Exhibit 10(86)

 

February 11, 2011

 

American International Group, Inc.

180 Maiden Lane

New York, NY 10038

Attention: General Counsel

 

Ladies and Gentlemen:

 

Reference is made to the Guarantee, Pledge and Proceeds Application Agreement,
dated as of January 14, 2011 (as amended, the “GPPA”), among American
International Group, Inc. (“AIG”), the Guarantors party thereto and AIA Aurora
LLC and ALICO Holdings LLC, as the Secured Parties. Capitalized terms used but
not otherwise defined herein shall have the meanings assigned to such terms in
the GPPA.

 

The Rights Holder, on behalf of the Secured Parties, AIG and the Secured Parties
hereby agree that, notwithstanding Section 4(b) of the GPPA, the amount of the
Net Proceeds received in respect of the transactions contemplated by the
Star-Edison Purchase Agreement (the “Star-Edison Proceeds”) that was not
retained by AIG pursuant to the letter agreement, dated February 8, 2011, among
the Rights Holder, AIG and the Secured Parties, shall be applied by AIG no later
than the close of business on February 14, 2011, in the following order of
priorities:

 

(i)                                    first, to the ALICO SPV as a repayment of
the ALICO SPV Intercompany Loan in an amount sufficient to repay in full all
amounts outstanding under the ALICO SPV Intercompany Loan Agreement, including
accrued and unpaid interest thereon;

 

(ii)                                 second, to the ALICO SPV as a capital
contribution in the amount of 1.25 billion dollars ($1,250,000,000); and

 

(iii)                              third, to the AIA SPV as a partial repayment
of amounts outstanding under the AIA SPV Intercompany Loan Agreement, including
accrued and unpaid interest thereon.

 

For the avoidance of doubt, (x) the amounts received by each SPV pursuant to the
foregoing clauses (i) through (iii) shall be applied by such SPV in accordance
with the Master Transaction Agreement and the applicable SPV LLC Agreement to
reduce the ALICO Junior Liquidation Preference and the preferred return thereon
and the AIA Liquidation Preference and the preferred return thereon, (y) all Net
Proceeds other than the Star-Edison Proceeds and any other amounts paid on
account of the Secured Obligations

 

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shall continue to be applied in accordance with Section 4 of the GPPA unless
otherwise agreed by the Rights Holder on behalf of the Secured Parties and
(z) the provisions of this letter shall not affect any other amounts payable to
the Secured Parties or the holder of the AIA/ALICO Preferred Units.

 

Sections 18 (Notices), 21 (Amendments and Waivers), 22 (Choice of Law), 23
(Waiver of Jury Trial), 26 (Counterparts) and 28 (Jurisdiction, Consent to
Service of Process) of the GPPA are incorporated herein by reference as if fully
set forth herein.

 

Please confirm your agreement to the foregoing by signing and returning an
executed counterpart of this letter.

 

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Yours sincerely,

 

 

 

 

 

UNITED STATES DEPARTMENT OF THE TREASURY, as the Rights Holder, on behalf of the
Secured Parties

 

 

 

 

 

 

 

 

By:

/s/ Timothy G. Massad

 

 

 

Name:

Timothy G. Massad

 

 

 

Title:

Acting Assistant Secretary for Financial Stability

 

 

 

 

 

 

 

 

Acknowledged and agreed:

 

 

 

 

 

 

 

 

AMERICAN INTERNATIONAL GROUP, INC., as Pledgor

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Brian T. Schreiber

 

 

 

 

 

Name:

Brian T. Schreiber

 

 

 

 

 

Title:

Executive Vice President, Treasury and Capital Markets

 

 

 

 

 

 

 

 

 

 

 

AIA AURORA LLC, as Secured Party

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Brian T. Schreiber

 

 

 

 

 

Name:

Brian T. Schreiber

 

 

 

 

 

Title:

Manager

 

 

 

 

 

 

 

 

 

 

 

ALICO HOLDINGS LLC, as Secured Party

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Brian T. Schreiber

 

 

 

 

 

Name:

Brian T. Schreiber

 

 

 

 

 

Title:

Manager

 

 

 

 

 

 

 

 

 

 

cc:

Robert W. Reeder III, Sullivan & Cromwell LLP

 

 

 

 

Michael M. Wiseman, Sullivan & Cromwell LLP

 

 

 

 

Gary Israel, Sullivan & Cromwell LLP

 

 

 

 

[SIGNATURE PAGE TO STAR/EDISON PROCEEDS LETTER]

 

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