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                              EMPLOYMENT AGREEMENT

     This Employment Agreement ("Agreement") is entered into between American
General Corporation, a Delaware corporation ("Company") and Richard W. Scott
("Executive"), to be effective as of the Effective Time as hereinafter defined.

     WHEREAS, Western National Corporation ("Western") and Executive have
entered into an Employment Agreement dated February 8, 1994, an Amendment to
Employment Agreement dated December 2, 1994, and a further Amendment to
Employment Agreement dated May 14, 1997 (the "February 8, 1994 Employment
Agreement").

     WHEREAS, contemporaneously herewith, Company, which presently owns certain
of the stock of Western, and a subsidiary of Company, have entered into an
Agreement and Plan of Merger ("Merger Agreement") with Western pursuant to
which Company shall acquire all or substantially all of the stock of Western
through merger (the "Merger").

     WHEREAS, it is an important element of Company's decision to acquire the
stock of Western through such Merger that Executive become employed by Company
and remain employed by Company and provide his personal services to Company in
connection with the operation of Company's and Western's business, the creation
and development of Company's and Western's products and services, and the
marketing of Company's and Western's products and services for at least three
years from the date of such acquisition.

     WHEREAS, during the three year Term of this Agreement, Company shall
disclose to Executive, or place Executive in a position to have access to or
develop, trade secrets or confidential information of Company or Western or
other of Company's subsidiaries or affiliates or their customers or clients;
and/or shall entrust Executive with business opportunities of Company or
Western or other of Company's subsidiaries or affiliates; and/or shall place
Executive in a position to develop business good will on behalf of Company or
Western or other of Company's subsidiaries or affiliates, and there is a need
and desire on the part of Company and Executive to specify the parties' rights
and obligations with respect to the ownership and protection of such
information, opportunities and goodwill.

     WHEREAS, Company is desirous of employing Executive pursuant to the terms
and conditions and for the consideration set forth in this Agreement, and
Executive is desirous of continuing in the employ of Company pursuant to such
terms and conditions and for such consideration, subject to the condition
subsequent that the contemplated Merger shall be consummated.

     WHEREAS, contemporaneously herewith, Company and Executive shall also
enter into a Severance Agreement ("Severance Agreement"). The terms and
conditions of such Severance Agreement are incorporated herein by reference.

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     NOW, THEREFORE, for and in consideration of the mutual promises,
covenants, and obligations contained herein, Company and Executive agree as
follows:

1.   Employment and Duties:

     1.1. Because of the important nature of Executive's personal services with
respect to the operation of Company's business, the creation and development of
Company's products and services, and the marketing of Company's products and
services, Company agrees to employ Executive, and Executive agrees to be
employed by Company, beginning as of forty eight hours after the Effective Time
as defined below and continuing thereafter for a Term of three (3) years (the
"Term"), subject to the terms and conditions of this Agreement.

     1.2. Commencing as of forty-eight hours after the Effective Time, Company
shall employ Executive in a senior executive or officer capacity with Company
or one of its significant subsidiaries with duties consonant with senior
executive status, but Company may assign Executive to different executive
positions and modify Executive's duties and responsibilities. Company may also
assign Executive to a position in which he performs services for other of
Company's subsidiaries or affiliates.

     1.3. Executive agrees to serve in the assigned position and to perform
diligently and to the best of Executive's abilities the duties and services
appertaining to such position as determined by Company, as well as such
additional or different duties and services appropriate to such position which
Executive from time to time may be reasonably directed to perform by Company.
Executive shall at all times comply with and be subject to such policies and
procedures as Company may establish from time to time. Executive shall, during
the period of Executive's employment by Company, devote Executive's full
business time, attention, energy, and best efforts to the business and affairs
of Company. For purposes of this Agreement, full business time shall mean the
normal work week for individuals in comparable executive positions with
Company. Executive may not engage, directly or indirectly, in any other
business, investment, or activity that interferes with Executive's performance
of Executive's duties hereunder, is contrary to the interests of Company, or
requires any significant portion of Executive's business time.

     1.4. Executive acknowledges and agrees that at all times during the
employment relationship Executive owes fiduciary duties to Company, including
but not limited to the fiduciary duties of the highest loyalty, fidelity and
allegiance to act at all times in the best interests of Company, to make full
disclosure to Company of all information that pertains to Company's business
and interests, to do no act which would injure Company's business, its
interests, or its reputation, and to refrain from using for Executive's own
benefit or for the benefit of others any information or opportunities
pertaining to Company's business or interests that are entrusted to Executive
or that he learned while employed by Company. Executive acknowledges and agrees
that upon termination of the employment relationship, Executive shall continue
to refrain from using for his own benefit or the benefit of others any
information or opportunities pertaining to Company's business or interests that
were entrusted to Executive during the employment relationship or that he
learned while employed by Company. Executive agrees that while employed by
Company and thereafter he

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shall not knowingly take any action which interferes with the external
relationships between Company and third parties.

     1.5.  It is agreed that any direct or indirect interest in, connection
with, or benefit from any outside activities, particularly commercial
activities, which interest might in any way adversely affect Company, or any of
its affiliates, involves a possible conflict of interest. In keeping with
Executive's fiduciary duties to Company, Executive agrees that during the
employment relationship Executive shall not knowingly become involved in a
conflict of interest with Company or its affiliates, or upon discovery thereof,
allow such a conflict to continue. Moreover, Executive agrees that Executive
shall disclose to Company's President any facts which might involve such a
conflict of interest that has not been approved by Company's President. Company
and Executive recognize that it is impossible to provide an exhaustive list of
actions or interests which constitute a "conflict of interest." Moreover,
Company and Executive recognize there are many borderline situations. In some
instances, full disclosure of facts by Executive to Company's President may be
all that is necessary to enable Company or its affiliates to protect their
interests. In others, if no improper motivation appears to exist and the
interests of Company or their affiliates have not suffered, prompt elimination
of the outside interest will suffice. In still others, it may be necessary for
Company to terminate the employment relationship. Company and Executive agree
that Company's determination as to whether a conflict of interest exists shall
be conclusive. Company reserves the right to take such action as, in its
judgment, will end the conflict.

2.    Compensation and Benefits:

     2.1. As compensation for services rendered under this Agreement, Executive
shall receive a base salary of Three Hundred Thousand ($300,000) per year
("Base Annual Salary"), payable in semi-monthly installments in accordance with
Company's standard payroll practice for its salaried employees. Executive's
Base Annual Salary may be increased from time to time based upon his
performance. The amounts of any such salary increases shall be approved by the
Personnel Committee of Company's Board of Directors.

     2.2. The parties recognize that Western will pay Executive his performance
bonus for the calendar year 1997 prior to the consummation of the Merger. In
addition to Base Annual Salary, Executive shall receive for the calendar years
1998, 1999 and 2000, an annual performance bonus in such amount as may be
determined by the Personnel Committee of Company's Board of Directors in its
sole discretion for each year during the Term of this Agreement. Such annual
bonus shall be paid in the March/April time frame of the following year, with
the first such payment in the March/April time frame of 1999 for the calendar
year 1998. It is understood and agreed that the amount of any such bonus shall
be determined based upon a consideration of both (i) the progress and success
of the Company as a whole, and (ii) the personal performance and contributions
made to the success of the Company by Executive. Finally, it is understood and
agreed that there may be years in which the Personnel Committee determines that
no bonus shall be paid.

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     2.3. In the event that, in connection with the Merger, the acceleration of
the vesting of Executive's stock options or restricted stock in Western, or any
payment, award or distribution under the February 8, 1994 Employment Agreement,
or any payment, award or distribution under this Agreement to or for the
benefit of Executive (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code or any interest or penalties with
respect to such excise tax (such excise tax, together with any such interest or
penalties, are hereinafter collectively referred to as the "Excise Tax"),
Company shall pay to Executive an additional payment (a "Gross-up Payment") in
an amount such that after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax imposed on any Gross-up Payment, Executive retains an amount of the
Gross-up Payment equal to the Excise Tax imposed upon the Payments. Company and
Executive shall make an initial determination as to whether a Gross-up Payment
is required and the amount of any such Gross-up Payment. Executive shall notify
Company immediately in writing of any claim by the Internal Revenue Service
which, if successful, would require Company to make a Gross-up Payment (or a
Gross-up Payment in excess of that, if any, initially determined by Company and
Executive) within ten days of the receipt of such claim. Company shall notify
Executive in writing at least ten days prior to the due date of any response
required with respect to such claim if it plans to contest the claim. If
Company decides to contest such claim, Executive shall cooperate fully with
Company in such action; provided, however, Company shall bear and pay directly
or indirectly all costs and expenses (including additional interest and
penalties) incurred in connection with such action and shall indemnify and hold
Executive harmless, on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result of
Company's action. If, as a result of the Company's action with respect to a
claim, Executive receives a refund of any amount paid by Company with respect
to such claim, Executive shall promptly pay such refund to Company. If Company
fails to timely notify Executive whether it will contest such claim or Company
determines not to contest such claim, then Company shall immediately pay to
Executive the portion of such claim, if any, which it has not previously paid
to Executive.

     2.4. While employed by Company, Executive shall be allowed to participate,
on the same basis generally as other executives of Company, in all general
executive benefit plans and programs, including improvements or modifications
of the same, which as of the Effective Time or thereafter are made available by
Company to other of Company's comparable executives. Such benefits plans, and
programs may include, without limitation, medical, health, and dental care,
life insurance, disability protection, and pension plans. Nothing in this
Agreement is to be construed or interpreted to provide greater rights,
participation, coverage, or benefits under such benefit plans or programs than
provided to similarly situated executives pursuant to the terms and conditions
of such benefit plans and programs.

     2.5. Company shall not by reason of this Article 2 be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing, any
of its medical, health, dental, insurance, disability or other benefit plans or
programs, so long as such actions are similarly applicable to covered employees
generally. Unless specifically provided for in a written plan document adopted
by the Board of Directors of Company, none of the benefits or arrangements
described in this Article

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2 shall be secured or funded in any way, and each shall instead constitute an
unfunded and unsecured promise to pay money in the future exclusively from the
general assets of Company.

     2.6. Company may withhold from any compensation, benefits, or amounts
payable under this Agreement all federal, state, city, or other taxes as may be
required pursuant to any law or governmental regulation or ruling.

3.   Termination of employment prior to expiration of Term and effects of
     such termination:

     3.1. [A] Notwithstanding any other provisions of this Agreement, Company
shall have the right to terminate Executive's employment under this Agreement
at any time prior to the expiration of the Term for cause upon the
determination by Company's Board of Directors or Company's Executive
Termination Review Committee that cause exists for the termination of the
employment relationship. As used in this Section 3.1, the term cause shall mean
[1] misuse, misappropriation or embezzlement by Executive of funds or property
belonging to Company, or his use of alcohol or drugs which interferes with the
performance of his duties hereunder or which compromises the integrity and
reputation of Company, its employees, or its products or services; [2]
Executive's conviction by a court of law, or admission that he is guilty, of a
felony or other crime involving moral turpitude; [3] Executive's absence from
his employment other than as a result of a disability as defined in Section 3.3
hereof, for whatever cause, for a period of more than one (1) month, without
prior written consent from Company; [4] Executive becomes incompetent or is
reasonably unable to undertake and discharge the duties and responsibilities of
his position, other than as a result of a disability as defined in Section 3.3
hereof; or [5] Executive's breach of any provisions of this Agreement, or his
gross negligence, willful malfeasance or fraud or dishonesty in performance of
his services on behalf of Company pursuant to this Agreement. It is expressly
acknowledged and agreed that the decision as to whether cause exists for
termination of the employment relationship by Company is delegated to Company's
Board of Directors or Company's Executive Termination Review Committee for
determination, which decision shall be made in good faith.

     [B] Upon a termination of the employment relationship for cause by Company
prior to expiration of the Term pursuant to this Section, Executive shall be
entitled to receive as a full and final settlement of all obligations of
Company hereunder his pro rata Base Annual Salary through the date of such
termination, but any and all other compensation to which Executive is entitled
under this Agreement and any and all future benefits for which Executive is
eligible under this Agreement shall cease and terminate, including but not
limited to, Executive shall not be entitled to any bonuses or other incentive
compensation, if any, not yet paid to Executive at the date of such
termination. Executive shall not be entitled to any severance payment.
Executive's rights under this Section are Executive's sole and exclusive rights
against Company or its affiliates, and Company's sole and exclusive liability
to Executive under this Agreement, in contract, tort, or otherwise, for any
termination for cause of the employment relationship by Company. Executive
covenants not to lodge any claim, demand, or cause of action against Company
based on termination for cause of the employment relationship for any monies
allegedly due under this Agreement other than those specified in this Section.
If Executive breaches this covenant, Company shall be entitled to recover

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from Executive all sums expended by Company (including costs and attorneys
fees) in connection with such suit, claim, demand, or cause of action.

     3.2. The employment relationship under this Agreement shall terminate
automatically upon Executive's death. Upon a termination of the employment
relationship prior to expiration of the Term because of Executive's death,
Executive's administrators, heirs or legatees shall be entitled to receive
Executive's then-current Base Annual Salary as if Executive's employment (which
shall cease on the date of such death) had continued for the full Term of this
Agreement. Company may, at its option, pay such Base Annual Salary in semi-
monthly installments or in a lump sum discounted to present value at the
discount rate then available to Company through its lenders. Executive's
administrators, heirs or legatees shall also be entitled to any individual
bonuses or any individual incentive compensation awarded but not yet paid to
Executive at the date of such termination but Executive's administrators, heirs
or legatees shall not be entitled to any future individual bonuses or any
individual incentive compensation payments not yet awarded (whether or not
allegedly accrued) as of the date of such termination.

     3.3. The employment relationship under this Agreement shall terminate
automatically upon Executive becoming permanently and totally unable to perform
Executive's duties for Company as a result of any medically determinable
physical or mental impairment as supported by a written medical opinion to the
foregoing effect by a physician selected by Company. Upon such termination of
the employment relationship, Executive shall be paid his pro rata Base Annual
Salary through the date of such termination and Executive shall thereafter be
paid sixty (60%) of his then-current Base Annual Salary on a semi-monthly
basis through the Term of this Agreement as if the employment relationship had
not terminated, reduced by any benefits he may receive under Company's
disability benefit plans. Executive shall also be entitled to any individual
bonuses or any individual incentive compensation awarded but not yet paid to
Executive at the date of such termination but Executive shall not be entitled
to any future individual bonuses or any individual incentive compensation
payments not yet awarded (whether or not allegedly accrued) as of the date of
such termination. For purposes of this Section, disability shall not include
disabilities arising from (a) chronic use of intoxicants, drugs or narcotics,
(b) intentionally self-inflicted injury or intentionally self-induced
sickness, or (c) a proven unlawful act or enterprise on the part of Executive.

     3.4. [A] Notwithstanding any other provisions of this Agreement, Company
shall have the right to terminate 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
Company's Board of Directors or Company's Executive Termination Review
Committee. Any termination of the employment relationship by Company prior to
the expiration of the Term other than a termination under Section 3.1 for cause
shall be deemed to be a termination without cause pursuant to this Section 3.4.

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     [B] If Company terminates the employment relationship without cause
pursuant to this Section 3.4, Executive's post-employment non-competition
obligation specified in Section 6.1(i) shall extend only to the date upon which
the Term of this Agreement would have otherwise expired.

     [C] Upon termination of the employment relationship by Company prior to
expiration of the Term pursuant to this Section 3.4, Executive shall be
entitled, in consideration of Executive's continuing obligations hereunder
after such termination (including, without limitation, Executive's
non-competition obligations), to receive his then-current Base Annual Salary as
if Executive's employment (which shall cease on the date of such termination)
had continued for the full Term of this Agreement. Company may, at its option,
pay such Base Annual Salary in semi-monthly installments or in a lump sum
discounted to present value at the discount rate then available to Company
through its lenders. Provided that Executive complies with his continuing
obligations hereunder after such termination, Executive shall also be entitled
to performance bonuses for each of the calendar years 1998, 1999 and 2000 as
follows: As to the bonus for calendar year 1998, if such termination of
employment occurs before Company's Personnel Committee awards a bonus for
calendar year 1998, the bonus for calendar year 1998 shall be equal to the
bonus paid by Company (or Western) to Executive for the calendar year 1997. As
to the bonus for calendar year 1999, if such termination of employment occurs
before Company's Personnel Committee awards a bonus for calendar year 1999, the
bonus for calendar year 1999 shall be equal to the average of the bonuses paid
by Company (or Western) to Executive for calendar years 1997 and 1998. As to
the bonus for calendar year 2000, if such termination of the employment
relationship occurs at any time prior to the end of the Term, the bonus for
calendar year 2000 shall be equal to the average of the bonuses paid by Company
(or Western) to Executive for the calendar years 1997, 1998 and 1999.

     [D] Executive shall not be under any duty or obligation to seek or accept
other employment following such termination of the employment relationship and,
subject to Executive complying with his continuing obligations (including
non-competition obligations), the amounts due Executive hereunder shall not be
reduced or suspended if Executive accepts subsequent employment. Executive's
rights under this Section 3.4 are Executive's sole and exclusive rights against
Company, and Company's sole and exclusive liability to Executive under this
Agreement, in contract, tort, or otherwise, for such termination of the
employment relationship by Company. Executive covenants not to lodge any claim,
demand, or cause of action against Company based on such termination of the
employment relationship by Company for any monies allegedly due under this
Agreement other than those specified in this Section 3.4. If Executive breaches
this covenant, Company shall be entitled to recover from Executive all sums
expended by Company (including costs and attorneys fees) in connection with
such suit, claim, demand, or cause of action.

     3.5. [A] Executive shall have the right to terminate the employment
relationship during its Term only for cause, which shall consist only of a
material breach by Company of any material provision of this Agreement which
remains uncorrected for thirty (30) days following written notice of such
breach by Executive to Company.

     [B] If Executive terminates the employment relationship for cause pursuant
to this Section 3.5, Executive's post-employment non-competition obligation
specified in Section 6.1(i) shall extend only to the date upon which the Term
of this Agreement would have otherwise expired.

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     [C] Upon termination of the employment relationship by Executive for cause
prior to expiration of the Term pursuant to this Section 3.5, Executive shall
be entitled, in consideration of Executive's continuing obligations hereunder
after such termination (including, without limitation, Executive's
non-competition obligations), to receive his Base Annual Salary as if
Executive's employment (which shall cease on the date of such termination) had
continued for the full Term of this Agreement. Company may, at its option, pay
such Base Annual Salary in semi-monthly installments or in a lump sum
discounted to present value at the discount rate then available to Company
through its lenders. Executive shall be entitled to bonuses or other incentive
compensation, if any, awarded but not yet paid as of the date of such
termination. Provided that Executive complies with his continuing obligations
hereunder after such termination, Executive shall also be entitled to
performance bonuses for each of the calendar years 1998, 1999 and 2000, even if
no such bonus had been awarded as of the date of such termination, as follows:
As to the bonus for calendar year 1998, if such termination of employment
occurs before Company's Personnel Committee awards a bonus for calendar year
1998, the bonus for calendar year 1998 shall be equal to the bonus paid by
Company (or Western) to Executive for the calendar year 1997. As to the bonus
for calendar year 1999, if such termination of employment occurs before
Company's Personnel Committee awards a bonus for calendar year 1999, the bonus
for calendar year 1999 shall be equal to the average of the bonuses paid by
Company (or Western) to Executive for calendar years 1997 and 1998. As to the
bonus for calendar year 2000, if such termination of the employment
relationship occurs at any time prior to the end of the Term, the bonus for
calendar year 2000 shall be equal to the average of the bonuses paid by Company
(or Western) to Executive for the calendar years 1997, 1998 and 1999.

     [D] Executive shall not be under any duty or obligation to seek or accept
other employment following such termination of the employment relationship and,
subject to Executive complying with his continuing obligations (including
non-competition obligations), the amounts due Executive hereunder shall not be
reduced or suspended if Executive accepts subsequent employment. Executive's
rights under this Section 3.5 are Executive's sole and exclusive rights against
Company, and Company's sole and exclusive liability to Executive under this
Agreement, in contract, tort, or otherwise, for any actions or inactions giving
rise to such termination of the employment relationship for cause by Executive.
Executive covenants not to lodge any claim, demand, or cause of action against
Company based on such termination of the employment relationship for cause by
Executive for any monies allegedly due under this Agreement other than those
specified in this Section 3.5. If Executive breaches this covenant, Company
shall be entitled to recover from Executive all sums expended by Company
(including costs and attorneys fees) in connection with such suit, claim,
demand, or cause of action.

     3.6. Termination of the employment relationship shall not terminate those
obligations imposed by this Agreement which are continuing in nature,
including, without limitation, Executive's continuing obligations of
confidence, Executive's continuing obligations with respect to business
opportunities that had been entrusted to Executive by Company during the
employment relationship, and Executive's obligations under Articles 5 and 6.

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4.   Continuation of Employment beyond Term; Termination and Effects of
     Termination:

     4.1.  Should Executive remain employed by Company beyond the expiration of
the Term, such employment shall automatically convert to an at-will
relationship terminable at any time by either Company or Executive for any
reason whatsoever, with or without cause. Upon such termination of the
employment relationship by either Company or Executive for any reason
whatsoever, all future compensation to which Executive is entitled and all
future benefits for which Executive is eligible shall cease and terminate.
Executive shall be entitled to pro rata salary through the date of such
termination. Executive shall also be entitled to bonuses or other incentive
compensation, if any, awarded but not yet paid as of the date of such
termination, but Executive shall not be entitled to any future individual
bonuses or any individual incentive compensation payments not yet awarded
(whether or not allegedly accrued) as of the date of such termination.

5.   Ownership and Protection of Information; Copyrights:

     5.1. All information, ideas, concepts, improvements, discoveries, and
inventions, whether patentable or not, and all expressions of ideas, which are
created, conceived, made, developed or acquired by Executive, individually or
in conjunction with others, during Executive's employment by Company (whether
during business hours or otherwise and whether on Company's premises or
otherwise), whether tangible or intangible, which relate to Company's business,
products or services (including, without limitation, all such information
relating to corporate opportunities, insurance or annuity products, research,
financial and sales data, pricing and trading terms, evaluations, opinions,
interpretations, acquisition prospects, the identity of customers or their
requirements, the identity of key contacts within the customer's organizations
or within the organization of acquisition prospects, or marketing and
merchandising techniques, prospective names, and marks) shall be disclosed to
Company. Executive acknowledges that he has heretofore disclosed all such
information, ideas, concepts, improvements, discoveries, and inventions, as
well as all expressions of ideas, to Company.

     5.2. All such information, ideas, concepts, improvements, discoveries, and
inventions identified in Section 5.1 are and shall be the sole and exclusive
property of Company. Moreover, if, during Executive's employment by Company,
Executive creates any work of authorship fixed in any tangible medium of
expression which is the subject matter of copyright (such as videotapes,
written presentations, or acquisitions, computer programs, E-mail, voicemail,
electronic databases, drawings, maps, architectural renditions, models,
manuals, brochures, or the like) relating to Company's business, products, or
services, whether such work is created solely by Executive or jointly with
others (whether during business hours or otherwise and whether on Company's
premises or otherwise), Company, shall be deemed the author of such work if the
work is prepared by Executive in the scope of Executive's employment; or, if
the work is not prepared by Executive within the scope of Executive's
employment but is specially ordered by Company as a contribution to a
collective work, as a part of a motion picture or other audiovisual work, as a
translation, as a supplementary work, as a compilation, or as an instructional
text, then the work shall be considered to be work made for hire and Company,
shall be the author of the work. If such work relating to Company's business,
products, or services is neither prepared by Executive within the scope of

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Executive's employment nor a work specially ordered that is deemed to be a work
made for hire, then Executive hereby agrees to assign, and by these
presents does assign, to Company all of Executive's worldwide right, title, and
interest in and to such work and all rights of copyright therein. Additionally,
all documents drawings, memoranda, notes, records, files, correspondence,
manuals, models, specifications, computer programs, E-mail, voice mail,
electronic databases, maps and all other writings or materials of any type
embodying any of such information, ideas, concepts, improvements, discoveries,
inventions and/or copyrightable expressions are and shall be the sole and
exclusive property of Company. Executive acknowledges that Company is the owner
of all such information, ideas, concepts, improvements, discoveries, inventions
and/or copyrightable expressions that he heretofore created, conceived, made,
developed or acquired while employed by Company.

     5.3. Executive will not, at any time during or after Executive's
employment by Company, make any unauthorized disclosure of any confidential
business information or trade secrets of Company, or make any use thereof,
except in the carrying out of Executive's employment responsibilities
hereunder. As a result of Executive's employment by Company, Executive shall
also from time to time have access to, or knowledge of, confidential business
information or trade secrets of third parties, such as customers, suppliers,
partners, joint venturers, and the like, of Company, Executive also agrees to
preserve and protect the confidentiality of such third party confidential
information and trade secrets to the same extent, and on the same basis, as
Company's confidential business information and trade secrets. Upon termination
of the employment relationship for any reason, Executive promptly shall deliver
to Company all documents and things containing Company trade secrets or
confidential information. Executive may disclose those aspects of Company's
confidential information as Executive has received the written advice of
counsel that such disclosure thereof is necessary under applicable federal,
state, local, or foreign law or other regulations applicable to Executive
(including, without limitation, any confidential information that Executive is
legally compelled to disclose as a result of depositions, interrogatories,
request for documents, subpoenas, civil investigative demands, or similar
processes), provided, however, that Executive has first provided Company with
prompt prior written notice of such requirement so that Company may seek a
protective order or other appropriate remedy and/or waive compliance with the
terms of this Agreement. In the event that such protective order or other
remedy is not obtained, or that Company does not waive compliance with the
provisions hereof, Executive agrees to furnish only that portion of Company's
confidential information which Executive is advised in writing by his counsel
is legally required to be disclosed and to exercise all reasonable efforts to
obtain assurance that confidential treatment will be accorded such confidential
information.

     5.4. Both during the period of Executive's employment by Company and
thereafter, Executive shall assist Company or its nominees, at any time, in the
protection of Company's worldwide right, title, and interest in and to
information, ideas, concepts, improvements, discoveries, and inventions, and
its copyrighted works, including without limitation, the execution of all
formal assignment documents requested by Company or its nominees and the
execution of all lawful oaths and applications for applications for patents and
registration of copyright in the United States and foreign countries.

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     5.5. Executive acknowledges that money damages would not be sufficient
remedy for any breach of this Article 5 by Executive, and Company shall be
entitled to enforce the provisions of this Article 5 by terminating any
payments then owing to Executive under this Agreement and/or to specific
performance and injunctive relief as remedies for such breach or any threatened
breach. Such remedies shall not be deemed the exclusive remedies for a breach
of this Article 5, but shall be in addition to all remedies available at law or
in equity to Company, including the recovery of damages from Executive and his
agents involved in such breach.

6.   Non-Competition and Non-Solicitation Obligations:

     6.1. As part of the consideration for the compensation and benefits to be
paid to Executive hereunder; to protect the trade secrets and confidential
information of Company or its subsidiaries or affiliates or their customers or
clients that have been and will in the future be disclosed or entrusted to
Executive, the business good will of Company or its subsidiaries or affiliates
that has been and will in the future be developed in Executive, or the business
opportunities that have been and will in the future be disclosed or entrusted
to Executive by Company or its subsidiaries or affiliates; and as an additional
incentive for Company to enter into this Agreement, Executive agrees to the
non-competition obligations hereunder: Executive shall not, anywhere in the
United States or any other country in which Company is offering financial
services as of the date of the termination of the employment relationship,
directly or indirectly for himself or for others, (i) in any manner compete
with Company or any subsidiary or affiliate of Company by whom Executive was
employed at any time during the twelve months preceding the termination of the
employment relationship, (ii) solicit or attempt to convert to other financial
service companies providing the same or similar products or services provided
by Company, any customers or policyholders of Company or its subsidiaries or
affiliates; or (iii) solicit for employment or employ any employee of Company.
Except as provided in Article 8, these obligations owed by Executive to Company
shall extend throughout the Term of this Agreement and, except as otherwise
provided in Sections 3.4 or 3.5, for a period of two (2) years following
termination of the employment relationship for whatever reason.

     6.2. Executive understands that the foregoing restrictions may limit
Executive's ability to engage in certain businesses in the areas specified
above during the period provided for above, but acknowledges that Executive
will receive sufficiently high remuneration and other benefits under this
Agreement to justify such restriction. Executive acknowledges that money
damages would not be sufficient remedy for any breach of this Article 6 by
Executive, and Company shall be entitled to enforce the provisions of this
Article 6 by terminating any payments then owing to Executive under this
Agreement and/or to specific performance and injunctive relief as remedies for
such breach or any threatened breach. Such remedies shall not be deemed the
exclusive remedies for a breach of this Article 6, but shall be in addition to
all remedies available at law or in equity to Company, including, without
limitation, the recovery of damages from Executive and Executive's agents
involved in such breach.

     6.3. It is expressly understood and agreed that Company and Executive
consider the restrictions contained in this Article 6 to be reasonable and
necessary to protect the trade secrets and confidential information of Company
or its subsidiaries or affiliates, the business good will of

                                  - Page 11 -
<PAGE>   12
Company or its subsidiaries or affiliates developed in Executive, and/or the
business opportunities disclosed or entrusted to Executive by Company or its
subsidiaries or affiliates. Nevertheless, if any of the aforesaid restrictions
are found to be unreasonable, or overly broad as to geographic area or time, or
otherwise unenforceable, the parties intend for the restrictions therein set
forth to be modified so as to be reasonable and enforceable and, as so modified
to be fully enforced.

     6.4. These duties and obligations of Executive specified in this Article 6
are not exclusive. Executive owes Company the duties and obligations agreed to
elsewhere in this Agreement and as are imposed by the law, e.g., the duty to
refrain from tortiously interfering with Company's contractual and business
relationships with others.

7.   Condition Subsequent, Effective Time, and Termination of February 8, 1994
     Employment Agreement with Western:

     7.1. Notwithstanding any provision in this Agreement to the contrary, it
is a condition subsequent to the execution and delivery of this Agreement that
the Merger, as such term is defined in the Merger Agreement, must be
consummated. If the Merger Agreement is terminated without consummation of the
Merger, then this Agreement shall be of no further force and effect and shall
be void ab initio.

     7.2. This Agreement shall be effective as of forty-eight (48) hours after
the Effective Time of the Merger, which term shall have the same meaning as
assigned to such term in the Merger Agreement.

     7.3. Executive waives any claim he may have against Western under the
February 8, 1994 Employment Agreement, including but not limited to claims for
future salary, control termination payments, severance allowance, or bonuses.
As of forty eight hours after the Effective Time, any and all prior or existing
employment agreements between Executive and Western shall be canceled and
terminated, including the February 8, 1994 Employment Agreement, and are
replaced and superseded by this Agreement and the accompanying Severance
Agreement.

8.   Conversion of employment relationship to at-will and release of certain
     duties and obligations upon a Change of Control as specified in Severance
     Agreement:

     8.1. Upon the occurrence of a Change of Control as specified in the
Severance Agreement, the employment relationship under this Agreement shall
immediately automatically convert to an at-will relationship terminable by
either Company or Executive at any time for any reason whatsoever, with or
without cause, and Executive is released from his post- employment obligations
specified in Article 6. The economic effect of any subsequent termination of
the employment relationship by Company without cause shall be governed by
Section 4.1. The economic effect of a subsequent termination of the employment
relationship by virtue of Executive's death or disability shall continue to be
governed by Sections 3.2 or 3.3, respectively, through the remainder of what
was the Term of the Agreement. The economic effect of a subsequent termination
of the employment relationship for cause by Company shall continue to be
governed by Section 3.1. The economic effect of any subsequent termination of
the employment relationship by Executive for any reason

                                  - Page 12 -
<PAGE>   13
shall be governed by Section 4.1. In all cases, Executive shall also be
entitled to the benefits of the Severance Agreement, if applicable; however, in
no event is it intended that a termination of the employment relationship
following a Change of Control will result in Executive receiving both
post-employment payments under this Agreement and under the severance
Agreement.

9.   Miscellaneous:

     9.1. For purposes of this Agreement the terms "affiliates" or "affiliated"
means an entity who directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with Company.

     9.2. Western is a third party beneficiary of this Agreement with respect
to certain agreements specified herein that affect the February 8, 1994
Employment Agreement.

     9.3. For purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been duly
given when personally delivered or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:

     If to Company:     American General Corporation
                        2929 Allen Parkway
                        Houston, Texas 77019
                        Attention: Corporate Secretary

     If to Executive,   to Richard W. Scott
                        122 Paul Revere
                        Houston, Texas 77024

Either Company or Executive may furnish a change of address to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

     9.4. No failure by either party hereto at any time to give notice of any
breach by the other party of, or to require compliance with, any condition or
provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.

     9.5. (a) Except for equitable relief as specified in Section 9.6, 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 Executive, 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

                                  - Page 13 -
<PAGE>   14
proceeding shall be conducted in Houston, Texas. This agreement to arbitrate
shall be enforceable 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. 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, his, or her 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.

     (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) Executive
shall denominate one arbitrator and (2) 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 Executive or
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.

     (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 Agreement and that no part
of their award includes any amount for exemplary or punitive damages. All
proceedings conducted hereunder and the decision of the arbitrators shall be
kept confidential by the parties, e.g., the arbitrators' award shall not be
released to the press or published in any of the various arbitration reporters.
Judgment upon any award rendered in any such arbitration proceeding may be
entered by any federal or state court having jurisdiction.

                                  - Page 14 -
<PAGE>   15

     9.6. In the event of a breach or threatened breach by Executive of any of
the covenants set forth in Sections 5 and 6 hereof, 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. With respect to any such action,
Executive hereby irrevocably submits to the non-exclusive jurisdiction of any
Federal or State court sitting in the City of Houston, Texas, and agrees that
process in any such action shall be valid and effective for all purposes if
served upon in accordance with the notice provisions of Section 9.3 hereof.

     9.7. This Agreement shall be binding upon and inure to the benefit of
Company and any other person, association, or entity which may hereafter
acquire or succeed to all or substantially all of the business or assets of
Company by any means whether direct or indirect, by purchase, merger,
consolidation, or otherwise. Executive's rights and obligations under this
Agreement are personal and such rights, benefits, and obligations of Executive
shall not be voluntarily or involuntarily assigned, alienated, or transferred,
whether by operation of law or otherwise, without the prior written consent of
Company.

     9.8. It is a desire and intent of the parties that the terms, provisions,
covenants and remedies contained in this Agreement shall be enforceable to the
fullest extent permitted by law. If any such term, provision, covenant, or
remedy of this Agreement or the application thereof to any person, association,
or entity or circumstances shall, to any extent, be construed to be invalid or
unenforceable in whole or in part, then such term, provision, covenant, or
remedy shall be construed in a manner so as to permit its enforceability under
the applicable law to the fullest extent permitted by law. In any case, the
remaining provisions of this Agreement or the application thereof to any
person, association, or entity or circumstances other than those to which they
have been held invalid or unenforceable, shall remain in full force and effect.

     9.9. Each party to this Agreement acknowledges that no representation,
inducement, promise, or agreement, oral or written, has been made by either
party with respect to such subject matters, which is not embodied herein, and
that no agreement, statement, or promise relating to the employment of
Executive by Company that is not contained in this Agreement shall be valid or
binding. Except as provided in written company policies promulgated by Company
dealing with issues such as securities trading, business ethics, governmental
affairs and political contributions, consulting fees, commissions or other
payments, compliance with law, investments and outside business interests as
officers and executives, reporting responsibilities, and administrative
compliance, and the written benefits, plans, and programs, if any, applicable
to Executive, this Agreement and the accompanying Severance Agreement
constitute the entire agreement of the parties with regard to such subject
matters, and contains all of the covenants, promises, representations,
warranties, and agreements between the parties with respect to Executive's
employment relationship with Company and the term and termination of such
relationship, and replaces and merges previous agreements and discussions
pertaining to the employment relationship between Company and Executive. Any
modification of this Agreement will be effective only if it is in writing and
signed by each party whose rights hereunder are affected thereby.

                                  - Page 15 -
<PAGE>   16

     IN WITNESS WHEREOF, Company and Executive have duly executed this
Agreement in multiple originals to be effective as provided herein.

                                  AMERICAN GENERAL CORPORATION


                                  By: /S/ ROBERT M. DEVLIN
                                  Name: Robert M. Devlin
                                  Title: Chairman and Chief Executive Officer
                                  This 11th day of September, 1997



                                  /S/ RICHARD W. SCOTT
                                  RICHARD W. SCOTT
                                  This 11th day of September, 1997



                                  - Page 16 -