EX-10.51






Exhibit 10(51)





American International Group, Inc.





2005/2006 Deferred Compensation Profit Participation Plan 




(Partners)





(Amended and Restated Effective December 31, 2008)




1. Purpose and Structure




     The Compensation and Management Resources Committee of the Board of Directors (the
“Compensation Committee”) of American International Group, Inc. (“AIG”) has determined that certain
key employees of AIG and its subsidiaries (together, the “Employer”) contribute substantially to
the growth of the value of the assets and income of AIG. AIG has created this AIG 2005/2006
Deferred Compensation Profit Participation Plan to reward these individuals (the “Participants”)
and to provide incentives for their continued contribution to the growth of AIG.



     The AIG 2005/2006 Deferred Compensation Profit Participation Plan (the “Plan”) is composed of
three plan documents, one for Participants in the “Senior Partner” category, one for Participants
in the “Partner” category and one for Participants in the “Associate” category. These documents
describe features that differ among these categories of Participants but together constitute one
Plan. This is the Plan document for participants in the “Partner” category.



2. Participation and Units




     The Compensation Committee, in its sole discretion, shall establish a list of the Participants
in the Plan (from the employees of the Employer) and express an amount of participation in the Plan
in “units” next to each name that shall indicate the level of participation of the Participant.
Categories of participation shall be divided, based on the number of allocated units, into
Associate, Partner or Senior Partner.



     Participants granted more than 599 participation units under the Plan but less than 1000
participation units under the Plan are referred to as “Partners”.



     All participation units under the Plan shall be deemed to be granted effective January 1, 2005
(the “Grant Date”), regardless of when an individual becomes a Participant. The term of the Plan
shall commence January 1, 2005 and shall continue to December 31, 2006.



3. Initial Allocated AIG Stock and EPS Threshold




     AIG shall cause an account to be kept in the name of each Participant that shall reflect the
shares of common stock of AIG, par value $2.50 per share (the “AIG Stock”), if any, contingently
allocated to each Participant under the Plan. If the EPS Growth Threshold (as defined below) is
satisfied, each Partner Participant employed



 









 







by the Employer at December 31, 2006 shall have contingently allocated to such Participant’s
account 12 shares of AIG Stock for each participation unit granted to such Participant (such
Participant’s “Initial Allocated AIG Stock”).



     The “EPS Growth Threshold” shall be satisfied if the cumulative earnings per share of AIG
Stock during the two year term of the Plan exceeds cumulative earnings per share of AIG Stock
during the two year period commencing January 1, 2003 and ending December 31, 2004. For this
purpose earnings per share shall be determined by the Compensation Committee in its sole discretion
in accordance with U.S. Generally Accepted Accounting Principles (1) without giving effect to
realized capital gains or losses, net of tax; the cumulative affect of changes in accounting
treatment during the relevant periods, net of tax; FAS 133 gains and losses, excluding realized
capital gains or losses, net of tax; or extraordinary items related to acquisition, restructuring
and related charges, net of tax, (2) with adjustments for any stock split or stock dividend during
the relevant period, (3) with adjustments in the case of cash acquisitions in excess of $5 billion
to equalize the effect of acquisitions for cash and acquisitions for AIG Stock, (4) giving effect
to any restatement in earnings per share for the relevant period and (5) with such other
adjustments as the Compensation Committee may make to provide consistency between the two year term
of the Plan and the two year period commencing January 1, 2003 and ending December 31, 2004. For
the avoidance of doubt, the preceding adjustments may be made by the Compensation Committee in its
sole discretion.



4. Payouts of Initial Allocated AIG Stock




     Subject to the following terms and conditions, each Partner Participant shall receive:




	 	A.	 	promptly after May 1, 2009 (but no later than the end of 2009) providing that
such Participant is employed by the Employer at such time, fifty percent (50%) of such
Participant’s Initial Allocated AIG Stock (less any withholding taxes required
thereon); and
	 
	 	B.	 	promptly after May 1, 2010 (but no later than the end of 2010) providing that
such Participant is employed by the Employer at such time, fifty percent (50%) of such
Participant’s Initial Allocated AIG Stock (less any withholding taxes required
thereon).





5. Payouts of Incremental Amount




     The amounts described in this section shall be contingently allocated to the account of each
Partner Participant in accordance with the rules of the Plan, regardless of any payouts received by
such Participant under section 4.




	 	A.	 	If any Partner Participant is employed with the Employer as of March 1, 2012,
an additional amount of AIG Stock equal to thirty-five percent (35%) of such
Participant’s Initial Allocated AIG Stock shall be paid to such Participant promptly
thereafter (but no later than the end of 2012) (such Participant’s “Incremental
Amount” and, together




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	 	 	 	with such Participant’s Initial Allocated AIG Stock, such Participant’s “Allocated
AIG Stock”).
	 
	 	B.	 	Notwithstanding the conditions of section 5 A, if a Partner Participant
terminates employment with the Employer by means of retirement after reaching age 65
(“Retires”), dies, or becomes subject to Disability, such Participant shall be
entitled in accordance with section 7 to such portion of the Incremental Amount
contingently allocated under this section as follows:






	 	(1)	 	25% of such amount if death, Disability or Retirement occurs
within 6 months from the Grant Date;
	 
	 	(2)	 	50% of such amount if death, Disability or Retirement occurs
on or after 6 months but within 12 months from the Grant Date;
	 
	 	(3)	 	75% of such amount if death, Disability or Retirement occurs
on or after 12 months but within 18 months from the Grant Date; and
	 
	 	(4)	 	100% of such amount if death, Disability or Retirement occurs
on or after 18 months from the Grant Date.






	 	C.	 	If a Partner Participant retires or is terminated with the consent of the
Compensation Committee prior to age 65 and satisfies the covenants, agreements and
conditions as provided by section 6 A, such Participant may be entitled in accordance
with section 7 to such portion of the Incremental Amount contingently allocated to the
Participant’s account under this section, the numerator of which shall be the number
of years from the Grant Date to the date of such retirement or termination, and the
denominator of which shall be eight (8). If the retirement or termination with
consent of the Compensation Committee occurs within the first 6 months of a calendar
year no credit for any part of the year shall be provided in calculating the numerator
of the fraction. If such event occurs during the last six months of a calendar year,
a full year of service shall be included in the numerator of the fraction.





6. Retirement or Termination with Consent of Compensation Committee





	 	A.	 	Notwithstanding the limitations provided in section 7 A that deprive a
Participant who retires, terminates, is terminated or otherwise departs prior to age
65 of any rights to the such Participant’s Allocated AIG Stock, but subject to section
6 B, the Compensation Committee may, in its sole discretion, reinstate such contingent
rights to the Allocated AIG Stock as provided in B (1) through (3) herein, if and only
if, such Participant complies with such covenants, agreements and conditions as the
Compensation Committee may, in




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	 	 	 	its sole discretion, impose from the time of early termination of employment to
age 65.






	 	B.	 	Any Participant who receives the consent of the Compensation Committee to
reinstate the contingent rights to such Participant’s Allocated AIG Stock under this
section shall be entitled to the following amounts after appropriate determination
that the required covenants, agreements and conditions of subsection A have been
complied with:






	 	(1)	 	one hundred percent (100%) of the Participant’s Initial
Allocated AIG Stock or, if such retirement occurs before the end of the two
year term of the Plan, such portion of the Participant’s Initial Allocated AIG
Stock as determined under section 8;
	 
	 	(2)	 	plus such portion of the Incremental Amount as described in
section 5 C;
	 
	 	(3)	 	less any Allocated AIG Stock previously distributed under the
provisions of section 4;






provided, however, that any Allocated AIG Stock reinstated pursuant to this section
6 will not be paid until the payment times set forth in sections 4 and 5.



7. General Rules




     Each Participant’s Allocated AIG Stock shall not vest and shall continue to be governed by and
contingently reserved for the Participant in accordance with the Plan’s terms and conditions until
the payment times set forth in sections 4 and 5 above.




	 	A.	 	The Participant will forfeit any and all rights to or interest in any
undistributed Allocated AIG Stock contingently allocated to the Participant’s account
in the event his/her employment with the Employer terminates or is terminated before
the applicable payment time set forth in section 4 or section 5 for any reason
including, but not limited to, redundancy or dismissal prior to such Retirement.
Notwithstanding the foregoing, if the Participant (1) dies, (2) becomes subject to
Disability or (3) Retires, in each case while a full time employee with the Employer,
the Participant or his/her estate, heir or successors, as the case may be, shall
become entitled to receive any Allocated AIG Stock contingently allocated to the
Participant’s account as provided hereunder, no later than 90 days after the date of
such event (in the case of death or Disability) or no later than the end of the
calendar year in which such event occurs (in the case of Retirement), as applicable.
For this purpose, “Disability” means a period of medically determined physical or
mental impairment that is expected to result in death or last for a period of not less
than 36




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	 	 	months during which a Participant qualifies for income replacement benefits under
the Employer’s long-term disability plan for at least six months, or, if a
Participant does not participate in such a plan, a period of disability during
which the Participant is unable to engage in any substantial gainful activity by
reason of any medically determined physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period of
not less than 36 months.
	 
	B.	 	The Participant will have no rights as a stockholder of AIG, and therefore
will not be entitled to cash dividends paid on the Allocated AIG Stock nor to vote
such stock until the AIG Stock is delivered to such individual by AIG under the terms
described in the Plan. Unless the Compensation Committee makes an adjustment pursuant
to the following sentence, all stock dividends or splits with respect to any Allocated
AIG Stock occurring after December 31, 2006 shall accrue and accumulate and be paid in
kind at the same time as the Allocated AIG Stock to which such stock dividend or split
relates. The Compensation Committee shall have the authority (but shall not be
required) to adjust equitably the shares of AIG Stock to be allocated for each
participation unit pursuant to section 3 and the shares of Allocated AIG Stock in such
manner as it deems appropriate to preserve the benefits or potential benefits intended
to be made available to Participants (including, without limitation, by payment of
cash or by substituting or adding other securities or property) for any change in the
AIG Stock resulting from a recapitalization, stock split, stock dividend, combination
or exchange of shares of AIG Stock, merger, consolidation, rights offering,
separation, reorganization or liquidation, or any other change in the corporate
structure or shares of AIG; provided that no such adjustment shall be made if or to
the extent that it would cause any payment under this Plan to fail to comply with
Section 409A. After any adjustment made pursuant to this section, the number of
shares of each Participant’s Allocated AIG Stock shall be rounded down to the nearest
whole number. For the avoidance of doubt, the Compensation Committee may, in its sole
discretion, decline to adjust the terms of any outstanding Allocated AIG Stock if it
determines that such adjustment would violate applicable law or result in adverse tax
consequences to the Participant or to the Employer.






	C.	 	For the avoidance of doubt, any Participant elections with respect to the
payment of Allocated AIG Stock made prior to the amendment of the Plan on March 11,
2008 will be disregarded for all purposes, and such Allocated AIG Stock will be paid
only at the times provided for in the Plan.
	 
	D.	 	The Compensation Committee in its sole discretion reserves the right of final
determination of whether to distribute to the Participant either the shares of AIG
Stock or an amount of cash equivalent in value to the fair market value of such shares
of AIG Stock.




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	E.	 	Notwithstanding any other provision existing within the Plan, a Participant
must have rendered service to one or more Employers for a period of at least four (4)
years before being considered eligible for any distributions under the Plan, subject
to any longer period of service required by any other provision of the Plan for any
payouts under any provision of the Plan.
	 
	F.	 	The provisions of the Plan provide no right or eligibility to a Participant
to any other payouts from AIG, its subsidiaries or affiliates under any other
alternative plans, schemes, arrangements or contracts AIG may have with any employees
or group of employees of AIG, its subsidiaries or affiliates.
	 
	G.	 	Shares of AIG Stock delivered to a Participant under the Plan shall be
treated as an “Award” made pursuant to the AIG 2002 Stock Incentive Plan, as amended
from time to time (the “SIP”), and, except as modified by this Plan, all terms of the
SIP shall apply to this Plan. Notwithstanding any other provision existing within the
Plan, the amount of Allocated AIG Stock contingently allocated to any Participant’s
account shall not exceed any per person per period award limit under the SIP.
	 
	H.	 	Only whole shares of AIG Stock shall be delivered under the Plan. Fractional
shares shall be rounded down to the nearest whole share and any such fractional shares
shall be forfeited.
	 
	I.	 	Grants and deliveries under the Plan shall constitute a special discretionary
incentive payment to the Participant and shall not be required to be taken into
account in computing the amount of salary or compensation of the Participant for the
purpose of determining any contributions to or any benefits under any pension,
retirement, profit-sharing, bonus, life insurance, severance or other benefit plan of
the Employer or under any agreement with the Participant, unless the Employer
specifically provides otherwise.
	 
	J.	 	The Plan is intended to provide payments that are “deferred compensation”
subject to Section 409A, and the Plan is intended to, and will be interpreted,
administered and construed to, comply with Section 409A. For this purpose, “Section
409A” means Section 409A of the U.S. Internal Revenue Code of 1986, as amended (the
“Code”), including any amendments or successor provisions to that section, and any
regulations and other administrative guidance thereunder, in each case as they may be
from time to time amended or interpreted through further administrative guidance. The
Compensation Committee will have full authority to give effect to the intent of this
section 7 J. Without limiting the generality of the foregoing: (1) references to the
termination of a Participant’s employment will mean the Participant’s separation from
service with the Employer within the meaning of Section 409A; (2) any payment to be
made under the Plan in connection with termination of a Participant’s




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	 	 	employment (and any other payment under the Plan) that would be subject to the
limitations in Section 409A(a)(2)(b) of the Code will be delayed until six months
after termination of the Participant’s employment (or earlier death) in accordance
with the requirements of Section 409A; (3) to the extent necessary to comply with
the foregoing, any securities or other property that the Employer may deliver in
lieu of AIG Stock or cash will not have the effect of deferring delivery or payment
beyond the date on which such delivery or payment would occur with respect to the
AIG Stock that would otherwise have been deliverable (unless the Committee elects a
later date for this purpose in accordance with section 7 J (5)); (4) each payment
under the Plan will be treated as a separate payment for purposes of Section 409A;
and (5) the Compensation Committee may, in its sole discretion, determine to defer
a payment under the Plan or permit a Participant to elect to defer a payment under
the Plan, in each case in a manner that conforms to the requirements of Section
409A(a)(4) of the Code.





8. Death, Disability or Retirement In The First Two Years Of Plan




     If a Participant dies, becomes subject to Disability, or retires with the consent of the
Compensation Committee as provided in section 6 during the two year term of the Plan (except that
Retirement does not need the consent of the Compensation Committee):




	 	A.	 	within the first six months after the Grant Date, the Participant will
receive following determination one fourth of the appropriate Initial Allocated AIG
Stock at the applicable time otherwise set forth in the Plan;
	 
	 	B.	 	on or after six months but within one year of the Grant Date, the Participant
will receive following determination one half of the appropriate Initial Allocated AIG
Stock at the applicable time otherwise set forth in the Plan;
	 
	 	C.	 	on or after twelve months but within eighteen months of the Grant Date, the
Participant will receive following determination three fourths of the appropriate
Initial Allocated AIG Stock at the applicable time otherwise set forth in the Plan;
	 
	 	D.	 	on or after eighteen months from the Grant Date, the Participant will receive
following determination one hundred percent (100%) of the appropriate Initial
Allocated AIG Stock at the applicable time otherwise set forth in the Plan;





in each case which would have been allocated to his or her account at the end of the second year of
the Plan and in each case excluding the Incremental Amount (which portion available for payment
shall be determined under section 5 B or C).



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9. Non-Assignable




     Any rights or expectancy thereof which a Participant may receive pursuant to the Plan shall
not be assignable, transferable, pledged, hedged or in any manner alienated, whether by operation
of law or otherwise, except as a result of death or incapacity where such rights are passed
pursuant to a will or by operation of law. The Compensation Committee may in its sole discretion
acknowledge the written direction by a Participant to transfer his/her contingent rights under the
Plan to a revocable grantor trust in such form and on such conditions as such officer may require
in his or her sole discretion. Any assignment, transfer, pledge, or other disposition in violation
of the provisions of this section 9 shall be null and void and any Allocated AIG Stock which is
hedged in any manner shall immediately be forfeited.



10. Administration of the Plan




     The Plan shall be administered by the Compensation Committee. Actions of the Committee may be
taken by the vote of a majority of its members. The Committee may allocate among its members and
delegate to any person who is not a member of the Committee any of its administrative
responsibilities.



     The Compensation Committee shall have power to interpret the Plan, to make regulations for
carrying out its purpose and to make all other determinations in connection with its
administration, all of which shall, unless otherwise determined by the Compensation Committee, be
final, binding and conclusive. The Compensation Committee shall have the power to amend the Plan
in any manner and at any time, including in a manner adverse to the rights of the Participants;
provided that, notwithstanding the foregoing, the Compensation Committee may not accelerate or
postpone the delivery of shares of AIG Stock or the delivery of any cash, securities or other
property under the Plan to occur at a time other than the time otherwise provided for in the Plan.
In addition, the Compensation Committee shall have the power to increase a Participant’s amount of
Initial Allocated AIG Stock.



     No member of the Board of Directors of AIG or the Compensation Committee or any employee of
the Company (each such person a “Covered Person”) shall have any liability to any person (including
any Participant) for any action taken or omitted to be taken or any determination made in good
faith with respect to the Plan or any Participant’s participation in it. 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 or resulting from any action, suit or proceeding to which such Covered Person may
be a party or in which such Covered Person may be involved by reason of any action taken or omitted
to be taken under the Plan and against and from any and all amounts paid by such Covered Person,
with AIG’s approval, in settlement thereof, or paid by such Covered Person in satisfaction of any
judgment in any such action, suit or proceeding against such Covered Person, provided that AIG
shall have the right, at its own expense, to assume and defend any such action, suit or proceeding
and, once AIG gives notice of its intent to assume the defense, AIG shall have sole control over
such defense



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with counsel of AIG’s choice. To the extent any taxable expense reimbursement under this
paragraph is subject to Section 409A, (x) the amount thereof eligible in one taxable year shall not
affect the amount eligible in any other taxable year; (y) in no event shall any expenses be
reimbursed after the last day of the taxable year following the taxable year in which the Covered
Person incurred such expenses; and (z) in no event shall any right to reimbursement be subject to
liquidation or exchange for another benefit. The foregoing right indemnification shall not be
available to a Covered Person to the extent that a court of competent jurisdiction in a final
judgment or other final adjudication, in either case, not subject to further appeal, determines
that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted
from such Covered Person’s bad faith, fraud or willful misconduct. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to which Covered
Persons may be entitled under AIG’s Restated Certificate of Incorporation or Bylaws, as a matter of
law, or otherwise, or any other power that AIG may have to indemnify such persons or hold them
harmless.



     If the Compensation Committee shall at any time determine that any consent (as hereinafter
defined) is necessary or desirable as a condition of, or in connection with, the granting of any
units, contingent allocation of any Allocated AIG Stock, the delivery of shares of AIG Stock or the
delivery of any cash, securities or other property under the Plan, or the taking of any other
action thereunder (each such action, a “plan action”), then such plan action shall not be taken, in
whole or in part, unless and until such consent shall have been effected or obtained to the full
satisfaction of the Compensation Committee; provided that if such consent has not been so effected
or obtained as of the latest date provided by the Plan for the delivery of shares of AIG Stock or
the delivery of any cash, securities or other property under the Plan and further delay of delivery
is not permitted in accordance with the requirements of Section 409A, such amounts will be
forfeited and terminate notwithstanding any prior earning or vesting. The Compensation Committee
may direct that any certificate evidencing AIG Stock delivered pursuant to the Plan shall bear a
legend setting forth such restrictions on transferability as the Compensation Committee may
determine to be necessary or desirable, and may advise the transfer agent to place a stop transfer
order against any legended shares. The term “consent” as used in this paragraph includes (A) any
and all listings, registrations or qualifications in respect thereof upon any securities exchange
or under any federal, state, or local law, or law, rule or regulation of a jurisdiction outside the
United States, (B) any other matter, which the Compensation Committee may deem necessary or
desirable to comply with the terms of any such listing, registration or qualification or to obtain
an exemption from the requirement that any such listing, qualification or registration be made,
(C) any and all other consents, clearances and approvals in respect of a plan action by any
governmental or other regulatory body or any stock exchange or self-regulatory agency and (D) any
and all consents required by the Compensation Committee. Nothing herein shall require AIG to list,
register or qualify the shares of AIG Stock on any securities exchange.



     The Compensation Committee’s determinations under the Plan need not be uniform and may be made
by it selectively among persons who receive, or are eligible to receive, benefits under the Plan
(whether or not such persons are



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similarly situated). Without limiting the generality of the foregoing, the Compensation
Committee shall be entitled, among other things, to make non-uniform and selective determinations
as to the persons to become Participants.



11. Determination of Employment




     Nothing contained in the Plan or in any participation granted pursuant to the Plan shall
confer on any Participant any right to be continued in the employ of the Employer or to be included
in any future plans of a similar nature.



     The Compensation Committee shall have the right to determine itself with respect to any
Participant the commencement date of such Participant’s employment with the Employer solely for
purposes of the Plan, separate and apart from any such determination as may be made by AIG, its
subsidiaries or affiliates with respect to the individual’s employment.



12. Governing Law; Waiver of Suit; Confidentiality




     Any dispute, controversy or claim between AIG and a Participant, arising out of or relating to
or concerning the Plan or any allocation, shall be finally settled by arbitration in New York City
before, and in accordance with the rules then obtaining of, the New York Stock Exchange, Inc. (the
“NYSE”) or, if the NYSE declines to arbitrate the matter (or if the matter otherwise is not
arbitrable by it), the American Arbitration Association (the “AAA”) in accordance with the
commercial arbitration rules of the AAA. Prior to arbitration, all claims maintained by a
Participant must first be submitted to the Compensation Committee in accordance with claims
procedures determined by the Compensation Committee. This Paragraph is subject to the other
provisions of section 12 below.



     AIG and each Participant hereby irrevocably submit to the exclusive jurisdiction of a state or
federal court of appropriate jurisdiction located in the Borough of Manhattan, the City of New York
over any suit, action or proceeding arising out of or relating to or concerning the Plan or any
allocation that is not otherwise arbitrated or resolved according to the foregoing paragraph. AIG
and each Participant acknowledge that the forum designated by this section has a reasonable
relation to the Plan and to such Participant’s relationship with AIG.



     AIG and each Participant waive, to the fullest extent permitted by applicable law, any
objection which AIG and such Participant now or hereafter may have to personal jurisdiction or to
the laying of venue of any such suit, action or proceeding in any court referred to in this
section. AIG and each Participant undertake not to commence any action, suit or proceeding arising
out of or relating to or concerning the Plan or any allocation in any forum other than a forum
described in this section.



     Each Participant irrevocably appoints the Secretary of AIG at 70 Pine Street, New York,
New York 10270, U.S.A. as his or her agent for service of process in connection with any action,
suit or proceeding arising out of or relating to or concerning the Plan or any allocation that is
not otherwise arbitrated or resolved



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according to the first paragraph of this section 12. The Secretary shall promptly advise the
Participant of any such service of process.



     Each Participant recognizes and agrees that prior to being selected by the Compensation
Committee to receive an allocation he/she has no right to any benefits under the Plan.
Accordingly, in consideration of each Participant’s receipt of an allocation, he/she expressly
waives any right to contest the amount of such allocation, the terms of such allocation, any
determination, action or omission made by the Compensation Committee, AIG or the board of directors
of AIG, or any amendment to the Plan.



     Each Participant must keep confidential any information concerning any allocation made under
the Plan and any dispute, controversy or claim relating to the Plan, except that a Participant may
disclose information concerning a dispute or claim to the court that is considering such dispute or
to such Participant’s legal counsel (provided that such counsel agrees not to disclose any such
information other than as necessary to the prosecution or defense of the dispute).




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