Exhibit 10.2

 

RETENTION AND SEVERANCE AGREEMENT

RETENTION AND SEVERANCE AGREEMENT (this “Agreement”), dated as of May 14, 2007
by and between 21st Century Insurance Group, a Delaware corporation (the
“Company”) and Dean E. Stark (the “Employee”).

WHEREAS, Employee is a key employee of Company;

WHEREAS, Company, American International Group, Inc., a Delaware corporation
(“Parent”), and AIG TW Corp., a Delaware corporation and wholly-owned indirect
subsidiary of Parent (“Merger Subsidiary”) have entered into an Agreement and
Plan of Merger, dated as of May 15, 2007 (the “Merger Agreement”) pursuant to
which the Merger Subsidiary will merge with and into the Company (the “Merger”);

WHEREAS, pursuant to the consummation of the transactions contemplated by the
Merger Agreement, Employee is expected to dispose of Employee’s ownership
interest in the Company and receive an early payout of Employee’s interest in
Company’s Supplemental Executive Retirement Plan; and

WHEREAS, Company desires to provide incentives for Employee to remain employed
by Company and its subsidiaries following the Closing Date of the Merger as
defined in the Merger Agreement (the “Closing Date”).

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, and intending to be legally bound hereby, the parties hereto agree as
follows:

1.                                       EMPLOYEE’S DUTIES.  EMPLOYEE SHALL
PERFORM HIS DUTIES WITH COMPANY AND ITS SUBSIDIARIES DILIGENTLY AND TO THE BEST
OF HIS ABILITY.  EMPLOYEE SHALL USE

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HIS BEST EFFORTS TO ASSIST COMPANY IN THE INTEGRATION OF THE BUSINESSES OF
COMPANY AND PARENT AND THE CONTINUED OPERATION OF THE BUSINESS OF COMPANY.  IF,
WITH THE CONSENT OF EMPLOYEE, THE EMPLOYMENT OF EMPLOYEE IS TRANSFERRED TO
PARENT, ALL REFERENCES TO “COMPANY” IN THIS AGREEMENT (OTHER THAN IN THE
RECITALS AT THE BEGINNING THEREOF) SHALL BE UNDERSTOOD TO REFER TO “PARENT”
EXCEPT WHERE OTHERWISE REQUIRED BY THE CONTEXT.

2.                                       RETENTION PAYMENT.  IF EMPLOYEE REMAINS
EMPLOYED BY COMPANY OR ITS SUBSIDIARIES ON THE FIRST ANNIVERSARY OF THE CLOSING
DATE, THEN COMPANY SHALL PAY TO EMPLOYEE IN A LUMP SUM WITHIN FIVE (5) BUSINESS
DAYS THEREAFTER, AN AMOUNT EQUAL TO $515,000  (THE “RETENTION PAYMENT”).

3.                                       TERMINATION PRIOR TO TWELVE MONTH
ANNIVERSARY OF CLOSING DATE.

(A)                                  IF COMPANY AND ITS SUBSIDIARIES TERMINATE
THE EMPLOYMENT OF EMPLOYEE FOR CAUSE (AS DEFINED HEREIN) PRIOR TO THE FIRST
ANNIVERSARY OF THE CLOSING DATE, OR IF EMPLOYEE TERMINATES EMPLOYMENT WITH
COMPANY AND ITS SUBSIDIARIES PRIOR TO THE FIRST ANNIVERSARY OF THE CLOSING DATE
FOR ANY REASON OTHER THAN GOOD REASON (AS DEFINED HEREIN), EMPLOYEE WILL NOT BE
ELIGIBLE FOR ANY PAYMENT UNDER THIS AGREEMENT.

(B)                                 IF COMPANY AND ITS SUBSIDIARIES TERMINATE
THE EMPLOYMENT OF EMPLOYEE WITHOUT CAUSE AFTER THE CLOSING DATE AND PRIOR TO THE
FIRST ANNIVERSARY OF THE CLOSING DATE, OR IF EMPLOYEE TERMINATES EMPLOYMENT WITH
COMPANY AND ITS SUBSIDIARIES PRIOR TO THE FIRST ANNIVERSARY OF THE CLOSING DATE
FOR GOOD REASON, THEN SUBJECT TO EMPLOYEE’S CONTINUED COMPLIANCE WITH SECTION 8
OF THIS AGREEMENT AND PROVIDED EMPLOYEE DOES NOT MAKE AN ELECTION (AS DEFINED
BELOW), COMPANY SHALL:

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(A) PAY TO EMPLOYEE AN AMOUNT EQUAL TO $1, 030,000 (SUCH AMOUNT, THE
“SEVERANCE”). THE SEVERANCE SHALL BE PAYABLE IN EQUAL MONTHLY INSTALLMENTS
(EACH, A “SEVERANCE INSTALLMENT”) OVER THE TWELVE (12) MONTH PERIOD COMMENCING
NO EARLIER THAN THE SECOND OF COMPANY’S STANDARD PAYROLL DATES FALLING AFTER
SUCH TERMINATION; PROVIDED, HOWEVER, THAT, IF NECESSARY TO AVOID THE APPLICATION
OF SECTION 409A OF THE CODE TO THE SEVERANCE, EMPLOYEE SHALL NOT RECEIVE ANY
INSTALLMENT PAYMENT UNTIL THE FIRST SCHEDULED PAYROLL DATE THAT OCCURS MORE THAN
SIX MONTHS FOLLOWING THE DATE OF TERMINATION OF EMPLOYMENT (THE “FIRST PAYMENT
DATE”), AND, ON THE FIRST PAYMENT DATE, COMPANY WILL PAY EMPLOYEE AN AMOUNT
EQUAL TO THE SUM OF ALL SEVERANCE INSTALLMENTS THAT WOULD HAVE BEEN PAYABLE IN
RESPECT OF THE PERIOD PRECEDING THE FIRST PAYMENT DATE BUT FOR THE DELAY IMPOSED
ON ACCOUNT OF THE AFOREMENTIONED SECTION 409A; AND

(B) PROVIDE CONTINUED HEALTH AND LIFE INSURANCE BENEFITS FOR EMPLOYEE AND HIS
SPOUSE AND DEPENDENTS, IF ANY, FOR A 24 MONTH PERIOD FOLLOWING THE DATE OF
EMPLOYEE’S TERMINATION OF EMPLOYMENT, ON THE SAME BASIS AS SUCH BENEFITS WERE
PROVIDED DURING EMPLOYEE’S EMPLOYMENT WITH COMPANY; PROVIDED, THAT  COMPANY’S
OBLIGATION TO PROVIDE SUCH HEALTH AND LIFE INSURANCE BENEFITS SHALL CEASE WITH
RESPECT TO SUCH BENEFITS AT THE TIME EMPLOYEE BECOMES ELIGIBLE FOR SUCH BENEFITS
FROM ANOTHER EMPLOYER.

(C)                                  FOR PURPOSES OF THIS AGREEMENT, “CAUSE”
SHALL MEAN, (I) THE CONTINUED FAILURE BY EMPLOYEE (OTHER THAN ANY SUCH FAILURE
RESULTING FROM (A) THE EMPLOYEE’S INCAPACITY DUE TO PHYSICAL OR MENTAL ILLNESS,
OR (B) THE COMPANY’S OBSTRUCTION OF THE PERFORMANCE OF THE EMPLOYEE’S DUTIES AND
RESPONSIBILITIES) TO PERFORM SUBSTANTIALLY

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THE DUTIES AND RESPONSIBILITIES OF EMPLOYEE’S POSITION WITH THE COMPANY AFTER A
WRITTEN DEMAND FOR SUBSTANTIAL PERFORMANCE IS DELIVERED TO THE EMPLOYEE BY THE
BOARD OF DIRECTORS OF COMPANY (THE “BOARD”), WHICH DEMAND SPECIFICALLY
IDENTIFIES THE MANNER IN WHICH THE BOARD BELIEVES THAT EMPLOYEE HAS NOT
SUBSTANTIALLY PERFORMED SUCH DUTIES OR RESPONSIBILITIES AND SUGGESTS CORRECTIVE
ACTION THAT IS CAPABLE OF BEING IMPLEMENTED WITHIN A REASONABLE PERIOD; (II) THE
CONVICTION, OR PLEA OF GUILTY OR NOLO CONTENDERE, OF EMPLOYEE BY A COURT OF
COMPETENT JURISDICTION FOR FELONY CRIMINAL CONDUCT;  (III) EMPLOYEE’S
INTENTIONAL MISCONDUCT OR GROSS NEGLIGENCE IN CONNECTION WITH EMPLOYEE’S DUTIES,
OR AN ACT OF FRAUD OR MATERIAL ACT OF DISHONESTY BY EMPLOYEE, OR (IV) EMPLOYEE’S
MATERIAL VIOLATION OF A PROVISION OF PARENT’S CODE OF CONDUCT, AS SUCH CODE OF
CONDUCT OR ITS EQUIVALENT POLICIES MAY BE IN EFFECT FROM TIME TO TIME.

(D)                                 FOR PURPOSES OF THIS AGREEMENT, “GOOD
REASON” MEANS: (I) A SIGNIFICANT ADVERSE CHANGE IN THE NATURE OR SCOPE OF
EMPLOYEE’S COMPANY-RELATED AUTHORITY OR DUTIES,  (II) A SIGNIFICANT REDUCTION IN
COMPENSATION OR BENEFITS PROVIDED BY  COMPANY, OR (III) THE GEOGRAPHICAL
LOCATION WHERE EMPLOYEE IS REQUIRED TO PERFORM PRINCIPAL DUTIES IS MOVED TO A
LOCATION MORE THAN FIFTY (50) MILES FROM SUCH LOCATION EXISTING AT THE DATE
HEREOF; PROVIDED THAT, A TERMINATION BY EMPLOYEE WITH GOOD REASON SHALL BE
EFFECTIVE ONLY IF, WITHIN SIXTY (60)  DAYS FOLLOWING EMPLOYEE’S FIRST BECOMING
AWARE OF THE CIRCUMSTANCES GIVING RISE TO GOOD REASON, EMPLOYEE DELIVERS A
NOTICE OF TERMINATION FOR GOOD REASON BY EMPLOYEE TO COMPANY, AND COMPANY WITHIN
THIRTY (30) DAYS FOLLOWING ITS RECEIPT OF SUCH NOTIFICATION HAS FAILED TO CURE
THE CIRCUMSTANCES GIVING RISE TO GOOD REASON. FOR PURPOSES OF THIS PARAGRAPH
3(D), EMPLOYEE ACKNOWLEDGES AND

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AGREES THAT GOOD REASON SHALL NOT BE DEEMED TO OCCUR (A) SOLELY ON ACCOUNT OF
COMPANY NO LONGER BEING A PUBLICLY TRADED ENTITY, (B) SOLELY AS A RESULT OF THE
MERGER OR (C) AS A RESULT OF EMPLOYEE HAVING TO UNDERTAKE REASONABLE BUSINESS
TRAVEL, INCLUDING TRAVEL TO DELAWARE TO IMPLEMENT THE INTEGRATION OF COMPANY
WITH PARENT.

4.                                       TERMINATION BETWEEN FIRST ANNIVERSARY
AND THIRD ANNIVERSARY OF CLOSING DATE.   IF COMPANY AND ITS SUBSIDIARIES
TERMINATE THE EMPLOYMENT OF EMPLOYEE WITHOUT CAUSE BETWEEN THE FIRST ANNIVERSARY
OF THE CLOSING DATE AND THE THIRD ANNIVERSARY OF THE CLOSING DATE, OR IF
EMPLOYEE TERMINATES EMPLOYMENT WITH COMPANY AND ITS SUBSIDIARIES FOR GOOD REASON
BETWEEN THE FIRST ANNIVERSARY OF THE CLOSING DATE AND THE THIRD ANNIVERSARY OF
THE CLOSING DATE, THEN SUBJECT TO EMPLOYEE’S CONTINUED COMPLIANCE WITH SECTION 8
OF THIS AGREEMENT AND PROVIDED EMPLOYEE DOES NOT MAKE AN ELECTION (AS DEFINED
BELOW), COMPANY SHALL:

(A)                                  PAY TO EMPLOYEE THE AMOUNT OF $515,000
(SUCH TOTAL SUM SHALL BE REFERRED TO AS THE “SUBSEQUENT SEVERANCE”).  THE
SUBSEQUENT SEVERANCE SHALL BE PAYABLE IN EQUAL MONTHLY INSTALLMENTS OVER THE
TWELVE (12) MONTH PERIOD COMMENCING NO EARLIER THAN THE SECOND OF COMPANY’S
STANDARD PAYROLL DATES FALLING AFTER SUCH TERMINATION (THE “SUBSEQUENT SEVERANCE
INSTALLMENTS”); PROVIDED, HOWEVER, THAT, IF NECESSARY TO AVOID THE APPLICATION
OF SECTION 409A OF THE CODE TO THE SUBSEQUENT SEVERANCE, EMPLOYEE SHALL NOT
RECEIVE ANY INSTALLMENT PAYMENT UNTIL THE FIRST PAYMENT DATE AND, ON THE FIRST
PAYMENT DATE,  COMPANY WILL PAY EMPLOYEE AN AMOUNT EQUAL TO THE SUM OF ALL
SUBSEQUENT SEVERANCE INSTALLMENTS THAT WOULD HAVE BEEN PAYABLE IN RESPECT OF THE
PERIOD PRECEDING THE

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FIRST PAYMENT DATE BUT FOR THE DELAY IMPOSED ON ACCOUNT OF THE AFOREMENTIONED
SECTION 409A; AND

(B)                                 PROVIDE CONTINUED HEALTH AND LIFE INSURANCE
BENEFITS FOR EMPLOYEE AND HIS SPOUSE AND DEPENDENTS, IF ANY, FOR A 24 MONTH
PERIOD FOLLOWING THE DATE OF EMPLOYEE’S TERMINATION OF EMPLOYMENT, ON THE SAME
BASIS AS SUCH BENEFITS WERE PROVIDED DURING EMPLOYEE’S EMPLOYMENT WITH COMPANY;
PROVIDED, THAT COMPANY’S OBLIGATION TO PROVIDE SUCH HEALTH AND LIFE INSURANCE
BENEFITS SHALL CEASE WITH RESPECT TO SUCH BENEFITS AT THE TIME EMPLOYEE BECOMES
ELIGIBLE FOR SUCH BENEFITS FROM ANOTHER EMPLOYER.

5.                                       RELEASE.  NOTWITHSTANDING ANY OTHER
PROVISION OF THIS AGREEMENT TO THE CONTRARY, EMPLOYEE ACKNOWLEDGES AND AGREES
THAT ANY AND ALL PAYMENTS AND BENEFITS TO WHICH EMPLOYEE IS ENTITLED UNDER
SECTIONS 3 AND 4 OF THIS AGREEMENT ARE CONDITIONED ON AND SUBJECT TO EMPLOYEE’S
EXECUTION OF A GENERAL RELEASE AND WAIVER, SUBSTANTIALLY IN THE FORM ATTACHED AS
EXHIBIT A HERETO.

6.                                       EFFECT ON SEVERANCE BENEFITS.  THIS
AGREEMENT CONTAINS THE ENTIRE UNDERSTANDING OF THE PARTIES WITH RESPECT TO THE
SUBJECT MATTER OF THIS AGREEMENT AND, WITHOUT LIMITING THE EFFECT OF THE
FOREGOING, SPECIFICALLY SUPERSEDES ANY INDIVIDUAL RETENTION AGREEMENT,
EMPLOYMENT AGREEMENT (INCLUDING, BUT NOT LIMITED TO, ANY INDIVIDUAL HIRE
AGREEMENT), SEVERANCE AGREEMENT AND COMPANY’S EXECUTIVE SEVERANCE PLAN.
NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS AGREEMENT SHALL AFFECT EMPLOYEE’S
ENTITLEMENTS PURSUANT TO THE COMPANY’S SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

7.                                       NO ALIENATION.  EMPLOYEE SHALL NOT HAVE
ANY RIGHT TO PLEDGE, HYPOTHECATE, ANTICIPATE OR IN ANY WAY CREATE A LIEN UPON
THE BENEFITS PROVIDED UNDER THIS

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AGREEMENT, AND SUCH BENEFITS SHALL NOT BE ASSIGNABLE IN ANTICIPATION OF PAYMENT
WHETHER BY VOLUNTARY OR INVOLUNTARY ACTS, OR BY OPERATION OF LAW, OTHER THAN THE
LAW OF DESCENT AND DISTRIBUTION.

8.                                       NON-COMPETITION; NON-SOLICITATION. 
EMPLOYEE ACKNOWLEDGES AND RECOGNIZES THE HIGHLY COMPETITIVE NATURE OF THE
BUSINESSES OF COMPANY, PARENT AND THEIR SUBSIDIARIES AND ACCORDINGLY AGREES AS
FOLLOWS:

(A)                                  WHILE EMPLOYED BY COMPANY AND FOR A PERIOD
OF TWELVE (12) MONTHS FOLLOWING THE DATE EMPLOYEE CEASES TO BE EMPLOYED BY
COMPANY (THE “RESTRICTED PERIOD”), EMPLOYEE WILL NOT DIRECTLY OR INDIRECTLY, ON
BEHALF OF ANY PERSON OR ENTITY OTHER THAN COMPANY, (U) ENGAGE IN ANY
“COMPETITIVE BUSINESS” (DEFINED BELOW), (V) ENTER THE EMPLOY OF, OR RENDER ANY
SERVICES TO, ANY PERSON ENGAGED IN ANY COMPETITIVE BUSINESS WITH RESPECT TO SUCH
BUSINESS, (W) ACQUIRE A FINANCIAL INTEREST IN, OR OTHERWISE BECOME ACTIVELY
INVOLVED WITH, ANY PERSON ENGAGED IN ANY COMPETITIVE BUSINESS, DIRECTLY OR
INDIRECTLY, AS AN INDIVIDUAL, PARTNER, SHAREHOLDER, OFFICER, DIRECTOR,
PRINCIPAL, AGENT, TRUSTEE OR CONSULTANT, (X) INTERFERE WITH BUSINESS
RELATIONSHIPS (WHETHER FORMED BEFORE OR AFTER THE CLOSING DATE) BETWEEN  COMPANY
AND CUSTOMERS OR SUPPLIERS OF, OR CONSULTANTS TO, COMPANY, (Y) SOLICIT, CONTACT,
COMMUNICATE OR ATTEMPT TO COMMUNICATE WITH, REGARDING PRODUCTS OR SERVICES
OFFERED OR PROPOSED TO BE OFFERED BY COMPANY, ANY CUSTOMER OR CLIENT OR
PROSPECTIVE CUSTOMER OR PROSPECTIVE CLIENT OF COMPANY (FOR PURPOSES OF THIS
SECTION 8, “CUSTOMER OR CLIENT” SHALL NOT INCLUDE INSURANCE BROKERS) OR (Z)
REGARDLESS OF WHO INITIATES THE COMMUNICATION, SOLICIT, PARTICIPATE IN THE
SOLICITATION OR RECRUITMENT OF, OR IN ANY MANNER ENCOURAGE OR PROVIDE ASSISTANCE
TO, ANY EMPLOYEE, CONSULTANT OR AGENT OF COMPANY (OR WHO

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WAS AN EMPLOYEE OF COMPANY WITHIN THE PRIOR 12 MONTHS) TO TERMINATE HIS OR HER
EMPLOYMENT OR OTHER RELATIONSHIP WITH COMPANY OR TO LEAVE ITS EMPLOY OR OTHER
RELATIONSHIP WITH  COMPANY FOR ANY ENGAGEMENT IN ANY CAPACITY OR FOR ANY OTHER
PERSON OR ENTITY; PROVIDED, HOWEVER, THAT EMPLOYEE MAY ELECT TO WAIVE RECEIPT OF
THE SEVERANCE AND SUBSEQUENT SEVERANCE (THE “ELECTION”), IN WHICH CASE SECTIONS
8(A)(U), 8(A)(V) AND 8(A)(W) WILL NOT APPLY TO THE EMPLOYEE; AND PROVIDED,
FURTHER, THAT SECTIONS 8(A)(U), 8(A)(V) AND 8(A)(W) SHALL NOT APPLY TO EMPLOYEE
IF (I) EMPLOYEE’S EMPLOYMENT IS TERMINATED BY COMPANY FOR CAUSE PURSUANT TO
SECTION 3(C)(I) IN THE DEFINITION OF CAUSE, OR (II) EMPLOYEE TERMINATES HIS
EMPLOYMENT WITHOUT GOOD REASON, AND IN EACH CASE EMPLOYEE RECEIVES NO SEVERANCE
BENEFIT.

(B)                                 FOR PURPOSES OF THIS SECTION 8, COMPANY
SHALL BE CONSTRUED TO INCLUDE PARENT, COMPANY AND ITS AFFILIATES.

(C)                                  FOR PURPOSES OF THIS SECTION 8, A
“COMPETITIVE BUSINESS” MEANS, AS OF ANY DATE, INCLUDING DURING THE RESTRICTED
PERIOD, ANY PERSON OR ENTITY (INCLUDING ANY JOINT VENTURE, PARTNERSHIP, FIRM,
CORPORATION OR LIMITED LIABILITY COMPANY) THAT ENGAGES IN OR PROPOSES TO ENGAGE
IN THE PERSONAL AUTO INSURANCE BUSINESS.

(D)                                 NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
THE AGREEMENT, EMPLOYEE MAY DIRECTLY OR INDIRECTLY, OWN, SOLELY AS AN
INVESTMENT, SECURITIES OF ANY PERSON ENGAGED IN THE BUSINESS OF COMPANY WHICH
ARE PUBLICLY TRADED ON A NATIONAL OR REGIONAL STOCK EXCHANGE OR ON THE
OVER-THE-COUNTER MARKET IF EMPLOYEE (X) IS NOT A CONTROLLING PERSON OF, OR A
MEMBER OF A GROUP WHICH CONTROLS, SUCH PERSON AND (Y) DOES NOT, DIRECTLY OR
INDIRECTLY, OWN ONE PERCENT (1%) OR MORE OF ANY CLASS OF SECURITIES OF SUCH
PERSON.

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(E)                                  EMPLOYEE SHALL NOT, WITHOUT THE PRIOR
WRITTEN CONSENT OF  COMPANY, USE, DIVULGE, DISCLOSE OR MAKE ACCESSIBLE TO ANY
OTHER PERSON, FIRM, PARTNERSHIP, CORPORATION OR OTHER ENTITY, ANY “CONFIDENTIAL
INFORMATION” (AS DEFINED BELOW) EXCEPT WHILE EMPLOYED BY COMPANY, IN FURTHERANCE
OF THE BUSINESS OF AND FOR THE BENEFIT OF COMPANY; PROVIDED THAT EMPLOYEE MAY
DISCLOSE SUCH INFORMATION WHEN REQUIRED TO DO SO BY A COURT OF COMPETENT
JURISDICTION, BY ANY GOVERNMENTAL AGENCY HAVING SUPERVISORY AUTHORITY OVER THE
BUSINESS OF COMPANY AND/OR ITS AFFILIATES, AS THE CASE MAY BE, OR BY ANY
ADMINISTRATIVE BODY OR LEGISLATIVE BODY (INCLUDING A COMMITTEE THEREOF) WITH
JURISDICTION TO ORDER EMPLOYEE TO DIVULGE, DISCLOSE OR MAKE ACCESSIBLE SUCH
INFORMATION; PROVIDED, FURTHER, THAT IN THE EVENT THAT EMPLOYEE IS ORDERED BY A
COURT OR OTHER GOVERNMENT AGENCY TO DISCLOSE ANY CONFIDENTIAL INFORMATION,
EMPLOYEE SHALL (I) PROMPTLY NOTIFY  COMPANY OF SUCH ORDER, (II) AT THE WRITTEN
REQUEST OF COMPANY, DILIGENTLY CONTEST SUCH ORDER AT THE SOLE EXPENSE OF COMPANY
AS EXPENSES OCCUR, AND (III) AT THE WRITTEN REQUEST OF  COMPANY, SEEK TO OBTAIN,
AT THE SOLE EXPENSE OF COMPANY, SUCH CONFIDENTIAL TREATMENT AS MAY BE AVAILABLE
UNDER APPLICABLE LAWS FOR ANY INFORMATION DISCLOSED UNDER SUCH ORDER. FOR
PURPOSES OF THIS SECTION 8(E), “CONFIDENTIAL INFORMATION” SHALL MEAN NON-PUBLIC
INFORMATION CONCERNING THE FINANCIAL DATA, STRATEGIC BUSINESS PLANS, PRODUCT
DEVELOPMENT (OR OTHER PROPRIETARY PRODUCT DATA), CUSTOMER LISTS, MARKETING
PLANS, EMPLOYEES, OFFICERS, DIRECTORS AND OTHER NON-PUBLIC, PROPRIETARY AND
CONFIDENTIAL INFORMATION RELATING TO THE BUSINESS OF COMPANY OR ITS AFFILIATES
OR CUSTOMERS, THAT, IN ANY CASE, IS NOT OTHERWISE AVAILABLE TO THE PUBLIC (OTHER
THAN BY EMPLOYEE’S BREACH OF THE TERMS HEREOF) INCLUDING, BUT NOT LIMITED TO,
THE TERMS OF THIS AGREEMENT. UPON TERMINATION OF EMPLOYEE’S EMPLOYMENT WITH
COMPANY, EMPLOYEE

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SHALL RETURN ALL COMPANY PROPERTY, INCLUDING, WITHOUT LIMITATION, FILES,
RECORDS, DISKS AND ANY MEDIA CONTAINING CONFIDENTIAL INFORMATION.

(F)                                    EMPLOYEE UNDERSTANDS THAT THE PROVISIONS
OF THIS SECTION 8 MAY LIMIT HIS ABILITY TO EARN A LIVELIHOOD IN A BUSINESS
SIMILAR TO THE BUSINESS OF COMPANY BUT HE NEVERTHELESS AGREES AND HEREBY
ACKNOWLEDGES THAT (A) SUCH PROVISIONS DO NOT IMPOSE A GREATER RESTRAINT THAN IS
NECESSARY TO PROTECT THE GOODWILL OR OTHER BUSINESS INTERESTS OF  COMPANY, (B)
SUCH PROVISIONS CONTAIN REASONABLE LIMITATIONS AS TO TIME AND SCOPE OF ACTIVITY
TO BE RESTRAINED, (C) SUCH PROVISIONS ARE NOT HARMFUL TO THE GENERAL PUBLIC AND
(D) SUCH PROVISIONS ARE NOT UNDULY BURDENSOME TO EMPLOYEE. IN CONSIDERATION OF
THE FOREGOING AND IN LIGHT OF EMPLOYEE’S EDUCATION, SKILLS AND ABILITIES,
EMPLOYEE AGREES THAT HE SHALL NOT ASSERT THAT, AND IT SHOULD NOT BE CONSIDERED
THAT, ANY PROVISIONS OF SECTION 8 OTHERWISE ARE VOID, VOIDABLE OR UNENFORCEABLE
OR SHOULD BE VOIDED OR HELD UNENFORCEABLE.

(G)                                 IT IS THE INTENTION OF THE PARTIES HERETO
THAT THE RESTRICTIONS CONTAINED IN THIS SECTION 8 BE ENFORCEABLE TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW.  THEREFORE, TO THE EXTENT ANY COURT OF
COMPETENT JURISDICTION SHALL DETERMINE THAT ANY PORTION OF THE FOREGOING
RESTRICTIONS IS EXCESSIVE, SUCH PROVISION SHALL NOT BE ENTIRELY VOID, BUT RATHER
SHALL BE LIMITED OR REVISED ONLY TO THE EXTENT NECESSARY TO MAKE IT
ENFORCEABLE.  SPECIFICALLY, IF ANY COURT OF COMPETENT JURISDICTION SHOULD HOLD
THAT ANY PORTION OF THE FOREGOING DESCRIPTION IS OVERLY BROAD AS TO ONE OR MORE
STATES OF THE UNITED STATES, THEN THAT STATE OR STATES SHALL BE ELIMINATED FROM
THE TERRITORY TO WHICH THE RESTRICTIONS OF PARAGRAPH (A) OF THIS

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SECTION APPLIES AND THE RESTRICTIONS SHALL REMAIN APPLICABLE IN ALL OTHER STATES
OF THE UNITED STATES.

9.                                       WITHHOLDING.  COMPANY MAY WITHHOLD FROM
ANY AMOUNT PAYABLE UNDER THIS AGREEMENT ANY TAXES REQUIRED TO BE WITHHELD UNDER
APPLICABLE FEDERAL, STATE OR LOCAL LAW.

10.                                 SEVERABILITY; EFFECTIVENESS.  IF ANY
PROVISION OF THIS AGREEMENT IS FOUND, HELD, OR DEEMED TO BE VOID, UNLAWFUL, OR
UNENFORCEABLE UNDER ANY APPLICABLE STATUTE OR OTHER CONTROLLING LAW, THE
REMAINDER OF THIS AGREEMENT SHALL CONTINUE IN FULL FORCE AND EFFECT.  THIS
AGREEMENT SHALL BE EFFECTIVE AS OF THE CONSUMMATION OF THE MERGER.  IF THE
MERGER IS NOT CONSUMMATED, THIS AGREEMENT SHALL BE NULL AND VOID AND OF NO FORCE
OR EFFECT.

11.                                 GOVERNING LAW.  THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

12.                                 COSTS.  IN THE EVENT OF ANY CONTEST OR
DISPUTE RELATING TO THIS AGREEMENT (OTHER THAN RELATING TO THE ENFORCEABILITY OF
SECTION 8(A)), COMPANY SHALL REIMBURSE ALL REASONABLE LEGAL EXPENSES OF
EMPLOYEE, UPON PRESENTATION OF APPROPRIATE COMMERCIAL VOUCHERS; PROVIDED ANY
SUCH EXPENSES THERETOFORE PAID BY OR ON BEHALF OF COMPANY SHALL BE REPAID TO
COMPANY IF AND TO THE EXTENT THAT EMPLOYEE FAILS TO PREVAIL IN SUCH DISPUTE.

13.                                 JURISDICTION AND CHOICE OF FORUM.  EMPLOYEE
AND  COMPANY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY STATE

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OR FEDERAL COURT LOCATED IN THE COUNTY OF LOS ANGELES, CALIFORNIA OVER ANY
CONTROVERSY OR CLAIM BETWEEN EMPLOYEE AND  COMPANY ARISING OUT OF OR RELATING TO
OR CONCERNING THIS AGREEMENT OR THE TERMINATION OF EMPLOYEE’S EMPLOYMENT.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

 

 

21st CENTURY INSURANCE GROUP

 

 

 

 

 

 

 

 

 

By:

/s/ Bruce W. Marlow

 

 

 

 

 

Name:

Bruce W. Marlow

 

 

 

 

 

Title:

President and Chief
Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/  Dean E. Stark

 

 

 

 

 

Dean E. Stark

 

 

 

 

 

 

 

 

 

May 14, 2007

 

 

 

 

 

Date

 

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RELEASE OF CLAIMS

1.                                       RELEASE OF CLAIMS

In consideration of the payments and benefits described in Sections 3 and 4 of
the Retention and Severance Agreement (the “Retention and Severance Agreement”),
dated May 14, 2007, by and between Dean E. Stark (“Employee”) and 21st Century
Insurance Group (the “Company”) and to which Employee agrees Employee is not
entitled until and unless he executes this Release, Employee, for and on behalf
of himself and his heirs and assigns, subject to the following three sentences
hereof, hereby waives and releases any employment, compensation or
benefit-related common law, statutory or other complaints, claims, charges or
causes of action of any kind whatsoever, both known and unknown, in law or in
equity, which Employee ever had, now has or may have against the Company,
American International Group, Inc. (“Parent”), or any of their subsidiary
companies, shareholders, successors, assigns, directors, officers, partners,
members, employees or agents, or any benefit plan sponsored by such company
(collectively, the “Releasees”) by reason of facts or omissions which have
occurred on or prior to the date that Employee signs this Release, including,
without limitation, any complaint, charge or cause of action arising under
federal, state or local laws pertaining to employment, including the Age
Discrimination in Employment Act of 1967 (“ADEA,” a law which prohibits
discrimination on the basis of age), the National Labor Relations Act, the Civil
Rights Act of 1991, the Americans With Disabilities Act of 1990, Title VII of
the Civil Rights Act of 1964, all as amended; and all other federal, state and
local laws and regulations. By signing this Release, Employee acknowledges that
he intends to waive and

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release any rights known or unknown that he may have against the Releasees under
these and any other laws; provided, that Employee does not waive or release
claims with respect to the right to enforce the Retention and Severance
Agreement (the “Unreleased Claims”). Notwithstanding the foregoing, Employee
does not release, discharge or waive any rights to indemnification that he may
have under the certificate of incorporation, the by-laws or equivalent governing
documents of the Company or its subsidiaries or affiliates, the laws of the
State of Delaware or any other state of which such subsidiary or affiliate is a
domiciliary, or any indemnification agreement between Employee and the Company,
or any rights to insurance coverage under any directors’ and officers’ personal
liability insurance or fiduciary insurance policy. Nothing herein modifies or
affects any vested rights that Employee may have under the American
International Group, Inc. Retirement Plan, the Company’s Supplemental Employee
Retirement Plan, any 401(k) or other incentive savings plan, with respect to any
equity compensation or other employee benefit plans within the meaning of
Section 3(2) of the Employee Retirement Income Security Act.

2.                                       PROCEEDINGS

Employee acknowledges that he has not filed any complaint, charge, claim or
proceeding, except with respect to an Unreleased Claim, if any, against any of
the Releasees before any local, state or federal agency, court or other body
(each individually a “Proceeding”). Employee represents that he is not aware of
any basis on which such a Proceeding could reasonably be instituted.

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3.                                       TIME TO CONSIDER

Employee acknowledges that he has been advised that he has twenty-one (21) days
from the date of receipt of this Release to consider all the provisions of this
Release and he does hereby knowingly and voluntarily waive said given twenty-one
(21) day period. EMPLOYEE FURTHER ACKNOWLEDGES THAT HE HAS READ THIS RELEASE
CAREFULLY, HAS BEEN ADVISED BY THE COMPANY TO, AND HAS IN FACT, CONSULTED AN
ATTORNEY, AND FULLY UNDERSTANDS THAT BY SIGNING BELOW HE IS GIVING UP CERTAIN
RIGHTS WHICH HE MAY HAVE TO SUE OR ASSERT A CLAIM AGAINST ANY OF THE RELEASEES,
AS DESCRIBED IN SECTION 1 OF THIS RELEASE AND THE OTHER PROVISIONS HEREOF.
EMPLOYEE ACKNOWLEDGES THAT HE HAS NOT BEEN FORCED OR PRESSURED IN ANY MANNER
WHATSOEVER TO SIGN THIS RELEASE, AND EMPLOYEE AGREES TO ALL OF ITS TERMS
VOLUNTARILY.

4.                                       REVOCATION

Employee hereby acknowledges and understands that Employee shall have seven (7)
days from the date of his execution of this Release to revoke this Release
(including, without limitation, any and all claims arising under the ADEA), in
writing to the General Counsel of the Company and with a copy to the General
Counsel of Parent, and that neither the Company nor any other person is
obligated to provide any benefits to Employee pursuant to Section 3 or 4 of the
Retention and Severance Agreement until eight (8) days have passed since
Employee’s signing of this Release without Employee having revoked this Release,
in which event the Company immediately shall arrange and/or pay for any such
benefits otherwise attributable to said eight (8) day period, consistent with
the

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terms of the Retention and Severance Agreement. If Employee revokes this
Release, Employee will be deemed not to have accepted the terms of this Release,
and no action will be required of the Company under any section of this Release.

5.                                       NO ADMISSION

This Release does not constitute an admission of liability or wrongdoing of any
kind by Employee or the Company.

6.                                       GENERAL PROVISIONS

A failure of any of the Releasees to insist on strict compliance with any
provision of this Release shall not be deemed a waiver of such provision or any
other provision hereof. If any provision of this Release is determined to be so
broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable, and in the event that any provision is determined to be
entirely unenforceable, such provision shall be deemed severable, such that all
other provisions of this Release shall remain valid and binding upon Employee
and the Releasees.

7.                                       GOVERNING LAW

The validity, interpretations, construction and performance of this Release
shall be governed by the laws of the State of California without giving effect
to conflict of laws principles.

8.                                       JURISDICTION AND CHOICE OF FORUM

Employee and the Company irrevocably submit to the exclusive jurisdiction of any
state or federal court located in the County of Los Angeles, California over any
controversy or claim between Employee and the Company arising out of or

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relating to or concerning this Release.

IN WITNESS WHEREOF, Employee has hereunto set Employee’s hand as of the day and
year set forth opposite his signature below.

 

 

 

 

 

 

 

DATE

 

Dean E. Stark

 

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