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                                                                   EXHIBIT 10.13

                              EMPLOYMENT AGREEMENT

                 THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of February
1, 1998 (the "Effective Date"), by and between Jon P. Newton (the "Executive")
and American General Corporation, a Texas corporation (the "Company").

         WHEREAS, during the course of Executive's employment with the Company,
the Executive has performed outstanding services for the Company; and

         WHEREAS, it is deemed by the Company to be in the best interests of
the Company to assure continuation of Executive's employment; and

         WHEREAS, the Company and the Executive have determined to enter into
this Agreement pursuant to which the Company will continue to employ the
Executive on the terms and conditions set forth herein;

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:

                 1.  Defined Terms.  The definitions of capitalized terms used
in this Agreement (if not provided where a capitalized term initially appears)
are provided in the last Section hereof.

                 2.  Employment.  The Company hereby agrees to employ the
Executive, and the Executive hereby accepts such employment, on the terms and
conditions hereinafter set forth.

                 3.  Term.

                          (a)  Duration of Term.  Unless earlier terminated as
provided in Section 3(b) hereof, the Executive's employment with the Company
under this Agreement shall commence at the Effective Date and shall end on the
final day of the Term.  For purposes of this Agreement, the "Term" shall mean
the full three-year term of the Agreement from the Effective Date until the day
before the third anniversary thereof, plus any extensions made as provided in
this Section 3.  On the first day of each month occurring after the Effective
Date, the Term shall automatically be extended for an additional month unless,
prior to any such first day of a month, the Company or
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the Executive shall have given notice not to extend the Term.  Nothing in this
Section shall limit the right of the Company or the Executive to terminate the
Executive's employment hereunder on the terms and conditions set forth in
Section 7 hereof.  The Company and the Executive agree that any such notice by
the Company shall not constitute Good Reason for the Executive to terminate his
employment.

                          (b)  Termination of Employment during the Term.
Nothing in this Section 3 shall limit the right of the Company or the Executive
to terminate the Executive's employment under this Agreement during the Term
hereof on the terms and conditions set forth in Section 7 hereof.  Further,
notwithstanding any other provision of this Agreement, the Company shall have
the right to terminate the Executive's employment under this Agreement at any
time prior to the expiration of the Term for any other reason whatsoever,
including termination without Cause, in the sole discretion of the Company's
Board of Directors (the "Board"); provided, however, that, any termination of
the employment relationship by the Company prior to the expiration of the Term
other than a termination by the Company on the terms and conditions set forth
in Section 7 hereof shall be deemed to be a termination without Cause within
the meanings of Sections 8(c) and 8(e) hereof.

                          (c)  After the Term: "At-Will" Relationship and
Termination of Employment.  If the Executive remains employed by the Company
beyond the expiration of the Term, such employment shall automatically convert
to an "at-will" relationship (upon the expiration of the Term hereof)
terminable at any time by either the Company or the Executive for any reason
whatsoever, with or without Cause.  Upon a termination of employment after the
Term hereof, the Company shall pay the Executive's full salary to the Executive
through the date of such termination at the rate in effect immediately prior to
such termination, together with all compensation and benefits payable to the
Executive under the terms of any compensation or benefit plan, program or
arrangement maintained by the Company during the Executive's employment by the
Company.  In addition to any payments or benefits due hereunder upon such a
termination, the Executive shall receive such post-termination compensation and
benefits as shall be determined under, and paid in accordance with, the
Company's retirement, insurance and other compensation or benefit plans,
programs and



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arrangements as in effect immediately prior to such termination.

                 4.  Position and Duties.  On and after the Effective Date, the
Executive shall serve as Vice Chairman of the Company and shall have such
additional or different titles, positions, duties and responsibilities as may
be assigned to the Executive by the Chief Executive Officer of the Company.
The Executive shall report to the Chief Executive Officer of the Company.  The
Executive agrees to devote substantially all the Executive's full working time,
attention and energies during normal business hours to the performance of the
Executive's duties for the Company, provided that the Executive may serve as a
director on the boards of such companies and organizations as may be agreed
upon in writing by the Chief Executive Officer and the Executive.

                 5.  Place of Performance.  The principal place of employment
and office of the Executive shall be in Houston, Texas, or such other location
as may be determined by the Chief Executive Officer serving as of the Effective
Date.

                 6.  Compensation and Related Matters.

                          (a)  Base Salary.  As compensation for the
performance by the Executive of the Executive's duties hereunder, during the
Employment Period the Company shall pay the Executive an annual base salary no
less than the greater of the annual base salary in effect on the Effective Date
or the annual base salary in effect on May 1, 1998 (such greater amount, as it
may be increased from time to time, is hereinafter referred to as "Base
Salary").  Base Salary shall be payable in accordance with the Company's normal
payroll practices, shall be reviewed at least annually by the Personnel
Committee and may be increased (but not decreased) upon review.

                          (b)     Annual Bonus.

                                  (i)  The Executive shall be provided an
opportunity for an annual bonus with respect to each fiscal year which ends
within the Employment Period (the "Annual Bonus"), including, without
limitation, the year which includes the Effective Date.  Except with respect to
any fiscal year during which the Executive participates in a Formula Annual
Bonus Plan (as described in Section 6(b)(ii) hereof), the amount of an Annual
Bonus





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with respect to any fiscal year shall be determined in the sole discretion of
the Personnel Committee; provided, however, that, except with respect to any
fiscal year during which the Executive participates in a Formula Annual Bonus
Plan, the amount of any such Annual Bonus shall not be less than seventy-five
percent (75%) of the Base Salary in effect on the last day of the fiscal year
with respect to which such Annual Bonus is awarded.

                                  (ii)  Notwithstanding the second sentence of
Section 6(b)(i) hereof, if the Executive participates in an Annual Bonus Plan
under which performance objectives, Annual Bonus opportunities (or target
bonuses) and levels of payment based on levels of achievement of the
performance objectives are established for the Executive and other participants
(a "Formula Annual Bonus Plan"), the Executive shall have an Annual Bonus
opportunity (expressed as a percentage of then-current Base Salary) for the
initial fiscal year during the Term covered by a Formula Annual Bonus Plan
which is no less than (and which may be more than) the "Average Bonus
Percentage".  The "Average Bonus Percentage" (for purposes of this Section)
shall be calculated by (i) dividing the actual bonus paid to the Executive with
respect to each of the applicable "Three Years" by the Base Salary in effect on
the last day of the respective year, and converting the result to a percentage,
and (ii) adding the three percentages together and dividing by three.  The
"Three Years", for purposes of this Section, shall be the three fiscal years
immediately preceding such initial fiscal year, or, if more favorable to the
Executive, the three fiscal years immediately preceding the Effective Date
hereof.  The percentage of Base Salary which determines the Executive's Annual
Bonus opportunity shall be reviewed by the Board annually and may be increased
(but not decreased) upon review by the Board.  Any Annual Bonus payable with
respect to a fiscal year (whether or not pursuant to a Formula Annual Bonus
Plan) shall be paid as soon as practicable after the end of such year.

                          (c)  Other Compensation and Benefit Plans and
Arrangements; Fringe Benefits.  During the Employment Period, the Executive
shall be entitled to participate, at a level appropriate to the Executive's
position with the Company, in such other employee benefit and compensation
plans and arrangements and fringe benefits as are generally available to senior
officers of the Company from time to time, and any successors thereto.





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                          (d)  Expenses.  The Company shall reimburse the
Executive for all reasonable business expenses incurred during the Employment
Period, subject to the applicable and reasonable policies and procedures of the
Company in force from time to time.

                          (e)  Office Facilities and Services Furnished.
During the Employment Period, the Company shall furnish the Executive with
appropriate office space and such other facilities and services as shall be
suitable to the Executive's position and adequate for the performance of the
Executive's duties as set forth in Section 4 hereof (including, without
limitation, secretarial services and furniture, telephone, telefax and work
station equipment), such office space and other facilities and services to be
furnished at the location set forth in Section 5 hereof.

                          (f)  Automobile Allowance.  At all times during the
Employment Period, the Company will provide the Executive with an automobile
(and pay related expenses) pursuant to the Company's policy as in effect on the
Effective Date, as such policy may be amended from time to time (the
"Automobile Policy"), provided, however, that in no event shall the automobile
provided to the Executive pursuant to this Section 6(f) be of lesser quality
than that available to the Executive pursuant to the Automobile Policy on the
Effective Date.

                          (g)  Nonstatutory Options.  Any nonstatutory options
granted to the Executive during the Employment Period after the Effective Date
hereof will, when (and to the extent that) they become exercisable, remain
exercisable for their full term.

                 7.  Termination.  The Executive's employment hereunder may be
terminated, and the Employment Period hereunder shall be ended, as follows:

                          (a)  Death.  The Executive's employment shall
terminate upon the Executive's death.  Upon such a termination, the Executive's
estate, designated beneficiary or surviving spouse, as the case may be, shall
become entitled to the payments provided in Sections 8(b) and 8(e) hereof.

                          (b)  Disability.  The Company may terminate the
Executive's employment hereunder for Disability.  During the Disability Period
(as defined in Section 8(a)





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hereof) and upon such a termination, the Executive shall be entitled to the
payments and benefits provided in Sections 8(a) and 8(e) hereof in accordance
with the terms of such Sections, provided, however, that during the thirty-six
(36) month period immediately following the Date of Termination for Disability,
the Company shall pay monthly to the Executive (in accordance with the
Company's usual payroll practices) any additional amount necessary (the
"Disability Supplement") so that the gross amount of (i) the Disability
Supplement and (ii) the payments provided to the Executive following a
termination of his employment for Disability pursuant to Sections 8(a) and 8(e)
hereof is equal to (A) three times the Base Salary and the Average Annual
Bonus, (B) divided by thirty-six (36).

                          (c)  Cause.  The Company may terminate the
Executive's employment hereunder for Cause.  Upon such a termination, the
Executive shall become entitled to the payments provided in Section 8(b)
hereof.

                          (d)  Termination by the Executive.

                               (i) The Executive may terminate the Executive's
employment hereunder for Good Reason.  The Executive may also terminate the
Executive's employment hereunder without Good Reason by giving a Notice of
Termination during the year immediately following a Change in Control (a
"Special Termination").  Upon a Good Reason termination or a Special
Termination, the Executive shall become entitled to the payments and benefits
provided in Sections 8(c) and 8(e) hereof in accordance with the terms of such
Sections.

                                  (ii) The Executive may terminate the
Executive's employment hereunder without Good Reason and outside of the
one-year period immediately following a Change in Control, upon giving notice
of one month to the Company.  In the event of such a termination, the Executive
shall comply with any reasonable request of the Company to assist in providing
for an orderly transition of authority, but such assistance shall not delay the
Executive's termination of employment longer than six months beyond the giving
of the Executive's Notice of Termination.  Upon such a termination, the
Executive shall become entitled to the payments and benefits provided in
Section 8(b) hereof in accordance with the terms of such Section.





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                          (e)  Notice of Termination.  Any purported
termination of the Executive's employment (other than termination pursuant to
Section 7(a) hereof) shall be communicated by written Notice of Termination to
the other party hereto in accordance with Section 17 hereof.  For purposes of
this Agreement, a "Notice of Termination" shall mean a notice that shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.  Further, a Notice of Termination for Cause based on
clause (ii) or (iii) of the definition of Cause herein is required to include a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a meeting of the
Board which was called and held for the purpose of considering such termination
(after reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive was guilty of
conduct set forth in clause (ii) or (iii) of the definition of Cause herein,
and specifying the particulars thereof in detail.

                          (f)  Date of Termination.  For purposes of this
Agreement, "Date of Termination" shall mean the following: (i) if the
Executive's employment is terminated by the Executive's death, the date of the
Executive's death; (ii) if the Executive's employment is terminated for
Disability pursuant to Section 7(b) hereof, thirty (30) days after the Notice
of Termination is given (provided that the Executive shall not have returned to
the full-time performance of the Executive's duties during such thirty-(30)-day
period); (iii) if the Executive's employment is terminated for Cause pursuant
to Section 7(c) hereof, the date specified in the Notice of Termination; (iv)
if the Executive's employment is terminated pursuant to Section 7(d)(ii)
hereof, the date determined in accordance with said Section, and (v) if the
Executive's employment is terminated for any other reason, the date specified
in the Notice of Termination (which, in the case of a termination by the
Company, shall not be less than thirty (30) days and, in the case of a
termination by the Executive, shall not be less than fifteen (15) days nor more
than sixty (60) days, respectively, from the date such Notice of Termination is
given).





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                          (g)  Dispute Concerning Termination.  If within
fifteen (15) days after any Notice of Termination is given, or, if later, prior
to the Date of Termination (as determined without regard to this Section 7(g)),
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be
extended until the earlier to occur of (i) the date on which the Term ends or
(ii) the date on which the dispute is finally resolved, either by mutual
written agreement of the parties or by the final judgment, order or decree of
an arbitrator or a court of competent jurisdiction (which is not appealable or
with respect to which the time for appeal therefrom has expired and no appeal
has been perfected); provided, however, that the Date of Termination shall be
extended by a notice of dispute given by the Executive only if such notice is
given in good faith and the Executive pursues the resolution of such dispute
with reasonable diligence.

                          (h)  Compensation During Dispute.  If the Date of
Termination is extended in accordance with Section 7(g) hereof with respect to
a Notice of Termination given after a Change in Control or within the six-month
period immediately preceding a Change in Control, the Company shall continue to
pay the Executive the full compensation in effect when the notice giving rise
to the dispute was given (including, but not limited to, Base Salary) and
continue the Executive as a participant in all compensation, benefit and
insurance plans in which the Executive was participating when the notice giving
rise to the dispute was given until the Date of Termination, as determined in
accordance with Section 7(g) hereof.  Amounts paid under this Section 7(h) are
in addition to all other amounts due under this Agreement other than those due
under Section 8(b)(i) or 8(c)(i) hereof) and shall not be offset against or
reduce any other amounts due under this Agreement.

                 8.  Compensation During Disability or Upon Termination.

                          (a)     Disability Period and Termination for
Disability.  During any period during the Employment Period that the Executive
fails to perform the Executive's full-time duties hereunder as a result of
incapacity due to physical or mental illness ("Disability Period"), the Company
shall pay the Executive's full salary to the Executive at the rate in effect at
the





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commencement of any such period, together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such period, until the
Executive's employment is terminated by the Company for Disability; provided,
however, that such salary payments shall be reduced by the sum of the amounts,
if any, payable to the Executive at or prior to the time of any such salary
payment under disability benefit plans of the Company or under the Social
Security disability insurance program, which amounts were not previously
applied to reduce any such salary payment.  Upon termination of the Executive's
employment for Disability, the Company shall have no additional obligations to
the Executive under this Agreement except to the extent provided in Sections
6(c), 6(d), 7(b), 8(e) and 15 hereof (and, to the extent applicable, Sections
9, 10 and 11 hereof) and to pay to the Executive the Executive's normal
post-termination compensation and benefits as such payments become due.  Such
post-termination compensation and benefits shall be determined under, and paid
in accordance with, the Company's retirement, insurance and other compensation
or benefit plans, programs and arrangements as in effect immediately prior to
the Date of Termination or, if more favorable to the Executive, as in effect
immediately prior to the occurrence of the first event or circumstance
constituting Good Reason.

                          (b)  Termination (x) by the Company with Cause, (y)
by the Executive without Good Reason in a Termination which is not a Special
Termination, or (z) by Reason of Death.  If the Executive's employment
hereunder is terminated (x) by the Company with Cause, (y) by the Executive
without Good Reason in a termination which is not a Special Termination, or (z)
by reason of death, then:

                                  (i)  as soon as practicable, the Company
         shall pay the Executive's Base Salary to the Executive through the
         Date of Termination at the rate in effect immediately prior to the
         Date of Termination or, if higher, the rate in effect immediately
         prior to the first occurrence of an event or circumstance constituting
         Good Reason, together with all compensation and benefits payable to
         the Executive through the Date of Termination under the terms of the
         Company's compensation and benefit plans, programs or arrangements as
         in effect immediately prior to the Date of Termination or, if





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         more favorable to the Executive, as in effect immediately prior to the
         first occurrence of an event or circumstance constituting Good Reason;
         and

                                  (ii)  the Company shall have no additional
         obligations to the Executive under this Agreement except to the extent
         provided in Sections 6(c), 6(d) and 15 hereof (and, to the extent
         applicable, Sections 8(e), 9, 10 and 11 hereof) and to pay to the
         Executive the Executive's normal post-termination compensation and
         benefits as such payments become due.  Such post-termination
         compensation and benefits shall be determined under, and paid in
         accordance with, the Company's retirement, insurance and other
         compensation or benefit plans, programs and arrangements as in effect
         immediately prior to the Date of Termination or, if more favorable to
         the Executive, as in effect immediately prior to the occurrence of the
         first event or circumstance constituting Good Reason.

                          (c)  Termination (x) by Company without Cause, (y) by
the Executive with Good Reason, or (z) by the Executive in a Special
Termination.  For purposes of this Agreement, termination of the Executive's
employment "by the Company without Cause" shall not include termination by the
Company for Disability or termination by reason of the Executive's death.  If
the Executive's employment hereunder is terminated (x) by the Company without
Cause, (y) by the Executive with Good Reason, or (z) by the Executive in a
Special Termination, then:

                                  (i)  the Company shall pay the Executive's
         Base Salary to the Executive through the Date of Termination at the
         rate in effect immediately prior to the Date of Termination or, if
         higher, the rate in effect immediately prior to the first occurrence
         of an event or circumstance constituting Good Reason, together with
         all compensation and benefits payable to the Executive through the
         Date of Termination under the terms of the Company's compensation and
         benefit plans, programs or arrangements as in effect immediately prior
         to the Date of Termination or, if more favorable to the Executive, as
         in effect immediately prior to the first occurrence of an event or
         circumstance constituting Good Reason;





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                                  (ii)  notwithstanding any provision of any
         Annual Bonus plan to the contrary, the Company shall pay to the
         Executive a lump sum amount, in cash, equal to the sum of (A) any
         Annual Bonus which has been allocated or awarded (but not yet paid) to
         the Executive for a completed fiscal year preceding the Date of
         Termination under any Annual Bonus plan, and (B) a pro rata portion to
         the Date of Termination of the Annual Bonus for the year in which the
         Date of Termination occurs, calculated by using a fraction (the
         numerator of which shall be the number of days of employment in such
         year up to and including the Date of Termination and the denominator
         of which shall be three-hundred-sixty-five (365)) to multiply (i) the
         award that the Executive would have earned for the entire year,
         assuming the achievement, at the target level, of any performance
         objectives established with respect to such award, or, (ii) if no such
         target level and performance objectives have been established, the
         Average Annual Bonus; provided, however, that any amount otherwise
         payable pursuant to this clause (B) of this Section 8(c)(ii) shall be
         reduced by any payment already received by the Executive pursuant to
         the applicable Annual Bonus plan with respect to the year in which the
         Date of Termination occurs;

                                  (iii)  in lieu of any further salary or bonus
         payments as severance to the Executive for periods subsequent to the
         Date of Termination and in lieu of any severance benefit otherwise
         payable to the Executive, the Company shall pay to the Executive a
         lump sum severance payment, in cash, equal to three times the sum of
         (x) the Executive's Base Salary as in effect immediately prior to the
         Date of Termination or, if higher, in effect immediately prior to the
         first occurrence of an event or circumstance constituting Good Reason,
         and (y) the Average Annual Bonus, as follows:

                                        (A) if the Date of Termination shall
                 occur on or after a Change in Control (or be deemed to occur
                 after a Change in Control pursuant to Section 8(d) hereof),
                 the Company shall pay such amount in a lump sum severance
                 payment, in cash; or

                                        (B) if the Date of Termination shall
                 not occur on or after a Change in Control (and not be deemed
                 to occur after a Change in





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                 Control pursuant to Section 8(d) hereof), the Company shall
                 pay such amount, in substantially equal monthly or more
                 frequent installments over the three-year period immediately
                 following the Date of Termination;

                                  (iv)  The Company shall (i) either prepay all
         remaining premiums, or establish an irrevocable grantor trust holding
         an amount of assets sufficient to pay all such remaining premiums
         (which trust shall be required to pay such premiums), under any
         insurance policy insuring the life of the Executive under any
         "split-dollar" insurance arrangement in effect between the Executive
         and the Company, and (ii) shall transfer to the Executive any and all
         rights and incidents of ownership in such arrangements at no cost to
         the Executive.  For the thirty-six (36) month period immediately
         following the Date of Termination, the Company shall also arrange to
         provide the Executive with life and accident insurance benefits
         substantially similar to those provided to the Executive (other than
         the "split-dollar" life insurance) immediately prior to the Date of
         Termination or, if more favorable to the Executive, those provided to
         the Executive immediately prior to the first occurrence of an event or
         circumstance constituting Good Reason, at no greater cost to the
         Executive than the cost to the Executive immediately prior to such
         date or occurrence.  Benefits otherwise receivable by the Executive
         pursuant to the immediately preceding sentence shall be reduced to the
         extent benefits of the same type are received by or made available to
         the Executive by a successor employer during the thirty-six (36) month
         period following the Executive's termination of employment (and any
         such benefits received by or made available to the Executive shall be
         reported to the Company by the Executive); provided, however, that the
         Company shall reimburse the Executive for the excess, if any, of the
         cost of such benefits to the Executive over such cost immediately
         prior to the Date of Termination or, if more favorable to the
         Executive, the first occurrence of an event or circumstance
         constituting Good Reason.

                                  (v)  The Company shall provide the Executive
         with outplacement services suitable to the Executive's position for a
         period of nine months or,





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         if earlier, until the first acceptance by the Executive of an offer of
         employment.

                                  (vi)  The Company shall provide the Executive
         with the office facilities and services and the automobile allowance
         described in Section 6(e) and (f) hereof for the thirty-six (36) month
         period immediately following the Date of Termination.

                                  (vii) Notwithstanding anything which is more
         restrictive in any applicable plan or grant or award agreement or in
         any other provision of this Agreement, the Executive shall become
         fully vested in all outstanding stock options, restricted stock and
         other similar equity-based awards which are granted to him by the
         Company (whether before or after the Effective Date); in the case of
         performance awards, it shall be assumed that the applicable
         performance goals were attained at target levels and the Committee
         shall also have the discretion to increase the amount so payable by
         assuming attainment of the applicable performance goals at up to
         maximum level.

                                  (viii)  the Company shall have no additional
         obligations to the Executive under this Agreement except to the extent
         provided in Sections 6(c), 6(d), 8(e) and 15 hereof (and, to the
         extent applicable, Sections 9, 10 and 11 hereof) and to pay to the
         Executive the Executive's normal post-termination compensation and
         benefits as such payments become due.  Such post-termination
         compensation and benefits shall be determined under, and paid in
         accordance with, the Company's retirement, insurance and other
         compensation or benefit plans, programs and arrangements as in effect
         immediately prior to the Date of Termination or, if more favorable to
         the Executive, as in effect immediately prior to the occurrence of the
         first event or circumstance constituting Good Reason.  If such
         insurance, other compensation and benefit plans, programs and
         arrangements provide for different levels of benefits and coverage,
         post-termination benefits and coverage shall be the most comprehensive
         benefits and coverage available.





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                          (d)  Termination Deemed to be after Change in
Control.  For purposes of this Agreement, the Executive's employment shall be
deemed to have been terminated after a Change in Control by the Company without
Cause or after a Change in Control by the Executive with Good Reason, if (i)
the Executive's employment is terminated by the Company without Cause prior to
a Change in Control (whether or not a Change in Control ever occurs) and such
termination was at the request or direction of a Person who has entered into an
agreement with the Company the consummation of which would constitute a Change
in Control, (ii) the Executive terminates the Executive's employment for Good
Reason prior to a Change in Control (whether or not a Change in Control ever
occurs) and the circumstance or event which constitutes Good Reason occurs at
the request or direction of such Person, or (iii) the Executive's employment is
terminated by the Company without Cause or by the Executive for Good Reason and
such termination or the circumstance or event which constitutes Good Reason is
otherwise in connection with or in anticipation of a Change in Control (whether
or not a Change in Control ever occurs).  For purposes of any determination
regarding the applicability of the immediately preceding sentence made after
the occurrence of a Change in Control or within the six-month period
immediately preceding a Change in Control, any position taken by the Executive
shall be presumed to be correct unless the Company establishes to the Committee
by clear and convincing evidence that such position is not correct.

                          (e)  Other Benefits upon Certain Terminations.

                                  (i)  Upon any termination of the Executive's
employment with the Company (whether or not occurring during the Term hereof),
other than a termination during the Term by the Company with Cause or a
termination during the Term by the Executive without Good Reason which is not a
Special Termination, and continuing until the earlier of (i) the later of the
death of the Executive or the death of the "Executive's Spouse", or (ii) the
date substantially equivalent coverage and benefits are provided to the
Executive (if then living) and the Executive's Spouse (if then living) by a
subsequent employer (whether or not such coverage and benefits will be
continued by the subsequent employer after any termination of the Executive's
employment by the subsequent employer), the Company (at the Company's sole
expense) shall provide the Executive, the Executive's Spouse and the
Executive's dependents with





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medical and dental insurance benefits substantially similar to those benefits
"provided" to them immediately prior to the Date of Termination or, if more
favorable to the Executive, those "provided" to them on the Effective Date
hereof.  In determining which benefits were "provided" at the applicable date,
the Executive shall be deemed to have elected the most comprehensive benefits
and coverage available to the Executive at that date (whether or not actually
elected); further, such benefits shall include, without limitation, an
unrestricted right for the Executive, the Executive's Spouse and the
Executive's dependents to select their own care providers.  The Company shall
provide such post-termination benefits under its medical and dental plans, to
the extent that the Executive's continued participation is possible under the
general terms and provisions of such plans.  To the extent that such
participation is not possible, the Company shall arrange to otherwise provide
the Executive with such post-termination benefits.  If the Executive obtains
other employment (and the Executive shall be under no obligation to do so),
insurance obtained as a result of such other employment shall be the first line
of insurance and insurance provided under this Section 8(e) shall only be
supplementary or secondary.  Also, to the extent that the Executive is, at any
time, entitled to insurance under the Medicare program or its equivalent, the
insurance under this Section 8(e) shall be only supplementary or secondary to
the extent allowed by law.  For purposes of this Section 8(e), "Executive's
Spouse" shall refer to the Executive's spouse immediately prior to the
termination of the Executive's employment with the Company.

                                  (ii)  Subject to Section 8(c)(vii) hereof,
but notwithstanding any more restrictive provision in the terms of the relevant
document evidencing an equity-based award or the terms of the plan under which
the equity-based award was granted, upon any termination described in the last
sentence of this Section 8(e)(ii), (i) the Executive shall become fully vested
in (and any restrictions shall lapse upon) all outstanding time-vesting stock
options, restricted stock and other similar equity-based awards granted to him
by the Company (whether before or after the Effective Date), and (ii) the
Executive shall become vested in a pro-rata portion of all equity-based
performance awards granted to him by the Company (whether before or after the
Effective Date), which pro-rata portion shall be based on the





                                       15
<PAGE>   16
attainment of the performance goals relevant to such awards on the date of
termination of the Executive's employment with the Company (and not based on
the portion of the applicable performance period during which the Executive was
employed by the Company), as determined by the Committee in its good faith
discretion.  The Committee shall also have the discretion to increase the
amount, if any, payable pursuant to clause (ii) of the preceding sentence, up
to the full amount of such award, assuming attainment of the applicable
performance goals at target level.  The terminations upon which the vesting
described in this Section 8(e)(ii) shall occur are the following: any
termination of the Executive's employment with the Company (whether or not
occurring during the Term hereof) which occurs on or after the date on which
the Executive attains Normal Retirement Age, other than a termination during
the Term by the Company with Cause.

                 9.  Excise Tax Gross-Up Payment.

                          (a)     Whether or not the Executive becomes entitled
to any payment pursuant to Section 8(c)(iii)(A) hereof, if any of the payments
or benefits received or to be received by the Executive in connection with any
Change in Control which occurs during the Term hereof or any termination of the
Executive's employment which occurs during the Term hereof (whether pursuant to
the terms of this Agreement or any other plan, arrangement or agreement with
the Company, any Person whose actions result in a Change in Control or any
Person affiliated with the Company or such Person) (such payments or benefits
(excluding the payment or payments to be made pursuant to this Section 9) being
hereinafter referred to as the "Total Payments") will be subject to the Excise
Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Executive, after deduction
of any Excise Tax on the Total Payments and any federal, state and local income
and employment taxes and Excise Tax upon the payment or payments provided by
this Section 9, shall be equal to the Total Payments.

                          (b)     For purposes of determining whether any of
the Total Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) all of the Total Payments shall be treated as "parachute
payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the
opinion of tax counsel ("Tax Counsel") reasonably acceptable to the Executive
and selected by





                                       16
<PAGE>   17
the accounting firm which was, immediately prior to the Change in Control, the
Company's independent auditor (the "Auditor"), such payments or benefits (in
whole or in part) do not constitute parachute payments, including by reason of
section 280G(b)(4)(A) of the Code, (ii) all "excess parachute payments" within
the meaning of section 280G(b)(l) of the Code shall be treated as subject to
the Excise Tax unless, in the opinion of Tax Counsel, such excess parachute
payments (in whole or in part) represent reasonable compensation for services
actually rendered (within the meaning of section 280G(b)(4)(B) of the Code) in
excess of the Base Amount allocable to such reasonable compensation, or are
otherwise not subject to the Excise Tax, and (iii) the value of any noncash
benefits or any deferred payment or benefit shall be determined by the Auditor
in accordance with the principles of sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment, the Executive
shall be deemed to pay federal income tax at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up Payment is
to be made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of the Executive's residence on the Date of
Termination (or if there is no Date of Termination, then the date on which the
Gross-Up Payment is calculated for purposes of this Section 9), net of the
maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes.

                          (c)     In the event that the Excise Tax is finally
determined to be less than the amount taken into account hereunder in
calculating the Gross-Up Payment, the Executive shall repay to the Company,
within the five (5) business days immediately following the date that the
amount of such reduction in the Excise Tax is finally determined, the portion
of the Gross-Up Payment attributable to the amount of such reduction (including
the Excise Tax component and the federal, state and local income and employment
tax components of the Gross-Up Payment) to the extent that such repayment
results in a reduction in the Excise Tax and a dollar-for-dollar reduction in
the Executive's taxable income and wages for purposes of federal, state and
local income and employment taxes, plus interest on the amount of such
repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code.
In the event that the Excise Tax is determined to exceed the amount taken into
account hereunder in calculating the Gross-Up Payment (including





                                       17
<PAGE>   18
by reason of any payment the existence or amount of which cannot be determined
at the time of the Gross-Up Payment), the Company shall make an additional
Gross-Up Payment in respect of such excess (plus any interest, penalties or
additions payable by the Executive with respect to such excess) within the five
(5) business days immediately following the date that the amount of such excess
is finally determined.  The Executive and the Company shall each reasonably
cooperate with the other in connection with any administrative or judicial
proceedings concerning the existence or amount of liability for Excise Tax with
respect to the Total Payments.

                 10.  Time of Certain Payments.  The payments provided to the
Executive or for the Executive's benefit in Sections 9 and 8(c) (other than
8(c)(iii)(B), 8(c)(v), 8(c)(vi), and 8(c)(viii)) hereof shall be made not later
than the fifth (5th) business day following the Date of Termination (or, if
earlier, in the case of payments provided in Section 9 hereof, not later than
the fifth (5th) business day following the Executive's receipt of an excess
parachute payment, within the meaning of section 4999 of the Code); provided,
however, that if the amounts of such payments cannot be finally determined on
or before such day, the Company shall pay to the Executive on such day an
estimate of the payments under Section 8(c), as determined in good faith by
the Executive, and an estimate of the payments under Section 9 hereof, as
determined in accordance with Section 9 hereof, the estimate in each case to be
of the minimum amount of such payments to which the Executive is clearly
entitled, and shall pay the remainder of such payments (together with interest
on the unpaid remainder (or on all such payments to the extent the Company
fails to make such payments when due) at 120% of the rate provided in section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but
in no event later than the thirtieth (30th) day after the Date of Termination
(or, if earlier, the thirtieth (30th) day after the date of the Executive's
receipt of an excess parachute payment).  In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive, payable on
the fifth (5th) business day after demand by the Company (together with
interest at 120% of the rate provided in section 1274(b)(2)(B) of the Code).
At the time that payments are made under this Agreement, the Company shall
provide the Executive with a





                                       18
<PAGE>   19
written statement setting forth the manner in which such payments were
calculated and the basis for such calculations including, without limitation,
any opinions or other advice the Company has received from Tax Counsel, the
Auditor or other advisors or consultants (and any such opinions or advice which
are in writing shall be attached to the statement).

                 11.  Legal and Arbitration Fees and Expenses.  The Company
also shall pay to the Executive all reasonable legal fees, arbitration fees and
expenses incurred by the Executive in disputing in good faith any issue
hereunder relating to the termination of the Executive's employment, in seeking
in good faith to obtain or enforce any benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder.  Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.  Notwithstanding the foregoing provisions of this
Section 11, no such fees and expenses shall be paid unless the Executive
prevails on at least one of the issues he raises.

                 12.  No Mitigation; Limited Offset.  The Company agrees that,
if the Executive's employment with the Company terminates during the Term, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to Section
7(h) or 8 hereof.  Further, the amount of any payment or benefit provided for
in this Agreement (other than Section 8(e) or the second sentence of Section
8(c)(iv) hereof) shall not be reduced by any compensation earned by the
Executive as the result of employment by another employer, by retirement
benefits, by offset against any amount claimed to be owed by the Executive to
the Company (unless such amount is evidenced by a promissory note signed by the
Executive), or otherwise.

                 13.  Protection of Ideas, Noncompetition and Nonsolicitation.

                          (a)  Protection of Ideas.  Both during the period of
the Executive's employment by the Company and thereafter, Executive shall
assist the Company or





                                       19
<PAGE>   20
its nominees, at any time, in the protection of the Company's worldwide right,
title, and interest in and to information, ideas, concepts, improvements,
discoveries, and inventions, and its copyrighted works, including without
limitation, the execution of all formal assignment documents requested by
Company or its nominees and the execution of all lawful oaths and applications
for applications for patents and registration of copyright in the United States
and foreign countries.

                          (b)     Noncompetition.  The Company shall disclose
to the Executive, or place the Executive in a position to have access to or to
develop, trade secrets or confidential information of the Company or its
affiliates; and/or shall entrust the Executive with business opportunities of
the Company or its affiliates; and/or shall place the Executive in a position
to develop business good will on behalf of the Company or its affiliates.  As
part of the consideration for the compensation and benefits to be paid to the
Executive hereunder, to protect the trade secrets and confidential information
of the Company or its subsidiaries or affiliates or their customers or clients
that have been and will in the future be disclosed or entrusted to the
Executive, the business good will of the Company or its subsidiaries or
affiliates that has been and will in the future be developed in the Executive,
or the business opportunities that have been and will in the future be
disclosed or entrusted to the Executive by the Company or its subsidiaries or
affiliates; and as an additional incentive for the Company to enter into this
Agreement, the Executive agrees to the non-competition obligations hereunder.
While the Executive continues to be an employee of the Company and, unless the
Executive's termination of employment is by the Company without Cause or by the
Executive with Good Reason or in a Special Termination, for the three-year
period immediately following the Executive's Date of Termination, the Executive
shall not, within any geographic region of the United States of America in
which the Company then conducts business or in which the Company plans to
conduct business pursuant to a business strategy adopted by the Board before
the Executive's termination of employment, except as permitted by the Company
upon its prior written consent, (i) enter, directly or indirectly, into the
employ of, or render or engage in, directly or indirectly, any services to any
person, firm or corporation which directly competes with





                                       20
<PAGE>   21
the Company with respect to any business then conducted by the Company or any
business which the Company plans to enter pursuant to a business strategy
adopted by the Board before the Executive's termination of employment (a
"Competitor"), or (ii) become interested, directly or indirectly, in any such
Competitor as an individual, partner, shareholder, creditor, director, officer,
principal, agent, employee, trustee, consultant, advisor or in any other
relationship or capacity.  The ownership of up to one percent (1%) of any class
of the outstanding securities of any publicly traded corporation, even though
such corporation may be a Competitor, shall not be deemed as constituting an
interest in such Competitor which violates clause (ii) of the immediately
preceding sentence.

                          (c)  While the Executive continues to be an employee
of the Company and, unless the Executive's termination of employment is by the
Company without Cause or by the Executive with Good Reason or in a Special
Termination, for the three-year period immediately following the Executive's
Date of Termination, the Executive shall not, except as permitted by the
Company upon its prior written consent, (i) attempt, directly or indirectly, to
induce any employee employed by or performing services for the Company (or its
affiliates) to be employed or perform services elsewhere, or (ii) solicit,
directly or indirectly, the customers of the Company (or its affiliates), the
suppliers of the Company (or its affiliates) or entities or individuals having
other business relationships with the Company (or its affiliates) for the
purpose of encouraging them to terminate (or reduce or detrimentally alter)
their respective relationships with the Company (or its affiliates).

                          (d)  The Company shall have the right and remedy to
have the provisions of this Section 13 specifically enforced, including by
temporary and/or permanent injunction, it being acknowledged and agreed that
any such violation may cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company.

                 14.  Independence and Severability of Section 13 Provisions.
Each of the rights and remedies enumerated in Section 13 hereof shall be
independent of the others and shall be severally enforceable and all of such
rights and remedies shall be in addition to, and





                                       21
<PAGE>   22
not in lieu of, any other rights and remedies available to the Company under
law or in equity.  If any of the covenants contained in Section 13 hereof or if
any of the rights or remedies enumerated in Section 13 hereof, or any part of
any of them, is hereafter construed to be invalid or unenforceable, the same
shall not affect the remainder of the covenant or covenants or rights or
remedies which shall be given full effect without regard to the invalid
portions.  If any of the covenants contained in Section 13 is held to be
unenforceable because of the duration of such provision or the area covered
thereby, the parties agree that the court making such determination shall have
the authority to reduce the duration and/or area of such provision, and in its
reduced form said provision shall then be enforceable.

                 15.      Indemnification.  The Company shall indemnify the
Executive to the full extent authorized by law and the Charter and By-Laws of
the Company, as applicable, for all expenses, costs, liabilities and legal fees
which the Executive may incur in the discharge of the Executive's duties
hereunder.  The Executive shall be insured under the Company's directors' and
officers' liability insurance policy as in effect from time to time.  Any
termination of the Executive's employment or of this Agreement shall have no
effect on the continuing operation of this Section 15.

                 16.      Successors; Binding Agreement.

                          (a)  In addition to any obligations imposed by law
upon any successor to the Company, the Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place.  Failure of the Company to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle the Executive to compensation from
the Company in the same amount and on the same terms as the Executive would be
entitled to hereunder if the Executive were to terminate the Executive's
employment for Good Reason on or after a Change in Control, except that, for
purposes of implementing the foregoing, the





                                       22
<PAGE>   23
date on which any such succession becomes effective shall be deemed the Date of
Termination.

                          (b)  This Agreement shall inure to the benefit of and
be enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.  If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death
of the Executive) if the Executive had continued to live, each such amount,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the executors, personal representatives or administrators of
the Executive's estate.

                 17.      Notices.  For the purpose of this Agreement, notices
and all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed,
if to the Executive, to the address inserted below the Executive's signature on
the final page hereof and, if to the Company, to the address set forth below,
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall
be effective only upon actual receipt:

                          To the Company:

                          American General Corporation
                          2929 Allen Parkway
                          Houston, Texas  77019
                          Attention:  General Counsel

                 18.      Miscellaneous.  No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer as may be
specifically designated by the Board.  No waiver by either party hereto at any
time of any breach by the other party hereto of, or of any lack of compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.  This Agreement





                                       23
<PAGE>   24
supersedes any other agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof which have been made by
either party, including, without limitation, any employment memorandum,
memorandum of understanding, or severance agreement.  Captions and Section
headings in this Agreement are provided merely for convenience and shall not
affect the interpretation of any of the provisions herein.  The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Texas.  All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections.  Any payments provided for hereunder shall be paid
net of any applicable withholding required under federal, state or local law
and any additional withholding to which the Executive has agreed.  The
obligations of the Company and the Executive under this Agreement which by
their nature may require either partial or total performance after the
expiration of the Term (including, without limitation, those under Sections 8
and 9 hereof) shall survive such expiration.

                 19.      Validity.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

                 20.      Counterparts.  This Agreement may be executed in
several counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.

                 21.      Settlement of Disputes; Arbitration.

                          (a)  All claims by the Executive for benefits under
this Agreement shall be directed to and determined by the Committee and shall
be in writing.  Any denial by the Committee of a claim for benefits under this
Agreement shall be delivered to the Executive in writing and shall set forth
the specific reasons for the denial and the specific provisions of this
Agreement relied upon.  The Committee shall afford a reasonable opportunity to
the Executive for a review of the decision denying a claim and shall further
allow the Executive to appeal to the Committee a decision of the Committee
within sixty (60) days after notification by the Committee that the Executive's
claim has been denied.





                                       24
<PAGE>   25
                          (b)  Except for equitable relief as specified in
Section 21(f) hereof and except for the Executive's claim under any Company
benefit or compensation plans, programs, arrangements or awards (whether
heretofore or hereafter established) which have a claim or dispute resolution
procedure specifically applicable thereto, any dispute or controversy which is
not resolved by agreement pursuant to Section 21(a) hereof, including all
claims, demands, causes of action, disputes, controversies, and other matters
in question arising out of or relating to this Agreement, any provision hereof,
the alleged breach thereof, or in any way relating to the subject matter of
this Agreement involving the Executive, the Company, and/or their respective
representatives, even though some or all of such claims allegedly are
extra-contractual in nature, whether such claims sound in contract, tort, or
otherwise, at law or in equity, under state or federal law, whether provided by
statute or the common law, for damages or any other relief, shall be resolved
by binding arbitration pursuant to the Federal Arbitration Act in accordance
with the Employment Dispute Resolution Rules then in effect with the American
Arbitration Association.  The arbitration proceeding shall be conducted in
Houston, Texas.  This agreement to arbitrate shall be enforceable in either
federal or state court.

                          (c)  The enforcement of this agreement to arbitrate
and all procedural aspects of this agreement to arbitrate, including but not
limited to, the construction and interpretation of this agreement to arbitrate,
the issues subject to arbitration (i.e., arbitrability), the scope of the
arbitrable issues, allegations of waiver, delay or defenses to arbitrability,
and the rules governing the conduct of the arbitration, shall be governed by
and construed pursuant to the Federal Arbitration Act and shall be decided by
the arbitrators; provided, however, that the evidentiary standards set forth in
this Agreement with respect to certain determinations made by the Board or the
Committee shall apply to those determinations when made (or reviewed) 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





                                       25
<PAGE>   26
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.


                          (d)  The arbitration may be initiated by any party by
providing to the other parties a written notice of arbitration specifying the
claims.  Within thirty (30) days of the notice of initiation of the arbitration
procedure, (1) the Executive shall denominate one arbitrator and (2) the
Company shall denominate one arbitrator.  The two arbitrators shall select a
third arbitrator failing agreement on which within sixty (60) days of the
original notice, either the Executive or the Company shall apply to the Senior
Active United States District Judge for the Southern District of Texas, who
shall appoint a third arbitrator.  While the third arbitrator shall be neutral,
the two party-appointed arbitrators are not required to be neutral and it shall
not be grounds for removal of either of the two party-appointed arbitrators or
for vacating the arbitrators' award that either of such arbitrators has past or
present minimal relationships with the party that appointed such arbitrator.
Evident partiality on the part of an arbitrator exists only where the
circumstances are such that a reasonable person would have to conclude there in
fact existed actual bias and a mere appearance or impression of bias will not
constitute evident partiality or otherwise disqualify an arbitrator.

                          (e)  The three arbitrators shall by majority vote
resolve all disputes between the parties.  There shall be no transcript of the
hearing before the arbitrators.  The arbitrators' decision shall be in writing,
but shall be as brief as possible.  The arbitrators shall not assign the
reasons for their decision.  The arbitrators shall certify in their award that
they have faithfully applied the terms and conditions of this Agreement and
that no part of their award includes any amount for exemplary or punitive
damages.  All proceedings conducted hereunder and the decision of the
arbitrators shall be kept confidential by the parties, e.g., the arbitrators'
award shall not be released to the press or published in any of the various
arbitration reporters.  Judgment upon any award





                                       26
<PAGE>   27
rendered in any such arbitration proceeding may be entered by any federal or
state court having jurisdiction.

                          (f)  Notwithstanding any provision of this Agreement
to the contrary, (i) in the event of a breach or threatened breach by the
Executive of any of the covenants set forth in Section 13 hereof, the Company
shall be entitled to seek equitable relief, including an injunction, in any
court of proper jurisdiction to maintain the status quo pending the resolution
of the dispute by binding arbitration as provided above, and (ii) the Executive
shall be entitled to seek specific performance of the Executive's right to be
paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.  With respect
to any such action, the Executive and the Company hereby irrevocably submit to
the non-exclusive jurisdiction of any Federal or State court sitting in the
City of Houston, Texas, and agree that process in any such action shall be
valid and effective for all purposes if served upon the respective party in
accordance with the notice provisions of Section 17 hereof.

                 22.      Definitions.  For purposes of this Agreement, the
following terms shall have the meanings indicated below:

                          (a)  "Affiliate" shall have the meaning set forth in
Rule 12b-2 promulgated under Section 12 of the Exchange Act.

                          (b)  "Auditor" shall have the meaning set forth in
Section 9(b) hereof.

                          (c)  "Average Annual Bonus" shall mean the average
annual bonus earned by the Executive pursuant to any annual bonus or incentive
plan maintained by the Company in which the Executive participated in respect
of any of the three calendar years ending immediately prior to the calendar
year in which occurs the Date of Termination or, if higher, immediately prior
to the calendar year in which occurs the first event or circumstance
constituting Good Reason; provided, however, that if there are fewer than three
bonuses earned by the Executive in the applicable three year period, the
average annual bonus will be calculated by dividing the total amount of the
bonuses





                                       27
<PAGE>   28
paid by the number of bonuses paid.

                          (d)  "Base Amount" shall have the meaning set forth
in section 280G(b)(3) of the Code.

                          (e)  "Beneficial Owner" shall have the meaning set
forth in Rule 13d-3 under the Exchange Act.

                          (f)  "Board" shall mean the Board of Directors of the
Company.

                          (g)  "Cause" for termination by the Company of the
Executive's employment shall mean (i) conviction of the Executive for the
commission of a felony, (ii) the willful gross neglect by the Executive to
substantially perform the Executive's duties with the Company (other than any
such failure resulting from the Executive's incapacity due to physical or
mental illness or any such actual or anticipated failure after the issuance of
a Notice of Termination for Good Reason by the Executive pursuant to Section
7(e) hereof) after a written demand for substantial performance is delivered to
the Executive by the Board, which demand specifically identifies the manner in
which the Board believes that the Executive has not substantially performed the
Executive's duties, or (iii) the engaging by the Executive in willful gross
misconduct resulting in demonstrable and material economic harm to the Company
or its subsidiaries.  For purposes of clauses (ii) and (iii) of this
definition, (x) no act, or failure to act, on the Executive's part shall be
deemed "willful" unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the Executive's act, or failure
to act, was in the best interest of the Company and (y) in the event of a
dispute concerning the application of this provision after the occurrence of a
Change in Control or within the six-month period immediately preceding a Change
in Control, no claim by the Company that Cause exists shall be given effect
unless the Company establishes to the Board by clear and convincing evidence
that Cause exists.

                          (h)  A "Change in Control" shall be deemed to have
occurred if the event set forth in any one of the following paragraphs shall
have occurred:





                                       28
<PAGE>   29
                                  (I)  any Person is or becomes the Beneficial
                 Owner, directly or indirectly, of securities of the Company
                 (not including in the securities beneficially owned by such
                 Person any securities acquired directly from the Company or
                 its Affiliates) representing thirty percent (30%) or more of
                 the combined voting power of the Company's then outstanding
                 securities, excluding any Person who becomes such a Beneficial
                 Owner in connection with a transaction described in clause (i)
                 of paragraph (III) below; or


                                  (II)  the following individuals cease for any
                 reason to constitute a majority of the number of directors
                 then serving: individuals who, on the date hereof, constitute
                 the Board and any new director (other than a director whose
                 initial assumption of office is in connection with an actual
                 or threatened election contest, including but not limited to a
                 consent solicitation, relating to the election of directors of
                 the Company) whose appointment or election by the Board or
                 nomination for election by the Company's shareholders was
                 approved or recommended by a vote of at least two-thirds (2/3)
                 of the directors then still in office who either were
                 directors on the date hereof or whose appointment, election or
                 nomination for election was previously so approved or
                 recommended; or

                                  (III)  there is consummated a merger or
                 consolidation of the Company or any direct or indirect
                 subsidiary of the Company with any other corporation (or a
                 share exchange between shareholders of the Company or any
                 direct or indirect subsidiary of the Company and another
                 corporation or entity pursuant to Article 5.02 (or any
                 successor provision thereto) of the Texas Business Corporation
                 Act), other than (i) a merger or consolidation which would
                 result in the voting securities of the Company outstanding
                 immediately prior to such merger or consolidation continuing
                 to represent (either by remaining outstanding or by being
                 converted into voting securities of the surviving entity or
                 any parent thereof), in combination with the ownership of any
                 trustee





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<PAGE>   30
                 or other fiduciary holding securities under an employee
                 benefit plan of the Company or any subsidiary of the Company,
                 at least fifty-one percent (51%) of the combined voting power
                 of the securities of the Company or such surviving entity or
                 any parent thereof outstanding immediately after such merger
                 or consolidation, or (ii) a merger or consolidation effected
                 to implement a recapitalization of the Company (or similar
                 transaction) in which no Person is or becomes the Beneficial
                 Owner, directly or indirectly, of securities of the Company
                 representing thirty percent (30%) or more of the combined
                 voting power of the Company's then outstanding securities; or

                                  (IV)  the shareholders of the Company approve
                 a plan of complete liquidation or dissolution of the Company
                 or there is consummated an agreement for the sale or
                 disposition by the Company of all or substantially all of the
                 Company's assets, other than a sale or disposition by the
                 Company of all or substantially all of the Company's assets to
                 an entity, at least fifty-one percent (51%) of the combined
                 voting power of the voting securities of which are owned by
                 shareholders of the Company in substantially the same
                 proportions as their ownership of the Company immediately
                 prior to such sale.

Notwithstanding the foregoing, a "Change in Control" shall not be deemed to
have occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.

                          (i)  "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.





                                       30
<PAGE>   31
                          (j)  "Committee" shall mean the Personnel Committee
of the Board until six months prior to the occurrence of a Change in Control
and thereafter shall mean (i) the individuals (not fewer than three in number)
who, on the date six months before a Change in Control, constitute the
Personnel Committee of the Board, plus (ii) in the event that fewer than three
individuals are available from the group specified in clause (i) above for any
reason, such individuals as may be appointed by the individual or individuals
so available (including for this purpose any individual or individuals
previously so appointed under this clause (ii)); provided, however, that the
maximum number of individuals constituting the Committee shall not exceed five.

                          (k)  "Company" shall mean American General
Corporation, a Texas corporation and, except in determining under Section 22(h)
hereof whether or not any Change in Control of the Company has occurred, shall
include any successor to its business and/or assets which assumes and agrees to
perform this Agreement by operation of law, or otherwise.

                          (l)  "Date of Termination" shall have the meaning set
forth in Section 7(f) hereof.

                          (m)  "Disability" shall be deemed the reason for the
termination by the Company of the Executive's employment, if, (i) as a result
of the Executive's incapacity due to physical or mental illness, the Executive
shall have been absent from the full-time performance of the Executive's duties
with the Company for a period of six (6) consecutive months, (ii) a physician
agreed upon by the Executive (or the Executive's legal representative) and the
Company (or, if the parties hereto are unable to agree upon a single physician,
a third physician agreed upon by two physicians, each of whom has been selected
by either the Executive (or the Executive's legal representative) or the
Company) shall have determined that the Executive will be incapable, due to
physical or mental illness, of substantially performing the Executive's duties
and responsibilities under this Agreement for the remainder of the Term, (iii)
the Company shall have given the Executive a Notice of Termination for
Disability, and (iv) within thirty (30) days after such Notice of Termination
is given, the Executive shall not have returned to the full-time performance of
the Executive's duties.





                                       31
<PAGE>   32
                          (n) "Employment Period" shall mean the period (which
in no event shall extend beyond the expiration of the Term and may end earlier
pursuant to Section 3(b) hereof) during which Executive has an obligation to
render services hereunder, as described in Section 4 hereof.

                          (o)  "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended from time to time.

                          (p)  "Excise Tax" shall mean any excise tax imposed
under section 4999 of the Code.


                          (q)  "Executive" shall mean the individual named in
the first paragraph of this Agreement.

                          (r)  "Good Reason" for termination by the Executive
of the Executive's employment shall mean the occurrence (without the
Executive's express written consent) of any one of the following acts by the
Company, or failures by the Company to act, unless, in the case of any act or
failure to act described in paragraph (I), (V), (VI), (VII) or (VIII) below,
such act or failure to act is corrected prior to the Date of Termination
specified in the Notice of Termination given in respect thereof:

                                  (I)  the assignment to the Executive on or
                 after any Change in Control (or prior to a Change in Control
                 under the circumstances described in clause (ii) or (iii) of
                 the first sentence of Section 8(d) hereof) of any duties
                 inconsistent with the Executive's status as an executive
                 officer of the Company or a substantial adverse alteration in
                 the nature or status of the Executive's responsibilities
                 during such period from those in effect immediately prior to
                 the Change in Control (or, where applicable, immediately prior
                 to the occurrence of an event or circumstance constituting
                 Good Reason pursuant to clauses (ii) and (iii) of the first
                 sentence of Section 8(d) hereof);





                                       32
<PAGE>   33
                                  (II)  a reduction by the Company in the
                 Executive's annual base salary as in effect on the date hereof
                 or as the same may be increased from time to time;

                                  (III)  the relocation of the Executive's
                 principal place of employment after a Change in Control (or
                 prior to a Change in Control under the circumstances described
                 in clause (ii) or (iii) of the first sentence of Section 8(d)
                 hereof) to a location more than fifty (50) miles from the
                 Executive's principal place of employment immediately prior to
                 the Change in Control (or, where applicable, immediately prior
                 to the occurrence of an event or circumstance constituting
                 Good Reason pursuant to clauses (ii) and (iii) of the first
                 sentence of Section 8(d) hereof) or the Company's requiring
                 the Executive to be based anywhere other than such principal
                 place of employment (or permitted relocation thereof) during
                 such period except for required travel on the Company's
                 business to an extent substantially consistent with the
                 Executive's present business travel obligations;

                                  (IV)  the failure by the Company to pay to
                 the Executive any portion of the Executive's current
                 compensation, or to pay to the Executive any portion of an
                 installment of deferred compensation under any deferred
                 compensation program of the Company, within seven (7) days of
                 the date such compensation is due;

                                  (V)  except for any changes required by
                 applicable law, the failure by the Company to continue in
                 effect any compensation plan in which the Executive
                 participates immediately prior to the date hereof which is
                 material to the Executive's total compensation, including but
                 not limited to the Company's Performance-Based Plan for
                 Executive Officers, Supplemental Thrift Plan, Restoration of
                 Retirement Income Plan, 1984 Stock and Incentive Plan, "1994
                 Stock and Incentive Plan", and 1997 Stock and Incentive Plan,
                 unless an equitable arrangement (embodied in an ongoing
                 substitute or alternative plan) has been made with respect to
                 such plan, or the





                                       33
<PAGE>   34
                 failure by the Company to continue the Executive's
                 participation therein (or in such substitute or alternative
                 plan) on a basis not materially less favorable, both in terms
                 of the amount or timing of payment of benefits provided and
                 the level of the Executive's participation relative to other
                 participants, as existed immediately prior to the date
                 hereof;

                                  (VI)  except for any changes required by
                 applicable law, the failure by the Company to continue to
                 provide the Executive with benefits substantially similar to
                 those enjoyed by the Executive under any of the Company's
                 pension, savings, life insurance, medical, health and
                 accident, or disability plans in which the Executive was
                 participating immediately prior to the date hereof, the taking
                 of any other action by the Company which would directly or
                 indirectly materially reduce any of such benefits or deprive
                 the Executive of any material fringe benefit enjoyed by the
                 Executive as of the date hereof, or the failure by the Company
                 to provide the Executive with the number of paid vacation days
                 to which the Executive is entitled on the basis of years of
                 service with the Company in accordance with the Company's
                 normal vacation policy in effect on the date hereof; prior to
                 a Change in Control, notwithstanding the foregoing provisions
                 of this Section 22(r)(VI), it shall not constitute Good Reason
                 that the Executive's benefits under the Company's general
                 medical, health and accident plans are no longer substantially
                 similar to the benefits enjoyed by the Executive immediately
                 prior to the date hereof, unless the changes in such benefits
                 constitute a material adverse alteration thereof;

                                  (VII)  any purported termination of the
                 Executive's employment which is not effected pursuant to a
                 Notice of Termination satisfying the requirements of Section
                 7(e) hereof; for purposes of this Agreement, no such purported
                 termination shall be effective, except as provided in Section
                 3(b) hereof; or





                                       34
<PAGE>   35
                                  (VIII) the Company's breach of a material 
term or condition of the Agreement.

                 It shall also constitute Good Reason for termination by the
Executive of the Executive's employment if:

         (X) if, at any time during the Term hereof (whether or not a Change in
         Control shall have occurred), Robert M. Devlin is not serving as
         Chief Executive Officer of the Company (or, if a merger, consolidation
         or share exchange by the Company (or a Company subsidiary) with
         another corporation shall have occurred, as Chief Executive Officer or
         second-in-command of the Company), and

         (Y)     (i) there is a material diminution in the duties,
                 responsibilities or title of the Executive,

                 (ii) a substantial adverse alteration is made in the nature or
                 status of the Executive's responsibilities from those in
                 effect immediately prior to Robert M. Devlin's ceasing to so
                 serve,

                 (iii) the Company relocates the Executive's principal place of
                 employment to a location more than fifty (50) miles from the
                 Executive's principal place of employment immediately prior to
                 Robert M. Devlin's ceasing to so serve, or

                 (iv) the Company requires the Executive to be based anywhere
                 other than such principal place of employment (or permitted
                 relocation thereof) except for required travel on the
                 Company's business to an extent substantially consistent with
                 the Executive's present business travel obligations.

                 The Executive's right to terminate the Executive's employment
for Good Reason shall not be affected by the Executive's incapacity due to
physical or mental illness.  The Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.





                                       35
<PAGE>   36
                 For purposes of any determination regarding the existence of
Good Reason which is made after the occurrence of a Change in Control or
during the six-month period immediately preceding the occurrence of a Change in
Control, any claim by the Executive that Good Reason exists shall be presumed
to be correct unless the Company establishes to the Committee by clear and
convincing evidence that Good Reason does not exist.

                          (s)  "Gross-Up Payment" shall have the meaning set
forth in Section 9 hereof.

                          (t)  "Normal Retirement Age" shall mean age 62.

                          (u)  "Notice of Termination" shall have the meaning
set forth in Section 7(e) hereof.

                          (v)  "Pension Plans" shall mean all tax-qualified and
non-qualified supplemental or excess benefit pension plans maintained by the
Company and any other plan or agreement entered into between the Executive and
the Company which is designed to provide the Executive with supplemental
retirement benefits.

                          (w)  "Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as their
ownership of stock of the Company.

                          (x)  "Tax Counsel" shall have the meaning set forth
in Section 9 hereof.

                          (y)  "Term" shall mean the period of time described
in Section 3 hereof (including any extension,





                                       36
<PAGE>   37
continuation or termination described therein).

                          (z)  "Total Payments" shall mean those payments so
described in Section 9 hereof.


                                American General Corporation



                                By:   /s/ LARRY D. HORNER       
                                   -----------------------------
                                   Name:  Larry D. Horner
                                   Title: Chairman of the   
                                          Personnel Committee




                                     /s/ JON P. NEWTON          
                                --------------------------------
                                         Jon P. Newton

                                Address:

                                                  
                                ---------------------------

                                                  
                                ---------------------------

                                                  
                                ---------------------------
                                (Please print carefully)





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