction of the company's business;
may sign certificates for shares of capital
stock of the company; and may be designated
as chief executive officer, as provided in
these bylaws. He may delegate such of his
powers and duties to other officers with
such limitations as he may deem proper. The
president shall have such other powers and
duties as may be prescribed in these bylaws
or from time to time by the board of
directors. If he is not designated as chief
executive officer, the president shall have
such powers and perform such duties as may
be delegated to him by the chief executive
officer, and shall be vested with all the
powers and authorized to perform all the
duties of the chief executive officer in his
absence or inability to act.
SECTION 6. Vice Chairman. Each vice
chairman shall have authority to execute all
legal instruments necessary for the
transaction of the company's business; shall
have such other powers and duties as may be
delegated to him by the board of directors
or the chief executive officer; and may
exercise the powers of the president during
his absence or inability to act.
SECTION 7. Vice President. Each vice
president shall have such powers and duties
as may be delegated to him by the board of
directors or the chief executive officer, or
any authorized officers senior to the vice
president.
SECTION 8. Secretary. The secretary
shall keep the minutes of all meetings of
the board of directors, of the shareholders,
and of the executive committee; shall issue
all notices; may sign with the chairman of
the board, the president, or a vice chairman
in the name of the company all legal
instruments necessary for the transaction of
the company's business and affix the seal of
the company thereto; shall sign with the
chairman of the board or president all
certificates for shares of the capital stock
of the company; and shall have such other
powers and duties as may be prescribed by
the board of directors or the chief
executive officer.
SECTION 9. Treasurer. The treasurer
shall have responsibility for the
safekeeping and custody of all the funds and
securities of the company; shall establish
and execute programs for the provision of
the capital required by the company,
including negotiating the procurement of
capital and maintaining the required
financial arrangements; shall establish and
maintain adequate sources for the company's
short-term borrowings; shall establish and
maintain liaison with investment bankers and
financial analysts; shall establish and
maintain banking arrangements; and shall
have such other powers and duties as may be
prescribed by the board of directors or the
chief executive officer.
<PAGE>
SECTION 10. Powers and Duties of
Assistant Secretaries. Each assistant
secretary shall have the usual powers and
duties pertaining to his office, together
with such other powers and duties as may be
assigned to him by the secretary, and may
exercise the powers of the secretary during
that officer's absence or inability to act.
Any action taken by an assistant secretary
in the performance of the duties of the
secretary shall be conclusive evidence of
the absence or inability to act of the
secretary at the time such action was taken.
SECTION 11. Powers and Duties of
Assistant Treasurers. Each assistant
treasurer shall have the usual powers and
duties pertaining to his office, together
with such other powers and duties as may be
assigned to him by the treasurer, and may
exercise the powers of the treasurer during
that officer's absence or inability to act.
Any action taken by an assistant treasurer
in the performance of the duties of the
treasurer shall be conclusive evidence of
the absence or inability to act of the
treasurer at the time such action was taken.
ARTICLE VI.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 1. Actions. The company shall
indemnify any person who was or is a named
defendant or respondent or is threatened to
be made a party to any threatened, pending
or completed action, suit or proceeding,
whether civil, criminal, administrative,
arbitrative, or investigative (including any
action by or in the right of the company),
or any appeal of such action, suit or
proceeding and any inquiry or investigation
that could lead to such an action, suit or
proceeding, by reason of the fact that he is
or was a director, officer or employee of
the company, or is or was serving at the
request of the company as a director,
officer, partner, venturer, proprietor,
trustee, employee, or similar functionary of
another foreign or domestic corporation or
non-profit corporation, partnership, joint
venture, sole proprietorship, trust,
employee benefit plan or other enterprise
(any such person acting in any such capacity
being hereinafter referred to as "potential
indemnitee"), against judgments, penalties
(including excise and similar taxes), fines,
amounts paid in settlement, and reasonable
expenses (including court costs and
attorneys' fees) actually incurred by him in
connection with such action, suit or
proceeding, if he acted in good faith and in
a manner he reasonably believed, (i) in the
case of conduct in his official capacity as
a director of the company, to be in the best
interests of the company and (ii) in all
other cases, to be not opposed to the best
interests of the company; and, with respect
to any criminal action or proceeding, if he
had no reasonable cause to believe his
conduct was unlawful; provided, however,
that in connection with any action, suit or
proceeding in which the person shall have
been adjudged to be liable to the company or
liable on the basis that personal benefit
was improperly received by him, whether or
not the benefit resulted from an action
taken in the person's official capacity as a
director or officer, (i) indemnification
shall be limited to reasonable expenses
(including court costs or attorneys' fees)
actually incurred in connection with such
proceeding, and (ii) indemnification shall
be prohibited, if the person is found liable
for willful or intentional misconduct in the
performance of his duty to the company. The
termination of any action, suit or
proceeding by judgment, order, settlement,
or conviction, or on a plea of nolo
contendere or its equivalent shall not, of
itself, create a presumption that the person
did not act in good faith and in a manner
which he reasonably believed to be in the
best interests of the company; and, with
respect
<PAGE>
to any criminal action or proceeding, shall
not create a presumption that the person had
reasonable cause to believe that his conduct
was unlawful.
SECTION 2. Success on Merits or
0therwise. Where a potential indemnitee has
been wholly successful, on the merits or
otherwise, in defense of any such action,
suit or proceeding, he shall be indemnified
against reasonable expenses (including court
costs and attorneys' fees) actually incurred
by him in connection therewith.
SECTION 3. Determination that
Indemnification is Proper. Any
indemnification under Section 1 of this
article (unless otherwise ordered by a court
of competent jurisdiction) shall be made by
the company only as authorized in a specific
case upon a determination that the
applicable standard of conduct has been met.
Such determination shall be made (i) by the
board of directors by a majority vote of a
quorum consisting of directors who at the
time of the vote have not been named as
defendants or respondents in such action,
suit or proceeding, or (ii) if such a quorum
cannot be obtained, by a majority vote of a
committee of the board of directors,
designated to act in the matter by a
majority vote of all directors, consisting
solely of two or more directors who at the
time of the vote are not named defendants or
respondents in such action, suit or
proceeding, or (iii) by special legal
counsel selected by the board of directors
(or a committee thereof) by vote in the
manner set forth in subparagraphs (i) and
(ii) of this Section 3, or if such a quorum
cannot be obtained and such a committee
cannot be established, by a majority vote of
all directors, or (iv) by the shareholders
in a vote that excludes the shares held by
any director who is named as a defendant or
respondent in such action, suit or
proceeding.
SECTION 4. Expenses Prior to Final
Disposition. Reasonable expenses incurred by
a director, officer, or employee of the
company or other person entitled to
indemnity hereunder, who was, is or is
threatened to be made a named defendant or
respondent in any such action, suit or
proceeding described in Section 1 shall be
paid by the company in advance of the final
disposition thereof upon receipt of a
written affirmation by the director,
officer, employee or other person of his
good faith belief that he has met the
standard of conduct necessary for
indemnification under this article and a
written undertaking by or on behalf of the
director, officer, employee or other person
to repay such amount if it is ultimately
determined that the person has not met such
necessary standard of conduct or that
indemnification is prohibited by Section 1
of this article. Determinations with respect
to payments under this Section 4 shall be
made in the manner specified by Section 3
for determining that indemnification is
permissible, except as otherwise provided by
law.
SECTION 5. Nonexclusive
Rights-Continuance Beyond Tenure. The
indemnification provided by this article
shall not be deemed (i) to be exclusive of
any other rights consistent with law to
which the person indemnified may be entitled
under the articles of incorporation of the
company, bylaws, any general or specific
action of the board of directors, agreement,
authorization of shareholders, or otherwise,
or as may be permitted or required by law,
both as to action in his official capacity
as a director and as to action in another
capacity while holding such office, or (ii)
to be a limitation upon the power of the
company to indemnify and to advance
expenses, consistent with law. The
indemnification provided by this article
shall continue as to a person who has ceased
to be a director, officer, or employee of
the company or other person entitled to
indemnity hereunder or to serve in
<PAGE>
such other capacity in which he was entitled
to indemnification hereunder, and shall inure
to the benefit of his heirs and legal
representatives.
SECTION 6. Insurance Authorized.
Subject to any restrictions now or hereafter
established by applicable law, the company
shall have power to purchase and maintain
insurance on behalf of any person who is or
was a director, officer, or employee of the
company or who is or was serving at the
request of the company as a director,
officer, partner, venturer, proprietor,
trustee, employee, agent, or similar
functionary of another foreign or domestic
corporation or non-profit corporation,
partnership, joint venture, sole
proprietorship, trust, employee benefit
plan, or other enterprise, against any
liability asserted against him and incurred
by him in such a capacity or arising out of
his status as such a person, whether or not
the company would have the power to
indemnify him against that liability under
the provisions of this article or the Texas
Business Corporation Act.
SECTION 7. Definitions. For purposes of
this article, references to "the company"
include any domestic or foreign predecessor
entity of the company in a merger,
consolidation, or other transaction in which
the liabilities of the predecessor are
transferred to the company by operation of
law and in any other transaction in which
the company assumes the liabilities of the
predecessor but does not specifically
exclude liabilities that are the subject
matter of this article. For purposes of this
article, references to "serving at the
request of the company" shall include any
service as a director, officer or employee
of the company which imposes duties on, or
involves services by, such director, officer
or employee with respect to an employee
benefit plan, its participants or
beneficiaries; and a person who acted in
good faith and in a manner he reasonably
believed to be in the interest of the
participants and beneficiaries of an
employee benefit plan shall be deemed to
have acted in a manner "not opposed to the
best interests of the company" as referred
to in this article.
SECTION 8. Expenses as Witness.
Notwithstanding any other provision of this
article, the company may pay or reimburse
expenses incurred by any director, officer,
or employee of the company or any other
potential indemnitee hereunder in connection
with his appearance as a witness or other
participation in any action, suit or a
proceeding described in Section 1 at a time
when he is not a named defendant or
respondent in such action, suit or
proceeding.
SECTION 9. Notice to Shareholders. Any
indemnification of or advance of expenses to
a director in accordance with this article
shall be reported in writing to the
shareholders of the company with or before
the notice or waiver of notice of the next
shareholders' meeting or with or before the
next submission to shareholders of a consent
to action without a meeting and, in any
case, within the twelve-month period
immediately following the date of the
indemnification or advance.
<PAGE>
ARTICLE VII.
Miscellaneous Provisions
SECTION 1. Registered Office. Unless
the board of directors otherwise determines,
the registered office of the company,
required by the Texas Business Corporation
Act to be maintained in the State of Texas,
shall be the principal place of business of
the company, but such registered office may
be changed from time to time by the board of
directors in the manner provided by law and
need not be identical to the principal place
of business of the company.
SECTION 2. Books and Records. Correct
and complete books and records of account of
the company and the minutes of the
proceedings of its shareholders, board of
directors, and each committee of its board
of directors shall be kept at the registered
office of the company. Records of the
original issuance of shares issued by the
company and of each transfer of those shares
that have been presented for registration of
transfer shall be kept at the registered
office of the company or at the office of
its principal transfer agent or registrar. A
record of the past and present shareholders
of the company, giving the names and
addresses of all such shareholders and the
number of shares of each class and series of
stock held by each, shall also be kept at
the registered office of the company or at
the office of its principal transfer agent
or registrar. Any books, records, and
minutes may be in written form or in any
other form capable of being converted into
written form within a reasonable time. Any
person who shall have been a holder of
record of shares for at least six (6) months
immediately preceding his demand, or who
shall be the holder of record of at least
five percent (5%) of all the outstanding
shares of the company, upon written demand
stating the purpose thereof, or any director
of the company shall have the right to
examine, in person or by agent, accountant,
or attorney, at any reasonable time or
times, for any proper purpose, its relevant
books and records of account, minutes, and
share transfer records, and to make extracts
therefrom.
SECTION 3. Action Without Meeting and
Telephone Meetings. Any action permitted, or
required by law, these bylaws, or the
articles of incorporation of the company, to
be taken at a meeting of the board of
directors or of any committee thereof may be
taken without a meeting if a consent in
writing, setting forth the action so taken,
is signed by all the members of the board of
directors or of such committee, as the case
may be. Such consent shall have the same
force and effect as a unanimous vote at a
meeting.
Subject to the notice requirements of
these bylaws, members of the board of
directors or of any committee created by the
board of directors may participate in and
hold a meeting of such board or committee by
means of conference telephone or similar
communications equipment, including
teleconferencing via a satellite
communications system, provided all persons
participating in the meeting can hear each
other.
SECTION 4. Fiscal Year. The fiscal year
of the company shall be the calendar year.
SECTION 5. Seal. The seal of the
company shall be such as from time to time
may be approved by the board of directors.
<PAGE>
SECTION 6. Notice and Waiver of Notice.
Whenever any notice is required to be given
under the provisions of these bylaws, said
notice shall be deemed to be sufficient if
given by depositing the same in a post
office box in a sealed postpaid wrapper
addressed to the person entitled thereto at
his post office address, as it appears on
the records of the company, and such notice
shall be deemed to have been given on the
day of such mailing. A waiver of notice,
signed by the person or persons entitled to
said notice, whether before or after the
date and time stated therein, shall be
deemed equivalent thereto.
SECTION 7. Resignations. Any director
or officer may resign at any time. Such
resignation shall be made in writing and
shall take effect at the time specified
therein, or if no time be specified, at the
time of its receipt by the chairman of the
board, the president, or the secretary. The
acceptance of a resignation shall not be
necessary to make it effective, unless
expressly so provided in the resignation.
SECTION 8. Securities of Other
Corporations. The board of directors shall
by resolution designate the officers of the
company who shall have power and authority
to transfer, endorse for transfer, vote, or
consent to or take any other action with
respect to any securities of another issuer
which may be held or owned by the company
and to make, execute, and deliver any
waiver, proxy, or consent with respect to
any such securities.
SECTION 9. Investments and Loans.
Investments and loans of the company shall
be made pursuant and subject to the
provisions of the law.
SECTION 10. Execution of Contracts and
Other Instruments. All contractual or
obligatory undertakings, including but not
limited to deeds, conveyances, transfers,
and releases, shall be signed by, (a) the
chairman of the board, the president, a vice
chairman, or a vice president, or (b) any
attorney-in-fact or agent of the company who
has been, or at any time in the future may
be, appointed by the chairman of the board,
the president, a vice chairman, or a vice
president, and by the company secretary or
an assistant secretary. When necessary, such
instruments may have the corporate seal
affixed and may be attested by the secretary
or an assistant secretary. Checks may be
signed by the chairman of the board, the
president, a vice chairman, a vice
president, the secretary, the treasurer, or
any other person who may be authorized by
the board of directors or the chief
executive officer.
SECTION 11. Rules and Regulations.
Rules and regulations for the conduct of the
company's business not in conflict with
these bylaws may be adopted by the executive
committee by resolution duly recorded in the
minutes of the committee; provided, however,
that such action may be modified or
abrogated by the board of directors.
<PAGE>
ARTICLE VIII.
Amendments
Unless otherwise provided in the
Articles of Incorporation, the power to
alter, amend, or repeal these bylaws or
adopt new bylaws shall be vested in the full
board of directors subject, however, to
repeal or change by action of the
affirmative vote of the holders of at least
seventy-five percent (75%) of the then
outstanding shares of all classes of stock
of the company entitled to vote generally in
election of directors, voting together as a
single class.
<PAGE>
SECOND AMENDMENT TO
EMPLOYMENT AGREEMENT
This Second Amendment to the Employment
Agreement made as of February 1, 1998
between American General Corporation, a
Texas corporation (the "Company") and Robert
M. Devlin (the "Executive"), as first
amended on April 30, 1998 (the "Agreement"),
is made on May 1, 2000.
1. Section 8(a) of the Agreement is
hereby amended by the addition of the
following sentence at the end thereof:
"As soon as practicable after a
termination of the Executive's
employment for Disability, the Company
shall pay the Executive a pro rata portion
to the Date of Termination of the
Annual Bonus for the year in which the
Date of Termination occurs, calculated
by using a fraction (the numerator of
which shall be the number of days of
employment in such year up to and
including the Date of Termination and
the denominator of which shall be three-
hundred-sixty-five (365)) to multiply
the award that the Executive would have
earned for the entire year (if the
Executive's employment had continued),
based on the Company's actual
performance for such year, and assuming
the achievement, at the target level,
of any individual performance
objectives established with respect to
such award; provided, however, that any
amount otherwise payable pursuant to
this sentence shall be reduced by any
payment already received by the
Executive pursuant to the applicable
Annual Bonus plan with respect to the
year in which the Date of Termination
occurs."
2. Further, the second sentence of
Section 8(a) of the Agreement is hereby
amended to read as follows:
"Upon termination of the Executive's
employment for Disability, the Company
shall have no additional obligations to
the Executive under this Agreement
except to the extent provided in the
last sentence of this Section 8(a) and
in Sections 6(c), 6(d), 7(b) 8(e) and
15 hereof (and, to the extent
applicable, Sections 9, 10 and 11
hereof) and to pay to the Executive the
Executive's normal post-termination
compensation and benefits as such
payments become due."
<PAGE>
3. As amended by this Second Amendment,
the Agreement is hereby specifically
ratified and reaffirmed.
IN WITNESS WHEREOF, the parties hereto
have executed this Second Amendment on May
1, 2000.
AMERICAN GENERAL CORPORATION
By___/S/ GARY D. REDDICK____________
Name: Gary D. Reddick
Title: Executive Vice President
____/S/ ROBERT M. DEVLIN____________
Robert M. Devlin
<PAGE>
SECOND AMENDMENT TO
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
This Second Amendment to the
Supplemental Executive Retirement Agreement
made as of February 1, 1998) between
American General Corporation, a Texas
corporation (the "Company") and Robert M.
Devlin (the "Executive"), as first amended
on April 30, 1998 (the "Agreement"), is made
on May 1, 2000.
1. Section 6.1 of the Agreement is
hereby amended by the addition of the
following sentence at the end of the
definition of Years of Service contained
therein:
"Notwithstanding the foregoing, if the
Executive retires on or after the
attainment of age 62, he shall be
credited with twenty-eight (28) Years
of Service."
3. As amended by this Second Amendment,
the Agreement is hereby specifically
ratified and reaffirmed.
IN WITNESS WHEREOF, the parties hereto
have executed this Second Amendment on May
1, 2000.
AMERICAN GENERAL CORPORATION
By__/S/ GARY D. REDDICK ________
Name: Gary D.Reddick
Title: Executive Vice President
__/S/ ROBERT M. DEVLIN__________
Robert M. Devlin
<PAGE>
(Form)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT
("Agreement") is made as of May 1,
2000 (the "Effective Date"), by and between
[______________________] (the "Executive")
and American General Corporation, a Texas
corporation (the "Company").
WHEREAS, during the course of
Executive's employment with the Company, the
Executive has performed outstanding services
for the Company; and
WHEREAS, it is deemed by the Company to
be in the best interests of the Company to
assure continuation of Executive's
employment; and
WHEREAS, the Company and the Executive
have determined to enter into this Agreement
pursuant to which the Company will continue
to employ the Executive on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the
premises and the mutual covenants herein
contained, the parties hereto agree as
follows:
1. Defined Terms. The definitions of
capitalized terms used in this Agreement (if
not provided where a capitalized term
initially appears) are provided in the last
Section hereof.
2. Employment. The Company hereby
agrees to employ the Executive, and the Executive
hereby accepts such employment, on the terms
and conditions hereinafter set forth.
3. Term.
(a) Duration of Term. Unless earlier
terminated as provided in Section 3(b)hereof,
the Executive's employment with the Company
under this Agreement shall commence at
the Effective Date and shall end on the
final day of the Term. For purposes of this
Agreement, the "Term" shall mean the full
three-year term of the Agreement from the
Effective Date until the day before the
third anniversary thereof, plus any extensions
made as provided in this Section 3. On
the first day of each month occurring after
the Effective Date, the Term shall
automatically be extended for an additional
month unless,
<PAGE>
prior to any such first day of
a month, the Company or the Executive shall
have given notice not to extend the Term.
Nothing in this Section shall limit the
right of the Company or the Executive to
terminate the Executive's employment
hereunder on the terms and conditions set
forth in Section 7 hereof. The Company and
the Executive agree that any such notice by
the Company shall not constitute Good Reason
for the Executive to terminate the
Executive's employment.
(b) Termination of Employment during
the Term. Nothing in this Section 3 shall
limit the right of the Company or the Executive
to terminate the Executive's employment under
this Agreement during the Term hereof on the
terms and conditions set forth in Section 7
hereof. Further, notwithstanding any other
provision of this Agreement, the Company
shall have the right to terminate the
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 the Company's Board of
Directors (the "Board"); provided, however,
that, any termination of the employment
relationship by the Company prior to the
expiration of the Term other than a
termination by the Company on the terms and
conditions set forth in Section 7 hereof
shall be deemed to be a termination without
Cause within the meanings of Section 8(c)
hereof.
(c) After the Term: "At-Will"
Relationship and Termination of Employment.
If the Executive remains employed by the
Company beyond the expiration of the Term, such
employment shall automatically convert to an
"at-will" relationship (upon the expiration
of the Term hereof) terminable at any time
by either the Company or the Executive for
any reason whatsoever, with or without
Cause. Upon a termination of employment
after the Term hereof, the Company shall pay
the Executive's full salary to the Executive
through the date of such termination at the
rate in effect immediately prior to such
termination, together with all compensation
and benefits payable to the Executive under
the terms of any compensation or benefit
plan, program or arrangement maintained by
the Company during the Executive's
employment by the Company. In addition to
any payments or benefits due hereunder upon
such a termination, the Executive shall
receive such post-termination compensation
and benefits as shall be determined under,
and paid in accordance with, the Company's
retirement, insurance and other compensation
or benefit plans, programs and
<PAGE>
arrangements as in effect immediately prior to
such termination.
4. Position and Duties. On and
after the Effective Date, the Executive shall
serve as Vice Chairman and Group Executive
of the Company and shall have such additional
duties and responsibilities as may be assigned
to the Executive by the Chief Executive Officer
of the Company. The Executive shall report to
the Chief Executive Officer of the Company. The
Executive agrees to devote substantially all the
Executive's full working time, attention and
energies during normal business hours to the
performance of the Executive's duties for
the Company, provided that the Executive may
serve as a director on the boards of such
companies and organizations as the Chief
Executive Officer of the Company may
specifically approve in writing.
5. Place of Performance. The
principal place of employment and office
of the Executive shall be in Houston, Texas,
or such other location as may be designated by
the Chief Executive Officer of the Company.
6. Compensation and Related Matters.
(a) Base Salary. As compensation for
the performance by the Executive of the
Executive's duties hereunder, during the
Employment Period the Company shall pay the
Executive an annual base salary no less than
the annual base salary in effect on the
Effective Date (such amount, as it may be
increased from time to time, is hereinafter
referred to as "Base Salary"). Base Salary
shall be payable in accordance with the
Company's normal payroll practices, shall be
reviewed at least annually by the Committee
and may be increased (but not decreased)
upon review.
(b) Annual Bonus. During the Employment
Period, the Executive shall participate, on
comparable terms, in the Company's performance-
based annual incentive plan in which similarly
situated executives of the Company participate.
(c) Other Compensation and Benefit
Plans and Arrangements; Fringe Benefits.
During the Employment Period, the Executive
shall be entitled to participate, at a level
appropriate to the Executive's position with
the Company, in such other employee benefit
and compensation plans and arrangements
(including, without limita-
<PAGE>
tion, long-term incentive arrangements,
medical and dental care, life insurance,
disability protection and pension and
retirement plans, whether tax-qualified
or supplemental) and fringe benefits as
are generally available to similarly
situated executives of the Company
from time to time, and any successors
thereto.
(d) Expenses. The Company shall reimburse
the Executive for all reasonable business
expenses incurred during the Employment
Period, subject to the applicable and
reasonable policies and procedures of the
Company in force from time to time.
(e) Automobile Allowance. At all times
during the Employment Period, the Company
shall provide the Executive with an
automobile (and pay related expenses)
pursuant to the Company's policy as in
effect on the Effective Date, as such policy
may be amended from time to time (the
"Automobile Policy").
(f) Vacation. During the Employment Period,
the Company shall provide the Executive with
the number of paid vacation days annually to
which the Executive is entitled on the basis
of years of service with the Company in
accordance with the Company's normal
vacation policy in effect on the date
hereof.
7. Termination. The Executive's
employment hereunder may be terminated, and
the Employment Period hereunder shall be
ended,as follows:
(a) Death. The Executive's employment
shall terminate upon the Executive's death.
Upon such a termination, the Executive's estate,
designated beneficiary or surviving spouse,
as the case may be, shall become entitled to
the payments provided in Section 8(b) hereof
in accordance with the terms of such
Section.
(b) Disability. The Company may terminate
the Executive's employment hereunder for
Disability. During the Disability Period (as
defined in Section 8(a) hereof) and upon
such a termination, the Executive shall be
entitled to the payments and benefits provid
ed in Section 8(a) hereof in accordance with
the terms of such Section.
<PAGE>
(c) Cause. The Company may terminate
the Executive's employment hereunder for Cause.
The decision as to whether Cause exists
shall be made in good faith by the
Committee. Upon such a termination, the
Executive shall become entitled to the payments
provided in Section 8(b) hereof in accordance
with the terms of such Section.
(d) Termination by the Executive.
(i) The Executive may terminate the
Executive's employment hereunder for Good
Reason. Upon a Good Reason termination, the
Executive shall become entitled to the
payments and benefits provided in Section
8(c) hereof in accordance with the terms of
such Section.
(ii) The Executive may terminate the
Executive's employment hereunder without
Good Reason, upon giving notice of one month
to the Company. In the event of such a
termination, the Executive shall comply with
any reasonable request of the Company to
assist in providing for an orderly transition
of authority, but such assistance shall not
delay the Executive's termination of employment
longer than six months beyond the giving of
the Executive's Notice of Termination. Upon
such a termination, the Executive shall
become entitled to the payments and benefits
provided in Section 8(b) hereof in
accordance with the terms of such Section.
(e) Notice of Termination. Any purported
termination of the Executive's employment
(other than termination pursuant to Section
7(a) hereof) shall be communicated by
written Notice of Termination to the other
party hereto in accordance with Section 16
hereof. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice
that shall indicate the specific termination
provision in this Agreement relied upon and
shall set forth in reasonable detail the
facts and circumstances claimed to provide a
basis for termination of the Executive's
employment under the provision so indicated.
Further, a Notice of Termination for Cause
is required to include a copy of the
resolution regarding such termination duly
adopted by the Board or by the Executive
Termination Review Committee.
(f) Date of Termination. For purposes of
this Agreement, "Date of Termination" shall
mean the following: (i) if the Executive's
employment is terminated by the Executive's
death, the date of the Executive's death;
(ii) if the Executive's employment is
terminated
<PAGE>
for Disability pursuant to Section 7(b) hereof,
thirty (30) days after the Notice of
Termination is given (provided that the
Executive shall not have returned
to the full-time performance of the
Executive's duties during such thirty-(30)-
day period); (iii) if the Executive's
employment is terminated for Cause pursuant
to Section 7(c) hereof, the date specified in
the Notice of Termination; (iv) if the
Executive's employment is terminated
pursuant to Section 7(d)(ii) hereof, the
date determined in accordance with said Section,
and (v) if the Executive's employment is
terminated for any other reason, the date
specified in the Notice of Termination
(which, in the case of a termination by the
Company, shall not be less than thirty (30)
days and, in the case of a termination by
the Executive, shall not be less than
fifteen (15) days nor more than sixty (60)
days, respectively, from the date such
Notice of Termination is given).
8. Compensation During Disability or Upon
Termination.
(a) Disability Period and Termination for
Disability. During any period during the
Employment Period that the Executive fails
to perform the Executive's full-time duties
hereunder as a result of incapacity due to
physical or mental illness ("Disability
Period"), the Company shall pay the
Executive's full salary to the Executive at
the rate in effect at the commencement of
any such period, together with all
compensation and benefits payable to the
Executive under the terms of any
compensation or benefit plan, program or
arrangement maintained by the Company during
such period, until the Executive's
employment is terminated by the Company for
Disability; provided, however, that such
salary payments shall be reduced by the sum
of the amounts, if any, payable to the
Executive at or prior to the time of any
such salary payment under disability benefit
plans of the Company or under the Social
Security disability insurance program, which
amounts were not previously applied to
reduce any such salary payment. Upon
termination of the Executive's employment
for Disability, the Company shall have no
additional obligations to the Executive
under this Agreement except to the extent
provided in Sections 6(c), 6(d), 7(b) and 14
hereof and the last sentence of this Section
8(a) (and, to the extent applicable,
Sections 9 and 10 hereof) and to pay to the
Executive the Executive's normal
post-termination compensation and benefits
as such payments become due. Such
post-termination compensation and benefits
shall be
<PAGE>
determined under, and paid in
accordance with, the Company's retirement,
insurance and other compensation or benefit
plans, programs and arrangements as in
effect from time to time. As soon as
practicable after such termination, the
Company shall pay the Executive a pro rata
portion to the Date of Termination of the
Annual Bonus for the year in which the Date
of Termination occurs, calculated by using a
fraction (the numerator of which shall be
the number of days of employment in such
year up to and including the Date of Termination
and the denominator of which shall be
three-hundred-sixty-five (365)) to multiply
the award that the Executive would have
earned for the entire year (if the
Executive's employment had continued), based
on the Company's actual performance for such
year, and assuming the achievement, at the
target level, of any individual performance
objectives established with respect to such
award; provided, however, that any amount
otherwise payable pursuant to this sentence
shall be reduced by any payment already
received by the Executive pursuant to the
applicable Annual Bonus plan with respect to
the year in which the Date of Termination
occurs
(b) Termination (x) by the Company with
Cause, (y) by the Executive without Good
Reason, or (z) by Reason of Death. If the
Executive's employment hereunder is terminated
(x) by the Company with Cause, (y) by the
Executive without Good Reason, or (z) by
reason of death, then:
(i) as soon as practicable, the
Company shall pay the Executive's Base
Salary to the Executive through the Date of
Termination at the rate in effect
immediately prior to the Date of
Termination, together with all compensation
and benefits payable to the Executive
through the Date of Termination under the
terms of the Company's compensation and
benefit plans, programs or arrangements as
in effect immediately prior to the Date of
Termination; and
(ii) the Company shall have no additional
obligations to the Executive under this
Agreement except to the extent provided in
Sections 6(c), 6(d) and 14 hereof (and, to
the extent applicable, Sections 9 and 10
hereof) and to pay to the Executive the
Executive's normal post-termination
compensation and benefits as such payments
become due. Such post-termination
compensation and benefits shall be
determined under, and paid in
<PAGE>
accordance with, the Company's retirement,
insurance and other compensation or benefit
plans,programs and arrangements as in effect
from time to time; and
(iii) only if such termination is by
reason of the Executive's death, the Company
shall pay the Executive a pro rata portion
to the Date of Termination of the Annual
Bonus for the year in which the Date of
Termination occurs, calculated by using a
fraction (the numerator of which shall be
the number of days of employment in such
year up to and including the Date of
Termination and the denominator of which shall
be three-hundred-sixty-five (365)) to multiply
the award that the Executive would have
earned for the entire year (if the
Executive's employment had continued), based
on the Company's actual performance for such
year, and assuming the achievement, at the
target level, of any individual performance
objectives established with respect to such
award; provided, however, that any amount
otherwise payable pursuant to this clause
(iii) shall be reduced by any payment
already received by the Executive pursuant
to the applicable Annual Bonus plan with
respect to the year in which the Date of
Termination occurs.
(c) Termination (x) by Company without
Cause or (y) by the Executive with Good
Reason. For purposes of this Agreement,
termination of the Executive's employment
"by the Company without Cause" shall not
include termination by the Company for
Disability or termination by reason of the
Executive's death. If the Executive's
employment hereunder is terminated (x) by
the Company without Cause or (y) by the
Executive with Good Reason:
(i) the Company shall pay the
Executive's Base Salary to the Executive
through the Date of Termination at the rate
in effect immediately prior to the Date of
Termination, together with all compensation
and benefits payable to the Executive
through the Date of Termination under the
terms of the Company's compensation and
benefit plans, programs or arrangements as
in effect immediately prior to the Date of
Termination or, if more favorable to the
Executive, as in effect immediately prior to
the first occurrence of an event or
circumstance constituting Good Reason;
(ii) notwithstanding any provision of
any Annual Bonus plan to the contrary, the
Company shall pay to the Executive a lump
sum amount, in cash,
<PAGE>
equal to the sum of (A) any Annual Bonus
which has been allocated or awarded (but not
yet paid or deferred) to the Executive for a
completed fiscal year preceding the Date of
Termination under any Annual Bonus plan, and
(B) a pro rata portion to the Date of Termination
of the Annual Bonus for the year in which the Date
of Termination occurs, calculated by using a
fraction (the numerator of which shall be
the number of days of employment in such
year up to and including the Date of Termination
and the denominator of which shall be
three-hundred-sixty-five (365)) to multiply
the award that the Executive would have
earned for the entire year (if the
Executive's employment had continued), based
on the Company's actual performance for such
year, and assuming the achievement, at the
target level, of any individual performance
objectives established with respect to such
award; provided, however, that any amount
otherwise payable pursuant to this clause
(B) of this Section 8(c)(ii) shall be
reduced by any payment already received by
the Executive pursuant to the applicable
Annual Bonus plan with respect to the year
in which the Date of Termination occurs;
(iii) in lieu of any further salary or
bonus payments as severance to the Executive
for periods subsequent to the Date of
Termination and (except as provided in
Section 8(d) hereof) in lieu of any
severance benefit otherwise payable to the
Executive, the Company shall pay to the
Executive a severance payment, in cash,
equal to three times the sum of (x) the
Executive's Base Salary as in effect
immediately prior to the Date of Termination
or, if higher, in effect immediately prior
to the first occurrence of an event or
circumstance constituting Good Reason, and
(y) the Average Annual Bonus. As determined
in the Company's sole discretion, such
severance payment may either be paid in
substantially equal monthly or more frequent
installments over the three-year period
immediately following the Date of
Termination or in a lump sum discounted to
present value using 120% of the rate
provided in section 1274(b)(2)(B) of the
Code;
(iv) For the thirty-six (36) month
period immediately following the Date of
Termination, the Company shall arrange to
provide the Executive with medical, dental,
life and accident insurance benefits
substantially similar to those provided to
the Executive (other than any "split-dollar"
life insurance) immediately prior to the
Date of Termination, at no greater cost to
the Executive than the cost to the Executive
<PAGE>
immediately prior to such date or
occurrence. Benefits otherwise receivable by
the Executive pursuant to the immediately
preceding sentence shall be reduced to the
extent benefits of the same type are
received by or made available to the
Executive by a successor employer during the
thirty-six (36) month period following the
Executive's termination of employment (and
any such benefits received by or made
available to the Executive shall be reported
to the Company by the Executive).
(v) The Company shall provide the
Executive with outplacement services
suitable to the Executive's position for a
period of six months or, if earlier, until
the first acceptance by the Executive of an
offer of employment.
(vi) The Company shall have no additional
obligations to the Executive under this
Agreement except to the extent provided in
Sections 6(c), 6(d) and 14 hereof (and, to
the extent applicable, Sections 9 and 10
hereof) and to pay to the Executive the
Executive's normal post-termination
compensation and benefits as such payments
become due. Such post-termination
compensation and benefits shall be
determined under, and paid in accordance
with, the Company's retirement, insurance
and other compensation or benefit plans,
programs and arrangements as in effect from
time to time at the level of benefits and
coverage applicable to the Executive
immediately prior to such termination.
(d) Effect of Entitlements (if any)
under Severance Agreement. Notwithstanding
any provision of this Agreement, it is the
intention of the parties hereto that there
shall be no duplication of benefits if the
circumstances of the Executive's termination
of employment would otherwise entitle the
Executive to payments and benefits under
both this Agreement and the Executive's
Severance Agreement. Accordingly, in the
event of such a termination, if a particular
type of benefit is payable under both
agreements, the Company shall in good faith
compare the two benefits and the Executive
shall be paid the greater of the two
benefits. Such payment shall be accepted by
the Executive in lieu of the lesser benefit
provided by the second agreement. It is
understood that this procedure may result in
one type of benefit (for example, continuing
medical insurance) being provided under one
of the agreements while another type of
benefit (for example, severance pay) is
provided under the second agreement.
<PAGE>
9. Time of Certain Payments. Any
lump sum cash payments provided to the
Executive or for the Executive's benefit in
Section 8(c)(i), 8(c)(ii)(A) and 8(c)(iii)
hereof shall be made not later than the fifth
(5th) business day following the Date of
Termination; provided, however, that if the
amounts of such payments cannot be finally
determined on or before such day, the
Company shall pay to the Executive on such
day an estimate of the payments under
Section 8(c), as determined in good faith by
the Company, the estimate in each case to be
of the minimum amount of such payments to
which the Executive is clearly entitled, and
shall pay the remainder of such payments
(together with interest on the unpaid
remainder (or on all such payments to the
extent the Company fails to make such
payments when due) at 120% of the rate
provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be
determined but in no event later than the
thirtieth (30th) day after the Date of
Termination. In the event that the amount of
the estimated payments exceeds the amount
subsequently determined to have been due,
such excess shall constitute a loan by the
Company to the Executive, payable on the
fifth (5th) business day after demand by the
Company (together with interest at 120% of
the rate provided in section 1274(b)(2)(B)
of the Code). At the time that payments are
made under this Agreement, the Company shall
provide the Executive with a written
statement setting forth the manner in which
such payments were calculated and the basis
for such calculations including, without
limitation, any opinions or other advice the
Company has received from advisors or
consultants (and any such opinions or advice
which are in writing shall be attached to
the statement).
10. Legal and Arbitration Fees and
Expenses. The Company also shall pay to the
Executive all reasonable legal fees,
arbitration fees and expenses incurred by
the Executive in disputing in good faith any
issue hereunder relating to the termination
of the Executive's employment, in seeking in
good faith to obtain or enforce any benefit
or right provided by this Agreement. Such
payments shall be made within five (5)
business days after delivery of the
Executive's written requests for payment
accompanied with such evidence of fees and
expenses incurred as the Company reasonably
may require. Notwithstanding the foregoing
provisions of this Section 10, no such fees
and expenses shall be paid unless the
Executive prevails on at least one of the
issues the
<PAGE>
Executive raises.
11. No Mitigation; Limited Offset.
The Company agrees that, if the Executive's
employment with the Company terminates
during the Term, the Executive is not
required to seek other employment or to
attempt in any way to reduce any amounts
payable to the Executive by the Company
pursuant to Section 8 hereof. Further, the
amount of any payment or benefit provided
for in this Agreement (other than Section
8(c)(iv) hereof) shall not be reduced by any
compensation earned by the Executive as the
result of employment by another employer, by
retirement benefits, by offset against any
amount claimed to be owed by the Executive
to the Company (unless such amount is
evidenced by a promissory note signed by the
Executive), or otherwise.
12. Ownership and Protection of
Information; Copyrights.
(a) 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
the Executive, individually or in
conjunction with others, during the
Executive's employment by Company, whether
tangible or intangible, which relate to
Company's business, products or services
(including, without limitation, all such
information relating to corporate
opportunities, mutual funds, 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. Executive acknowledges
that the Executive has heretofore disclosed
all such information, ideas, concepts,
improvements, discoveries, and inventions,
as well as all expressions of ideas, to
Company.
(b) All such information, ideas, concepts,
improvements, discoveries, and inventions
identified in Section 12(a) hereof are and
shall be the sole and exclusive property of
Company. Moreover, if, during the
Executive's employment by Company, the
Executive creates any work of authorship
fixed in any tangible medium of expression
which is the subject matter of
<PAGE>
copyright(such as videotapes, written
presentations, computer programs, E-mail, voice
mail, electronic databases, drawings, maps,
architectural renditions, models, manuals,
brochures, or the like) relating to
Company's business, products, or services,
whether such work is created solely by the
Executive or jointly with others (whether
during business hours or otherwise and
whether on Company's premises or otherwise)
Company shall be deemed the author of such
work if the work is prepared by the
Executive in the scope of the Executive's
employment; or, if the work is not prepared
by the Executive within the scope of the
Executive's employment but is specially
ordered by Company as a contribution to a
collective work, as 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 shall be the author of the work.
If such work relating to Company's business,
products, or services is neither prepared by
the Executive within the scope of the
Executive's employment nor a work specially
ordered that is deemed to be a work made for
hire, then the Executive hereby agrees to
assign, and by these presents does assign,
to Company all of the 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. Executive acknowledges
that Company is the owner of all such
information, ideas, concepts, improvements,
discoveries, inventions and/or copyrightable
expressions that the Executive heretofore
created, conceived, made, developed or
acquired while employed by Company.
(c) Executive will not, at any time
during or after the Executive's employment by
Company, make any unauthorized disclosure of
any confidential business information or
trade secrets of Company, or make any use
thereof, for the Executive's benefit or for
the benefit of others, except in the
carrying out of the Executive's employment
responsibilities hereunder. As a result of
the Executive's employment by Company, the
Executive shall also from time to time have
access to, or
<PAGE>
knowledge of, confidential business
information or trade secrets of third parties,
such as customers, suppliers, partners, joint
venturers, and the like, of Company. 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, the Executive shall promptly
deliver to Company all documents and things
containing Company trade secrets or
confidential information. Executive may
disclose those aspects of Company's
confidential information as to which the
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 the Executive (including,
without limitation, any confidential
information that the 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 the Executive has first
provided Company with prompt prior written
notice of such requirement so that Company
may seek a protective order or other
appropriate remedy and/or waive compliance
with the terms of this Agreement. In the
event that such protective order or other
remedy is not obtained, or that Company does
not waive compliance with the provisions
hereof, the Executive agrees to furnish only
that portion of Company's confidential
information which the Executive is advised
in writing by the Executive's 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.
(d) Both during the period of the
Executive's employment by Company and
thereafter, the Executive shall assist
Company or its nominees, at any time, in the
protection of Company'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 its 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. To the extent any assistance is
required from the Executive following the
termination of the Executive's employment
with Company, Company shall make
<PAGE>
reasonable efforts to coordinate the assistance
required with the Executive's other business
and personal commitments and the Executive
shall likewise make reasonable efforts to
accommodate Company's needs and time
considerations.
(e) Executive acknowledges that money
damages would not be sufficient remedy for
any breach of this Section 12 by the
Executive, and Company shall be entitled to
enforce the provisions of this Section 12 by
terminating any payments then owing to the
Executive under this Agreement and/or
entitled 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 Section 12,
but shall be in addition to all remedies
available at law or in equity to Company,
including the recovery of damages from the
Executive and the Executive's agents
involved in such breach.
13. Non-Competition and Non-Solicitation
Obligations.
(a) As part of the consideration for the
compensation and benefits to be paid to the
Executive hereunder, to protect the trade
secrets and confidential information of
Company or its subsidiaries or affiliates or
their customers or clients that have been
and will in the future be disclosed or
entrusted to the Executive, the business
goodwill of Company or its subsidiaries or
affiliates that has been and will in the
future be developed in the Executive, or the
business opportunities that have been and
will in the future be disclosed or entrusted
to the Executive by Company or its
subsidiaries or affiliates; and as an
additional incentive for Company to enter
into this Agreement, the Executive agrees to
the non-competition and non-solicitation
obligations hereunder: the Executive shall
not, anywhere in the United States or any
other country in which Company is offering
financial services, directly or indirectly
for the Executive or for others (i) during
the term of the Executive's employment,
compete in any manner with Company or any
subsidiary or affiliate of Company by whom
the Executive is employed at any time, (ii)
solicit or attempt to convert to other
financial services companies providing the
same or similar products or services
provided by Company, any customers or
policyholders of Company or its subsidiaries
or affiliates; or (iii) solicit for
employment or employ any employee of
Company. The obligations under clauses (i),
(ii) and (iii) of the immediately preceding
sentence shall extend throughout the
Executive's period of employment hereunder
and, unless the Executive's termination of
employ-
<PAGE>
ment is by the Company without Cause
or by the Executive with Good Reason or
occurs after a Change in Control (as defined
in the Executive's Severance Agreement), for
a period of three (3) years following
termination of the employment relationship;
provided, however, that, if such termination
shall have been preceded by the Company's
having given notice not to extend the Term
of this Agreement, such three-year period
shall be reduced (but not to less than one
year) by the period of the Executive's
continued employment subsequent to the
giving of such notice.
(b) Executive understands that the
foregoing restrictions may limit the
Executive's ability to engage in certain
businesses in the areas specified above
during the period provided for above, but
acknowledges that the 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 Section 13 by
the Executive, and Company shall be entitled
to enforce the provisions of this Section 13
by terminating any payments then owing to
the 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 Section 13, but shall be in
addition to all remedies available at law or
in equity to Company, including, without
limitation, the recovery cf damages from the
Executive and the Executive's agents
involved in such breach.
(c) It is expressly understood and agreed
that Company and the Executive consider the
restrictions contained in this Section 13 to
be reasonable and necessary to protect the
trade secrets and confidential information
of Company or its subsidiaries or
affiliates, the business goodwill of Company
or its subsidiaries or affiliates developed
in the Executive, and/or the business
opportunities disclosed or entrusted to the
Executive by Company or its subsidiaries or
affiliates. Nevertheless, if any of the
aforesaid restrictions are found to
<PAGE>
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.
(d) These duties and obligations of the
Executive specified in this Section 13 are
not exclusive. Executive owes Company 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
contractual and business relationships with
others.
14. Indemnification and Liability
Insurance. The Company shall indemnify the
Executive to the full extent authorized by
law and the Charter and By-Laws of the
Company, as applicable, for all expenses,
costs, liabilities and legal fees which the
Executive may incur in the discharge of the
Executive's duties hereunder. The Executive
shall be insured under the Company's
directors' and officers' liability insurance
policy as in effect from time to time. Any
termination of the Executive's employment or
of this Agreement shall have no effect on
the continuing operation of this Section 14.
15. Successors; Binding Agreement.
(a) In addition to any obligations imposed
by law upon any successor to the Company,
the Company will require any successor
(whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all
or substantially all of the business and/or
assets of the Company to expressly assume
and agree to perform this Agreement in the
same manner and to the same extent that the
Company would be required to perform it if
no such succession had taken place. Failure
of the Company to obtain such assumption and
agreement prior to the effectiveness of any
such succession shall be a breach of this
Agreement and shall entitle the Executive to
compensation from the Company in the same
amount and on the same terms as the
Executive would be entitled to hereunder if
the Executive were to terminate the
Executive's employment for Good Reason,
except that, for purposes of implementing
the foregoing, the date on which any such
succession becomes effective shall be deemed
the Date of Termination.
<PAGE>
(b) This Agreement shall inure to the
benefit of and be enforceable by the
Executive's personal or legal
representatives, executors, administrators,
successors, heirs, distributees, devisees
and legatees. If the Executive shall die
while any amount would still be payable to
the Executive hereunder (other than amounts
which, by their terms, terminate upon the
death of the Executive) if the Executive had
continued to live, each such amount, unless
otherwise provided herein, shall be paid in
accordance with the terms of this Agreement
to the executors, personal representatives
or administrators of the Executive's estate.
16. Notices. For the purpose of this
Agreement, notices and all other
communications provided for in the Agreement
shall be in writing and shall be deemed to
have been duly given when delivered or
mailed by United States registered mail,
return receipt requested, postage prepaid,
addressed, if to the Executive, to the
address inserted below the Executive's
signature on the final page hereof and, if
to the Company, to the address set forth
below, or to such other address as either
party may have furnished to the other in
writing in accordance herewith, except that
notice of change of address shall be
effective only upon actual receipt:
To the Company:
American General Corporation
2929 Allen Parkway
Houston, Texas 77019
Attention: General Counsel
17. Miscellaneous. No provision of
this Agreement may be modified, waived or
discharged unless such waiver, modification
or discharge is agreed to in writing and
signed by the Executive and such officer as
may be specifically designated by the Board.
No waiver by either party hereto at any time
of any breach by the other party hereto of,
or of any lack of compliance with, any
condition or provision of this Agreement to
be performed by such other party shall be
deemed a waiver of similar or dissimilar
provisions or conditions at the same or at
any prior or subsequent time. This Agreement
supersedes any other agreements or
representations, oral or otherwise, express
or implied, with respect to the subject
matter hereof which have been made by either
party, including, without limitation, any
employment memorandum, memorandum of
understanding, or severance
<PAGE>
arrangements (other than the Severance
Agreement). Captions and Section headings in
this Agreement are provided merely for
convenience and shall not affect the
interpretation of any of the provisions
herein. The validity, interpretation,
construction and performance of this
Agreement shall be governed by the laws of
the State of Texas. All references to
sections of the Exchange Act or the Code
shall be deemed also to refer to any
successor provisions to such sections. Any
payments provided for hereunder shall be
paid net of any applicable withholding
required under federal, state or local law
and any additional withholding to which the
Executive has agreed. The obligations of the
Company and the Executive under this
Agreement which by their nature may require
either partial or total performance after
the expiration of the Term (including,
without limitation, those under Section 8
hereof) shall survive such expiration.
18. Validity. The invalidity or
unenforceability of any provision of this
Agreement shall not affect the validity or
enforceability of any other provision of
this Agreement, which shall remain in full
force and effect.
19. Counterparts. This Agreement may be
executed in several counterparts, each of
which shall be deemed to be an original but
all of which together will constitute one
and the same instrument.
20. Settlement of Disputes; Arbitration.
(a) All claims by the Executive for
benefits under this Agreement shall be
directed to and determined by the Committee
and shall be in writing. Any denial by the
Committee of a claim for benefits under this
Agreement shall be delivered to the
Executive in writing and shall set forth the
specific reasons for the denial and the
specific provisions of this Agreement relied
upon. The Committee shall afford a
reasonable opportunity to the Executive for
a review of the decision denying a claim and
shall further allow the Executive to appeal
to the Committee a decision of the Committee
within sixty (60) days after notification by
the Committee that the Executive's claim has
been denied.
<PAGE>
(b) Except for equitable relief as
specified in Section 20(f) hereof and except
for the Executive's claim under any Company
benefit or compensation plans, programs,
arrangements or awards (whether heretofore
or hereafter established) which have a claim
or dispute resolution procedure specifically
applicable thereto, any dispute or
controversy which is not resolved by
agreement pursuant to Section 20(a) hereof,
including 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 the Executive, the
Company, 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.
(c) 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 hereby waiving their right, if
any, to recover treble, exemplary, or
punitive damages in connection with any such
claims.
<PAGE>
(d) The arbitration may be initiated by
any party by providing to the other parties a
written notice of arbitration specifying the
claims. Within thirty (30) days of the
notice of initiation of the arbitration
procedure, (1) the Executive shall
denominate one arbitrator and (2) the
Company shall denominate one arbitrator. The
two arbitrators shall select a third
arbitrator failing agreement on which within
sixty (60) days of the original notice,
either the Executive or the Company 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.
(e) 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.
(f) Notwithstanding any provision of this
Agreement to the contrary, (i) in the event
of a breach or threatened breach by the
Executive of any of the covenants set forth
in Section 12 or 13 hereof, the Company
shall be entitled to seek equitable relief,
including an injunction, in any court of
proper jurisdic-
<PAGE>
tion to maintain the status quo pending the
resolution of the dispute by binding arbitration
as provided above, and (ii) the Executive shall
be entitled to seek specific performance of the
Executive's right to be paid until the Date of
Termination during the pendency of any
dispute or controversy arising under or in
connection with this Agreement. With respect
to any such action, the Executive and the
Company hereby irrevocably submit to the non-
exclusive jurisdiction of any Federal or
State court sitting in the City of Houston,
Texas, and agree that process in any such
action shall be valid and effective for all
purposes if served upon the respective party
in accordance with the notice provisions of
Section 16 hereof.
21. Definitions. For purposes of this
Agreement, the following terms shall have
the meanings indicated below:
(a) "Affiliate" shall have the meaning set
forth in Rule 12b-2 promulgated under
Section 12 of the Exchange Act.
(b) "Average Annual Bonus" shall mean the
average annual bonus earned by the Executive
pursuant to any annual bonus or incentive
plan maintained by the Company in which the
Executive participated in respect of any of
the two calendar years ending immediately
prior to the calendar year in which occurs
the Date of Termination; provided, however,
that if only one bonus is earned by the
Executive in the applicable two-year period,
such bonus shall be deemed to be the Average
Annual Bonus.
(c) "Board" shall mean the Board of
Directors of the Company.
(d) "Cause" for termination by the
Company of the Executive's employment shall
mean only the following actions or inactions
by the Executive: (i) a willful material
misrepresentation pertaining to the business
or property of the Company or its
Affiliates, (ii) misappropriation of a
material aspect of the business or property
of the Company or its Affiliates, (iii)
willfully causing material damage to the
property or business of the Company or its
Affiliates, (iv) willful gross neglect to
substantially perform the Executive's duties
with the Company (other than any such
failure resulting from the Executive's
incapacity due to physical or mental
illness), (v) willful gross misconduct
result-
<PAGE>
ing in demonstrable and material
economic harm to the Company or its
Affiliates,(vi) conviction of the Executive
for the commission of a felony involving
moral turpitude or involving some aspect of
the business or property of the Company or
its Affiliates, or (vii) use of alcohol or
drugs which interferes with the performance
of the Executive's duties.
(e) "Code" shall mean the Internal Revenue
Code of 1986, as amended from time to time.
(f) "Committee" shall mean the Personnel
Committee of the Board.
(g) "Company" shall mean American General
Corporation, a Texas corporation and shall
include any successor to its business and/or
assets which assumes and agrees to perform
this Agreement by operation of law, or
otherwise.
(h) "Date of Termination" shall have the
meaning set forth in Section 7(f) hereof.
(i) "Disability" shall be deemed the
reason for the termination by the Company
of the Executive's employment, if, (i) as
a result of the Executive's incapacity due
to physical or mental illness, the Executive
shall have been absent from the full-time
performance of the Executive's duties with
the Company for a period of six (6)
consecutive months, (ii) a physician agreed
upon by the Executive (or the Executive's
legal representative) and the Company (or,
if the parties hereto are unable to agree
upon a single physician, a third physician
agreed upon by two physicians, each of whom
has been selected by either the Executive
(or the Executive's legal representative) or
the Company) shall have determined that the
Executive will be incapable, due to physical
or mental illness, of substantially
performing the Executive's duties and
responsibilities under this Agreement for
the remainder of the Term, (iii) the Company
shall have given the Executive a Notice of
Termination for Disability, and (iv) within
thirty (30) days after such Notice of
Termination is given, the Executive shall
not have returned to the full-time
performance of the Executive's duties.
<PAGE>
(j) "Employment Period" shall mean the
period (which in no event shall extend
beyond the expiration of the Term and may
end earlier pursuant to Section 3(b) hereof)
during which Executive has an obligation to
render services hereunder, as described in
Section 4 hereof.
(k) "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended
from time to time.
(l) "Executive" shall mean the individual
named in the first paragraph of this
Agreement.
(m) "Good Reason" for termination by
the Executive of the Executive's employment
shall mean the occurrence (without the
Executive's express written consent) of any
one of the following acts by the Company, or
failures by the Company to act, unless, in
the case of any act or failure to act
described in paragraph (I), (V), (VI), (VII)
or (VIII) below, such act or failure to act
is corrected prior to the Date of
Termination specified in the Notice of
Termination given in respect thereof:
(I) a substantial adverse alteration
in the nature or status of the Executive's
responsibilities from those in effect
immediately prior to the date hereof;
(II) a reduction by the Company in the
Executive's Base Salary;
(III) the failure by the Company to pay
to the Executive any portion of the
Executive's current compensation, or to pay
to the Executive any portion of an
installment of deferred compensation under
any deferred compensation program of the
Company, within seven (7) days of the date
such compensation is due;
(IV) except for any changes required by
applicable law, the failure by the Company
to continue in effect any compensation plan
in which the Executive participates
immediately prior to the date hereof which
is material to the Executive's total
compensation, including but not limited to
the Company's Performance-Based Plan for
Executive Officers, Supplemental Thrift
Plan, Restoration of Retirement Income
<PAGE>
Plan, and 1997 Stock and Incentive Plan,
unless an equitable arrangement (embodied in
an ongoing substitute or alternative plan) has
been made with respect to such plan, or the
failure by the Company to continue the
Executive's participation therein (or in
such substitute or alternative plan) on a
basis not materially less favorable, both in
terms of the amount or timing of payment of
benefits provided and the level of the
Executive's participation relative to other
participants, as existed immediately prior
to the date hereof;
(V) except for any changes required by
applicable law, the failure by the Company
to continue to provide the Executive with
benefits substantially similar to those
enjoyed by the Executive under any of the
Company's pension, savings, life insurance,
medical, health and accident, or disability
plans in which the Executive was
participating immediately prior to the date
hereof, the taking of any other action by
the Company which would directly or
indirectly materially reduce any of such
benefits or deprive the Executive of any
material fringe benefit enjoyed by the
Executive as of the date hereof, or the
failure by the Company to provide the
Executive with at least the number of annual
paid vacation days to which the Executive is
entitled on the basis of years of service
with the Company in accordance with the
Company's normal vacation policy in effect
on the date hereof; notwithstanding the
foregoing provisions of this Section
21(m)(V), it shall not constitute Good
Reason that the Executive's benefits under
the Company's general medical, health and
accident plans are no longer substantially
similar to the benefits enjoyed by the
Executive immediately prior to the date
hereof, unless the changes in such benefits
constitute a material adverse alteration
thereof;
(VI) any purported termination of the
Executive's employment which is not effected
pursuant to a Notice of Termination
satisfying the requirements of Section 7(e)
hereof; for purposes of this Agreement, no
such
<PAGE>
purported termination shall be
effective, except as provided in Section
3(b) hereof; or
(VII) the Company's breach of a material
term or condition of the Agreement.
It shall also constitute Good
Reason for termination by the Executive of
the Executive's employment if:
(X)if, at any time during the Term
hereof (whether or not a Change in
Control shall have occurred), Robert M.
Devlin is not serving as Chief
Executive Officer of the Company (or,
if a merger, consolidation or share
exchange by the Company (or a Company
subsidiary) with another corporation
shall have occurred, as Chief Executive
Officer or second-in-command of the
Company), and
(Y) (i) there is a material diminution
in the duties, responsibilities or
title of the Executive,
(ii) a substantial adverse
alteration is made in the nature
or status of the Executive's
responsibilities from those in
effect immediately prior to Robert
M. Devlin's ceasing to so serve,
(iii) the Company relocates the
Executive's principal place of
employment to a location more than
fifty (50) miles from the
Executive's principal place of
employment immediately prior to
Robert M. Devlin's ceasing to so
serve, or
(iv) the Company requires the
Executive to be based anywhere
other than such principal place of
employment (or permitted
relocation thereof) except for
required travel on the Company's
business to an extent
substantially consistent with the
Executive's present business
travel obligations.
The Executive's right to terminate
the Executive's employment for Good Reason
shall not be affected by the Executive's
incapacity due to physical or mental
illness. The Executive's continued
employment shall not constitute consent to,
or a waiver of rights with respect to, any
act or failure to act constituting Good
Reason hereunder.
<PAGE>
(n) "Notice of Termination" shall have the
meaning set forth in Section 7(e) hereof.
(o) "Pension Plans" shall mean all tax-
qualified and non-qualified supplemental or
excess benefit pension plans maintained by
the Company and any other plan or agreement
entered into between the Executive and the
Company which is designed to provide the
Executive with supplemental retirement
benefits.
(p) "Severance Agreement" shall mean the
Change in Control Severance Agreement (if
any) in effect between the Executive and the
Company from time to time, as amended from
time to time.
(q) "Term" shall mean the period of time
described in Section 3 hereof (including any
extension, continuation or termination
described therein).
American General Corporation
By:___________________________
Name: Robert M. Devlin
Title: Chairman and Chief Executive Officer
______________________________
Executive
Address:
______________________________
______________________________
______________________________
(Please print carefully)
<PAGE>
(Form for Geissinger and Martin)
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
THIS AGREEMENT is made as of the 1st
day of May, 2000, by and between AMERICAN
GENERAL CORPORATION, a Texas corporation
(the "Company"), and [ ] (the
"Executive").
WHEREAS, the Executive has been
employed by the Company in valuable
executive service to the Company; and
WHEREAS, the Company desires to reward
such past service and to encourage and
reward the continued employment of Executive
with the Company until his retirement and to
promote his devotion to his duties on behalf
of the Company without uncertainty or
concern as to his retirement income security
or that of his spouse;
NOW, THEREFORE, the Company and the
Executive hereby enter into this
Supplemental Executive Retirement Agreement
as hereinafter provided:
ARTICLE I.
GENERAL
Section 1.1 Effective Date. This
Agreement shall be effective as of May 1,
2000 (the "Effective Date").
Section 1.2 Defined Terms. The
definitions of capitalized terms used in
this Agreement (if not provided where a
capitalized term initially appears) are
provided in the last Article hereof.
ARTICLE II.
RETIREMENT BENEFITS
Section 2.1 Normal Retirement Benefit.
If the Executive retires on or after his
Normal Retirement Date, the Retirement
Benefit shall be an annual retirement
benefit payable to the Executive for his
lifetime, with a ten-year term certain (the
"Normal Retirement Benefit"), in an annual
amount equal to (X) minus (Y), calculated as
follows:
<PAGE>
(A) The amount of (X) equals (a)
multiplied by (b):
(a) sixty-seven-and-2/10ths
percent (67.2%) of such
Executive's Final Average
Compensation;
(b) the fraction equal to his
Years of Service (not in
excess of twenty-eight (28)
years) divided by twenty-
eight (28); and
(B) The amount of (Y) equals (e) plus
(f) plus (g):
(e) the Social Security
Benefit;
(f) the Qualified Plan Benefit;
and
(g) the Restoration Plan
Benefit.
Unless the Executive shall have
notified the Company in writing no later
than July 1, 2000 (and prior to any
termination of his employment) of his
election that this paragraph shall be null
and void and of no effect, then,
notwithstanding the foregoing provisions of
this Section 2.1, if payment of a lump sum
amount equal to the actuarial equivalent of
a Normal Retirement Benefit is to be made
pursuant to Section 2.6 hereof, the annual
amount of the Normal Retirement Benefit
shall equal (X) minus (Y), where (X) is
calculated as set forth above, but the
amount of (Y) equals only the Social
Security Benefit plus the Qualified Plan
Benefit (and not the Restoration Plan
Benefit). The resulting increase in such
lump sum amount shall be paid in lieu of any
Restoration Plan Benefit under the
circumstances described in Section 2.6
hereof and the Executive hereby waives his
right to any Restoration Plan Benefit under
(and only under) such circumstances.
Section 2.2 Early Retirement Benefit.
If the Executive retires on or after his
Early Retirement Date (but before his Normal
Retirement Date), the Retirement Benefit
shall be the annual Retirement Benefit
computed under Section 2.1, reduced as
follows:
(A) If payment of the Retirement
Benefit commences after the
Executive has attained age sixty
(60), the Retirement Benefit shall
be reduced by two-and-one-half
percent (2.5%) per year for each
complete year between such
commencement
<PAGE>
and the Executive's
Normal Retirement Date; the
reduction per year shall be pro-
rated for incomplete years;
(B) If payment of the Retirement
Benefit commences before the
Executive attains age sixty (60),
the Retirement Benefit shall be
further reduced (beyond the
reduction imposed by Section
2.2(A) hereof) by five percent
(5%) per year for each complete
year between such commencement and
the Executive's attaining age
sixty (60); the reduction per year
shall be pro-rated for incomplete
years.
Section 2.3 Termination of Employment
Prior to Early Retirement Date and Normal
Retirement Date. If the Executive incurs a
termination of employment with the Company
after satisfying the vesting requirement
under Section 2.7, but before attaining
either an Early Retirement Date or a Normal
Retirement Date, he shall receive a
Retirement Benefit determined under Section
2.1, but, unless such termination is
described in Section 2.6 hereof, such
benefit shall be calculated by using his
actual Years of Service (including all
periods credited as Years of Service
pursuant to this Agreement) and actual
compensation at the time of his termination
and the actual Social Security Benefit that
he is entitled to receive at his Normal
Retirement Date. Unless such termination is
described in Section 2.6 hereof, payment of
such benefit shall commence after, but not
more than sixty (60) days after, his Normal
Retirement Date.
Section 2.4 Disability. If the
Executive is receiving either short-term or
long-term disability benefits under any
Company plan, then, during the period of
payment of such disability benefits, the
Executive shall be treated as employed for
all purposes of the Agreement, including,
without limitation, attainment of the age,
service and vesting requirements under the
Agreement. The parties hereto agree that
such disability benefits will cease and the
Executive will no longer be considered
employed by the Company on the date on which
the Executive attains his Normal Retirement
Age. Payment of the Executive's Retirement
Benefit shall commence after, but not more
than sixty (60) days after, his Normal
Retirement Date.
<PAGE>
Section 2.5 Termination by Reason of
Death. If the Executive dies (i) while in
the employment of the Company, (ii) after
the attainment of age fifty-five (55), (iii)
having been credited with ten (10) Years of
Service, and (iv) prior to the commencement
of the payment of the Retirement Benefit
hereunder, the Executive's surviving spouse,
if any, shall receive for her lifetime an
annual benefit equal to the two-thirds (2/3)
survivor annuity she would have received had
the Executive retired on the day before his
death, deeming the Executive, for purposes
of this Section 2.5 only, to have elected a
joint and survivor annuity payable
immediately at a reduced amount with a two-
thirds (2/3) survivor annuity. The payment
of spouse's benefit shall commence not later
than sixty (60) days after the Executive's
death.
Section 2.6 Termination on or after
Change in Control; Certain Other
Terminations. Notwithstanding any other
provision of this Agreement, upon any
termination of the Executive's employment
(whether occurring before or after any
Change in Control), which termination is (i)
by the Company without Cause, or (ii) by the
Executive with Good Reason (as such terms
are defined in the Executive's Employment
Agreement with the Company dated as of May 1,
2000, as it may be amended from time to
time (the "Employment Agreement")), the
Company shall pay the Executive within the
five (5) business days immediately following
such termination a lump sum amount, in cash,
equal to the actuarial equivalent of the
Normal Retirement Benefit which the
Executive would have accrued, if the
Executive had accumulated (after his
termination of employment) thirty-six (36)
additional months of service and age credit
(but in no event shall the Executive be
deemed to have accumulated additional
service and age credit after the Executive's
sixty-fifth birthday). For purposes of this
Section 2.6, an "actuarial equivalent" shall
be determined using the same assumptions
utilized under the American General
Retirement Plan (or any successor plan
thereto) immediately prior to the
Executive's termination of employment, or,
if earlier and more favorable to the
Executive, immediately prior to the Change
in Control. The Retirement Benefit so
calculated shall be based on a projected Social
Security Benefit that is determined under
the provisions of the Social Security Act as
in effect on the date of such termination,
using the estimated "primary insurance
amount" the Executive would be entitled to
under such Act
<PAGE>
at his Normal Retirement
Date, assuming (i) the amount of income he
is receiving on the date such termination
becomes effective which would be treated as
wages for purposes of such Act would remain
constant through his Normal Retirement Date,
and (ii) an annual cost-of-living adjustment
equal to four percent (4%). Notwithstanding
the foregoing provisions of this Section
2.6, if termination of the Executive's
employment occurs after a Change in Control
(or during a Period of Anticipated Change in
Control, as defined in the Executive's
Change in Control Severance Agreement with
the Company, as it may be amended from time
to time (the "Severance Agreement")) and if
payment of a lump sum amount equal to the
actuarial equivalent of a Normal Retirement
Benefit is to be made pursuant to this
Section 2.6 after the Executive shall have
attained age 57, the Normal Retirement
Benefit calculated pursuant to this Section
2.6 shall not be less than the Normal
Retirement Benefit which the Executive would
have accrued if the Executive had continued
to be employed by the Company until his
Normal Retirement Date.
Section 2.7 Vesting of Retirement
Benefit. The Executive shall have a vested
right to his Retirement Benefit upon the
occurrence of any of the following while the
Executive is employed by the Company:
(i) his completion
of ten (10) Years
of Service;
(ii) the attainment
of his Normal
Retirement Age;
(iii) the termination of
the Executive's
employment pursuant
to Section 8(c) of
the Employment
Agreement; or
(iv) the occurrence of a
Change in Control
at any time.
Section I.8 Time and Form of Payment.
(A) Time of Payment. Except where
specifically otherwise provided herein, the
payment of any Retirement Benefit to which
the Executive has become entitled shall
commence after, but no more than sixty (60)
days after, the Executive's date of
retirement.
<PAGE>
The Executive shall give the
Company reasonable advance notice in writing
of his intention to retire (which shall be
given at least one month before his intended
retirement date).
(B) Normal Form of Payment. A life
annuity with a ten-year term certain is the
normal form of payment of the Retirement
Benefit for the Executive and any actuarial
equivalents to be calculated pursuant to
this Agreement will be based on the normal
form of payment. If the Executive dies after
payment of the Retirement Benefit in the
normal form has commenced, payments shall
continue for the remainder of the ten-year
term certain to the beneficiary or
beneficiaries designated by the Executive by
written instruction delivered to the
Administrator during the Executive's
lifetime. The Executive may designate one or
more primary and contingent beneficiaries to
receive the remaining payments of the
Retirement Benefit, and may designate the
proportions in which such beneficiaries are
to receive such payments. The Executive may
change such designations from time to time,
and the last written designation filed with
the Administrator prior to the Executive's
death shall control. If the Executive fails
to specifically designate a beneficiary, or
if no designated beneficiary survives the
Executive, payment shall be made by the
Administrator in the following order of
priority:
(i) to the Executive's
surviving spouse, or,
if none,
(ii) to the Executive's
children, or, if none,
(iii) to the Executive's
estate.
(C) Election of Alternative Forms
of Payment. Subject to Section 2.6 hereof,
the Executive can elect that his Retirement
Benefit be paid in any of the following
forms by an irrevocable election in writing
which is delivered to the Company within
sixty (60) days after the Effective Date,
or, with the permission of the Committee, by
an irrevocable election in writing which is
delivered to the Company at any time before
his retirement becomes effective:
(i) a joint and survivor
annuity payable at a
reduced amount for the
life of the Executive
with a survivor annuity
for the life of the
Executive's surviving
spouse which shall be
one hundred percent
(100%) of the annuity
payable during the
joint lives of the
Executive and the
surviving spouse;
(ii) a joint and survivor
annuity payable at a
reduced amount for the
life of the Executive
with a survivor annuity
for the life of the
Executive's surviving
spouse which shall be
seventy-five percent
(75%) of the annuity
payable during the
joint lives of the
Executive and the
surviving spouse;
(iii) a joint and survivor
annuity payable at a
reduced amount for the
life of the Executive
with a survivor annuity
for the life of the
Executive's surviving
spouse which shall be
fifty percent (50%) of
the annuity payable
during the joint lives
of the Executive and
the surviving spouse;
or
(iv) a lump-sum payment of
the actuarial present
value of the normal
form of payment of the
Retirement Benefit.
In calculating an alternative form of
payment for the Retirement Benefit, the
Administrator shall use the same assumptions
utilized under the American General
Retirement Plan (or any successor plan
thereto) immediately prior to the
Executive's termination of employment, or,
if a Change in Control shall have occurred
prior to the Executive's termination of
employment, the assumptions so utilized
immediately prior to the Change in Control,
if more favorable to the Executive.
<PAGE>
ARTICLE III.
ADMINISTRATION
Section 3.1 General. Except as
otherwise specifically provided in the
Agreement, the Administrator shall be
responsible for administration of the
Agreement.
Section 3.2 Administrative Rules. The
Administrator may adopt such rules of
procedure as it deems desirable for the
conduct of its affairs, except to the extent
that such rules conflict with the provisions
of the Agreement.
Section 3.3 Duties. The Administrator
shall have the following rights, powers and
duties:
(A) The decision of the Administrator
in matters within its jurisdiction
shall be final, binding and
conclusive upon the Company and
upon any person affected by such
decision, subject to the claims
procedure hereinafter set forth.
(B) The Administrator shall have the
duty and authority to interpret
and construe the provisions of the
Agreement, to determine
eligibility for a Retirement
Benefit and the appropriate amount
of any Retirement Benefit, to
decide any question which may
arise regarding the rights of the
Executive hereunder and to
exercise such powers as the
Administrator may deem necessary
for the administration of the
Agreement.
(C) The Administrator shall maintain
full and complete records of its
decisions. Its records shall
contain all relevant data
pertaining to the Executive and
his rights and duties under the
Agreement. The Administrator shall
maintain a bookkeeping account
with respect to payment of any
Retirement Benefit.
(D) Notwithstanding any other
provision of this Agreement, upon
and after the occurrence of a
Change in Control and within the
six-month period immediately
preceding a Change in Control, the
Administrator's authority and
powers
<PAGE>
shall not be used to
interpret or construe the
provisions hereof in any way (or
to take any other action) which
would adversely affect any right
given the Executive by this
Agreement.
Section 3.4 Fees. No fee or
compensation shall be paid to any person for
services as the Administrator.
ARTICLE IV.
CLAIMS PROCEDURE
Section 4.1 General. Any claim for a
Retirement Benefit under the Agreement shall
be filed by the Executive or beneficiary
(either of which is referred to in this
Article as the "claimant") in the manner
prescribed by the Administrator.
Section 4.2 Denials. If a claim for a
Retirement Benefit under the Agreement is
wholly or partially denied, notice of the
decision shall be furnished to the claimant
by the Administrator within a reasonable
period of time after receipt of the claim by
the Administrator.
Section 4.3 Notice. Any claimant who
is denied a claim for Retirement Benefits
shall be furnished written notice setting
forth:
(i) the specific reason or
reasons for the denial;
(ii) specific reference to the
pertinent provision of the
Agreement upon which the
denial is based;
(iii) a description of any
additional material or
information necessary of
the claimant to perfect the
claim; and
(iv) an explanation of the
claims review procedure
under the Agreement.
Section 4.4 Appeals Procedure. In
order that a claimant may appeal a denial of
a claim, the claimant or the claimant's duly
authorized representative may:
<PAGE>
(i) request a review by written
application to the
Committee, no later than
sixty (60) days after
receipt by the claimant of
written notification of
denial of a claim;
(ii) review pertinent documents;
and
(iii) submit issues and comments
in writing.
Section 4.5 Review. A decision on
review of a denied claim shall be made by
the Committee not later than sixty (60) days
after receipt of a request for review,
unless special circumstances require an
extension of time for processing, in which
case a decision shall be rendered within a
reasonable period of time, but not later
than one-hundred-and-twenty (120) days after
receipt of a request for a review. The
decision on review shall be in writing and
shall include the specific reason(s) for the
decision and the specific references(s) to
the pertinent provisions of the Agreement on
which the decision is based.
Section 4.6 Arbitration. Any further
dispute or controversy arising under or in
connection with this Agreement which is not
resolved by agreement pursuant to Sections
4.1 through 4.5 hereof 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.
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 arbitra
tion, 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
<PAGE>
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 hereby waiving
their right, if any, to recover treble,
exemplary, or punitive damages in connection
with any such claims.
The arbitration may be initiated by any
party by providing to the other parties a
written notice of arbitration specifying the
claims. Within thirty (30) days of the
notice of initiation of the arbitration
procedure, (1) the Executive shall
denominate one arbitrator and (2) the
Company shall denominate one arbitrator. The
two arbitrators shall select a third
arbitrator failing agreement on which within
sixty (60) days of the original notice,
either the Executive or the Company 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.
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
<PAGE>
award rendered in any such arbitration
proceeding may be entered by any federal or
state court having jurisdiction.
ARTICLE V.
MISCELLANEOUS PROVISIONS
Section 5.1 Amendment and Termination.
This Agreement may be amended or modified
only with the written consent of the parties
hereto.
Section 5.2 No Assignment. The
Executive shall not have the power to
pledge, transfer, assign, anticipate,
mortgage or otherwise encumber or dispose of
in advance any interest in amounts payable
hereunder of any of the payments provided
for herein, nor shall any interest in
amounts payable hereunder or in any payments
be subject to seizure for payments of any
debts, judgments, alimony or separate
maintenance, or be reached or transferred by
operation of law in the event of bankruptcy,
insolvency or otherwise.
Section 5.3 Successors and Assigns.
The provisions of the Agreement are binding
upon and inure to the benefit of each
Company, its successors and assigns, and the
Executive, his beneficiaries, heirs and
legal representatives.
Section 5.4 Governing Law. The
Agreement shall be subject to and construed
in accordance with the laws of the State of
Texas to the extent not preempted by the
provisions of ERISA.
Section 5.5 No Guarantee of
Employment. Nothing contained in the
Agreement shall be construed as a contract
of employment or deemed to give the
Executive the right to be retained in the
employ of an Company or any equity or other
interest in the assets, business or affairs
of an Company.
Section 5.6 Severability. If any
provision of the Agreement shall be held
illegal or invalid for any reason, such
illegality or invalidity shall not affect
the remaining provisions of the Agreement,
but the Agreement shall be construed and
enforced as if such illegal or invalid
provision had never been included herein.
<PAGE>
Section 5.7 Notification of Addresses.
The Executive and each beneficiary shall
file with the Administrator, from time to
time, in writing, the post office address of
the Executive, the post office address of
each beneficiary, and each change of post
office address. Any communication, statement
or notice addressed to the last post office
address filed with the Administrator (or if
no such address was filed with the
Administrator, then to the last post office
address of the Executive or beneficiary as
shown on the Company's records) shall be
binding on the Executive and each
beneficiary for all purposes of the
Agreement and neither the Administrator nor
the Company shall be obliged to search for
or ascertain the whereabouts of the
Executive or beneficiary.
Section 5.8 Bonding. The Administrator
and all agents and advisors employed by it
shall not be required to be bonded, except
as may otherwise be required by ERISA.
Section 5.9 Taxes. The Company shall
have the right to withhold from any cash or
other amounts due or to become due from the
Company to a Executive (including by
reducing the amount of any Retirement
Benefit payable in the future) the amount of
any federal, state and local taxes required
to be withheld or otherwise deducted and
paid by the Company with respect to the
vesting or payment of any Retirement Benefit
hereunder.
Section 5.10 No Funding. There shall be
no funding of the benefit amounts to be paid
pursuant to this Agreement. The Agreement
shall not confer upon the Executive (or
beneficiary or any other person) any
security interest or any other right, title
or interest of any kind in or to any
property of the Company. The Agreement shall
constitute merely the unsecured promise of
the Company to make the benefit payments
provided for herein. Notwithstanding the
foregoing provisions of this Section 5.10,
the Company, in its discretion, may
establish a trust to pay the benefit amounts
hereunder, which trust shall be subject to
the claims of the Company's general
creditors in the event of the Company's
bankruptcy or insolvency. If such a trust is
established, the Company shall remain
responsible for the payment of any benefit
amounts provided hereunder which are not
paid in accordance with the provisions
hereof by such trust.
<PAGE>
ARTICLE VI.
DEFINITIONS AND USAGE
Section 6.1 Definitions. Wherever used
in the Agreement, the following words and
phrases shall have the meaning set forth
below, unless the context plainly requires a
different meaning:
"Administrator" means the Company,
acting through the Personnel Committee of
the Board, or other person or persons
designated by the Personnel Committee.
"Affiliate" shall have the meaning set
forth in Rule 12b-2 promulgated under
Section 12 of the Exchange Act.
"Agreement" means this Supplemental
Executive Retirement Agreement, as set forth
herein and as amended from time to time.
"Beneficial Owner" shall have the
meaning set forth in Rule 13d-3 under the
Exchange Act.
"Board" means the Board of Directors of
the Company.
"Change in Control" means a change in
the control of the Company, which shall be
deemed to have occurred if the event set
forth in any one of the following paragraphs
shall have occurred:
(I)any Person is or becomes
the Beneficial Owner, directly or
indirectly, of securities of the
Company (not including in the
securities beneficially owned by
such Person any securities
acquired directly from the Company
or its Affiliates) representing
thirty percent (30%) or more of
the combined voting power of the
Company's then outstanding
securities, excluding any Person
who becomes such a Beneficial
Owner in connection with a
transaction described in clause
(i) of paragraph (III) below; or
(II) the following
individuals cease for any reason
to constitute a majority of the
number of directors then serving:
individuals
<PAGE>
who, on the date
hereof, constitute the Board and
any new director (other than a
director whose initial assumption
of office is in connection with an
actual or threatened election
contest, including but not limited
to a consent solicitation,
relating to the election of
directors of the Company) whose
appointment or election by the
Board or nomination for election
by the Company's shareholders was
approved or recommended by a vote
of at least two-thirds (2/3) of
the directors then still in office
who either were directors on the
date hereof or whose appointment,
election or nomination for
election was previously so
approved or recommended; or
(III) there is consummated
a merger or consolidation of the
Company or any direct or indirect
subsidiary of the Company with any
other corporation (or a share
exchange between shareholders of
the Company or any direct or
indirect subsidiary of the Company
and another corporation or entity
pursuant to Article 5.02 (or any
successor provision thereto) of
the Texas Business Corporation
Act), other than (i) a merger or
consolidation which would result
in the voting securities of the
Company outstanding immediately
prior to such merger or
consolidation continuing to
represent (either by remaining
outstanding or by being converted
into voting securities of the
surviving entity or any parent
thereof), in combination with the
ownership of any trustee or other
fiduciary holding securities under
an employee benefit plan of the
Company or any subsidiary of the
Company, at least fifty-one
percent (51%) of the combined
voting power of the securities of
the Company or such surviving
entity or any parent thereof
outstanding immediately after such
merger or consolidation, or (ii) a
merger or consolidation effected
to implement a recapitalization of
the Company (or similar
transaction) in which no Person is
or becomes the Beneficial Owner,
directly or indirectly, of
securities of the Company
representing thirty percent (30%)
or more of the combined voting
<PAGE>
power of the Company's then
outstanding securities; or
(IV) the shareholders of
the Company approve a plan of
complete liquidation or
dissolution of the Company or
there is consummated an agreement
for the sale or disposition by the
Company of all or substantially
all of the Company's assets, other
than a sale or disposition by the
Company of all or substantially
all of the Company's assets to an
entity, at least fifty-one percent
(51%) of the combined voting power
of the voting securities of which
are owned by shareholders of the
Company in substantially the same
proportions as their ownership of
the Company immediately prior to
such sale.
Notwithstanding the foregoing, a
"Change in Control" shall not be deemed to
have occurred by virtue of the consummation
of any transaction or series of integrated
transactions immediately following which the
record holders of the common stock of the
Company immediately prior to such
transaction or series of transactions
continue to have substantially the same
proportionate ownership in an entity which
owns all or substantially all of the assets
of the Company immediately following such
transaction or series of transactions.
"Code" means the Internal Revenue Code
of 1986, as amended from time to time. Any
reference to a particular Code section shall
include any provision which modifies,
replaces or supersedes it.
"Committee" shall mean the Personnel
Committee of the Board until six months
prior to the occurrence of a Change in
Control and thereafter shall mean (i) the
individuals (not fewer than three in number)
who, on the date six months before a Change
in Control, constitute the Personnel
Committee of the Board, plus (ii) in the
event that fewer than three individuals are
available from the group specified in clause
(i) above for any reason, such individuals
as may be appointed by the individual or
individuals so available (including for this
purpose any individual or individuals
previously so appointed under this clause
(ii)); provided, however,
<PAGE>
that the maximum
number of individuals constituting the
Committee shall not exceed five.
"Company" means American General
Corporation, a Texas corporation, and,
except in determining under the definition
of Change in Control herein whether or not
any Change in Control of the Company has
occurred, shall include any successor to its
business and/or assets which assumes and
agrees to perform this Agreement by
operation of law, or otherwise.
"Early Retirement Date" means the first
date on which the Executive (i) has
completed ten (10) Years of Service and (ii)
has attained the age of fifty-five (55).
"ERISA" means the Employee Retirement
Income Security Act of 1974, as amended from
time to time. Any reference to a particular
ERISA section shall include any provision
which modifies, replaces, or supersedes it.
"Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended
from time to time.
"Final Average Compensation" means the
following sum divided by three (3): the sum
of the base salary received by the Executive
during, and the incentive payments received
by the Executive pursuant to any annual
bonus, incentive compensation or similar
plan maintained by the Company with respect
to, the three (3) calendar years (whether or
not consecutive) ending within the last
sixty (60) months of the Executive's
employment with the Company which produce
the highest total of such base salary and
incentive payments (for purposes of this
sentence, any amount of such base salary or
incentive payment which is deferred by the
Executive shall be included in the
calculation of amounts received).
Notwithstanding the immediately preceding
sentence, if the Executive's termination of
employment is described in Section 2.6
hereof and the Executive receives (pursuant
to Section 8(c)(iii) of his Employment
Agreement (or any successor provision
thereto), or Section 4.5 of his Severance
Agreement (or any successor provision
thereto) and in lieu of any further salary
or bonus payments) a lump sum amount (the
"Severance Amount"), Final Average
Compensation shall mean the Severance Amount
divided by three (3).
<PAGE>
"Normal Retirement Age" means age sixty-
two (62).
"Normal Retirement Date" means the date
on which the Executive attains his Normal
Retirement Age.
"Person" shall have the meaning given
in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and
14(d) thereof, except that such term shall
not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other
fiduciary holding securities under an
employee benefit plan of the Company or any
of its Affiliates, (iii) an underwriter
temporarily holding securities pursuant to
an offering of such securities, or (iv) a
corporation owned, directly or indirectly,
by the shareholders of the Company in
substantially the same proportions as their
ownership of stock of the Company.
"Qualified Plan" means the American
General Retirement Plan, together with any
other defined benefit retirement plan
intended to be qualified under Section
401(a) of the Code which is adopted and
maintained by the Company and under which
the Executive is entitled to a retirement
benefit at the date of his retirement or
other termination of employment.
"Qualified Plan Benefit" means the
aggregate annual retirement benefit to which
the Executive (at the date of his retirement
or other termination of employment) is
entitled under the plan or plans which
comprise the Qualified Plan (expressed in
the form of a single life annuity with a ten-
year term certain commencing payment on the
date payment of the Retirement Benefit
hereunder commences).
"Restoration Plan Benefit" means the
annual retirement benefit to which the
Executive (at the date of his retirement or
other termination of employment) is entitled
under the American General Corporation
Restoration of Retirement Income Plan
(expressed in the form of a single life
annuity with a ten-year term certain
commencing payment on the date payment of
the Retirement Benefit hereunder commences).
<PAGE>
"Retirement Benefit" means the benefit
payable under this Agreement, as determined
under Article II.
"Social Security Benefit" means one-
half of the annual benefit payable under the
Social Security Act, relating to Old-Age and
Disability benefits, as of the Executive's
Normal Retirement Date, or upon actual
retirement, if later.
"Years of Service" means the total
number of years (measured in full and
partial years, in increments of one-twelfth
years) of active employment with the
Company during which substantial services
were rendered as an employee, commencing on
the date the Executive was first employed
by the Company and ending on the date he
ceases to perform services for the Company
(including employment before the Effective
Date), but in no event shall more than
twenty-eight (28) years be credited to the
Executive regardless of his actual period
of service with the Company.
Notwithstanding the foregoing, if the
Executive retires on or after the
attainment of age 62, he shall be credited
with twenty-eight (28) Years of Service.
IN WITNESS WHEREOF, the parties hereto
have executed this Agreement on the day and
year first above written.
AMERICAN GENERAL CORPORATION
By_____________________________
Robert M. Devlin
Chairman, President and
Chief Executive Officer
____________________________
Executive
<PAGE>
(Form for Graf and Scott)
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
THIS AGREEMENT is made as of the 1st
day of May, 2000, by and between AMERICAN
GENERAL CORPORATION, a Texas corporation
(the "Company"), and [ ] (the
"Executive").
WHEREAS, the Executive has been
employed by the Company in valuable
executive service to the Company; and
WHEREAS, the Company desires to reward
such past service and to encourage and
reward the continued employment of Executive
with the Company until his retirement and to
promote his devotion to his duties on behalf
of the Company without uncertainty or
concern as to his retirement income security
or that of his spouse;
NOW, THEREFORE, the Company and the
Executive hereby enter into this
Supplemental Executive Retirement Agreement
as hereinafter provided:
ARTICLE I.
GENERAL
Section 1.1 Effective Date. This
Agreement shall be effective as of May 1,
2000 (the "Effective Date").
Section 1.2 Defined Terms. The
definitions of capitalized terms used in
this Agreement (if not provided where a
capitalized term initially appears) are
provided in the last Article hereof.
ARTICLE II.
RETIREMENT BENEFITS
Section 2.1 Normal Retirement Benefit.
If the Executive retires on or after his
Normal Retirement Date, the Retirement
Benefit shall be an annual retirement
benefit payable to the Executive for his
lifetime, with a ten-year term certain (the
"Normal Retirement Benefit"), in an annual
amount equal to (X) minus (Y), calculated as
follows:
<PAGE>
(A) The amount of (X) equals (a)
multiplied by (b):
(a) sixty-seven-and-2/10ths
percent (67.2%) of such
Executive's Final Average
Compensation;
(b) the fraction equal to his
Years of Service (not in
excess of twenty-eight (28)
years) divided by twenty-
eight (28); and
(B) The amount of (Y) equals (e) plus
(f) plus (g):
(e) the Social Security
Benefit;
(f) the Qualified Plan Benefit;
and
(g) the Restoration Plan
Benefit.
Unless the Executive shall have
notified the Company in writing no later
than July 1, 2000 (and prior to any
termination of his employment) of his
election that this paragraph shall be null
and void and of no effect, then,
notwithstanding the foregoing provisions of
this Section 2.1, if payment of a lump sum
amount equal to the actuarial equivalent of
a Normal Retirement Benefit is to be made
pursuant to Section 2.6 hereof, the annual
amount of the Normal Retirement Benefit
shall equal (X) minus (Y), where (X) is
calculated as set forth above, but the
amount of (Y) equals only the Social
Security Benefit plus the Qualified Plan
Benefit (and not the Restoration Plan
Benefit). The resulting increase in such
lump sum amount shall be paid in lieu of any
Restoration Plan Benefit under the
circumstances described in Section 2.6
hereof and the Executive hereby waives his
right to any Restoration Plan Benefit under
(and only under) such circumstances.
Section 2.2 Early Retirement Benefit.
If the Executive retires on or after his
Early Retirement Date (but before his Normal
Retirement Date), the Retirement Benefit
shall be the annual Retirement Benefit
computed under Section 2.1, reduced as
follows:
(A) If payment of the Retirement
Benefit commences after the
Executive has attained age sixty
(60), the Retirement Benefit shall
be reduced by two-and-one-half
percent (2.5%) per year for each
complete year between such
commencement
<PAGE>
and the Executive's
Normal Retirement Date; the
reduction per year shall be pro-
rated for incomplete years;
(B) If payment of the Retirement
Benefit commences before the
Executive attains age sixty (60),
the Retirement Benefit shall be
further reduced (beyond the
reduction imposed by Section
2.2(A) hereof) by five percent
(5%) per year for each complete
year between such commencement and
the Executive's attaining age
sixty (60); the reduction per year
shall be pro-rated for incomplete
years.
Section 2.3 Termination of Employment
Prior to Early Retirement Date and Normal
Retirement Date. If the Executive incurs a
termination of employment with the Company
after satisfying the vesting requirement
under Section 2.7, but before attaining
either an Early Retirement Date or a Normal
Retirement Date, he shall receive a
Retirement Benefit determined under Section
2.1, but, unless such termination is
described in Section 2.6 hereof, such
benefit shall be calculated by using his
actual Years of Service (including all
periods credited as Years of Service
pursuant to this Agreement) and actual
compensation at the time of his termination
and the actual Social Security Benefit that
he is entitled to receive at his Normal
Retirement Date. Unless such termination is
described in Section 2.6 hereof, payment of
such benefit shall commence after, but not
more than sixty (60) days after, his Normal
Retirement Date.
Section 2.4 Disability. If the
Executive is receiving either short-term or
long-term disability benefits under any
Company plan, then, during the period of
payment of such disability benefits, the
Executive shall be treated as employed for
all purposes of the Agreement, including,
without limitation, attainment of the age,
service and vesting requirements under the
Agreement. The parties hereto agree that
such disability benefits will cease and the
Executive will no longer be considered
employed by the Company on the date on which
the Executive attains his Normal Retirement
Age. Payment of the Executive's Retirement
Benefit shall commence after, but not more
than sixty (60) days after, his Normal
Retirement Date.
<PAGE>
Section 2.5 Termination by Reason of
Death. If the Executive dies (i) while in
the employment of the Company, (ii) after
the attainment of age fifty-five (55), (iii)
having been credited with ten (10) Years of
Service, and (iv) prior to the commencement
of the payment of the Retirement Benefit
hereunder, the Executive's surviving spouse,
if any, shall receive for her lifetime an
annual benefit equal to the two-thirds (2/3)
survivor annuity she would have received had
the Executive retired on the day before his
death, deeming the Executive, for purposes
of this Section 2.5 only, to have elected a
joint and survivor annuity payable
immediately at a reduced amount with a two-
thirds (2/3) survivor annuity. The payment
of spouse's benefit shall commence not later
than sixty (60) days after the Executive's
death.
Section 2.6 Termination on or after
Change in Control; Certain Other
Terminations. Notwithstanding any other
provision of this Agreement, upon any
termination of the Executive's employment
(whether occurring before or after any
Change in Control), which termination is (i)
by the Company without Cause, or (ii) by the
Executive with Good Reason (as such terms
are defined in the Executive's Employment
Agreement with the Company dated as of May 1,
2000, as it may be amended from time to
time (the "Employment Agreement")), the
Company shall pay the Executive within the
five (5) business days immediately following
such termination a lump sum amount, in cash,
equal to the actuarial equivalent of the
Normal Retirement Benefit which the
Executive would have accrued, if the
Executive had accumulated (after his
termination of employment) thirty-six (36)
additional months of service and age credit
(but in no event shall the Executive be
deemed to have accumulated additional
service and age credit after the Executive's
sixty-fifth birthday). For purposes of this
Section 2.6, an "actuarial equivalent" shall
be determined using the same assumptions
utilized under the American General
Retirement Plan (or any successor plan
thereto) immediately prior to the
Executive's termination of employment, or,
if earlier and more favorable to the
Executive, immediately prior to the Change
in Control. The Retirement Benefit so
calculated shall be based on a projected Social
Security Benefit that is determined under
the provisions of the Social Security Act as
in effect on the date of such termination,
using the estimated "primary insurance
amount" the Executive would be entitled to
under such Act
<PAGE>
at his Normal Retirement
Date, assuming (i) the amount of income he
is receiving on the date such termination
becomes effective which would be treated as
wages for purposes of such Act would remain
constant through his Normal Retirement Date,
and (ii) an annual cost-of-living adjustment
equal to four percent (4%). Notwithstanding
the foregoing provisions of this Section
2.6, if termination of the Executive's
employment occurs after a Change in Control
(or during a Period of Anticipated Change in
Control, as defined in the Executive's
Change in Control Severance Agreement with
the Company, as it may be amended from time
to time (the "Severance Agreement")) and if
payment of a lump sum amount equal to the
actuarial equivalent of a Normal Retirement
Benefit is to be made pursuant to this
Section 2.6 after the Executive shall have
attained age 57, the Normal Retirement
Benefit calculated pursuant to this Section
2.6 shall not be less than the Normal
Retirement Benefit which the Executive would
have accrued if the Executive had continued
to be employed by the Company until his
Normal Retirement Date.
Section 2.7 Vesting of Retirement
Benefit. The Executive shall have a vested
right to his Retirement Benefit upon the
occurrence of any of the following while the
Executive is employed by the Company:
(i) his completion
of ten (10) Years
of Service;
(ii) the attainment
of his Normal
Retirement Age;
(iii) the termination of
the Executive's
employment pursuant
to Section 8(c) of the
Employment Agreement;
or
(iv) the occurrence of a
Change in Control
at any time.
Section 2.8 Time and Form of Payment.
(A) Time of Payment. Except where
specifically otherwise provided herein, the
payment of any Retirement Benefit to which
the Executive has become entitled shall
commence after, but no more than sixty (60)
days after, the Executive's date of
retirement. The
<PAGE>
Executive shall give the
Company reasonable advance notice in writing
of his intention to retire (which shall be
given at least one month before his intended
retirement date).
(B) Normal Form of Payment. A life
annuity with a ten-year term certain is the
normal form of payment of the Retirement
Benefit for the Executive and any actuarial
equivalents to be calculated pursuant to
this Agreement will be based on the normal
form of payment. If the Executive dies after
payment of the Retirement Benefit in the
normal form has commenced, payments shall
continue for the remainder of the ten-year
term certain to the beneficiary or
beneficiaries designated by the Executive by
written instruction delivered to the
Administrator during the Executive's
lifetime. The Executive may designate one or
more primary and contingent beneficiaries to
receive the remaining payments of the
Retirement Benefit, and may designate the
proportions in which such beneficiaries are
to receive such payments. The Executive may
change such designations from time to time,
and the last written designation filed with
the Administrator prior to the Executive's
death shall control. If the Executive fails
to specifically designate a beneficiary, or
if no designated beneficiary survives the
Executive, payment shall be made by the
Administrator in the following order of
priority:
(i) to the Executive's
surviving spouse, or,
if none,
(ii) to the Executive's
children, or, if none,
(iii) to the Executive's
estate.
(C) Election of Alternative Forms
of Payment. Subject to Section 2.6 hereof,
the Executive can elect that his Retirement
Benefit be paid in any of the following
forms by an irrevocable election in writing
which is delivered to the Company within
sixty (60) days after the Effective Date,
or, with the permission of the Committee, by
an irrevocable election in writing which is
delivered to the Company at any time before
his retirement becomes effective:
<PAGE>
(i) a joint and survivor
annuity payable at a
reduced amount for the
life of the Executive
with a survivor annuity
for the life of the
Executive's surviving
spouse which shall be
one hundred percent
(100%) of the annuity
payable during the
joint lives of the
Executive and the
surviving spouse;
(ii) a joint and survivor
annuity payable at a
reduced amount for the
life of the Executive
with a survivor annuity
for the life of the
Executive's surviving
spouse which shall be
seventy-five percent
(75%) of the annuity
payable during the
joint lives of the
Executive and the
surviving spouse;
(iii) a joint and survivor
annuity payable at a
reduced amount for the
life of the Executive
with a survivor annuity
for the life of the
Executive's surviving
spouse which shall be
fifty percent (50%) of
the annuity payable
during the joint lives
of the Executive and
the surviving spouse;
or
(iv) a lump-sum payment of
the actuarial present
value of the normal
form of payment of the
Retirement Benefit.
In calculating an alternative form of
payment for the Retirement Benefit, the
Administrator shall use the same assumptions
utilized under the American General
Retirement Plan (or any successor plan
thereto) immediately prior to the
Executive's termination of employment, or,
if a Change in Control shall have occurred
prior to the Executive's termination of
employment, the assumptions so utilized
immediately prior to the Change in Control,
if more favorable to the Executive.
<PAGE>
ARTICLE III.
ADMINISTRATION
Section 3.1 General. Except as
otherwise specifically provided in the
Agreement, the Administrator shall be
responsible for administration of the
Agreement.
Section 3.2 Administrative Rules. The
Administrator may adopt such rules of
procedure as it deems desirable for the
conduct of its affairs, except to the extent
that such rules conflict with the provisions
of the Agreement.
Section 3.3 Duties. The Administrator
shall have the following rights, powers and
duties:
(A) The decision of the Administrator
in matters within its jurisdiction
shall be final, binding and
conclusive upon the Company and
upon any person affected by such
decision, subject to the claims
procedure hereinafter set forth.
(B) The Administrator shall have the
duty and authority to interpret
and construe the provisions of the
Agreement, to determine
eligibility for a Retirement
Benefit and the appropriate amount
of any Retirement Benefit, to
decide any question which may
arise regarding the rights of the
Executive hereunder and to
exercise such powers as the
Administrator may deem necessary
for the administration of the
Agreement.
(C) The Administrator shall maintain
full and complete records of its
decisions. Its records shall
contain all relevant data
pertaining to the Executive and
his rights and duties under the
Agreement. The Administrator shall
maintain a bookkeeping account
with respect to payment of any
Retirement Benefit.
(D) Notwithstanding any other
provision of this Agreement, upon
and after the occurrence of a
Change in Control and within the
six-month period immediately
preceding a Change in Control, the
Administrator's authority and
powers
<PAGE>
shall not be used to
interpret or construe the
provisions hereof in any way (or
to take any other action) which
would adversely affect any right
given the Executive by this
Agreement.
Section 3.4 Fees. No fee or
compensation shall be paid to any person for
services as the Administrator.
ARTICLE IV.
CLAIMS PROCEDURE
Section 4.1 General. Any claim for a
Retirement Benefit under the Agreement shall
be filed by the Executive or beneficiary
(either of which is referred to in this
Article as the "claimant") in the manner
prescribed by the Administrator.
Section 4.2 Denials. If a claim for a
Retirement Benefit under the Agreement is
wholly or partially denied, notice of the
decision shall be furnished to the claimant
by the Administrator within a reasonable
period of time after receipt of the claim by
the Administrator.
Section 4.3 Notice. Any claimant who
is denied a claim for Retirement Benefits
shall be furnished written notice setting
forth:
(i) the specific reason or
reasons for the denial;
(ii) specific reference to the
pertinent provision of the
Agreement upon which the
denial is based;
(iii) a description of any
additional material or
information necessary of
the claimant to perfect the
claim; and
(iv) an explanation of the
claims review procedure
under the Agreement.
Section 4.4 Appeals Procedure. In
order that a claimant may appeal a denial of
a claim, the claimant or the claimant's duly
authorized representative may:
<PAGE>
(i) request a review by written
application to the
Committee, no later than
sixty (60) days after
receipt by the claimant of
written notification of
denial of a claim;
(ii) review pertinent documents;
and
(iii) submit issues and comments
in writing.
Section 4.5 Review. A decision on
review of a denied claim shall be made by
the Committee not later than sixty (60) days
after receipt of a request for review,
unless special circumstances require an
extension of time for processing, in which
case a decision shall be rendered within a
reasonable period of time, but not later
than one-hundred-and-twenty (120) days after
receipt of a request for a review. The
decision on review shall be in writing and
shall include the specific reason(s) for the
decision and the specific references(s) to
the pertinent provisions of the Agreement on
which the decision is based.
Section 4.6 Arbitration. Any further
dispute or controversy arising under or in
connection with this Agreement which is not
resolved by agreement pursuant to Sections
4.1 through 4.5 hereof 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.
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 arbitra
tion, 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
<PAGE>
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 hereby waiving
their right, if any, to recover treble,
exemplary, or punitive damages in connection
with any such claims.
The arbitration may be initiated by any
party by providing to the other parties a
written notice of arbitration specifying the
claims. Within thirty (30) days of the
notice of initiation of the arbitration
procedure, (1) the Executive shall
denominate one arbitrator and (2) the
Company shall denominate one arbitrator. The
two arbitrators shall select a third
arbitrator failing agreement on which within
sixty (60) days of the original notice,
either the Executive or the Company 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.
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
<PAGE>
award rendered in any such arbitration
proceeding may be entered by any federal or
state court having jurisdiction.
ARTICLE V.
MISCELLANEOUS PROVISIONS
Section 5.1 Amendment and Termination.
This Agreement may be amended or modified
only with the written consent of the parties
hereto.
Section 5.2 No Assignment. The
Executive shall not have the power to
pledge, transfer, assign, anticipate,
mortgage or otherwise encumber or dispose of
in advance any interest in amounts payable
hereunder of any of the payments provided
for herein, nor shall any interest in
amounts payable hereunder or in any payments
be subject to seizure for payments of any
debts, judgments, alimony or separate
maintenance, or be reached or transferred by
operation of law in the event of bankruptcy,
insolvency or otherwise.
Section 5.3 Successors and Assigns. The
provisions of the Agreement are binding upon
and inure to the benefit of each Company,
its successors and assigns, and the
Executive, his beneficiaries, heirs and
legal representatives.
Section 5.4 Governing Law. The
Agreement shall be subject to and construed
in accordance with the laws of the State of
Texas to the extent not preempted by the
provisions of ERISA.
Section 5.5 No Guarantee of Employment.
Nothing contained in the Agreement shall be
construed as a contract of employment or
deemed to give the Executive the right to be
retained in the employ of an Company or any
equity or other interest in the assets,
business or affairs of an Company.
Section 5.6 Severability. If any
provision of the Agreement shall be held
illegal or invalid for any reason, such
illegality or invalidity shall not affect
the remaining provisions of the Agreement,
but the Agreement shall be construed and
enforced as if such illegal or invalid
provision had never been included herein.
<PAGE>
Section 5.7 Notification of Addresses.
The Executive and each beneficiary shall
file with the Administrator, from time to
time, in writing, the post office address of
the Executive, the post office address of
each beneficiary, and each change of post
office address. Any communication, statement
or notice addressed to the last post office
address filed with the Administrator (or if
no such address was filed with the
Administrator, then to the last post office
address of the Executive or beneficiary as
shown on the Company's records) shall be
binding on the Executive and each
beneficiary for all purposes of the
Agreement and neither the Administrator nor
the Company shall be obliged to search for
or ascertain the whereabouts of the
Executive or beneficiary.
Section 5.8 Bonding. The Administrator
and all agents and advisors employed by it
shall not be required to be bonded, except
as may otherwise be required by ERISA.
Section 5.9 Taxes. The Company shall
have the right to withhold from any cash or
other amounts due or to become due from the
Company to a Executive (including by
reducing the amount of any Retirement
Benefit payable in the future) the amount of
any federal, state and local taxes required
to be withheld or otherwise deducted and
paid by the Company with respect to the
vesting or payment of any Retirement Benefit
hereunder.
Section 5.10 No Funding. There shall be
no funding of the benefit amounts to be paid
pursuant to this Agreement. The Agreement
shall not confer upon the Executive (or
beneficiary or any other person) any
security interest or any other right, title
or interest of any kind in or to any
property of the Company. The Agreement shall
constitute merely the unsecured promise of
the Company to make the benefit payments
provided for herein. Notwithstanding the
foregoing provisions of this Section 5.10,
the Company, in its discretion, may
establish a trust to pay the benefit amounts
hereunder, which trust shall be subject to
the claims of the Company's general
creditors in the event of the Company's
bankruptcy or insolvency. If such a trust is
established, the Company shall remain
responsible for the payment of any benefit
amounts provided hereunder which are not
paid in accordance with the provisions
hereof by such trust.
<PAGE>
ARTICLE VI.
DEFINITIONS AND USAGE
Section 6.1 Definitions. Wherever used
in the Agreement, the following words and
phrases shall have the meaning set forth
below, unless the context plainly requires a
different meaning:
"Administrator" means the Company,
acting through the Personnel Committee of
the Board, or other person or persons
designated by the Personnel Committee.
"Affiliate" shall have the meaning set
forth in Rule 12b-2 promulgated under
Section 12 of the Exchange Act.
"Agreement" means this Supplemental
Executive Retirement Agreement, as set forth
herein and as amended from time to time.
"Beneficial Owner" shall have the
meaning set forth in Rule 13d-3 under the
Exchange Act.
"Board" means the Board of Directors of
the Company.
"Change in Control" means a change in
the control of the Company, which shall be
deemed to have occurred if the event set
forth in any one of the following paragraphs
shall have occurred:
(I)any Person is or becomes
the Beneficial Owner, directly or
indirectly, of securities of the
Company (not including in the
securities beneficially owned by
such Person any securities
acquired directly from the Company
or its Affiliates) representing
thirty percent (30%) or more of
the combined voting power of the
Company's then outstanding
securities, excluding any Person
who becomes such a Beneficial
Owner in connection with a
transaction described in clause
(i) of paragraph (III) below; or
(II) the following
individuals cease for any reason
to constitute a majority of the
number of directors then serving:
individuals
<PAGE>
who, on the date
hereof, constitute the Board and
any new director (other than a
director whose initial assumption
of office is in connection with an
actual or threatened election
contest, including but not limited
to a consent solicitation,
relating to the election of
directors of the Company) whose
appointment or election by the
Board or nomination for election
by the Company's shareholders was
approved or recommended by a vote
of at least two-thirds (2/3) of
the directors then still in office
who either were directors on the
date hereof or whose appointment,
election or nomination for
election was previously so
approved or recommended; or
(III) there is consummated
a merger or consolidation of the
Company or any direct or indirect
subsidiary of the Company with any
other corporation (or a share
exchange between shareholders of
the Company or any direct or
indirect subsidiary of the Company
and another corporation or entity
pursuant to Article 5.02 (or any
successor provision thereto) of
the Texas Business Corporation
Act), other than (i) a merger or
consolidation which would result
in the voting securities of the
Company outstanding immediately
prior to such merger or
consolidation continuing to
represent (either by remaining
outstanding or by being converted
into voting securities of the
surviving entity or any parent
thereof), in combination with the
ownership of any trustee or other
fiduciary holding securities under
an employee benefit plan of the
Company or any subsidiary of the
Company, at least fifty-one
percent (51%) of the combined
voting power of the securities of
the Company or such surviving
entity or any parent thereof
outstanding immediately after such
merger or consolidation, or (ii) a
merger or consolidation effected
to implement a recapitalization of
the Company (or similar
transaction) in which no Person is
or becomes the Beneficial Owner,
directly or indirectly, of
securities of the Company
representing thirty percent (30%)
or more of the combined voting
<PAGE>
power of the Company's then
outstanding securities; or
(IV) the shareholders of
the Company approve a plan of
complete liquidation or
dissolution of the Company or
there is consummated an agreement
for the sale or disposition by the
Company of all or substantially
all of the Company's assets, other
than a sale or disposition by the
Company of all or substantially
all of the Company's assets to an
entity, at least fifty-one percent
(51%) of the combined voting power
of the voting securities of which
are owned by shareholders of the
Company in substantially the same
proportions as their ownership of
the Company immediately prior to
such sale.
Notwithstanding the foregoing, a
"Change in Control" shall not be deemed to
have occurred by virtue of the consummation
of any transaction or series of integrated
transactions immediately following which the
record holders of the common stock of the
Company immediately prior to such
transaction or series of transactions
continue to have substantially the same
proportionate ownership in an entity which
owns all or substantially all of the assets
of the Company immediately following such
transaction or series of transactions.
"Code" means the Internal Revenue Code
of 1986, as amended from time to time. Any
reference to a particular Code section shall
include any provision which modifies,
replaces or supersedes it.
"Committee" shall mean the Personnel
Committee of the Board until six months
prior to the occurrence of a Change in
Control and thereafter shall mean (i) the
individuals (not fewer than three in number)
who, on the date six months before a Change
in Control, constitute the Personnel
Committee of the Board, plus (ii) in the
event that fewer than three individuals are
available from the group specified in clause
(i) above for any reason, such individuals
as may be appointed by the individual or
individuals so available (including for this
purpose any individual or individuals
previously so appointed under this clause
(ii)); provided, however,
<PAGE>
that the maximum
number of individuals constituting the
Committee shall not exceed five.
"Company" means American General
Corporation, a Texas corporation, and,
except in determining under the definition
of Change in Control herein whether or not
any Change in Control of the Company has
occurred, shall include any successor to its
business and/or assets which assumes and
agrees to perform this Agreement by
operation of law, or otherwise.
"Early Retirement Date" means the first
date on which the Executive (i) has
completed ten (10) Years of Service and (ii)
has attained the age of fifty-five (55).
"ERISA" means the Employee Retirement
Income Security Act of 1974, as amended from
time to time. Any reference to a particular
ERISA section shall include any provision
which modifies, replaces, or supersedes it.
"Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended
from time to time.
"Final Average Compensation" means the
following sum divided by three (3): the sum
of the base salary received by the Executive
during, and the incentive payments received
by the Executive pursuant to any annual
bonus, incentive compensation or similar
plan maintained by the Company with respect
to, the three (3) calendar years (whether or
not consecutive) ending within the last
sixty (60) months of the Executive's
employment with the Company which produce
the highest total of such base salary and
incentive payments (for purposes of this
sentence, any amount of such base salary or
incentive payment which is deferred by the
Executive shall be included in the
calculation of amounts received).
Notwithstanding the immediately preceding
sentence, if the Executive's termination of
employment is described in Section 2.6
hereof and the Executive receives (pursuant
to Section 8(c)(iii) of his Employment
Agreement (or any successor provision
thereto), or Section 4.5 of his Severance
Agreement (or any successor provision
thereto) and in lieu of any further salary
or bonus payments) a lump sum amount (the
"Severance Amount"), Final Average
Compensation shall mean the Severance Amount
divided by three (3).
<PAGE>
"Normal Retirement Age" means age sixty-
two (62).
"Normal Retirement Date" means the date
on which the Executive attains his Normal
Retirement Age.
"Person" shall have the meaning given
in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and
14(d) thereof, except that such term shall
not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other
fiduciary holding securities under an
employee benefit plan of the Company or any
of its Affiliates, (iii) an underwriter
temporarily holding securities pursuant to
an offering of such securities, or (iv) a
corporation owned, directly or indirectly,
by the shareholders of the Company in
substantially the same proportions as their
ownership of stock of the Company.
"Qualified Plan" means the American
General Retirement Plan, together with any
other defined benefit retirement plan
intended to be qualified under Section
401(a) of the Code which is adopted and
maintained by the Company and under which
the Executive is entitled to a retirement
benefit at the date of his retirement or
other termination of employment.
"Qualified Plan Benefit" means the
aggregate annual retirement benefit to which
the Executive (at the date of his retirement
or other termination of employment) is
entitled under the plan or plans which
comprise the Qualified Plan (expressed in
the form of a single life annuity with a ten-
year term certain commencing payment on the
date payment of the Retirement Benefit
hereunder commences).
"Restoration Plan Benefit" means the
annual retirement benefit to which the
Executive (at the date of his retirement or
other termination of employment) is entitled
under the American General Corporation
Restoration of Retirement Income Plan
(expressed in the form of a single life
annuity with a ten-year term certain
commencing payment on the date payment of
the Retirement Benefit hereunder commences).
<PAGE>
"Retirement Benefit" means the benefit
payable under this Agreement, as determined
under Article II.
"Social Security Benefit" means one-
half of the annual benefit payable under the
Social Security Act, relating to Old-Age and
Disability benefits, as of the Executive's
Normal Retirement Date, or upon actual
retirement, if later.
"Years of Service" means the total
number of years (measured in full and
partial years, in increments of one-twelfth
years) of active employment with Western
National Corporation or the Company during
which substantial services were rendered as
an employee, commencing on the date the
Executive was first employed by Western
National Corporation and ending on the date
he ceases to perform services for the
Company (including employment before the
Effective Date), but in no event shall more
than twenty-eight (28) years be credited to
the Executive regardless of his actual
period of service with Western National
Corporation and the Company. Notwithstanding
the foregoing, if the Executive retires on
or after the attainment of age 62, he shall
be credited with twenty-eight (28) Years of
Service.
IN WITNESS WHEREOF, the parties hereto
have executed this Agreement on the day and
year first above written.
AMERICAN GENERAL CORPORATION
By_________________________
Robert M. Devlin
Chairman, President and
Chief Executive Officer
____________________________
Executive
Exhibit 12
AMERICAN GENERAL CORPORATION
Computation of Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends
(Unaudited)
($ in millions)
Three Months Ended
March 31,
1999 1998
Consolidated operations:
Income before income tax expense, minority interest,
and dividends on preferred securities ............. $ 477 $ 428
Fixed charges deducted from income
Interest expense .................................. 182 172
Implicit interest in rents ........................ 5 5
Total fixed charges deducted from income ........ 187 177
Earnings available for fixed charges........... $ 664 $ 605
Fixed charges per above ............................. $ 187 $ 177
Dividends on preferred stock and securities ......... 37 37
Combined fixed charges and preferred
stock dividends ................................. $ 224 $ 214
Ratio of earnings to fixed charges .................. 3.54 3.41
Ratio of earnings to combined fixed charges
and preferred stock dividends ................. 2.96 2.83
Consolidated operations, corporate fixed charges
and preferred stock dividends only:
Income before income tax expense, minority
interest, and dividends on preferred securities . $ 477 $ 428
Corporate fixed charges deducted from income -
corporate interest expense ...................... 53 54
Earnings available for fixed charges .......... $ 530 $ 482
Total corporate fixed charges per above ........... $ 53 $ 54
Dividends on preferred stock and securities ....... 37 37
Combined corporate fixed charges and
preferred stock dividends ..................... $ 90 $ 91
Ratio of earnings to corporate fixed charges....... 9.95 8.85
Ratio of earnings to combined corporate
fixed charges and preferred stock dividends ..... 5.90 5.29
Exhibit 12
(continued)
AMERICAN GENERAL CORPORATION
Computation of Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends
(Unaudited)
($ in millions)
Three Months Ended
March 31,
1999 1998
American General Finance, Inc.:
Income before income tax expense ................... $ 80 $ 71
Fixed charges deducted from income
Interest expense ................................. 138 122
Implicit interest in rents ....................... 4 3
Total fixed charges deducted from income ....... 142 125
Earnings available for fixed charges ......... $ 222 $ 196
Ratio of earnings to fixed charges ................. 1.56 1.57
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<DEBT-HELD-FOR-SALE> 61,794<F1>
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 357
<MORTGAGE> 3,667
<REAL-ESTATE> 220
<TOTAL-INVEST> 70,783
<CASH> 240
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 6,309<F2>
<TOTAL-ASSETS> 121,767
<POLICY-LOSSES> 63,422<F3>
<UNEARNED-PREMIUMS> 337<F3>
<POLICY-OTHER> 385<F3>
<POLICY-HOLDER-FUNDS> 2,515<F3>
<NOTES-PAYABLE> 13,508
1,925<F4>
0
<COMMON> 936
<OTHER-SE> 5,674<F5>
<TOTAL-LIABILITY-AND-EQUITY> 121,767
993<F6>
<INVESTMENT-INCOME> 1,330
<INVESTMENT-GAINS> (51)
<OTHER-INCOME> 465<F7>
<BENEFITS> 1,384
<UNDERWRITING-AMORTIZATION> 171<F8>
<UNDERWRITING-OTHER> (287)<F9>
<INCOME-PRETAX> 478<F10>
<INCOME-TAX> 168<F11>
<INCOME-CONTINUING> 285
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 285
<EPS-BASIC> 1.14
<EPS-DILUTED> 1.12
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>ALL FIXED MATURITY SECURITIES ARE CLASSIFIED AS AVAILABLE-FOR-SALE AND RECORDED
AT FAIR VALUE.
<F2>INCLUDES COST OF INSURANCE PURCHASED (CIP).
<F3>THE SUM OF POLICY LOSSES, UNEARNED PREMIUMS, POLICY-OTHER, AND POLICYHOLDER
FUNDS COMPRISES INSURANCE AND ANNUITY LIABILITIES.
<F4>CONSISTS OF NON-CONVERTIBLE AND CONVERTIBLE MANDATORILY REDEEMABLE PREFERRED
SECURITIES OF SUBSIDIARIES.
<F5>CONSISTS OF NET OF THE FOLLOWING: COST OF TREASURY STOCK; RETAINED EARNINGS;
AND ACCUMULATED OTHER COMPREHENSIVE INCOME.
<F6>INCLUDES INSURANCE CHARGES.
<F7>INCLUDES PRIMARILY FINANCE CHARGES ON FINANCE RECEIVABLES.
<F8>CONSISTS OF AMORTIZATION OF POLICY ACQUISITION COSTS AND CIP, NET OF ACCRETION
OF INTEREST.
<F9>CONSISTS OF CAPITALIZATION OF POLICY ACQUISITION COSTS AND CIP.
<F10>EXCLUDES $38 MILLION OF DIVIDENDS ON PREFERRED SECURITIES OF SUBSIDIARIES,
SHOWN SEPARATELY, NET OF TAX, IN THE CONSOLIDATED INCOME STATEMENT.
<F11>EXCLUDES $13 MILLION TAX BENEFIT FOR TAX DEDUCTIBLE DIVIDENDS RELATED TO
PREFERRED SECURITIES OF SUBSDIARIES.
</FN>
</TABLE>
