Office of the Chairman
Second-to-Die Policy
SPLIT-DOLLAR AGREEMENT
THIS SPLIT-DOLLAR AGREEMENT (this "Agreement") is made and entered into
effective as of May ___, 1998 (the "Effective Date"), by and among AMERICAN
GENERAL CORPORATION, a Texas corporation, with principal offices and place
of business in Houston, Texas (hereinafter referred to as the "Company"),
__________________________________________________________________________
_________________________ (herein-after referred to as the "Executive"),
and ______________________________________________________________________
_____________________________________________________ (hereinafter
referred to as the "Owner"),1/
WITNESSETH THAT:
WHEREAS, the Executive is currently employed by the Company or an
affiliate of the Company; and
WHEREAS, the Personnel Committee of the Board of Directors of the
Company has heretofore authorized the Company to establish and pay premiums
under a split-dollar life insurance arrangement relating to a life insur-
ance policy insuring the life of the Executive and providing the Executive-
's family with a death benefit equal to 200% of the sum of the Executive's
base salary and average annual incentive bonus; and
WHEREAS, a greater percentage of the sum of the Executive's base salary
and average annual incentive bonus can be provided to the Executive's
family as a death benefit if the premiums the Company would have paid
toward a life insurance policy insuring only the life of the Executive were
used to pay premiums with respect to a life insurance policy insuring the
life of the Executive and his spouse as of the Effective Date (the
"Spouse"); and
WHEREAS, in order to provide his family with greater death benefits, the
Executive has requested the Company to use [all][some] of the premiums the
Company would have paid toward such individual life insurance policy to
make premium payments under a split-dollar arrangement relating to a life
insurance policy insuring the life of the Executive and the Spouse; and
WHEREAS, in order to retain the benefits of the services of the
Executive for the Company and its affiliates, the Company desires to assist
the Executive in providing life insurance protection for the Executive's
family under a policy of life insurance (hereinafter referred to as the
"Policy") insuring the life of the Executive and the Spouse, which Policy
is described in Exhibit A attached hereto and by this reference made a part
1/ If the Executive will be the owner of the policy (as opposed to an
insurance trust or other entity), then the Executive's name should be
inserted in each of the blank spaces provided for the name of the Owner.
If the space provided for the name of the Owner is not completed, then
the Executive shall be deemed to be the Owner.
hereof, and which is being issued by American General Life Insurance
Company (hereinafter referred to as the "Insurer"); and
WHEREAS, the Company is willing to pay all of the premiums due on the
Policy as an additional employment benefit for the Executive, on the terms
and conditions hereinafter set forth; and
WHEREAS, the Owner will be the owner of the Policy and, as such, will
possess all incidents of ownership in and to the Policy; and
WHEREAS, the Company wishes to have the Policy collaterally assigned to
it by the Owner in order to secure the repayment of the amounts which it
will pay toward the premiums on the Policy;
NOW, THEREFORE, in consideration of the premises and of the mutual
promises contained herein, the parties hereto agree as follows:
1. Defined Terms. The terms "Agreement," "Company," "Effective
Date," "Executive," "Insurer," "Owner," "Policy," and "Spouse" shall have
the meanings assigned to such terms in the preceding provisions of this
Agreement. Where the following words and terms are used in this Agreement,
they shall have the respective meanings set forth below, unless the context
clearly indicates to the contrary:
(a) Affiliate: The term "Affiliate" shall have the meaning set
forth in Rule 12b-2 promulgated under Section 12 of the Securities
Exchange Act of 1934, as amended from time to time.
(b) Anniversary Date: Each annual anniversary of the Effective
Date; provided, however, that for purposes of Paragraph 1(d) below, the
Effective Date shall also be considered an Anniversary Date.
(c) Average Annual Bonus: As of any date for which the Benefit
Amount must be determined pursuant to the terms of this Agreement that
occurs (1) during the period beginning on the Effective Date and ending
on the first Anniversary Date, an amount equal to the most recent annual
incentive bonus paid in cash by the Company (or an Affiliate of the
Company) to the Executive on or before the Effective Date, (2) during
the period beginning on the day immediately following the first Anniver-
sary Date and ending on the second Anniversary Date, an amount equal to
the average of the two most recent annual incentive bonuses paid in cash
by the Company (or an Affiliate of the Company) to the Executive on or
before the first Anniversary Date, and (3) after the second Anniversary
Date, an amount equal to the average of the three most recent annual
incentive bonuses paid in cash by the Company (or an Affiliate of the
Company) to the Executive on or before the Anniversary Date next
preceding such date for which the Benefit Amount is determined.
(d) Base Salary: As of any date for which the Benefit Amount
must be determined pursuant to the terms of this Agreement, the Executi-
ve's annual base salary from the Company or an Affiliate of the Company
at the rate in effect on the Anniversary Date next preceding such date.
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(e) Benefit Amount: As of any given date, an amount equal to
_____% of the sum of the Executive's Base Salary and Average Annual
Bonus as of such date. Notwithstanding the foregoing or any provision
in this Agreement to the contrary, the Benefit Amount shall not be
increased at any time after the Effective Date to the extent such
increase is subject to the medical underwriting requirements of the
Insurer and the Insurer refuses to increase the face amount of the
Policy based upon the health or medical condition of the Executive or
the Spouse.
(f) Change in Control: The term "Change in Control" shall have
the meaning assigned to such term in the Employment Agreement between
the Company and the Executive that is in effect on the Effective Date
(or any successor agreement thereto).
(g) Claimant: The term "Claimant" shall have the meaning
assigned to such term in Paragraph 10 hereof.
(h) Measurement Date: The earlier of (1) the date upon which
the Executive's employment with the Company terminates for any reason
whatsoever (including, without limitation, termination of employment by
reason of the death or retirement of the Executive), (2) the date of the
death of the Spouse, (3) the date upon which the Executive becomes
entitled to receive long-term disability benefits under a long-term
disability plan maintained by the Company or an Affiliate of the
Company, or (4) the effective date of the termination of this Agreement
pursuant to Paragraph 8 hereof.
(i) Normal Retirement Date: The term "Normal Retirement Date"
shall have the meaning assigned to such term in the Supplemental
Executive Retirement Agreement between the Company and the Executive
that is in effect on the Effective Date.
(j) Premium Payment Period: A period of 10 years commencing on
the Effective Date.
(k) Relevant Assumptions: As of any given date, (1) the
Company's assumption as of such date with respect to the rate of in-
crease, if any, in the Benefit Amount from such date to the Executive's
Normal Retirement Date (or, if the Executive continues his employment
with the Company beyond the Executive's Normal Retirement Date, to the
Executive's projected date of retirement from the Company) and (2)
current mortality rates and charges, crediting rates, expenses, and
other relevant matters applicable to the Policy as of such date.
Notwithstanding the foregoing, the assumed rate of increase in the
Benefit Amount shall be 0% from and after the Measurement Date.
2. Acquisition and Ownership of Policy; Limitations on Owner's
Rights in Policy.
(a) The Owner shall contemporaneously purchase the Policy from
the Insurer in the initial total face amount specified in Exhibit A
attached hereto. The parties hereto agree that they shall take all
reasonable action necessary to cause the Insurer to issue the Policy, and
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shall take any further reasonable action which may be necessary to cause
the Policy to conform to the provisions of this Agreement. The parties
hereto agree that the Policy shall be subject to the terms and conditions
of this Agreement and of the collateral assignment filed with the Insurer
relating to the Policy.
(b) The Policy names the Owner, and the Owner shall be, the sole
and absolute owner of the Policy. The Owner shall not exercise any of the
ownership rights granted to the owner of the Policy by the terms thereof
except with the express written consent of the Company. Without limiting
the scope of the foregoing, the Owner shall not sell, assign, transfer,
borrow against or withdraw from the cash surrender value of the Policy,
change the beneficiary designation provision of the Policy, change the
elected death benefit option provisions of the Policy, decrease or increase
the face amount of insurance, surrender or cancel the Policy, or take any
other action with respect to the Policy without, in any such case, the
express written consent of the Company.
(c) Notwithstanding the provisions of Paragraph 2(b) above, the
Owner shall have the right to take any of the following actions without the
express written consent of the Company, provided that the Owner provides
the Company with 15 days prior written notice of any such action: (1)
designate the beneficiary or beneficiaries to receive the portion of the
proceeds payable under the Policy specified in Paragraph 7(b) hereof; (2)
elect the settlement option with respect to such proceeds from among the
settlement options available under the Policy; and (3) change such benefi-
ciary designation and settlement option from time to time.
3. Collateral Assignment; Limitation on Company's Rights in Policy.
(a) To secure the repayment to the Company of the amount of the
premiums on the Policy paid by the Company hereunder, the Owner has,
contemporaneously herewith, assigned the Policy to the Company as collater-
al under a separate assignment instrument. The collateral assignment of
the Policy to the Company shall not be terminated, altered or amended by
the Owner, without the express written consent of the Company. The parties
hereto agree to take all action necessary to cause such collateral assign-
ment to conform to the provisions of this Agreement and to be accepted by
the Insurer. Without limiting the scope of the preceding provisions of
this Paragraph 3, the parties hereto agree that the Company shall have an
interest in the cash surrender value and the death benefits under the
Policy to secure the amounts due to the Company hereunder, which interest
shall in no event be less than the aggregate premium payments made with
respect to the Policy by the Company pursuant to Paragraph 5 below.
(b) The Company shall not at any time prior to the termination
of this Agreement (1) take any action that would cause the death benefits
under the Policy that would be available for distribution to the beneficia-
ry or beneficiaries designated by the Owner as provided herein to be less
than the Benefit Amount (determined as of the earlier of the Measurement
Date or the date such action was taken by the Company) and (2) from and
after the date upon which a Change in Control occurs, borrow against the
Policy, pledge the Policy as collateral for a loan, withdraw any amount
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from the Policy or otherwise access any funds held under the Policy until
such time as the beneficiary or beneficiaries designated by the Owner have
received all of the Policy death benefits to which they are entitled
pursuant to the provisions of this Agreement.
4. Adjustments to Policy Face Amount. On each Anniversary Date that
occurs prior to the Measurement Date, the parties hereto shall cause the
total face amount of the Policy to be adjusted to the extent necessary, if
any, so that such face amount is equal to the Benefit Amount (which Benefit
Amount shall be determined as of the day immediately following such
Anniversary Date); provided, however, that if any such adjustment would
require a reduction in the face amount of the Policy, then the Company may,
in its sole discretion, determine that no such adjustment to the face
amount of the Policy shall be made for such Anniversary Date. The parties
hereto agree that they shall take all reasonable action necessary to cause
the Insurer to adjust the face amount of the Policy as provided in the
preceding sentence. Without limiting the scope of the foregoing, (a) the
Executive, the Spouse and the Owner shall furnish any and all information
requested by the Company or the Insurer to facilitate an adjustment to the
face amount of the Policy and (b) the Executive and the Spouse shall take
such physical examinations as the Insurer may deem necessary.
5. Payment of Premiums.
(a) On the Effective Date and on or before each Anniversary
Date, the Company shall pay to the Insurer, as premium payments with
respect to the Policy, the amount, if any, determined by the Company in its
sole discretion; provided, however, that:
(1) on the Effective Date and on each Anniversary Date
that occurs during the Premium Payment Period and prior to the termina-
tion of this Agreement, the Company shall make substantially level
premium payments with respect to the Policy based upon a premium payment
policy established by the Company that is designed to (i) maintain the
Policy in a manner sufficient to provide the level of death benefits to
the Owner s beneficiary or beneficiaries pursuant to Paragraph 7(b)
hereof in the event of the death of both the Executive and the Spouse
prior to the end of the Premium Payment Period and (ii) accumulate
sufficient funds under the Policy (based upon the assumption that the
Executive will retire as of the Executive's Normal Retirement Date) so
that as of the end of the Premium Payment Period the Policy is projected
to have sufficient funds to (A) at all times thereafter provide a
minimum death benefit in an amount equal to the Benefit Amount without
any further premium payments and (B) permit the Owner to terminate this
Agreement as of the fifteenth Anniversary Date and use accumulations
under the Policy to obtain the release of the collateral assignment of
the Policy to the Company; and
(2) on each Anniversary Date that occurs after the end of
the Premium Payment Period and prior to the termination of this Agree-
ment, the Company shall make a premium payment with respect to the
Policy in at least the amount required so that as of such Anniversary
Date the Policy is projected to have sufficient funds to (i) at all
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times thereafter provide a minimum death benefit in an amount equal to
the Benefit Amount without any further premium payments and (ii) permit
the Owner to terminate this Agreement as of the fifteenth Anniversary
Date and use accumulations under the Policy to obtain the release of the
collateral assignment of the Policy to the Company.
The amount of each premium payment required pursuant to clauses (1) and (2)
of the preceding sentence shall be determined based upon (i) the Relevant
Assumptions in effect as of the date such premium payment is required to be
paid by the Company pursuant to this Paragraph 5(a) and (ii) if the
Measurement Date has not occurred as of such premium payment date, the
Company's estimate of the date upon which the Measurement Date will occur
(which date shall be estimated to be no earlier than the Executive's Normal
Retirement Date). The Owner and the Executive acknowledge and agree that
(A) the Company is agreeing to make premium payments with respect to the
Policy as described above based upon the Relevant Assumptions and for the
period of time set forth in this Agreement, (B) the actual crediting rates
under the Policy and the charges and expenses incurred with respect to the
Policy may deviate from the rates, charges and expenses utilized from time
to time under the Relevant Assumptions, and (C) accordingly, the Company
makes no guarantee that the Policy will, in fact, have sufficient funds to
provide a minimum death benefit in an amount equal to the Benefit Amount at
all times after the termination of this Agreement without any further
premium payments. The Company shall promptly notify the Owner of the date
and the amount of each premium payment made by the Company with respect to
the Policy and, promptly upon receipt, the Owner shall furnish the Company
with a copy of the annual report for the Policy received by the Owner from
the Insurer.
(b) Upon the occurrence of a Change in Control, the Company
shall promptly pay into a rabbi trust a single lump sum cash payment in an
amount equal to the projected amount of premium payments that the Company
would be required to make with respect to the Policy pursuant to Paragraph
5(a) hereof during the longer of (1) the remaining portion of the Premium
Payment Period and (2) the 36 month period beginning on the date of such
Change in Control. For purposes of this Paragraph 5(b), the longer of the
periods referred to in clauses (1) and (2) of the preceding sentence shall
be referred to as the "Rabbi Trust Period." Pursuant to the terms of the
rabbi trust, on each Anniversary Date that occurs during the Rabbi Trust
Period, the trustee of the rabbi trust shall pay to the Insurer as a
premium with respect to the Policy an amount equal to (i) the amount
initially deposited in the rabbi trust by the Company divided by (ii) the
number of Anniversary Dates that will occur during the Rabbi Trust Period.
After the trustee has made such a premium payment on each Anniversary Date
that occurs during the Rabbi Trust Period, the rabbi trust shall terminate
and any remaining funds held by the trustee shall be returned to the
Company. Notwithstanding the foregoing, the Company shall remain obligated
to make all premium payments required pursuant to Paragraph 5(a) hereof;
provided, however, that the Company shall be relieved of such obligation to
the extent of the amount of each premium payment made by the trustee of the
rabbi trust with respect to the Policy. All costs and expenses associated
with the establishment and maintenance of the rabbi trust shall be paid by
the Company.
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(c) Neither the Executive, the Spouse nor the Owner shall have
any obligation to pay any premiums with respect to the Policy prior to the
termination of this Agreement. The Company shall have no obligation to pay
any premiums with respect to the Policy from and after the termination of
this Agreement pursuant to Paragraph 8 below.
6. Provision of Information. On or before January 31 of each
calendar year, the Company shall furnish to the Executive a statement of
the amount of income, if any, reportable by the Executive for federal and
state income tax purposes for the preceding calendar year as a result of
the existence and maintenance of the Policy. The Owner and the Executive
shall promptly furnish the Company with (a) copies of any information or
notices provided by the Insurer from time to time with respect to the
Policy and (b) any other material or information relating to the Policy and
reasonably requested by the Company from time to time. Upon request, the
Company shall promptly furnish to the Owner evidence of timely payment of
any amount required to be paid by the Company pursuant to Paragraph 5
hereof.
7. Collection and Distribution of Death Proceeds.
(a) Upon the death of the second to die of the Executive and the
Spouse prior to the termination of this Agreement during the lifetime of
the Executive or the Spouse, the Company and the Owner shall cooperate with
the beneficiary or beneficiaries designated by the Owner to take whatever
action is necessary to collect the death benefit provided under the Policy.
When such benefit has been collected and paid as provided herein, this
Agreement shall thereupon terminate.
(b) Upon the death of the second to die of the Executive and the
Spouse prior to the termination of this Agreement during the lifetime of
the Executive or the Spouse, the beneficiary or beneficiaries designated by
the Owner pursuant to Paragraph 2(c) hereof shall be entitled to receive a
portion of the death benefits provided under the Policy in an amount equal
to the Benefit Amount determined as of the Measurement Date. This amount
shall be paid under the settlement option elected by the Owner.
(c) Upon the death of the second to die of the Executive and the
Spouse prior to the termination of this Agreement during the lifetime of
the Executive or the Spouse, the Company shall have the unqualified right
to receive any and all of the death benefits provided under the Policy in
excess of the amount payable pursuant to Paragraph 7(b) above to the
beneficiary or beneficiaries designated by the Owner. This amount shall be
paid to the Company in a single lump sum cash payment.
(d) The parties hereto agree that, upon the request of the
Company, the beneficiary designation provision of the Policy shall conform
to the provisions hereof.
8. Termination of Agreement.
(a) This Agreement may be terminated by the Owner at any time
during the lifetime of the Executive or the Spouse and after the fifteenth
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Anniversary Date upon written notice to the Company and payment to the
Company by the Owner at the time of such notice of a single lump sum cash
payment in an amount equal to the aggregate premium payments made by the
Company pursuant to Paragraph 5 hereof on or before the date of such
termination, less any withdrawals from the Policy by the Company prior to
the date of such termination and any indebtedness secured by the Policy
which was incurred by the Company and remains outstanding as of the date of
such termination, including any unpaid accrued interest on such indebted-
ness. Upon receipt of such amount, the Company shall release the collater-
al assignment of the Policy by the execution and delivery of an appropriate
instrument of release.
(b) This Agreement may be terminated by the Company at any time
during the lifetime of the Executive or the Spouse and after the later of
(i) the date upon which the Executive's employment with the Company termi-
nates, (ii) the Executive's Normal Retirement Date and (iii) the fifteenth
Anniversary Date. The Company shall provide the Owner and, if then living,
the Executive with 30 days' prior written notice of any such termination of
this Agreement by the Company. If this Agreement is terminated by the
Company as provided in the preceding provisions of this Paragraph 8(b),
then for 60 days after the effective date of the termination of this
Agreement, the Owner shall have the option of obtaining the release of the
collateral assignment of the Policy to the Company. To obtain such
release, the Owner shall repay to the Company the total amount of the
premium payments made by the Company hereunder, less any withdrawals from
the Policy by the Company prior to the date of such termination and any
indebtedness secured by the Policy which was incurred by the Company and
remains outstanding as of the date of such termination, including any
unpaid accrued interest on such indebtedness. Upon receipt of such amount,
the Company shall release the collateral assignment of the Policy by the
execution and delivery of an appropriate instrument of release. If the
Owner fails to exercise such option within such 60 day period, then the
interest of the Owner in the Policy shall automatically be transferred to
the Company and the Owner shall execute any document or documents requested
by the Company or the Insurer to effect such transfer. Alternatively, the
Company may enforce its right to be repaid the amount due it hereunder from
the cash surrender value of the Policy under the collateral assignment of
the Policy; provided that in the event the cash surrender value of the
Policy exceeds the amount due the Company, such excess shall be paid to the
Owner. Thereafter, neither the Owner nor any person claiming under the
Owner shall have any further interest in and to the Policy, either under
the terms thereof or under this Agreement.
9. Insurer Not a Party. Subject to the terms and conditions of the
Policy, the Insurer shall be fully discharged from its obligations under
the Policy by payment of the Policy death benefit to the beneficiary or
beneficiaries named in the Policy and upon the performance of its other
obligations in accordance with the terms of the Policy. In no event shall
the Insurer be considered a party to this Agreement, or any modification or
amendment hereof. No provision of this Agreement, nor of any modification
or amendment hereof, shall in any way be construed as enlarging, changing,
varying, or in any other way affecting the obligations of the Insurer as
expressly provided in the Policy.
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10. Named Fiduciary, Determination of Benefits, Claims Procedure and
Administration.
(a) Named Fiduciary. The Company is hereby designated as the
named fiduciary under this Agreement. The named fiduciary shall have
authority to control and manage the operation and administration of this
Agreement, and it shall be responsible for establishing and carrying out a
premium payment policy and method consistent with the objectives of this
Agreement.
(b) (1) Claim. A person who believes that he or she is being
denied a benefit to which he or she is entitled under this Agreement
(hereinafter referred to as a "Claimant") may file a written request for
such benefit with the Company, setting forth his or her claim. The
request must be addressed to the Company at its then principal place of
business.
(2) Claim Decision. Upon receipt of a claim, the Company
shall advise the Claimant that a reply will be forthcoming within 90
days and shall, in fact, deliver such reply within such period. The
Company may, however, extend the reply period for an additional 90 days
for reasonable cause.
If the claim is denied in whole or in part, the
Company shall adopt a written opinion, using language calculated to be
understood by the Claimant, setting forth: (i) the specific reason or
reasons for such denial; (ii) the specific reference to pertinent
provisions of this Agreement on which such denial is based; (iii) a
description of any additional material or information necessary for the
Claimant to perfect his or her claim and an explanation why such
material or such information is necessary; (iv) appropriate information
as to the steps to be taken if the Claimant wishes to submit the claim
for review; and (v) the time limits for requesting a review under
subsection (3) and for review under subsection (4) hereof.
(3) Request for Review. Within 60 days after the receipt
by the Claimant of the written opinion described above, the Claimant may
request in writing that the Company review its determination. Such
request must be addressed to the Company, at its then principal place of
business. The Claimant or his or her duly authorized representative
may, but need not, review the pertinent documents and submit issues and
comments in writing for consideration by the Company. If the Claimant
does not request a review of the Company's determination within such 60
day period, he or she shall be barred and estopped from challenging the
Company's determination.
(4) Review of Decision. Within 60 days after the Company-
's receipt of a request for review, it will review the determination.
After considering all materials presented by the Claimant, the Company
will render a written opinion, written in a manner calculated to be
understood by the Claimant, setting forth the specific reasons for the
decision and containing specific references to the pertinent provisions
of this Agreement on which the decision is based. If special circum-
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stances require that the 60 day time period be extended, the Company
will so notify the Claimant and will render the decision as soon as
possible, but no later than 120 days after receipt of the request for
review.
11. Arbitration.
(a) Upon completion of the claims procedure described in
Paragraph 10(b) hereof (if applicable), all claims, demands, causes of
action, disputes, controversies, and other matters in questions 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 parties hereto 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 enforce-
able in either federal or state court.
(b) The enforcement of this agreement to arbitrate and all
procedural aspects of this agreement to arbitrate, including but not
limited to, the construction and interpretation of this agreement to
arbitrate, the issues subject to arbitration (i.e., arbitrability), the
scope of the arbitrable issues, allegations of waiver, delay or defenses to
arbitrability, and the rules governing the conduct of the arbitration,
shall be governed by and construed pursuant to the Federal Arbitration Act
and shall be decided by the arbitrators. In deciding the substance of any
such claims, the arbitrators shall apply the substantive laws of the State
of Texas (excluding Texas choice-of-law principles that might call for the
application of some other state s law); provided, however, it is expressly
agreed that the arbitrators shall have no authority to award treble,
exemplary, or punitive damages under any circumstances regardless of
whether such damages may be available under Texas law, the parties hereby
waiving their right, if any, to recover treble, exemplary, or punitive
damages in connection with any such claims. The Company shall bear all of
its costs and expenses incurred in connection with the arbitration proceed-
ing. If arbitration is instituted to enforce the terms of this Agreement
and the Owner or the Executive, as applicable, prevails on at least one of
the issues involved in such arbitration, whether as plaintiff or defendant,
then, in addition to the remedy or relief obtained in such arbitration
proceeding by the Owner or the Executive, such party shall be entitled to
recover its or his expenses incurred in connection with such arbitration
proceeding, including, without limitation, arbitrators and attorneys fees,
and the arbitrators are authorized to so award such costs and fees.
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(c) The arbitration may be initiated by any party by providing
to the other parties a written notice of arbitration specifying the claims.
Within 30 days of the notice of initiation of the arbitration procedure,
(1) the Owner and the Executive, acting together, 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 60 days of the original notice, either the Owner, 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. A mere appearance or impression of bias
will not constitute evident partiality or otherwise disqualify an arbitra-
tor.
(d) The three arbitrators shall by majority vote resolve all
disputes between the parties. There shall be no transcript of the hearing
before the arbitrators. The arbitrators' decision shall be in writing, but
shall be as brief as possible. The arbitrators shall not assign the
reasons for their decision. The arbitrators shall certify in their award
that they have faithfully applied the terms and conditions of this Agree-
ment 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.
12. Amendment. This Agreement may not be amended, altered, or
modified, except by a written instrument signed by the parties hereto, or
their respective successors or assigns. Notwithstanding the foregoing or
any other provision herein to the contrary, the Premium Payment Period, the
face amount of the Policy, the amount of premiums to be paid by the
Company, and/or the references in this Agreement to the fifteenth Anniver-
sary Date may be changed by the Company without the consent of the Owner or
the Executive to the extent necessary to (a) maintain the Policy as a "life
insurance contract" (within the meaning of Section 7702 of the Internal
Revenue Code of 1986, as amended (the "Code"), and the interpretative
authority promulgated thereunder) and (b) prevent the Policy from consti-
tuting a "modified endowment contract" (within the meaning of Section 7702A
of the Code and the interpretative authority promulgated thereunder). The
Company shall provide the Owner and the Executive with prompt written
notice of any such change.
13. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns, and the Owner,
the Executive and their respective successors, assigns, heirs, executors,
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administrators, and beneficiaries; provided, however, that the rights and
obligations of the Owner and the Executive hereunder are personal and
neither this Agreement, nor any right, benefit, or obligation of the Owner
or the Executive hereto, shall be subject to voluntary or involuntary
assignment, alienation or transfer, whether by operation of law or other-
wise, without the prior written consent of the Company.
14. Notice. Any notice, consent or demand required or permitted to
be given under the provisions of this Agreement shall be in writing, and
shall be signed by the party giving or making the same. If such notice,
consent or demand is mailed to a party hereto, it shall be sent by United
States registered or certified mail, postage prepaid, addressed to such
party's last known address as shown on the records of the Company. The
date of such mailing shall be deemed the date of notice, consent or demand.
15. Employment Relationship. For all purposes of this Agreement, the
Executive shall be considered to be in the employment of the Company as
long as the Executive remains an employee of the Company or any Affiliate
of the Company. However, this Agreement is not an employment agreement.
This Agreement shall not be construed as creating an express or implied
contract of employment and does not modify the nature of the Executive's
employment relationship with the Company or its Affiliates, as the case may
be. Except as otherwise agreed in writing between the Executive and the
Company or an Affiliate of the Company, the employment relationship between
the Executive and the Company or its Affiliates is at-will, i.e., the
employment relationship may be terminated at any time at the will of either
the Company or the Executive for any reason or no reason at all.
16. Taxes and Policy Illustrations. The Company makes no guarantees
and assumes no obligations or responsibilities with respect to the Owner's,
the Executive's or the Spouse's federal, state, or local income, estate,
inheritance, and gift tax obligations, if any, under this Agreement, the
Policy or the collateral assignment of the Policy to the Company. The
Executive and the Owner agree and acknowledge that the Policy illustrations
provided prior to the Effective Date and any Policy illustrations that may
be provided from time to time thereafter by the Company, the Insurer or
their respective agents and representatives are not guaranteed and are not
a part of the Policy or this Agreement. Such Policy illustrations shall
not create any additional obligations or responsibilities to the Executive
or the Owner by the Company, the Insurer, or their respective agents and
representatives.
17. Governing Law. This Agreement, and the rights of the parties
hereunder, shall be governed by and construed in accordance with the laws
of the State of Texas.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this the _____ day of ____________, 1998, effective as of the Effective
Date.
AMERICAN GENERAL CORPORATION
By:_______________________________________
Name:_____________________________________
Title:____________________________________
"COMPANY"
__________________________________________
____________________
"EXECUTIVE"
__________________________________________
_______________________________________
"OWNER"
The Spouse joins in the execution of this Agreement for the sole purpose
of evidencing her agreement to the provisions set forth in Paragraphs 2(a)
and 4 of this Agreement.
__________________________________________
______________________
"SPOUSE"
EXHIBIT A
The following life insurance policy is subject to the attached Split-
Dollar Agreement:
Insurer: American General Life Insurance Company
Insureds: __________________________
Policy Number: __________________________
Face Amount on the
Effective Date: $_________________________
Effective Date of Policy: May____, 1998
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Office of the Chairman
Second-to-Die Policy
ASSIGNMENT OF LIFE INSURANCE POLICY AS COLLATERAL
A. FOR VALUE RECEIVED, the undersigned (hereinafter the "Owner")
hereby assigns, transfers and sets over to American General Corporation,
with principal offices and place of business in Houston, Texas, its
successors and assigns (hereinafter the "Assignee"), Policy No. __________-
_______ issued by American General Life Insurance Company (hereinafter the
"Insurer"), and any supplementary contracts issued in connection therewith
(said policy and contracts hereinafter the "Policy"), insuring the lives of
________________ ___________ (the "Executive") and his spouse as of the
date hereof, and all claims, options, privileges, rights, title and
interest therein and thereunder (except as otherwise provided herein),
subject to all the terms and conditions of the Policy and to all superior
liens, if any, which the Insurer may have against the Policy. The Owner, by
this Assignment, and the Assignee, by acceptance of the assignment of the
Policy to it hereunder, agree to the terms and conditions contained herein.
B. This Assignment is made and the Policy is to be held as collateral
security for any and all liabilities and obligations of the Owner to the
Assignee, either now existing or that may hereafter arise, under and
pursuant to that certain Split-Dollar Agreement by and among the Owner, the
Assignee, and the Executive, dated effective as of May ____, 1998 (herein-
after the "Split-Dollar Agreement"). The liabilities and obligations
described in the preceding sentence are hereinafter referred to as the
"Liabilities."
C. It is expressly agreed that, without detracting from the generali-
ty of the foregoing, the following specific rights are included in this
Assignment and pass to the Assignee by virtue hereof:
1. The sole right to collect from the Insurer the net proceeds
of the Policy when it becomes a claim by death or maturity;
2. The sole right to surrender the Policy and receive the
surrender value thereof at any time provided by the terms of the Policy
and at such other times as the Insurer may allow; and
3. The sole right to obtain one or more withdrawals, loans or
advances on the Policy, either from the Insurer or, at any time, from
other persons, and to pledge or assign the Policy as security for such
loans or advances.
D. It is expressly agreed that the following specific rights, so long
as the Policy has not been surrendered and to the extent permitted under
the Split-Dollar Agreement, are reserved by the Owner and excluded from
this Assignment and do not pass by virtue hereof:
1. The right to designate and change the beneficiary to receive
the portion of the proceeds under the Policy specified in Paragraph 7(b)
of the Split-Dollar Agreement; and
2. The right to elect any optional mode of settlement permitted
by the Policy or allowed by the Insurer with respect to such proceeds.
However, the reservation of these rights by the Owner shall in no way
impair the right of the Assignee to surrender the Policy nor impair any
other right of the Assignee hereunder. Further, any exercise of these
rights shall be made subject to this Assignment and to the rights of the
Assignee hereunder.
E. Notwithstanding the foregoing, the Assignee covenants and agrees
with the Owner as follows:
1. Any balance of sums received hereunder from the Insurer
remaining after payment of the then existing Liabilities shall be paid
by the Assignee to the persons entitled thereto under the terms of the
Policy, had this Assignment not been executed;
2. The Assignee will not exercise the right to surrender the
Policy, nor the right to make withdrawals from the Policy or obtain
policy loans from the Insurer, unless and until there has been default
in any of the Liabilities or the Split-Dollar Agreement has been
terminated, pursuant to its terms; in any event, the Assignee will not
exercise any such right until 15 days after the Assignee shall have
mailed notice of intention to exercise such right, by first class mail,
to the Owner at the address last supplied in writing to the Assignee
specifically referring to this Assignment; and
3. The Assignee will, upon request, forward the Policy to the
Insurer without unreasonable delay, for endorsement of any designation
or change of beneficiary or any election of an optional mode of settle-
ment that has been elected by the Owner.
F. The Insurer is hereby authorized to recognize the Assignee's
claims to rights hereunder without investigating the reason for any action
taken by the Assignee, the validity or the amount of the Liabilities, the
existence of any default therein, termination of the Split-Dollar Agree-
ment, the giving of any notice hereunder, or the application to be made by
the Assignee of any amounts to be paid to the Assignee. The sole signature
of the Assignee shall be sufficient for the exercise of any rights under
the Policy assigned hereby and the sole receipt of the Assignee for any
sums received shall be a full discharge and release therefor to the
Insurer. Payment for all or any part of the sums due under the Policy and
assigned herein shall be drawn to the exclusive order of or as directed by
the Assignee if, when, and in such amounts as may be requested by the
Assignee.
G. The Assignee shall be under no obligation to pay any premium on
the Policy nor the principal of or interest on any loans or advances on the
Policy, whether or not obtained by the Assignee, or any other charges on
the Policy.
H. The exercise of any right, option, privilege or power given herein
to the Assignee shall be at the option of the Assignee, and (except as
-15-
provided herein) the Assignee may exercise any such right, option, privi-
lege or power without notice to, or assent by, or affecting the liability
of, or releasing any interest hereby assigned by the Owner.
I. If applicable, the Assignee may take or release other security,
may release any party primarily or secondarily liable for any of the
Liabilities, may grant extensions, renewals or indulgences with respect to
the Liabilities, or may apply the proceeds of the Policy hereby assigned or
any amount received on account of the Policy by the exercise of any right
permitted under this Assignment to the Liabilities in such order as the
Assignee shall determine, without resorting to or regard to other security.
J. As applied to the duties and responsibilities of the Insurer, in
the event of any conflict between the provisions of this Assignment and the
provisions of the Split-Dollar Agreement with respect to the Policy or the
Assignee's rights of collateral security therein, the provisions of this
Assignment shall prevail. As applied between the Owner and the Assignee,
in the event of any such conflict, the provisions of the Split-Dollar
Agreement shall prevail.
K. The Owner declares that no proceedings in bankruptcy are pending
against the Owner and that the Owner's property is not subject to any
assignment for the benefit of creditors of the Owner.
SIGNED this ___ day of ______________, 1998, effective as of May _____,
1998.
___________________________________
___________________________________
___________________________________
"OWNER"
This Assignment is hereby accepted and agreed to by the Assignee.
AMERICAN GENERAL CORPORATION
By:______________________________________
Name:____________________________________
Title:___________________________________
"ASSIGNEE"
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STATE OF _______________ Section
Section
_______________ COUNTY Section
On the _____ day of ___________________________, 1998, before me
personally came ______________________, __________________________________-
__________________, to me known to be the individual who executed the
Assignment on the preceding pages hereof and acknowledged to me that he or
she executed the same.
_____________________________________
Notary Public in and for
THE STATE OF_________________________
My Commission Expires:
____________________________
-17-
Other Executives
SPLIT-DOLLAR AGREEMENT
THIS SPLIT-DOLLAR AGREEMENT (this "Agreement") is made and entered into
effective as of May ___, 1998 (the "Effective Date"), by and among AMERICAN
GENERAL CORPORATION, a Texas corporation, with principal offices and place
of business in Houston, Texas (hereinafter referred to as the "Company"),
____________________________________________ (hereinafter referred to as
the "Executive"), and ____________________________________________________-
______
__________________ _________________________________ (hereinafter referred
to as the "Owner"),2/
WITNESSETH THAT:
WHEREAS, the Executive is currently employed by the Company or an
affiliate of the Company; and
WHEREAS, in order to retain the benefits of the services of the Execu-
tive for the Company and its affiliates, the Company desires to assist the
Executive in providing life insurance protection for the Executive's family
under a policy of life insurance (hereinafter referred to as the "Policy")
insuring the life of the Executive, which Policy is described in Exhibit A
attached hereto and by this reference made a part hereof, and which is
being issued by American General Life Insurance Company (hereinafter
referred to as the "Insurer"); and
WHEREAS, the Company is willing to pay all of the premiums due on the
Policy as an additional employment benefit for the Executive, on the terms
and conditions hereinafter set forth; and
WHEREAS, the Owner will be the owner of the Policy and, as such, will
possess all incidents of ownership in and to the Policy; and
WHEREAS, the Company wishes to have the Policy collaterally assigned to
it by the Owner in order to secure the repayment of the amounts which it
will pay toward the premiums on the Policy;
NOW, THEREFORE, in consideration of the premises and of the mutual
promises contained herein, the parties hereto agree as follows:
1. Defined Terms. The terms "Agreement," "Company," "Effective
Date," "Executive," "Insurer," "Owner," and "Policy" shall have the
meanings assigned to such terms in the preceding provisions of this
Agreement. Where the following words and terms are used in this Agreement,
2/ If the Executive will be the owner of the policy (as opposed
to an insurance trust or other entity), then the Executive's name should
be inserted in each of the blank spaces provided for the name of the
Executive and the name of the Owner. If the space provided for the
name of the Owner is not completed, then the Executive shall be deemed
to be the Owner.
they shall have the respective meanings set forth below, unless the context
clearly indicates to the contrary:
(a) Affiliate: The term "Affiliate" shall have the meaning set
forth in Rule 12b-2 promulgated under Section 12 of the Securities
Exchange Act of 1934, as amended from time to time.
(b) Anniversary Date: Each annual anniversary of the Effective
Date; provided, however, that for purposes of Paragraph 1(d) below, the
Effective Date shall also be considered an Anniversary Date.
(c) Average Annual Bonus: [FOR EXECUTIVES OTHER THAN MESSRS.
XXXX AND XXXXX: As of any date for which the Benefit Amount must be
determined pursuant to the terms of this Agreement that occurs (1)
during the period beginning on the Effective Date and ending on the
first Anniversary Date, an amount equal to the most recent annual
incentive bonus paid in cash by the Company (or an Affiliate of the
Company) to the Executive on or before the Effective Date, (2) during
the period beginning on the day immediately following the first Anniver-
sary Date and ending on the second Anniversary Date, an amount equal to
the average of the two most recent annual incentive bonuses paid in cash
by the Company (or an Affiliate of the Company) to the Executive on or
before the first Anniversary Date, and (3) after the second Anniversary
Date, an amount equal to the average of the three most recent annual
incentive bonuses paid in cash by the Company (or an Affiliate of the
Company) to the Executive on or before the Anniversary Date next
preceding such date for which the Benefit Amount is determined.][FOR
MESSRS. XXXX AND XXXXX: As of any date for which the Benefit Amount
must be determined pursuant to the terms of this Agreement that occurs
(1) during the period beginning on the Effective Date and ending on the
first Anniversary Date, an amount equal to ____ % of the Executive s
annual base salary from the Company or an Affiliate of the Company at
the rate in effect on the Effective Date (the "Deemed Bonus"), (2)
during the period beginning on the day immediately following the first
Anniversary Date and ending on the second Anniversary Date, an amount
equal to the average of the Deemed Bonus and the most recent annual
incentive bonus paid in cash by the Company (or an Affiliate of the
Company) to the Executive on or before the first Anniversary Date, (3)
during the period beginning on the day immediately following the second
Anniversary Date and ending on the third Anniversary Date, an amount
equal to the average of the Deemed Bonus and the two most recent annual
incentive bonuses paid in cash by the Company (or an Affiliate of the
Company) to the Executive on or before the second Anniversary Date, and
(4) after the third Anniversary Date, an amount equal to the average of
the three most recent annual incentive bonuses paid in cash by the
Company (or an Affiliate of the Company) to the Executive on or before
the Anniversary Date next preceding such date for which the Benefit
Amount is determined.]
(d) Base Salary: As of any date for which the Benefit Amount
must be determined pursuant to the terms of this Agreement, the Executi-
ve's annual base salary from the Company or an Affiliate of the Company
at the rate in effect on the Anniversary Date next preceding such date.
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(e) Benefit Amount: As of any given date, an amount equal to
200% of the sum of the Executive's Base Salary and Average Annual Bonus
as of such date; provided, however, that on the Executive's Normal
Retirement Date, the Benefit Amount shall be reduced to 100% of the sum
of the Executive's Base Salary and Average Annual Bonus as of the
Measurement Date (except that if the Executive continues his or her
employment beyond the Executive's Normal Retirement Date, then such
reduction shall occur on the date of the Executive's termination of
employment with the Company for a reason other than death). Notwith-
standing the foregoing or any provision in this Agreement to the
contrary, the Benefit Amount shall not be increased at any time after
the Effective Date to the extent such increase is subject to the medical
underwriting requirements of the Insurer and the Insurer refuses to
increase the face amount of the Policy based upon the health or medical
condition of the Executive.
(f) Cause: The term "Cause" shall have the meaning assigned to
such term in the Change in Control Severance Agreement.
(g) Change in Control: The term "Change in Control" shall have
the meaning assigned to such term in the Change in Control Severance
Agreement.
(h) Change in Control Severance Agreement: The Change in
Control Severance Agreement between the Company and the Executive that
is in effect on the Effective Date (or any successor agreement thereto).
(i) Claimant: The term "Claimant" shall have the meaning
assigned to such term in Paragraph 10 hereof.
(j) Disabled: The Executive shall be considered "Disabled" for
purposes of this Agreement at such time as the Executive becomes
entitled to receive long-term disability benefits under a long-term
disability plan maintained by the Company or an Affiliate of the
Company.
(k) Measurement Date: The earlier of (1) the date upon which
the Executive's employment with the Company terminates for any reason
whatsoever (including, without limitation, termination of employment by
reason of the death or retirement of the Executive), (2) the date upon
which the Executive becomes Disabled, or (3) the effective date of the
termination of this Agreement pursuant to Paragraph 8 hereof.
(l) Normal Retirement Date: The term "Normal Retirement Date"
shall have the meaning assigned to such term in the Company's Supplemen-
tal Executive Retirement Plan that is in effect on the Effective Date.
(m) Premium Payment Period: A period of 10 years commencing on
the Effective Date; provided, however, that upon written notice to the
Owner and the Executive prior to the occurrence of a Change in Control,
the Company may from time to time extend the Premium Payment Period for
any period determined by the Company that ends on or before the later of
-20-
(1) the Executive's Normal Retirement Date or (2) the fifteenth Anniver-
sary Date.
(n) Relevant Assumptions: As of any given date, (1) the
Company's assumption as of such date with respect to the rate of
increase, if any, in the Benefit Amount from such date to the Executive-
's Normal Retirement Date (or, if the Executive continues his or her
employment with the Company beyond the Executive's Normal Retirement
Date, to the Executive's projected date of retirement from the Company)
and (2) current mortality rates and charges, crediting rates, expenses,
and other relevant matters applicable to the Policy as of such date.
Notwithstanding the foregoing, the assumed rate of increase in the
Benefit Amount shall be 0% from and after the Measurement Date.
2. Acquisition and Ownership of Policy; Limitations on Owner's
Rights in Policy.
(a) The Owner shall contemporaneously purchase the Policy from
the Insurer in the initial total face amount specified in Exhibit A
attached hereto. The parties hereto agree that they shall take all
reasonable action necessary to cause the Insurer to issue the Policy, and
shall take any further reasonable action which may be necessary to cause
the Policy to conform to the provisions of this Agreement. The parties
hereto agree that the Policy shall be subject to the terms and conditions
of this Agreement and of the collateral assignment filed with the Insurer
relating to the Policy.
(b) The Policy names the Owner, and the Owner shall be, the sole
and absolute owner of the Policy. The Owner shall not exercise any of the
ownership rights granted to the owner of the Policy by the terms thereof
except with the express written consent of the Company. Without limiting
the scope of the foregoing, the Owner shall not sell, assign, transfer,
borrow against or withdraw from the cash surrender value of the Policy,
change the beneficiary designation provision of the Policy, change the
elected death benefit option provisions of the Policy, decrease or increase
the face amount of insurance, surrender or cancel the Policy, or take any
other action with respect to the Policy without, in any such case, the
express written consent of the Company.
(c) Notwithstanding the provisions of Paragraph 2(b) above, the
Owner shall have the right to take any of the following actions without the
express written consent of the Company, provided that the Owner provides
the Company with 15 days prior written notice of any such action: (1)
designate the beneficiary or beneficiaries to receive the portion of the
proceeds payable under the Policy specified in Paragraph 7(b) hereof; (2)
elect the settlement option with respect to such proceeds from among the
settlement options available under the Policy; and (3) change such benefi-
ciary designation and settlement option from time to time.
3. Collateral Assignment; Limitation on Company's Rights in Policy.
(a) To secure the repayment to the Company of the amount of the
premiums on the Policy paid by the Company hereunder, the Owner has,
contemporaneously herewith, assigned the Policy to the Company as collater-
-21-
al under a separate assignment instrument. The collateral assignment of
the Policy to the Company shall not be terminated, altered or amended by
the Owner, without the express written consent of the Company. The parties
hereto agree to take all action necessary to cause such collateral assign-
ment to conform to the provisions of this Agreement and to be accepted by
the Insurer. Without limiting the scope of the preceding provisions of
this Paragraph 3, the parties hereto agree that the Company shall have an
interest in the cash surrender value and the death benefits under the
Policy to secure the amounts due to the Company hereunder, which interest
shall in no event be less than the aggregate premium payments made with
respect to the Policy by the Company pursuant to Paragraph 5 below.
(b) The Company shall not at any time prior to the termination
of this Agreement (1) take any action that would cause the death benefits
under the Policy that would be available for distribution to the beneficia-
ry or beneficiaries designated by the Owner as provided herein to be less
than the Benefit Amount (determined as of the earlier of the Measurement
Date or the date such action was taken by the Company) and (2) from and
after the date upon which a Change in Control occurs, borrow against the
Policy, pledge the Policy as collateral for a loan, withdraw any amount
from the Policy or otherwise access any funds held under the Policy until
such time as the beneficiary or beneficiaries designated by the Owner have
received all of the Policy death benefits to which they are entitled
pursuant to the provisions of this Agreement.
4. Adjustments to Policy Face Amount. On each Anniversary Date that
occurs prior to the Measurement Date, the parties hereto shall cause the
total face amount of the Policy to be adjusted to the extent necessary, if
any, so that such face amount is equal to the Benefit Amount (which Benefit
Amount shall be determined as of the day immediately following such
Anniversary Date); provided, however, that if any such adjustment would
require a reduction in the face amount of the Policy, then the Company may,
in its sole discretion, determine that no such adjustment to the face
amount of the Policy shall be made for such Anniversary Date. Further, on,
or as soon as administratively practicable after, the Executive's Normal
Retirement Date (or, if later, the date of the termination of the Executiv-
e's employment with the Company for a reason other than death), the parties
hereto shall cause the total face amount of the Policy to be reduced to the
extent necessary, if any, so that such face amount is equal to the Benefit
Amount in effect at such time. The parties hereto agree that they shall
take all reasonable action necessary to cause the Insurer to adjust the
face amount of the Policy as provided in the preceding provisions of this
Paragraph 4. Without limiting the scope of the foregoing, (a) the Execu-
tive and the Owner shall furnish any and all information requested by the
Company or the Insurer to facilitate an adjustment to the face amount of
the Policy and (b) the Executive shall take such physical examinations as
the Insurer may deem necessary.
5. Payment of Premiums.
(a) On the Effective Date and on or before each Anniversary
Date, the Company shall pay to the Insurer, as premium payments with
-22-
respect to the Policy, the amount, if any, determined by the Company in its
sole discretion; provided, however, that:
(1) on the Effective Date and on each Anniversary Date
that occurs during the Premium Payment Period and prior to the termina-
tion of this Agreement, the Company shall make substantially level
premium payments with respect to the Policy based upon a premium payment
policy established by the Company that is designed to (i) maintain the
Policy in a manner sufficient to provide the level of death benefits to
the Owner's beneficiary or beneficiaries pursuant to Paragraph 7(b)
hereof in the event of the Executive's death prior to the end of the
Premium Payment Period and (ii) accumulate sufficient funds under the
Policy (based upon the assumption that the Executive will retire as of
the Executive's Normal Retirement Date) so that as of the end of the
Premium Payment Period the Policy is projected to have sufficient funds
to (A) at all times thereafter provide a minimum death benefit in an
amount equal to the Benefit Amount without any further premium payments
and (B) permit the Owner to terminate this Agreement as of the later of
the Executive s Normal Retirement Date or the fifteenth Anniversary Date
and use accumulations under the Policy to obtain the release of the
collateral assignment of the Policy to the Company; and
(2) on each Anniversary Date that occurs after the end of
the Premium Payment Period and prior to the termination of this Agree-
ment, the Company shall make a premium payment with respect to the
Policy in at least the amount required so that as of such Anniversary
Date the Policy is projected to have sufficient funds to (i) at all
times thereafter provide a minimum death benefit in an amount equal to
the Benefit Amount without any further premium payments and (ii) permit
the Owner to terminate this Agreement as of the later of the Executive s
Normal Retirement Date or the fifteenth Anniversary Date and use
accumulations under the Policy to obtain the release of the collateral
assignment of the Policy to the Company.
The amount of each premium payment required pursuant to clauses (1) and (2)
of the preceding sentence shall be determined based upon (i) the Relevant
Assumptions in effect as of the date such premium payment is required to be
paid by the Company pursuant to this Paragraph 5(a) and (ii) if the
Measurement Date has not occurred as of such premium payment date, the
Company's estimate of the date upon which the Measurement Date will occur
(which date shall be estimated to be no earlier than the Executive's Normal
Retirement Date). The Owner and the Executive acknowledge and agree that
(A) the Company is agreeing to make premium payments with respect to the
Policy as described above based upon the Relevant Assumptions and for the
period of time set forth in this Agreement, (B) the actual crediting rates
under the Policy and the charges and expenses incurred with respect to the
Policy may deviate from the rates, charges and expenses utilized from time
to time under the Relevant Assumptions, and (C) accordingly, the Company
makes no guarantee that the Policy will, in fact, have sufficient funds to
provide a minimum death benefit in an amount equal to the Benefit Amount at
all times after the termination of this Agreement without any further
premium payments. The Company shall promptly notify the Owner of the date
and the amount of each premium payment made by the Company with respect to
-23-
the Policy and, promptly upon receipt, the Owner shall furnish the Company
with a copy of the annual report for the Policy received by the Owner from
the Insurer.
(b) If the Executive's employment with the Company is terminated
under circumstances pursuant to which the Executive is entitled to a
severance benefit under the Change in Control Severance Agreement, then the
Company shall promptly pay into a rabbi trust a single lump sum cash
payment in an amount equal to the projected amount of premium payments that
the Company would be required to make with respect to the Policy pursuant
to Paragraph 5(a) hereof during the 36 month period immediately following
such termination of employment. Pursuant to the terms of the rabbi trust,
on each of the first three Anniversary Dates that occur after the termina-
tion of the Executive's employment with the Company, the trustee of the
rabbi trust shall pay to the Insurer as a premium with respect to the
Policy one-third of the amount initially deposited in the rabbi trust by
the Company. After the trustee has made three such premium payments, the
rabbi trust shall terminate and any remaining funds held by the trustee
shall be returned to the Company. Notwithstanding the foregoing, the
Company shall remain obligated to make all premium payments required
pursuant to Paragraph 5(a) hereof; provided, however, that the Company
shall be relieved of such obligation to the extent of the amount of each
premium payment made by the trustee of the rabbi trust with respect to the
Policy. All costs and expenses associated with the establishment and
maintenance of the rabbi trust shall be paid by the Company.
(c) Neither the Executive nor the Owner shall have any obliga-
tion to pay any premiums with respect to the Policy prior to the termina-
tion of this Agreement. The Company shall have no obligation to pay any
premiums with respect to the Policy from and after the termination of this
Agreement pursuant to Paragraph 8 below.
6. Provision of Information. On or before January 31 of each
calendar year, the Company shall furnish to the Executive a statement of
the amount of income, if any, reportable by the Executive for federal and
state income tax purposes for the preceding calendar year as a result of
the existence and maintenance of the Policy. The Owner and the Executive
shall promptly furnish the Company with (a) copies of any information or
notices provided by the Insurer from time to time with respect to the
Policy and (b) any other material or information relating to the Policy and
reasonably requested by the Company from time to time. Upon request, the
Company shall promptly furnish to the Owner evidence of timely payment of
any amount required to be paid by the Company pursuant to Paragraph 5
hereof.
7. Collection and Distribution of Death Proceeds.
(a) Upon the death of the Executive prior to the termination of
this Agreement during the Executive's lifetime, the Company and the Owner
shall cooperate with the beneficiary or beneficiaries designated by the
Owner to take whatever action is necessary to collect the death benefit
provided under the Policy. When such benefit has been collected and paid
as provided herein, this Agreement shall thereupon terminate.
-24-
(b) Upon the death of the Executive prior to the termination of
this Agreement during the Executive's lifetime, the beneficiary or benefi-
ciaries designated by the Owner pursuant to Paragraph 2(c) hereof shall be
entitled to receive a portion of the death benefits provided under the
Policy in an amount equal to the Benefit Amount determined as of the
Measurement Date (which amount shall be reduced as provided in Paragraph
1(e) hereof upon the later of the Executive's Normal Retirement Date or the
date of the termination of the Executive's employment with the Company for
a reason other than death). This amount shall be paid under the settlement
option elected by the Owner.
(c) Upon the death of the Executive prior to the termination of
this Agreement during the Executive's lifetime, the Company shall have the
unqualified right to receive any and all of the death benefits provided
under the Policy in excess of the amount payable pursuant to Paragraph 7(b)
above to the beneficiary or beneficiaries designated by the Owner. This
amount shall be paid to the Company in a single lump sum cash payment.
(d) The parties hereto agree that, upon the request of the
Company, the beneficiary designation provision of the Policy shall conform
to the provisions hereof.
8. Termination of Agreement.
(a) This Agreement may be terminated by the Owner at any time
during the Executive's lifetime and after the fifteenth Anniversary Date
upon written notice to the Company and payment to the Company by the Owner
at the time of such notice of a single lump sum cash payment in an amount
equal to the aggregate premium payments made by the Company pursuant to
Paragraph 5 hereof on or before the date of such termination, less any
withdrawals from the Policy by the Company prior to the date of such
termination and any indebtedness secured by the Policy which was incurred
by the Company and remains outstanding as of the date of such termination,
including any unpaid accrued interest on such indebtedness. Upon receipt
of such amount, the Company shall release the collateral assignment of the
Policy by the execution and delivery of an appropriate instrument of
release.
(b) This Agreement may be terminated by the Company at any time
during the Executive's lifetime (including, without limitation, upon the
Executive's termination of employment with the Company or at any time
before or after such termination); provided, however, that (i) from and
after the Executive s Normal Retirement Date, this Agreement may not be
terminated by the Company until the later of such Normal Retirement Date,
the date upon which the Executive's employment with the Company terminates,
the expiration of the Premium Payment Period or the fifteenth Anniversary
Date, (ii) from and after the date upon which the Executive becomes
Disabled, this Agreement may not be terminated by the Company until the
earlier of the Executive's Normal Retirement Date, the expiration of the
Premium Payment Period, the fifteenth Anniversary Date or the third
anniversary of the date upon which the Executive becomes Disabled, and
(iii) from and after the date upon which a Change in Control occurs, this
Agreement may be terminated by the Company only on or after the date upon
-25-
which the Executive's employment with the Company terminates (except that,
if the Executive's employment with the Company terminates under circum-
stances pursuant to which the Executive is entitled to a severance benefit
under the Change in Control Severance Agreement, then this Agreement may
not be terminated by the Company until the third anniversary of the date of
such termination of employment). The Company shall provide the Owner and
the Executive with 30 days prior written notice of any such termination of
this Agreement by the Company. If this Agreement is terminated by the
Company as provided in the preceding provisions of this Paragraph 8(b),
then for 60 days after the effective date of the termination of this
Agreement, the Owner shall have the option of obtaining the release of the
collateral assignment of the Policy to the Company. To obtain such
release, the Owner shall repay to the Company the total amount of the
premium payments made by the Company hereunder, less any withdrawals from
the Policy by the Company prior to the date of such termination and any
indebtedness secured by the Policy which was incurred by the Company and
remains outstanding as of the date of such termination, including any
unpaid accrued interest on such indebtedness. Upon receipt of such amount,
the Company shall release the collateral assignment of the Policy by the
execution and delivery of an appropriate instrument of release. If the
Owner fails to exercise such option within such 60 day period, then the
interest of the Owner in the Policy shall automatically be transferred to
the Company and the Owner shall execute any document or documents requested
by the Company or the Insurer to effect such transfer. Alternatively, the
Company may enforce its right to be repaid the amount due it hereunder from
the cash surrender value of the Policy under the collateral assignment of
the Policy; provided that in the event the cash surrender value of the
Policy exceeds the amount due the Company, such excess shall be paid to the
Owner. Thereafter, neither the Owner nor any person claiming under the
Owner shall have any further interest in and to the Policy, either under
the terms thereof or under this Agreement.
(c) Notwithstanding any provision in this Agreement to the
contrary, if the Executive's employment with the Company is terminated for
Cause at any time (whether before or after the Executive attains his or her
Normal Retirement Date), then (i) this Agreement shall automatically
terminate upon such termination of employment, (ii) the interest of the
Owner in the Policy shall automatically be transferred to the Company and
the Owner shall execute any document or documents requested by the Company
or the Insurer to effect such transfer, (iii) the Company may exercise all
rights of ownership of the Policy, take all proceeds of the Policy, take
proceeds designated for the beneficiary or beneficiaries designated by the
Owner, assign its ownership interest in the Policy to any other party or
take any other action the Company determines in its sole discretion, and
(iv) neither the Owner, the Executive nor their respective heirs, assigns,
personal representatives, or beneficiaries shall have any further rights,
claims, or interests of any nature whatsoever in the Policy or in this
Agreement.
(d) It is a condition precedent to the execution of this
Agreement that the Owner and the Executive acknowledge and agree that the
Company has the right, subject to certain limitations set forth in Para-
graph 8(b) hereof, to terminate this Agreement at any time for any reason
-26-
whatsoever or for no reason at all. Without limiting the scope of the
foregoing, the Owner and the Executive specifically acknowledge and agree
that the Company shall have the right to terminate this Agreement prior to
the occurrence of a Change in Control in the event that the premiums
required to be paid under the Policy are increased due to a deterioration
in the health or medical condition of the Executive after the Effective
Date. In such event, the Owner and the Executive hereby waive, and agree
that they shall not assert, any claim or cause of action, in contract, tort
or otherwise, against the Company, any Affiliate of the Company or any
employee, director, officer or agent of the Company or any such Affiliate
with respect to the termination of this Agreement, including, without
limitation, any claim or cause of action based on any alleged discriminato-
ry practice. By entering into this Agreement, the parties hereto agree
that the conditions and provisions set forth in this Paragraph 8(d) are an
essential component of this Agreement, and it is their intent that such
conditions and provisions not be severed from the other terms and provi-
sions of this Agreement.
9. Insurer Not a Party. Subject to the terms and conditions of the
Policy, the Insurer shall be fully discharged from its obligations under
the Policy by payment of the Policy death benefit to the beneficiary or
beneficiaries named in the Policy and upon the performance of its other
obligations in accordance with the terms of the Policy. In no event shall
the Insurer be considered a party to this Agreement, or any modification or
amendment hereof. No provision of this Agreement, nor of any modification
or amendment hereof, shall in any way be construed as enlarging, changing,
varying, or in any other way affecting the obligations of the Insurer as
expressly provided in the Policy.
10. Named Fiduciary, Determination of Benefits, Claims Procedure and
Administration.
(a) Named Fiduciary. The Company is hereby designated as the
named fiduciary under this Agreement. The named fiduciary shall have
authority to control and manage the operation and administration of this
Agreement, and it shall be responsible for establishing and carrying out a
premium payment policy and method consistent with the objectives of this
Agreement.
(b) (1) Claim. A person who believes that he or she is being
denied a benefit to which he or she is entitled under this Agreement
(hereinafter referred to as a "Claimant") may file a written request for
such benefit with the Company, setting forth his or her claim. The
request must be addressed to the Company at its then principal place of
business.
(2) Claim Decision. Upon receipt of a claim, the Company
shall advise the Claimant that a reply will be forthcoming within 90
days and shall, in fact, deliver such reply within such period. The
Company may, however, extend the reply period for an additional 90 days
for reasonable cause.
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If the claim is denied in whole or in part, the
Company shall adopt a written opinion, using language calculated to be
understood by the Claimant, setting forth: (i) the specific reason or
reasons for such denial; (ii) the specific reference to pertinent
provisions of this Agreement on which such denial is based; (iii) a
description of any additional material or information necessary for the
Claimant to perfect his or her claim and an explanation why such
material or such information is necessary; (iv) appropriate information
as to the steps to be taken if the Claimant wishes to submit the claim
for review; and (v) the time limits for requesting a review under
subsection (3) and for review under subsection (4) hereof.
(3) Request for Review. Within 60 days after the receipt
by the Claimant of the written opinion described above, the Claimant may
request in writing that the Company review its determination. Such
request must be addressed to the Company, at its then principal place of
business. The Claimant or his or her duly authorized representative
may, but need not, review the pertinent documents and submit issues and
comments in writing for consideration by the Company. If the Claimant
does not request a review of the Company's determination within such 60
day period, he or she shall be barred and estopped from challenging the
Company's determination.
(4) Review of Decision. Within 60 days after the
Company's receipt of a request for review, it will review the determina-
tion. After considering all materials presented by the Claimant, the
Company will render a written opinion, written in a manner calculated to
be understood by the Claimant, setting forth the specific reasons for
the decision and containing specific references to the pertinent
provisions of this Agreement on which the decision is based. If special
circumstances require that the 60 day time period be extended, the
Company will so notify the Claimant and will render the decision as soon
as possible, but no later than 120 days after receipt of the request for
review.
11. Arbitration.
(a) Upon completion of the claims procedure described in
Paragraph 10(b) hereof (if applicable), all claims, demands, causes of
action, disputes, controversies, and other matters in questions 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 parties hereto 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 enforce-
able in either federal or state court.
-28-
(b) The enforcement of this agreement to arbitrate and all
procedural aspects of this agreement to arbitrate, including but not
limited to, the construction and interpretation of this agreement to
arbitrate, the issues subject to arbitration (i.e., arbitrability), the
scope of the arbitrable issues, allegations of waiver, delay or defenses to
arbitrability, and the rules governing the conduct of the arbitration,
shall be governed by and construed pursuant to the Federal Arbitration Act
and shall be decided by the arbitrators. In deciding the substance of any
such claims, the arbitrators shall apply the substantive laws of the State
of Texas (excluding Texas choice-of-law principles that might call for the
application of some other state's law); provided, however, it is expressly
agreed that the arbitrators shall have no authority to award treble,
exemplary, or punitive damages under any circumstances regardless of
whether such damages may be available under Texas law, the parties hereby
waiving their right, if any, to recover treble, exemplary, or punitive
damages in connection with any such claims. If any party to this Agreement
institutes arbitration to enforce the terms of this Agreement, the party
who prevails in such arbitration, whether plaintiff or defendant, in
addition to the remedy or relief obtained in such arbitration proceeding
shall be entitled to recover its or his expenses incurred in connection
with such arbitration proceeding, including, without limitation, arbitra-
tors and attorneys fees, and the arbitrators are authorized to so award
such costs and fees.
(c) The arbitration may be initiated by any party by providing
to the other parties a written notice of arbitration specifying the claims.
Within 30 days of the notice of initiation of the arbitration procedure,
(1) the Owner and the Executive, acting together, 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 60 days of the original notice, either the Owner, 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. A mere appearance or impression of bias
will not constitute evident partiality or otherwise disqualify an arbitra-
tor.
(d) The three arbitrators shall by majority vote resolve all
disputes between the parties. There shall be no transcript of the hearing
before the arbitrators. The arbitrators' decision shall be in writing, but
shall be as brief as possible. The arbitrators shall not assign the
reasons for their decision. The arbitrators shall certify in their award
that they have faithfully applied the terms and conditions of this Agree-
ment 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
-29-
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.
12. Amendment. This Agreement may not be amended, altered, or
modified, except by a written instrument signed by the parties hereto, or
their respective successors or assigns. Notwithstanding the foregoing or
any other provision herein to the contrary, the Premium Payment Period, the
face amount of the Policy, the amount of premiums to be paid by the
Company, and/or the references in this Agreement to the fifteenth Anniver-
sary Date may be changed by the Company without the consent of the Owner or
the Executive to the extent necessary to (a) maintain the Policy as a "life
insurance contract" (within the meaning of Section 7702 of the Internal
Revenue Code of 1986, as amended (the "Code"), and the interpretative
authority promulgated thereunder) and (b) prevent the Policy from consti-
tuting a modified endowment contract (within the meaning of Section 7702A
of the Code and the interpretative authority promulgated thereunder). The
Company shall provide the Owner and the Executive with prompt written
notice of any such change.
13. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns, and the Owner,
the Executive and their respective successors, assigns, heirs, executors,
administrators, and beneficiaries; provided, however, that the rights and
obligations of the Owner and the Executive hereunder are personal and
neither this Agreement, nor any right, benefit, or obligation of the Owner
or the Executive hereto, shall be subject to voluntary or involuntary
assignment, alienation or transfer, whether by operation of law or other-
wise, without the prior written consent of the Company.
14. Notice. Any notice, consent or demand required or permitted to
be given under the provisions of this Agreement shall be in writing, and
shall be signed by the party giving or making the same. If such notice,
consent or demand is mailed to a party hereto, it shall be sent by United
States registered or certified mail, postage prepaid, addressed to such
party s last known address as shown on the records of the Company. The
date of such mailing shall be deemed the date of notice, consent or demand.
15. Employment Relationship. For all purposes of this Agreement, the
Executive shall be considered to be in the employment of the Company as
long as the Executive remains an employee of the Company or any Affiliate
of the Company. However, this Agreement is not an employment agreement.
This Agreement shall not be construed as creating an express or implied
contract of employment and does not modify the nature of the Executive's
employment relationship with the Company or its Affiliates, as the case may
be. Except as otherwise agreed in writing between the Executive and the
Company or an Affiliate of the Company, the employment relationship between
the Executive and the Company or its Affiliates is at-will, i.e., the
employment relationship may be terminated at any time at the will of either
the Company or the Executive for any reason or no reason at all.
-30-
16. Taxes and Policy Illustrations. The Company makes no guarantees
and assumes no obligations or responsibilities with respect to the Owner's
or the Executive's federal, state, or local income, estate, inheritance,
and gift tax obligations, if any, under this Agreement, the Policy or the
collateral assignment of the Policy to the Company. The Executive and the
Owner agree and acknowledge that the Policy illustrations provided prior to
the Effective Date and any Policy illustrations that may be provided from
time to time thereafter by the Company, the Insurer or their respective
agents and representatives are not guaranteed and are not a part of the
Policy or this Agreement. Such Policy illustrations shall not create any
additional obligations or responsibilities to the Executive or the Owner
by the Company, the Insurer, or their respective agents and representa-
tives.
17. Governing Law. This Agreement, and the rights of the parties
hereunder, shall be governed by and construed in accordance with the laws
of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this the _____ day of ____________, 1998, effective as of the Effective
Date.
AMERICAN GENERAL CORPORATION
By:____________________________________________
Name:__________________________________________
Title:_________________________________________
"COMPANY"
_________________________________________
____________________
"EXECUTIVE"
_________________________________________
_______________________________________
"OWNER"
-31-
EXHIBIT A
The following life insurance policy is subject to the attached Split-
Dollar Agreement:
Insurer: American General Life Insurance Company
Insured: __________________________
Policy Number: __________________________
Face Amount on the
Effective Date: $_________________________
Effective Date of Policy: May____, 1998
-32-
ASSIGNMENT OF LIFE INSURANCE POLICY AS COLLATERAL
A. FOR VALUE RECEIVED, the undersigned (hereinafter the "Owner")
hereby assigns, transfers and sets over to American General Corporation,
with principal offices and place of business in Houston, Texas, its
successors and assigns (hereinafter the "Assignee"), Policy No. __________-
_______ issued by American General Life Insurance Company (hereinafter the
"Insurer"), and any supplementary contracts issued in connection therewith
(said policy and contracts hereinafter the "Policy"), insuring the life of
__________________ __________ (the "Executive"), and all claims, options,
privileges, rights, title and interest therein and thereunder (except as
otherwise provided herein), subject to all the terms and conditions of the
Policy and to all superior liens, if any, which the Insurer may have
against the Policy. The Owner, by this Assignment, and the Assignee, by
acceptance of the assignment of the Policy to it hereunder, agree to the
terms and conditions contained herein.
B. This Assignment is made and the Policy is to be held as collateral
security for any and all liabilities and obligations of the Owner to the
Assignee, either now existing or that may hereafter arise, under and
pursuant to that certain Split-Dollar Agreement by and among the Owner, the
Assignee, and the Executive, dated effective as of May ____, 1998 (herein-
after the "Split-Dollar Agreement"). The liabilities and obligations
described in the preceding sentence are hereinafter referred to as the
"Liabilities."
C. It is expressly agreed that, without detracting from the generali-
ty of the foregoing, the following specific rights are included in this
Assignment and pass to the Assignee by virtue hereof:
1. The sole right to collect from the Insurer the net proceeds
of the Policy when it becomes a claim by death or maturity;
2. The sole right to surrender the Policy and receive the
surrender value thereof at any time provided by the terms of the Policy
and at such other times as the Insurer may allow; and
3. The sole right to obtain one or more withdrawals, loans or
advances on the Policy, either from the Insurer or, at any time, from
other persons, and to pledge or assign the Policy as security for such
loans or advances.
D. It is expressly agreed that the following specific rights, so long
as the Policy has not been surrendered and to the extent permitted under
the Split-Dollar Agreement, are reserved by the Owner and excluded from
this Assignment and do not pass by virtue hereof:
1. The right to designate and change the beneficiary to receive
the portion of the proceeds under the Policy specified in Paragraph 7(b)
of the Split-Dollar Agreement; and
2. The right to elect any optional mode of settlement permitted
by the Policy or allowed by the Insurer with respect to such proceeds.
However, the reservation of these rights by the Owner shall in no way
impair the right of the Assignee to surrender the Policy nor impair any
other right of the Assignee hereunder. Further, any exercise of these
rights shall be made subject to this Assignment and to the rights of the
Assignee hereunder.
E. Notwithstanding the foregoing, the Assignee covenants and agrees
with the Owner as follows:
1. Any balance of sums received hereunder from the Insurer
remaining after payment of the then existing Liabilities shall be paid
by the Assignee to the persons entitled thereto under the terms of the
Policy, had this Assignment not been executed;
2. The Assignee will not exercise the right to surrender the
Policy, nor the right to make withdrawals from the Policy or obtain
policy loans from the Insurer, unless and until there has been default
in any of the Liabilities or the Split-Dollar Agreement has been
terminated, pursuant to its terms; in any event, the Assignee will not
exercise any such right until 15 days after the Assignee shall have
mailed notice of intention to exercise such right, by first class mail,
to the Owner at the address last supplied in writing to the Assignee
specifically referring to this Assignment; and
3. The Assignee will, upon request, forward the Policy to the
Insurer without unreasonable delay, for endorsement of any designation
or change of beneficiary or any election of an optional mode of settle-
ment that has been elected by the Owner.
F. The Insurer is hereby authorized to recognize the Assignee's
claims to rights hereunder without investigating the reason for any action
taken by the Assignee, the validity or the amount of the Liabilities, the
existence of any default therein, termination of the Split-Dollar Agree-
ment, the giving of any notice hereunder, or the application to be made by
the Assignee of any amounts to be paid to the Assignee. The sole signature
of the Assignee shall be sufficient for the exercise of any rights under
the Policy assigned hereby and the sole receipt of the Assignee for any
sums received shall be a full discharge and release therefor to the
Insurer. Payment for all or any part of the sums due under the Policy and
assigned herein shall be drawn to the exclusive order of or as directed by
the Assignee if, when, and in such amounts as may be requested by the
Assignee.
G. The Assignee shall be under no obligation to pay any premium on
the Policy nor the principal of or interest on any loans or advances on the
Policy, whether or not obtained by the Assignee, or any other charges on
the Policy.
H. The exercise of any right, option, privilege or power given herein
to the Assignee shall be at the option of the Assignee, and (except as
provided herein) the Assignee may exercise any such right, option, privi-
lege or power without notice to, or assent by, or affecting the liability
of, or releasing any interest hereby assigned by the Owner.
-34-
I. If applicable, the Assignee may take or release other security,
may release any party primarily or secondarily liable for any of the
Liabilities, may grant extensions, renewals or indulgences with respect to
the Liabilities, or may apply the proceeds of the Policy hereby assigned or
any amount received on account of the Policy by the exercise of any right
permitted under this Assignment to the Liabilities in such order as the
Assignee shall determine, without resorting to or regard to other security.
J. As applied to the duties and responsibilities of the Insurer, in
the event of any conflict between the provisions of this Assignment and the
provisions of the Split-Dollar Agreement with respect to the Policy or the
Assignee s rights of collateral security therein, the provisions of this
Assignment shall prevail. As applied between the Owner and the Assignee,
in the event of any such conflict, the provisions of the Split-Dollar
Agreement shall prevail.
K. The Owner declares that no proceedings in bankruptcy are pending
against the Owner and that the Owner s property is not subject to any
assignment for the benefit of creditors of the Owner.
SIGNED this ___ day of ______________, 1998, effective as of May _____,
1998.
__________________________________
__________________________________
__________________________________
"OWNER"
This Assignment is hereby accepted and agreed to by the Assignee.
AMERICAN GENERAL CORPORATION
By:_____________________________________
Name: _________________________________
Title: _________________________________
"ASSIGNEE"
-35-
STATE OF _______________ Section
Section
_______________ COUNTY Section
On the _____ day of ___________________________, 1998, before me
personally came ______________________, __________________________________-
__________________, to me known to be the individual who executed the
Assignment on the preceding pages hereof and acknowledged to me that he or
she executed the same.
___________________________________
Notary Public in and for
THE STATE OF_______________________
My Commission Expires:
____________________________
-36-
