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ASSURANCE AGREEMENT

Fee Agreement

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This Fee Agreement involves

AMERICAN INTERNATIONAL GROUP INC

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Title: ASSURANCE AGREEMENT
Governing Law: New York     Date: 6/28/2005
Industry: INSPPY     Sector: FINANC

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EX-10.6:
 

Ex. 10(6)

               Assurance Agreement , dated as of June 27, 2005 (this “Agreement”), by American International Group, Inc., a Delaware corporation (“AIG”), in favor of each Eligible Employee (as defined below).

Recitals

               A. The Covered Plans. Starr International Company, Inc. (“SICO”) has historically established Deferred Compensation Profit Participation Plans for the benefit of employees of AIG and its subsidiaries (each such plan established through December 31, 2004, a “Covered Plan”). In the letter to participants attached as an Annex to this Agreement (the “Annex”), SICO reaffirmed its obligations under each Covered Plan.

               B. The Eligible Employees. AIG has determined, subject to the conditions set forth in this Agreement, to assure each participant in a Covered Plan who was as of May 18, 2005 an employee of AIG or its subsidiaries (each, an “Eligible Employee”) that all cash or AIG common stock, par value $2.50 per share (as adjusted for any Fundamental Transaction (as defined below), the “Common Stock”), due under the express terms of the Covered Plans is promptly paid or delivered to the Eligible Employee.

               Now, Therefore , AIG agrees as follows, intending to be legally bound:

               1. Assurance of Delivery. AIG agrees (a) to pay to any Eligible Employee any cash that is not promptly paid and (b) to deliver to any Eligible Employee any shares of Common Stock that are not promptly delivered, in each case by SICO to such Eligible Employee as required by the express terms of any Covered Plan, subject to the conditions set forth in Section 2 and the terms of this Agreement. The agreement to make the deliveries and payments described in this Section 1 is irrevocable.

               2. Conditions. AIG’s obligation to make the deliveries and payments contemplated by Section 1 is subject to the following conditions:

          (a) The obligation will apply only to the express terms of the Covered Plans as in effect on December 31, 2004, without giving effect to any subsequent modification, waiver or amendment or action or inaction by the directors of SICO (or any committee thereof), in each case not approved by the Compensation Committee of the Board of Directors of AIG (the “Compensation Committee”);

          (b) The obligation will apply only to deliveries and payments to an Eligible Employee who is not terminated by AIG for cause, as determined by the Compensation Committee;

          (c) Whether obligations under the Covered Plans are satisfied by delivery of shares of Common Stock, payment of cash or combination of the two shall be determined by the Compensation Committee (from time to time, in its sole discretion and regardless of the form of consideration the directors of SICO elected to pay);

 


 

          (d) AIG’s total obligation under this Agreement will be limited to a combination of shares of Common Stock and cash that does not exceed the number of shares of Common Stock set forth in the Annex, as such number shall be equitably adjusted in the event of a recapitalization, stock split, stock dividend, combination or exchange of shares, merger, consolidation, rights offering, separation, reorganization, or liquidation or any other change in the corporate structure of AIG or shares of the Common Stock (a “Fundamental Transaction”), and, for purposes of calculating this limit, cash payments shall be converted into a number of shares of Common Stock based on the fair market value of the Common Stock (as determined by the Compensation Committee) on the date the payment is due under the relevant Covered Plan; and

          (e) The Eligible Employee shall agree to take all actions reasonably requested by AIG to subrogate AIG to his or her rights against SICO for any delivery or payment made by AIG. Without limiting the generality of the preceding sentence, each Eligible Employee shall be required to agree, before receiving a delivery or payment pursuant to Section 1, that he or she will repay the shares or payments if the underlying obligation is ultimately satisfied by SICO.

               3. Nature of Obligations. This Agreement shall remain in full force and effect and shall be binding on AIG, its successors and assigns until all deliveries and payments under the express terms of the Covered Plans to Eligible Employees have been made in full. In the event that any delivery of shares or payment to an Eligible Employee under a Covered Plan is rescinded or must otherwise be returned for any reason whatsoever, AIG shall remain liable under this Agreement with respect to delivery or payment as if it had not been made. AIG reserves the right to assert any and all defenses that SICO may have to any delivery or payment.

               4. Subrogation. On making any delivery or payment under Section 1, AIG shall be subrogated to the rights of the Eligible Employee against SICO with respect to the underlying obligations of SICO.

               5. Administration of this Agreement.

          (a) This Agreement shall be administered by the Compensation Committee. Actions of the Compensation Committee may be taken by the vote of a majority of its members. The Compensation Committee may allocate among its members and delegate to any person who is not a member of the Compensation Committee any of its responsibilities and, unless the context otherwise requires, any and all references to the Compensation Committee in this Agreement shall include any member or person so allocated or delegated.

          (b) All decisions, writings and actions under this Agreement shall be subject to the approval to the Compensation Committee in its sole and absolute discretion. Without limiting the generality of the foregoing, the Compensation Committee shall have power to interpret this Agreement, to make regulations for carrying out its purpose and to make all other

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determinations in connection with its administration (including whether an Eligible Employee has been terminated for cause, as contemplated by Section 2(b), whether and how to make adjustments following a Fundamental Transaction or to adjust the maximum number of shares of Common Stock described in Section (2)(d), whether any particular obligation shall be satisfied in shares or cash, as contemplated by Section 2(c) and how the fair market value of the Common Stock shall be determined as contemplated by Section 2(d)), all of which shall be final, binding and conclusive.

          (c) No member of the Board of Directors of AIG or the Compensation Committee or any employee of AIG (each such person a “Covered Person”) shall have any liability to any person (including any Eligible Employee) for any action taken or omitted to be taken or any determination made in good faith with respect to this Agreement or any Eligible Employee’s rights under this Agreement. Each Covered Person shall be indemnified and held harmless by AIG against and from any loss, cost, liability, or expense (including attorneys’ fees) that may be imposed upon or incurred by such Covered Person in connection with o

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