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Exhibit 10(m)
RETENTION AND EMPLOYMENT AGREEMENT
AGREEMENT by and among SunAmerica Inc., a Maryland corporation (the
"Company"), and Xxx Xxxxxxx (the "Executive"), dated as of the 2lst day of
December, 1998.
1. Employment Period. Subject to the consummation of the
transactions contemplated by the Agreement and Plan of Merger (the "Merger
Agreement") dated as of August 19, 1998 between the Company and American
International Group, Inc., a Delaware corporation ("AIG"), the Company hereby
agrees to continue to employ the Executive, and the Executive hereby agrees to
remain in the employ of the Company subject to the terms and conditions of this
Agreement, for the period commencing on the closing date of the transactions
contemplated by the Merger Agreement (the "Commencement Date") and ending on the
third anniversary thereof (the "Employment Period").
2. Terms of Employment. (a) Position and Duties. (i) During the
Employment Period, the Executive shall be based at the location set forth on
Exhibit A attached hereto, and shall have a title and responsibilities no less
significant than those set forth on Exhibit A.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote full attention and time during normal business hours to the
business and affairs of the Company and to use the Executive's reasonable best
efforts to perform such responsibilities in a professional manner in accordance
with the Company's written policies regarding professional and ethical conduct.
Subject to prior approval to the extent required in accordance with Company
Policy 1OOOA, it shall not be a violation of this Agreement for the executive to
serve on corporate, civic or charitable boards or committees, or manage personal
investments, so long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of the Company in
accordance with this Agreement.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary (the "Annual Base
Salary") of not less than the annual base salary in effect with respect to the
Executive immediately prior to the Commencement Date. The Annual Base Salary
shall be paid no less frequently than in equal monthly installments.
(ii) Annual Bonus. During the Employment Period, the Executive
shall be entitled to participate in all bonus and incentive compensation plans,
practices, policies and programs (the "Compensation Plans") available generally
to other peer executives of the Company and its affiliated companies. For
purposes of this Agreement, the phrase "peer executives of the Company and its
affiliated companies" shall mean those officers of SunAmerica Inc. and its
affiliated companies and, following the Commencement Date, those officers of the
subsidiaries and business units of AIG that continue the business operations of
SunAmerica Inc. and its affiliated companies, that have a level of title, duties
and responsibilities comparable to the Executive. Such Compensation Plans shall
provide the Executive with the opportunity under reasonable expectations of
Company performance to earn annually an amount
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of cash bonus and incentive compensation at least equal, in the aggregate, to
the average annual cash bonus and incentive compensation earned by the Executive
(including any portions thereof deferred into the SunAmerica Inc. Executive
Savings Plan (the "ESP") or applied to reimburse the Company for an earlier
advance) with respect to the Company's two full fiscal years immediately
preceding the Commencement Date.
(iii) Retention Bonus. Subject to the provisions of Section
4(a), on the third anniversary of the Commencement Date, the Executive shall be
entitled to a cash bonus in the amount set forth on Exhibit A hereto (the
"Retention Bonus"), provided that the Executive has been continuously employed
by the Company and/or any of its affiliates from the Commencement Date through
the third anniversary of the Commencement Date. The Retention Bonus will be paid
to the Executive within 10 business days after the third anniversary of the
Commencement Date unless, prior to the second anniversary of the Commencement
Date, the Executive elects to have such Retention Bonus deferred and paid in one
or more periodic installments in accordance with the ESP (or a successor plan)
or deferred on such other terms as may be agreed to by the Company and the
Executive.
(iv) Savings, Retirement and Incentive Plans. During the
Employment Period, the Executive shall be eligible to participate in the
Company's savings, retirement and incentive plans, practices, policies and
programs in which the Executive participated immediately prior to the
Commencement Date and, if such plans, practices, policies, and programs are not
continued, in all savings, retirement and incentive plans, practices, policies
and programs to the extent applicable to other peer executives of the Company
and its affiliates; provided that, in all circumstances, the cash and
equity-based incentive awards and rights granted to the Executive prior to the
Commencement Date, as listed on Exhibit B hereto, shall continue to be honored
and shall remain outstanding, notwithstanding any prior termination or
suspension of the applicable Company plan pursuant to which they were awarded.
During the period from the Commencement Date through the first anniversary
thereof, the benefits provided to the Executive under such plans, practices,
policies and programs will be substantially similar in the aggregate to those
currently provided by the Company to the Executive (except with respect to
additional awards following the Commencement Date under plans involving the
issuance of shares). For purposes of all such plans, the Executive shall receive
full credit for all service with the company prior to the Commencement Date for
purposes of eligibility to participate and receive benefits and vesting, but not
for benefit accruals or the amount or level of employer contributions in any AIG
retirement plan.
(v) Welfare and Other Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the case may be, shall
be eligible for participation in and shall receive all benefits under welfare,
fringe, vacation and other similar benefit plans, practices, policies and
programs in effect with respect to peer executives of the Company and its
affiliated companies (including, without limitation, medical, prescription,
dental, disability, employee life, group life, accidental death and travel
accident insurance plans and programs) on the same basis as peer executives of
the Company and its affiliated companies. During the period from the
Commencement Date through the first anniversary thereof, the benefits provided
to the Executive under such plans, practices, policies and programs will be
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substantially similar in the aggregate to those currently provided by the
Company to the Executive. For purposes of all such plans, the Executive shall
receive full credit for all service with the Company prior to the Commencement
Date for all purposes, except for benefit levels or amounts under any AIG
welfare benefit plans. With respect to welfare benefit plans, any preexisting
condition exclusions and eligibility waiting periods thereunder shall be waived
with respect to the Executive and the Executive's eligible dependents and any
covered expenses incurred on or before the Commencement Date shall be taken into
account for purposes of satisfying applicable deductibles and annual
out-of-pocket limits after the Commencement Date.
(vi) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable business
expenses incurred by the Executive, in accordance with the policies of the
Company.
(vii) Indemnity. The Executive shall be indemnified by the
Company against claims arising in connection with the Executive's status as an
employee, officer, director or agent of the Company or any of its affiliates in
accordance with the Company's indemnity policies for its senior executives.
(viii) Vacation. During the Employment Period, the Executive
shall be entitled to annual vacation at least equal to the number of weeks of
paid vacation per year that the Executive was entitled to immediately prior to
the Commencement Date.
(ix) Perquisites. During the Employment Period, the Executive
will receive perquisites no less favorable than those received by peer
executives of the Company and its affiliates.
3. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's death
during the Employment Period. If the Company determines in good faith that the
Executive has suffered a Disability during the Employment Period (pursuant to
the definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 10(b) of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 120
consecutive days (or, if longer, the period required for coverage under the
Company's long-term disability plan under which the Executive is covered) as a
result of incapacity due to mental or physical illness or injury.
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement. "Cause"
shall mean:
(i) gross misconduct by the Executive intending to cause
damage to the Company, or (ii) a material breach by Executive of this Agreement,
which is not remedied within
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30 days after receipt of written notice from the Company delivered to the
Executive within 90 days after the Company first became aware of such claimed
act or breach describing such claimed act or breach and setting forth the
Company's intention to terminate the employment of the Executive if such breach
is not remedied. No breach, act or failure to act on the Executive's part shall
constitute "Cause" if such breach, act or failure to act resulted from the
Executive's incapacity due to physical or mental illness or injury or a
resignation by the Executive for Good Reason.
(c) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean a material breach by the Company of this Agreement, which is not remedied
within 30 days after receipt of written notice from the Executive delivered to
the Company within 90 days after the Executive first became aware of such
claimed breach describing such claimed breach and setting forth the Executive's
intention to terminate his employment if such breach is not remedied, including
(i) any action or failure to act by the Company which results in the Executive's
position, authority or duties being reduced in any material respect below the
level specified in Section 2(a)(i) and Exhibit A of this Agreement, (ii) any
failure by the Company to comply in any material respect with the provisions of
Section 2(b) of this Agreement, (iii) relocation of the Executive's principal
place of employment to any location that is more than 50 miles from the location
specified in Section 2(a)(i) and Exhibit A of this Agreement, (iv) any purported
termination by the Company of the Executive's employment otherwise than as
expressly permitted by this Agreement, or (v) the failure of the Company to
obtain an agreement reasonably satisfactory to the Executive from any successor
to assume and agree to perform this Agreement, as contemplated in Section 8
hereof or, if the business for which the Executive's services are principally
performed is sold or transferred, the failure of the Company to obtain such an
agreement from the purchaser or transferee of such business.
(d) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 10(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets 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 and (iii) specifies
the termination date (which date shall be not more than 30 days after the giving
of such notice). The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Good Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the Executive's or the
Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date that is one day after the last day of the
cure period, to the extent applicable, or such later date set forth in the
Notice of Termination, (ii) if the Executive's employment is terminated by
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the Company other than for Cause or Disability, or the Executive resigns without
Good Reason, the Date of Termination shall be the date on which the Company or
the Executive notifies the Executive or the Company, respectively, of such
termination and (iii) if the Executive's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.
4. Obligations of the Company upon Termination. (a) Good Reason;
Other Than for Cause. If, during the Employment Period, the Company shall
terminate the Executive's employment other than for Cause, including by reason
of the Executive's death or Disability, or the Executive shall terminate
employment for Good Reason:
(i) The Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the sum of (1) the Executive's
Annual Base Salary through the Date of Termination, (2) the product of (x) an
amount equal to the average annual cash bonus and incentive compensation earned
by the Executive (including any portions thereof deferred into the ESP or
applied to reimburse the Company for an earlier advance) with respect to the
Company's two full fiscal years immediately preceding the Commencement Date and
(y) a fraction, the numerator of which is the number of days in the current
fiscal year through the Date of Termination, and the denominator of which is
365, and (3) any compensation previously deferred by the Executive (together
with any accrued interest or earnings thereon), unless the Executive has
previously instructed the Company to pay such deferred amounts in a lump sum or
in periodic installments in accordance with the terms of a previous deferral
election, in each case to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2) and (3) shall be hereinafter referred to
as the "Accrued Obligations"); and
(ii) the Company shall pay to the Executive in a lump sum in
cash within 30 days of the Date of Termination an amount equal to the Retention
Bonus to the extent not theretofore paid; and
(iii) for the 15-month period following the Date of
Termination, the Executive shall continue to be provided with the benefits and
rights described in Section 2(b)(iv) and shall be deemed to be employed by the
Company for purposes of all benefits and rights described therein, provided that
the Executive shall not be entitled to additional awards under any of the
Company's incentive plans and shall cease to accrue additional benefits (other
than earnings on amounts maintained in the Company's 401(k) and deferred
compensation plans in accordance with their terms) under any qualified and
nonqualified retirement plans; and
(iv) for the 12-month period following the Date of
Termination, the Executive and the Executive's dependents shall continue to be
eligible to participate in the medical, dental, health, life and other welfare
benefit plans and arrangements applicable to the Executive immediately prior to
the Date of Termination on the same terms and conditions (including the amount
of the Executive's required contributory premium payments) in effect for the
Executive and the Executive's dependents immediately prior to the Date of
Termination; and
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(v) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is entitled to
receive under any plan, program, policy or practice or contract or agreement of
the Company and its affiliated companies, including, without limitation,
benefits under outstanding awards (as set forth in Exhibit B hereto) granted to
the Executive, but excluding any broad-based severance plan or policy (such
other amounts and benefits shall be hereinafter referred to as the "Other
Benefits").
(b) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause or the Executive terminates employment without
Good Reason during the Employment Period, the Company shall (x) pay to the
Executive in a lump sum in cash within 30 days after the Date of Termination the
Accrued Obligations less the amount determined under Section 4(a)(i)(2), and (y)
timely pay or provide to the Executive the Other Benefits, in each case to the
extent theretofore unpaid.
(c) Release. If the Executive's employment shall terminate during
the Employment Period, the Executive agrees, upon payment to the Executive of
all amounts due under Section 4(a) or 4(b), as applicable, to execute a release
of claims in the form of Exhibit C hereto.
5. Binding Arbitration. Any controversy or claim arising out of or
relating to this Agreement (including any claims relating to employment or the
termination of employment, whether arising under federal, state or local law and
whether in contract or in tort and including any discrimination or common law
claims, but excluding workers' compensation and unemployment insurance) shall at
the request of either party be determined by arbitration. The arbitration shall
be conducted in Los Angeles, California, in accordance with the United States
Arbitration Act (Title 9, United States Code), notwithstanding any choice of law
provision in this Agreement, and under the rules of the American Arbitration
Association. The dispute shall be submitted to a single arbitrator to be
mutually agreed upon by the parties. If the parties cannot agree on a single
arbitrator, each party shall appoint one arbitrator who shall then jointly
appoint a single arbitrator. The arbitrator shall give effect to applicable
statutes of limitations. Any controversy concerning whether an issue is
arbitrable shall be determined by the arbitrator. Judgment upon the arbitration
award may be entered in any court having jurisdiction. The institution and
maintenance of an action for judicial relief or pursuit of a provisional or
ancillary remedy shall not constitute a waiver of the right of any party,
including the plaintiff, to submit the controversy or claim to arbitration if
any other party contests such action for judicial relief. The Company agrees to
pay for the costs of arbitration and shall reimburse the Executive for his
reasonable attorneys' fees, provided the Executive prevails on at least one
material issue in the arbitration.
6. Confidential Information/Nonsolicitation. (a) The Executive
shall hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any of
its affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by the Company or
any of its affiliated companies and which shall not be or become
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public knowledge (other than by acts by the Executive or representatives of the
Executive in violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it or to an attorney retained by the
Executive.
(b) While employed by the Company or any of its affiliates and for
one year after the Executive's termination of employment, the Executive will
not, directly or indirectly, on behalf of the Executive or any other person, (i)
solicit for employment by other than the Company any person employed by the
Company or its affiliates (or any independent contractor involved in the sale or
manufacture of products sold or manufactured by the Company or any of its
affiliates) at the Commencement Date, nor will the Executive, directly or
indirectly, on behalf of the Executive or any other person, solicit for
employment by other than the Company any person known by the Executive to be
employed (or to be an independent contractor involved in the sale or manufacture
of products sold or manufactured by the Company or any of its affiliates) at the
time by the Company or its affiliates; (ii) make any public statement concerning
the Company, any of its affiliates or subsidiaries, or Executive's employment
unless previously approved by the Company, except as may be required by law or
legal process; (iii) induce, attempt to induce or knowingly encourage any
Customer (as defined below) to divert any business or income from the Company or
any of its affiliates or to stop or alter the manner in which they are then
doing business with the Company or any of its affiliates; or (iv) induce,
attempt to induce or knowingly encourage, directly or through an intermediary
such as a registered representative, insurance agent or a broker-dealer firm,
any contractholder, shareholder or client, as the case may be, to cancel,
surrender, lapse or not renew any insurance or annuity policy, mutual fund
shares or trust services offered by a subsidiary of the Company. The term
"Customer" shall mean any individual or business firm that was or is a customer
or client of, or one that was or is a party in a selling agreement with, or
whose business was actively solicited by, the Company or any of its affiliates
at any time, regardless of whether such customer was generated, in whole or in
part, by Executive's efforts.
(c) The provisions of this Section 6 shall remain in full force and
effect as specified herein notwithstanding the earlier termination of the
Executive's employment hereunder.
7. Specific Performance. The Executive acknowledges that a violation
on his part of any of the covenants contained in Section 6 hereof would cause
immeasurable and irreparable damage to the Company and that damages would be
inadequate and insufficient. Accordingly, the Executive agrees that the Company
shall be entitled to injunctive relief in any court of competent jurisdiction
for any actual or threatened violation of any such covenant in addition to any
other remedies it may have. The Executive agrees that in the event that any
arbitrator or court of competent jurisdiction shall finally hold that any
provision of Section 6 hereof is void or constitutes an unreasonable restriction
against the Executive, the provisions of such Section 6 shall not be rendered
void but shall apply to such extent as such arbitrator or court may determine
constitutes a reasonable restriction under the circumstances.
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8. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) 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, or any business
of the Company for which the Executive's services are principally performed, to
assume expressly and agree to perform this Agreement. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes this Agreement by
operation of law, or otherwise. As used herein, the terms "affiliates" and
"affiliated companies" shall mean any company controlled by, controlling or
under common control with the Company; and the term "Agreement" shall mean this
Retention and Employment Agreement and the Exhibits hereto, which are
incorporated herein and made a part hereof.
9. Indemnification by the Company. (a) Based on the information and
calculations supplied by the Company and its advisors, the Company and the
Executive believe that no excise tax will be imposed under Section 4999 of the
Code on any payments, distributions or other items included or includable in
income from the Company to or for the benefit of the Executive. However, as a
result of the uncertainty of the application of Section 4999, and subject to the
Company's rights under Section 9(b) hereof, if it shall be determined that any
such payment, distribution or other item included or includable in income from
the Company to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 9) (a "Payment") is or will be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Company shall indemnify the Executive against and hold
the Executive harmless, on an after-tax basis, from such Excise Tax and shall
promptly pay to the Executive an amount in cash (the "Indemnification Payment")
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Indemnification Payment, the Executive retains
an amount of the Indemnification Payment equal to the Excise Tax imposed upon
the Payments.
(b) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Executive of the Excise Tax and, as a result, payment by the Company of
the Indemnification Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of
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such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which he or she gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim; provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. The Company shall control
all proceedings taken in connection with such contest and, at its sole option,
may pursue or forgo any and all administrative appeals, proceedings, hearings
and conferences with the taxing authority in respect of such claim and may, at
its sole option, either direct the Executive to pay the tax claimed and xxx for
a refund or contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and xxx for a refund, the Company shall
advance the amount of such payment to the Executive, on an interest-free basis
and shall indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any extension of
the statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Company's control
of the contest shall be limited to issues with respect to which the
Indemnification Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(c) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 9(b), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the
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requirements of Section 9(b)) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(b), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall be considered to be a portion of
the Indemnification Payment required to be paid.
10. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives. The provisions of Sections 2(b)(vii), 4, 5, 6, 7, 8, 9 and this
Section 10 shall survive, and remain in full force and effect following, any
termination of the Executive's employment hereunder; and notwithstanding the
earlier expiration or termination of this Agreement or anything contained herein
to the contrary, the provisions of Sections 2(b)(vii) and 9 hereof shall remain
in full force and effect until the day following the expiration of the statute
of limitations applicable thereto. This Agreement shall be rendered null and
void if, prior to the Closing, the Merger Agreement is terminated and the merger
between the Company and AIG is abandoned pursuant to Article VIII of the Merger
Agreement.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive: Xxx Xxxxxxx
SunAmerica Inc.
0 XxxXxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
If to the Company: SunAmerica Inc.
0 XxxXxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and, such
amounts shall not be reduced whether or not the Executive obtains other
employment. Amounts which are vested benefits or which the Executive
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is otherwise entitled to receive under any plan, policy, practice or program of
or any contract or agreement with the Company or any of its affiliated companies
at or subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
(d) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(e) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from its Board of Directors, the Company
has caused these presents to be executed in its name on its behalf, all as of
the day and year first above written.
/s/ Xxx Xxxxxxx
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XXX XXXXXXX
SUNAMERICA INC.
By /s/ Xxx Xxxxx
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Exhibit A:
Name: Xxxxxxx, Xxx
Title: Vice Chairman and Chief Operating Officer, SAI & President,
SunAmerica Investments and/or other title(s) assigned by Xxx
Xxxxx.
Responsibilities: Comparable to current duties at SAI, and/or other duties
assigned by Xxx Xxxxx.
Location: 0 XxxXxxxxxx Xxxxxx, Xxx Xxxxxxx, XX 00000
Retention Bonus: $5,000,000
13
EXHIBIT B
Executive's Outstanding Awards
Executive has been granted the stock options listed on Schedule B-1, and
the shares of restricted stock, the super share award(s) and the cash bonus
award listed on Schedule B-2 (together, "Awards").
The closing of the transactions contemplated by the Merger Agreement (the
"Closing") constitutes a Change of Ownership under the Company's 1988 Employee
Stock Option Plan, 1997 Employee Incentive Stock Plan, and Long-Term Incentive
Plan (the "Award Plans"). At the time of Closing, each unvested stock option
shall vest and become fully exercisable, and shall remain exercisable thereafter
through the expiration date or earlier cancellation of such stock option, and
all restrictions on shares of restricted stock (not including "super shares")
and on Executive's cash bonus award shall lapse (notwithstanding information set
forth on the attached Schedules regarding the dates on which such Awards were
otherwise to become exercisable or restrictions on such Awards were otherwise to
lapse).
Pursuant to and in accordance with the terms of the Award Plans, the
Executive has the right to satisfy his or her tax withholding obligations with
respect to any Award by directing the Company to withhold from the shares
issuable or deliverable to the Executive under such Award a number of shares
having a fair market value equal to the amount of tax required to be withheld
upon the lapse of restrictions applicable to or exercise of such Award;
provided, however, that if the Executive signs an "Affiliates Letter" as
described in Section 6.8 of the Merger Agreement, the Executive agrees to pay
withholding tax arising from the lapse of restrictions applicable to or exercise
of any Awards during the period beginning 30 days prior to the date of the
Closing and ending on the date (the "Permitted Sale Date") on which the
Executive may first sell shares of AIG capital stock in accordance with such
"Affiliates Letter", by delivering to the Company, within 10 business days
following the Permitted Sale Date, cash or a number of shares having a fair
market value equal to the amount of tax required to be withheld. If the
Executive signs such an "Affiliates Letter", his or her agreement set forth in
the preceding sentence shall, within the meaning of and pursuant to the Award
Plans, constitute "arrangements satisfactory to the Committee" regarding payment
of any taxes required to be withheld with respect to Executive's Awards, and
payment to the Company of such withholding taxes shall not be a condition to the
lapse of restrictions pertaining to, or the delivery of shares in connection
with the exercise of, any Award prior to the time that the Executive may sell
shares of AIG capital stock in accordance with such "Affiliates Letter".
Capitalized terms used and not otherwise defined in this Exhibit B shall
have the meanings given such terms in Executive's Employment Agreement, to which
this Exhibit B is attached.
14
Grant Detail Report SunAmerica Inc.
Exercisable as of 11/25/1998 Schedule B-1
--------------------------------------------------------------------------------
XXX X. XXXXXXX
[ADDRESS]
[SOCIAL SECURITY NUMBER]
Grant Expiration Plan Grant Options Option Options Options
Date Date ID Type Granted Price Outstanding Vested
---------------------------------------------------------------------------------------------
3/1/1989 3/1/1999 1988 Non-Qualified 225,000 $1.444500 0 0
Exercises
----------------------------------
Date Exercised Price
7/16/1997 112,500 $37.375000
11/20/1998 112,500 $76.969900
---------------------------------------------------------------------------------------------
3/1/1989 3/1/1999 1988 Non-Qualified 112,500 $1.444500 75,000 75,000
Exercises
----------------------------------
Date Exercised Price
11/20/1998 37,500 $76.969900
---------------------------------------------------------------------------------------------
7/25/1990 7/25/2000 1988 Non-Qualified 135,000 $2.208900 135,000 135,000
---------------------------------------------------------------------------------------------
7/25/1991 7/25/2001 1988 Non-Qualified 112,500 $2.346700 112,500 112,500
---------------------------------------------------------------------------------------------
7/30/1992 7/30/2002 1988 Non-Qualified 112,500 $4.500000 112,500 112,500
---------------------------------------------------------------------------------------------
7/29/1993 7/29/2003 1988 Non-Qualified 90,000 $7.152700 90,000 90,000
---------------------------------------------------------------------------------------------
7/29/1994 7/29/2004 1988 Non-Qualified 101,250 $10.013300 101,250 81,000
Options Becoming Exercisable
20,250 on 7/29/1999
---------------------------------------------------------------------------------------------
7/28/1995 7/28/2005 1988 Non-Qualified 112,500 $12.306700 112,500 67,500
Options Becoming Exercisable
22,500 on 7/28/1999 22,500 on 7/28/2000
---------------------------------------------------------------------------------------------
8/1/1996 8/1/2006 1988 Non-Qualified 90,000 $20.458300 90,000 36,000
--------------------------------------------------------------------------------
page 85
15
Grant Detail Report SunAmerica Inc.
Exercisable as of 11/25/1998
--------------------------------------------------------------------------------
XXX X. XXXXXXX
[ADDRESS]
[SOCIAL SECURITY NUMBER]
Grant Expiration Plan Grant Options Option Options Options
Date Date ID Type Granted Price Outstanding Vested
---------------------------------------------------------------------------------------------
Options Becoming Exercisable
18,000 on 8/1/1999 18,000 on 8/1/2000 18,000 on 8/1/2001
---------------------------------------------------------------------------------------------
11/7/1996 11/7/2006 1997 Non-Qualified 165,000 $27.166700 165,000 0
Options Becoming Exercisable
165,000 on 11/7/2005
---------------------------------------------------------------------------------------------
8/4/1997 8/4/2007 1997 Non-Qualified 47,700 $39.354200 47,700 9,540
Options Becoming Exercisable
9,540 on 8/4/1999 9,540 on 8/4/2000 9,540 on 8/4/2001 9,540 on 8/4/2002
---------------------------------------------------------------------------------------------
Totals 1,303,950 1,041,450 719,040
--------------------------------------------------------------------------------
page 86
16
SCHEDULE B-2 - As of 11/1/98
XXX XXXXXXX
RESTRICTED STOCK / STOCK UNITS
Grant Date Number of shares of Restricted Stock / Stock Units
---------- --------------------------------------------------
1987 Plan 26,127
7/28/94 135,000
12/23/94 225,000
5/31/95 112,500
SUPER SHARES
Grant Date Number of shares subject to Super Share Award
---------- ---------------------------------------------
12/23/94 112,500
5/31/95 56,250
CASH BONUS AWARD
Grant Date Dollar Amount of Award
---------- ----------------------
11/7/96 $4,482,500
17
Exhibit C
RESIGNATION AND GENERAL RELEASE AGREEMENT
This Resignation and General Release Agreement ("Release Agreement"), made
this ______ of ______________, ______, by and between _____________________
("Executive"), an individual, and ______________________ Inc. (together with its
subsidiaries, affiliates and successors, the "Company"), a ______________
corporation, is an agreement which includes a general release of claims.
Capitalized terms not defined in this Release Agreement shall have the meanings
ascribed to such terms in that certain Employment Agreement between the
Executive and the Company dated as of _____________________________ (the
"Employment Agreement").
WHEREAS, pursuant to the Employment Agreement, the Executive agreed to
execute this Release Agreement upon any termination of employment during the
Employment Period, as such term is defined in the Employment Agreement, and upon
payment of certain amounts specified in the Employment Agreement; and
WHEREAS, Executive and the Company now desire to terminate Executive's
employment relationship with the Company during the Employment Period.
NOW THEREFORE, in consideration of the mutual terms, conditions and
covenants contained in this Release Agreement, Executive and the Company agree
as follows:
1. Executive hereby relinquishes Executive's position as
____________________________ effective ________________, and resigns as an
employee of the Company in any other capacity, such resignation to be effective
_____________________. Such date coincides with the Date of Termination
determined in accordance with Section 3(e) of the Employment Agreement. E
Executive and the Company represent and warrant that any employment relationship
between them terminates on the Date of Termination, and that they shall have no
further employment relationship except as may be set forth in this Release
Agreement [insert if termination under Section 4(a): and to the extent necessary
for Executive to receive the benefits contemplated by Sections 4(a)(iii) and
4(a)(iv) of the Employment Agreement]. Notwithstanding such termination of
employment or any provision of this Release Agreement to the contrary, Executive
shall be entitled to all rights and benefits to be provided to Executive
following the Date of Termination under or pursuant to the terms of the
Employment Agreement, including, without limitation, those specified in Section
4 [insert as applicable (a) or (b)] thereof. Executive and the Company each
acknowledge and agree to abide by their respective obligations pursuant to the
Sections of the Employment Agreement that survive, and remain in full force and
effect, notwithstanding any termination of Executive's employment, as specified
in Section 10(a) of the Employment Agreement.
2. The Company shall pay Executive $_______________ in a lump sum in cash,
less standard withholding and authorized deductions, no later than the 30th day
after the Date of Termination, so long as Executive has not revoked this Release
Agreement prior to the date of such payment. Such payment represents all cash
amounts due on or prior to such date from the Company to Executive under Section
4 [insert as applicable: (a) or (b)] of the
1
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Employment Agreement. This Release Agreement shall be null and void if any
amount or amounts payable to Executive under or pursuant to the terms of the
Employment Agreement are not paid when due.
3. (a) Except for the compensation, rights and benefits to be paid or
provided to Executive, and other obligations of the Company to be complied with,
following the Date of Termination under or pursuant to the terms of the
Employment Agreement, as set forth therein or in Paragraphs 1 and 2 hereof,
which shall not be limited in any way by the provisions of this Paragraph 3, and
except as provided below, Executive on behalf of Executive, Executive's
descendants, dependents, heirs, executors, administrator, assigns, and
successors, and each of them, hereby covenants not to xxx and fully releases and
discharges the Company, and its subsidiaries and affiliates, past and present,
and each of them, as well as its and their trustees, directors, officers,
agents, attorneys, insurers, employees, stockholders, representatives, assigns,
and successors, past and present, and each of them, hereinafter and collectively
referred to as "Releasees," with respect to and from any and all claims, wages,
demands, rights, liens, agreements, contracts, covenants, actions, suits, causes
of action, obligations, debts, costs, expenses, attorneys' fees, damages,
judgments, orders and liabilities of whatever kind or nature in law, equity or
otherwise, whether now known or unknown, suspected or unsuspected, and whether
or not concealed or hidden, which Executive now owns or holds or Executive has
at any time heretofore owned or held or may in the future hold as against said
Releasees, arising out of or in any way connected with Executive's employment
relationship with the Company, or termination of that employment relationship,
or any other transactions, occurrences, acts or omissions or any loss, damage or
injury whatever, known or unknown, suspected or unsuspected, resulting from any
act or omission by or on the part of said Releasees, or any of them, committed
or omitted prior to the date of this Release Agreement including, without
limiting the generality of the foregoing, any claim under Title VII of the Civil
Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with
Disabilities Act, the Family and Medical Leave Act of 1993, the California Fair
Employment and Housing Act, the California Family Rights Act or any claim for
severance pay, bonus, sick leave, holiday pay, vacation pay, life insurance,
health or medical insurance or any other fringe benefit or disability; provided,
however, that, nothing herein shall be deemed to constitute a waiver of
Executive's rights under COBRA.
(b) Except for those obligations of Executive to be complied with
following the Date of Termination, as identified in the Employment Agreement or
arising out of this Agreement, and except as provided below, the Company hereby
acknowledges full and complete satisfaction of and releases and discharges, and
covenants not to xxx, Executive from and with respect to any and all claims,
agreements, obligations, losses, damages, injuries, demands and causes of
action, known or unknown, suspected or unsuspected, arising out of or in any way
connected with Executive's employment relationship with or termination from the
Company, or any other occurrences, actions, omissions or claims whatever, known
or unknown, suspected or unsuspected, which the Company now owns or holds or has
at any time heretofore owned or held against as Executive, provided, however,
that such release of Executive shall not extend to any claims, known or unknown,
suspected or unsuspected, against Executive which arise out of facts which are
finally adjudged by a court of competent jurisdiction to be a crime under any
federal.
2
19
state, or local statute, law, ordinance or regulation, or which are based upon
facts which give rise to a recovery by the Company under any applicable policies
of insurance solely as a result of actions or omissions by Executive and as to
which the insurer has a right to subrogation.
(c) It is the intention of Executive and the Company in executing
this Release Agreement that the same shall be effective as a bar to each and
even claim, demand and cause of action hereinabove specified (specifically
excluding from such bar claims, demands and causes of action relating to or
arising out of those matters set forth as exceptions in, or included in the
proviso clauses of, Paragraphs 3(a) and 3(b) hereof (the "Continuing Claims")).
In furtherance of this intention, Executive and the Company hereby expressly
waive any and all rights and benefits conferred upon each of them by the
provisions of SECTION 1542 OF THE CALIFORNIA CIVIL CODE or any similar provision
and each expressly consents that this Release Agreement shall be given full
force and effect according to each and all of its express terms and provisions,
including those related to unknown and unsuspected claims, demands and causes of
action, if any, as well as those relating to any other claims, demands and
causes of action hereinabove specified (specifically excluding from such waiver
and consent claims, demands and causes of action relating to or arising out of
the Continuing Claims ). SECTION 1542 provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
Executive and the Company acknowledge that they each may hereafter discover
claims or facts in addition to or different from those which each now knows or
believes to exist with respect to the subject matter of this Release Agreement
and which, if known or suspected at the time of executing this Release
Agreement, may have materially affected this settlement. Nevertheless, Executive
and the Company each hereby waives any right, claim or cause of action that
might arise as a result of such different or additional claims or facts
(specifically excluding from such waiver any rights, claims or causes of action
relating to or arising out of the Continuing Claims). Executive and the Company
individually acknowledge that they each understand the significance and
consequence of such release and such specific waiver of SECTION 1542.
4. Executive expressly acknowledges and agrees that, by entering into this
Release Agreement, Executive is waiving any and all rights or claims that
Executive may have arising under the Age Discrimination in Employment Act of
1967, as amended, which have arisen on or before the date of execution of this
Release Agreement. Executive further expressly acknowledges and agrees that:
(a) In return for this Release Agreement, Executive will receive
consideration beyond that which Executive is already entitled to receive before
entering into this Release Agreement:
3
20
(b) Executive was orally advised by the Company and is hereby
advised in writing by this Release Agreement to consult with an attorney before
signing this Release Agreement;
(c) Executive was given a copy of this Release Agreement on
_________________, and informed that Executive had 21 days within which to
consider the Release Agreement; and
(d) Executive was informed that Executive has seven (7) days
following the date of execution of the Release Agreement in which to revoke the
Release Agreement.
5. Executive and the Company each warrant and represent to the other that
they have not heretofore assigned or transferred to any person not a party to
this Release Agreement any matter released pursuant to Paragraph 3 and 4 hereof
or any part or portion thereof.
6. The parties agree that the terms and conditions of this Release
Agreement are confidential as between the parties and shall not be disclosed,
except as required by law or to enforce this Release Agreement. Without limiting
the generality of the foregoing, the parties will not respond to or in any way
participate in or contribute to any public discussion, notice or other publicity
concerning, or in any way relating to, execution of this Release Agreement or
the events (including any negotiations) which led to its execution.
7. Neither the Executive nor the Company shall assign or transfer any
rights under this Release Agreement without the other party's prior written
consent, and any attempt of assignment or transfer without such consent shall be
void.
8. This instrument constitutes and contains the final understanding
between the parties and is intended by the parties as a complete and exclusive
statement of the terms of their agreement. Except as otherwise set forth herein,
it supersedes and replaces all prior negotiations and all agreements proposed or
otherwise, whether written or oral, concerning the subject matters hereof. This
Release Agreement may be modified only with a written instrument duly executed
by each of the parties. No person has any authority to make any representation
or promise on behalf of any of the parties not set forth herein and this Release
Agreement has not been executed in reliance upon any representations or promises
except those contained herein. Any dispute between the parties hereto with
respect to the subject matter hereof shall at the request of either party be
determined by binding arbitration in accordance with the provisions of Section 5
of the Employment Agreement, which Section 5 is incorporated herein and made a
part hereof by this reference.
9. If any provision of this Release Agreement or the application thereof
is held invalid, the invalidity shall not affect other provisions or
applications of the Release Agreement which can be given effect without the
invalid provisions or applications and to this end the provisions of this
Release Agreement are declared to be severable.
10. This Release Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without reference to
principles of conflict of laws.
4
21
11. This Release Agreement may be executed in counterparts, and each
counterpart, when executed, shall have the efficacy of a signed original, but
all executed counterparts shall constitute one and the same agreement.
12. No waiver of any breach of any term or provision of this Release
Agreement shall be construed to be, or shall be, a waiver of any other breach of
this Release Agreement. No waiver shall be binding unless in writing and signed
by the party waiving the breach.
13. The parties agree to cooperate fully and to execute any and all
supplementary documents and to take all additional actions that may be necessary
or appropriate to give full force to the basic terms and intent of this Release
Agreement and which are not inconsistent with its terms.
The parties acknowledge that they have each read the foregoing Release
Agreement and accept and agree to the provisions it contains and hereby execute
it voluntarily with full understanding of its consequences.
EXECUTED this ___day of ____________, _________ in ________________.
---------------------------------
NAME
SUNAMERICA INC.
By:
------------------------------
NAME & TITLE
5
22
EMPLOYMENT AGREEMENT
AGREEMENT by and between SunAmerica Inc., a Maryland corporation
(the "Company"), and Xxx X. Xxxxxxx (the "Executive"), dated as of the 27th day
of April, 1995.
In view of Executive's long-term service with and continuing
contribution to the Company, the Company's Board of Directors (the "Board")
believes it is in the best interests of the Company and its shareholders to
secure Executive's continued services by reducing the personal uncertainties and
risks associated with the possibility or occurrence of a Change of Control (as
defined in Exhibit A). The Board has, therefor, caused the Company to enter into
this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Effective Date.
(a) The "Effective Date" shall mean the first date following the
eighth anniversary of Executive's employment with the Company and prior to April
27, 2000 on which a Change of Control occurs; provided that no Change of Control
shall be deemed to have occurred so long as Xxx Xxxxx continues to serve as the
Chief Executive Officer of the Company or continues to beneficially own more
than 35% of the Outstanding Company Voting Securities (as such terms are defined
in Exhibit A). Notwithstanding anything in this Agreement to the contrary, if a
Change of Control occurs within one year after termination of Executive's
employment with the Company, and if it is reasonably demonstrated by the
Executive that such termination of employment (i) was at the request of a third
party who had taken steps reasonably calculated to effect the Change of Control
or (ii) otherwise arose in connection with or anticipation of the Change of
Control, then the "Effective Date" shall mean the date immediately prior to the
date of such termination of employment.
(b) The Executive and the Company acknowledge that, prior to the
Effective Date, the employment of the Executive by the Company is "at will" and
may be terminated by either the Executive or the Company at any time. Moreover,
if prior to the Effective Date, the Executive's employment with the Company
terminates, then the Executive shall have no further rights under this
Agreement.
2. Employment Period. The Company hereby agrees to continue the Executive
in its employ, and the Executive hereby agrees to remain in the employ of the
Company, in accordance with the terms and provisions of this Agreement, for the
period
23
commencing on the Effective Date and ending on the fifth anniversary of such
date (the "Employment Period").
3. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Executive's position
(including titles and reporting requirements), authority and duties shall
be at least commensurate in all material respects with those held,
exercised and assigned during the 180-day period immediately preceding the
Effective Date and (B) the Executive's services shall be performed at the
location where he was employed immediately preceding the Effective Date or
any office which is the headquarters of the Company and is less than 50
miles from such location.
(ii) During the Employment Period, the Executive agrees to
devote his full business time and attention to the business and affairs of
the Company and to use his reasonable best efforts to perform faithfully
and efficiently the responsibilities assigned to him in accordance with
this Agreement. During the Employment Period it shall not be a violation
of this Agreement for the Executive to (A) serve on civic or charitable
boards or committees, (B) fulfill speaking engagements and (C) manage
personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive
shall receive an annual base salary at least equal to his annual base
salary in effect immediately prior to the Effective Date.
(ii) Compensation Plans. During the Employment Period, the
Executive shall be entitled to participate in all bonus and incentive
compensation plans, practices, policies and programs ("Compensation
Plans") available generally to other peer executives of the Company and
its affiliated companies. Such Compensation Plans shall provide the
Executive with the opportunity under reasonable expectations of Company
performance to earn an amount of bonus and incentive compensation at least
equal, in the aggregate, to the average annual bonus and incentive
compensation received by Executive with respect to the Company's two full
fiscal years immediately preceding the Effective Date or, if greater, an
amount consistent with the
24
bonus and incentive compensation paid to other peer executives of the
Company and its affiliated companies.
(iii) Additional Benefits and Policies. During the Employment
Period, the Executive shall be entitled to (A) life and executive medical
insurance and other welfare benefits and fringe benefits, (B) prompt
reimbursement for all reasonable employment expenses incurred by the
Executive, (C) paid vacation, and (D) an office and secretarial and other
assistants, in each case in accordance with the policies, practices and
procedures of the Company in effect generally with respect to other peer
executives of the Company and its affiliated companies.
(iv) Affiliated Companies. For purposes of this Agreement, the
term "affiliated companies" will not include any corporation or other
entity not controlled by the Company but deemed to be an affiliate because
of the ownership or control of Xxx Xxxxx.
4. Termination of Employment.
(a) Certain Definitions. The terms "Cause," "Disability," "Good
Reason" and "Notice off Termination," as used in this Agreement, are defined in
Exhibit A, which is incorporated in and made a part of this Agreement.
(b) Termination of Employment. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment Period.
The Company may terminate the Executive's employment during the Employment
Period for Cause or due to the Executive's Disability. The Executive may
terminate his employment during the Employment Period for Good Reason.
(c) Notice of Termination. Any termination by the Company for Cause
or Disability, or by the Executive for Good Reason, shall be communicated by
Notice of Termination to the other party hereto given in accordance with Section
9(b). The failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason, Cause or Disability shall not waive any right of the Executive or the
Company hereunder or preclude the Executive or the Company from asserting such
fact or circumstance in enforcing the Executive's or the Company's rights
hereunder.
5. Obligations of the Company upon Termination.
(a) Payments Upon Termination. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause or
Disability, or the Executive shall terminate his employment for Good Reason, the
Company shall
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25
pay to the Executive as severance an amount in cash equal to (i) Executive's
average annual cash compensation (base salary plus any bonus or incentive
compensation) earned during the Company's three full fiscal years immediately
preceding the fiscal year in which the Date of Termination occurs (the "Average
Cash Compensation"), multiplied by (ii) a fraction, the numerator of which is
the number of days remaining, after the Date of Termination (as defined in
Exhibit A), in the Employment Period, and the denominator of which is 365;
provided, however, that in no event will the amount of such payment be less than
one or more than two times the Average Cash Compensation (the "Severance
Amount"). One half of such Severance Amount shall be paid to Executive in a lump
sum within 10 days after the Date of Termination, with the remaining one half
payable in equal installments on the last day of each of the twelve calendar
months immediately following the Date of Termination. In addition to any amounts
that may be due to Executive pursuant to the previous two sentences or any other
provision of this Agreement, upon termination of the Executive's employment with
the Company during the Employment Period for any reason whatsoever, the Company
(i) will pay to executive, within 10 days after the Date of Termination, any
amount of base salary accrued but unpaid through the Date of Termination, any
compensation previously deferred by the Executive and accrued vacation pay, and
(ii) will timely pay or provide to the Executive and/or his family any other
amounts or benefits required to be paid or provided, or which the Executive
and/or his family is eligible to receive, pursuant to this Agreement or under
any plan, program, policy or practice, contract or agreement of the Company
applicable to the Executive or generally applicable to other peer executives of
the Company and its affiliated companies (except for severance payments under
the severance plan in effect for all Company employees, the benefits under which
are replaced during the Employment Period by the provisions of this Section
5(a)).
(b) Effect of Termination on Restricted Stock and Stock Options.
Notwithstanding any other provision of this Agreement, of any Company plan or
any agreement between Executive and the Company, if Executive's employment with
the Company is terminated during the Employment Period (i) by the Company other
than for Cause or Disability, or by Executive for Good Reason, then (x) all
options to purchase securities of the Company theretofore granted to Executive
and not fully exercisable shall become exercisable in full and may be exercised
by Executive at any time prior to the one-year anniversary of the Date of
Termination, and (y) all restrictions on any shares of restricted stock granted
by the Company to and then held by Executive (other than "Super Shares," as
defined in the Company's 1995 Performance Stock Plan) shall lapse, and (z) the
Company shall issue to Executive the number of Super Shares subject to
Executive's outstanding awards and as to which the applicable Super Performance
Objectives (as defined in the Company's 1995 Performance Stock Plan) have been
achieved on or prior to the
4
26
Date of Termination, or, if such objectives have not been achieved by such date,
as to which the Company's Board determines, in the reasonable exercise of its
business judgement and based on the Company's actual and reasonably anticipated
financial results through the end of the applicable Performance Period (as
defined in the Company's 1995 Performance Stock Plan), that the applicable Super
Performance Objectives are reasonably certain to be achieved by the end of such
Performance Period, or (ii) by reason of the Executive's death or Disability,
then (x) all restrictions will lapse on that number of shares of restricted
stock then held by Executive as to which such restrictions would have lapsed on
or prior to the Date of Termination had each agreement between the Company and
Executive regarding grants of restricted stock provided for restrictions to
lapse on 1 2/3% of the number of shares (other than "Super Shares") included in
such grant at the end of each month following the date of such grant, and (y)
the Company shall issue to Executive a number of Super Shares equal to the
number that would have been issued pursuant to Section 5(b)(i)(z) above had
Executive's employment been terminated by the Company other than for Cause or
Disability, multiplied by a fraction, the numerator of which is the number of
shares of restricted stock as to which restrictions will lapse in accordance
with Section 5(b)(ii)(x) above and the denominator of which is the number of
shares of restricted stock held by Executive as of the Date of Termination.
Certificates representing the number of shares of Company common stock as to
which restrictions shall have lapsed and to be issued to Executive under awards
of Super Shares pursuant to the previous sentence shall be delivered to
Executive (or his estate or legal representatives) by the Company, free of any
restrictive legends or conditions, within 10 days after the Date of Termination.
This Section 5(b) shall be deemed an amendment to any agreements between the
Company and the Executive with respect to outstanding stock options, shares of
restricted stock or Super Shares.
6. Non-exclusivity of Rights; Option to Waive Benefits. Nothing in this
Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliated companies and for which the Executive may qualify
(except for the severance plan in effect for all Company employees, the benefits
under which are replaced during the Employment Period by the provisions of
Section 5(a) hereof), nor shall anything herein reduce such rights as the
Executive may have under any contract or agreement with the Company or any of
its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement. In no event shall the
Executive be obligated to seek other employment or take any other
5
27
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and such amounts shall not be reduced whether
or not the Executive obtains other employment. Executive shall be entitled to
refuse or defer all or any portion of any payments or benefits under this
Agreement, by delivering written notice of such refusal or deferral to the
Company in writing, if he determines that the receipt of such payment or benefit
may result in adverse tax consequences to him; provided that such refusal or
deferral shall not extend or modify the period during which options may be
exercised or restrictions may lapse on restricted shares or Super Shares or as
to which performance is measured under any Company benefit or stock plan.
7. Successors. This Agreement is personal to the Executive and shall not
be assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives. This Agreement shall inure to the benefit
of and be binding upon the Company and its successors and assigns. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets that becomes subject to this Agreement
by operation of law or otherwise.
8. Confidentiality and Solicitation. During the performance of Executive's
duties on behalf of the Company, Executive will receive and be entrusted with
certain confidential and/or secret information of a proprietary nature.
Executive shall not disclose or use, during his employment or any time
thereafter, any such information which is not otherwise publicly available,
except as may be required by law. Executive agrees that during his employment he
will not engage as a director, officer, owner, part-owner (five or more percent
shareholder), joint venturer or otherwise, in any business competitive with the
Company or any of its affiliated companies; provided that passive investments
are permitted by this sentence. In the event of termination of Executive's
employment for any reason, for a period of one year thereafter, Executive will
not (a) employ or seek to employ or engage any employee of the Company or any of
its affiliated companies, or (b) make any public statement concerning the
Company, any of its affiliates or affiliated companies, or his employment unless
previously approved by the Company, except as may be required by law.
9. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of California. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written agreement
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executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive: Xxx X. Xxxxxxx
0000 Xx Xxxxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
If to the Company: SunAmerica Inc.
0 XxxXxxxxxx Xxxxxx
Xxxxxxx Xxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: Chief Executive Officer
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) If any legal action shall be brought for the enforcement of this
Agreement, or because of any alleged dispute, breach or default hereunder, the
successful or prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in such action in addition to any other
relief to which it or he may be entitled.
(f) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason,
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
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IN WITNESS WHEREOF, the Executive has executed this Agreement and,
pursuant to the authorization from its Board of Directors, the Company has
caused this Agreement to be executed in its name on its behalf, all as of the
day and year first above written.
by: /s/ Xxx X. Xxxxxxx
----------------------------
Xxx X. Xxxxxxx
SUNAMERICA INC.
By: /s/ Xxx Xxxxx
-------------------------
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EXHIBIT A
Certain Definitions
I. "Cause." For purposes of this Agreement, "Cause" shall mean (i) the
conviction of the Executive of a felony or other crime involving fraud,
dishonesty or moral turpitude, (ii) fraud with respect to the business of the
Company, or (iii) a material breach by the Executive of the Executive's
obligations under Section 3(a) of this Agreement (other than as a result of
incapacity due to physical or mental illness), which is willful and deliberate
or the result of Executive's gross neglect of duties, and which is not remedied
in a reasonable period of time after receipt of written notice from the Board of
Directors of the Company specifying such breach.
II. "Change of Control." For purposes of this Agreement, a "Change of Control"
shall mean the occurrence of any of the following events:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more, or
such greater percentage as shall be required to make such individual, entity or
group, immediately following such acquisition, the largest holder, of the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that the following acquisitions
shall not constitute a Change of Control: (i) any acquisition directly from the
Company (excluding an acquisition by virtue of the exercise of a conversion
privilege), (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, or (iv) any acquisition by any
corporation pursuant to a reorganization, merger or consolidation, if, following
such reorganization, merger or consolidation, the conditions described in
clauses (A), (B) and (C) of subsection (c) of this paragraph II are satisfied;
or
(b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such
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31
individual whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or
(c) Approval by the shareholders of the Company of (i) a complete
liquidation or dissolution of the Company, (ii) a reorganization, consolidation
or merger (a "Reorganization"), or (iii) the sale or other disposition of all or
substantially all of the assets of the Company (a "Sale"), unless, following the
consummation of any such Reorganization or Sale, the following requirements are
satisfied with respect to the corporation resulting from such Reorganization, or
the corporation which has acquired all or substantially all of the assets of the
Company: (A) more than 60% of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners of the Outstanding
Company Voting Securities immediately prior to such Reorganization or Sale, in
substantially the same proportion as their ownership, immediately prior to such
Reorganization or Sale of the Outstanding Company Voting Securities, (B) no
Person (excluding the Company and any employee benefit plan (or related trust)
of the Company or such corporation and any Person beneficially owning,
immediately prior to such reorganization, consolidation or merger, or such sale
or other disposition, directly or indirectly, 20% or more of the Outstanding
Company Voting Securities) beneficially owns, directly or indirectly, 20% or
more of the combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of directors and (C)
at least a majority of the members of the board of directors of such corporation
were members of the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such Reorganization or Sale.
If any of the foregoing events occurs and Xxx Xxxxx is then the
Chief Executive Officer of the Company or the beneficial owner of more than 35%
of the Outstanding Company Voting Securities, then, notwithstanding the
foregoing, such Change of Control shall be deemed to have occurred on the first
date on which Mr. Broad is no longer the Chief Executive Officer of the Company
or the beneficial owner of more than 35% of the Outstanding Company Voting
Securities.
III. "Date of Termination." For purposes of this Agreement, the "Date of
Termination" means (i) if the Executive's employment is terminated by the
Company for Cause or Disability, or by the Executive for Good Reason, the date
of receipt of the Notice of Termination or any later date specified therein, as
the case may be, (ii) if the Executive's employment is terminated by the
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32
Company other than for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies the Executive of such termination and (iii)
if the Executive's employment is terminated by reason of death, the Date of
Termination shall be the date of Executive's death.
IV. "Disability." For purposes of this Agreement, "Disability" shall mean the
absence of the Executive from his duties with the Company on a full-time basis
for 120 consecutive days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or his legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
V. "Good Reason." For purposes of this Agreement, "Good Reason" shall mean:
(i) any action or failure to act by the Company which results
in Executive's position (including titles and reporting requirements),
authority or duties being reduced below the level specified in Section
3(a) (i) (A) of this Agreement;
(ii) any failure by the Company to comply with the provisions
of Section 3(b) of this Agreement;
(iii) the Company's requiring the Executive to be based at any
office or location other than that described in Section 3(a) (i) (B) of
this Agreement; or
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement.
VI. "Notice of Termination." For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment (specifying the provision of
this Agreement relied upon) and (ii) if the Date of Termination is other than
the date of receipt of such notice, specifies the termination date (which date
shall be not more than 15 days after the giving of such notice).
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AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
This AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT dated as of February __, 1997
amends in the respects set forth herein that certain Employment Agreement by and
between SunAmerica Inc., a Maryland Corporation, (the "Company"), and Xxx X.
Xxxxxxx (the "Executive"), dated as of April 27, 1995.
Section 5(b) of the Employment Agreement is amended to include the following
sentence to the end of that Section:
References in this Agreement to "options," "restricted stock" and "Super
Shares" shall include all similar awards or plans offering similar
benefits to the Employee, including, without limitation, any restricted
stock units awarded under the 1995 Performance Stock Plan or the 1988
Employee Stock Plan, stock options under the 1997 Employee Incentive Stock
Plan, and awards under the 1997 Long-Term, Incentive Plan.
IN WITNESS WHEREOF, the Employee has executed this Amendment and, pursuant to
the authorization from the Board of Directors, the Company has caused this
Amendment to be executed in its name on its behalf, all as of the day and year
first above written.
/s/ Xxx X. Xxxxxxx
----------------------------
Xxx X. Xxxxxxx
SUNAMERICA INC.
By: /s/ Xxx Xxxxx
-------------------------
Xxx Xxxxx
