Document:

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                                                                    EXHIBIT 10.1

                       AMERICAN INTERNATIONAL GROUP, INC.

            2005/2006 DEFERRED COMPENSATION PROFIT PARTICIPATION PLAN

                                (SENIOR PARTNERS)

1.       PURPOSE AND STRUCTURE

         The Compensation 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 "Senior 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 1000 or more participation units under the Plan
are referred to as "Senior 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 Senior
Partner Participant employed by the Employer at December 31, 2006 shall have
contingently allocated to such Participant's account 16 shares of AIG Stock for
each participation unit granted to such Participant (such Participant's "Initial
Allocated AIG Stock").
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         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.       EARLY PAYOUTS OF INITIAL ALLOCATED AIG STOCK

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

         A.   on May 1, 2009 providing that such Participant is employed by the
              Employer at such time, ten percent (10%) of such Participant's
              Initial Allocated AIG Stock (less any withholding taxes required
              thereon);

         B.   on May 1, 2010 providing that such Participant is employed by the
              Employer at such time, ten percent (10%) of such Participant's
              Initial Allocated AIG Stock (less any withholding taxes required
              thereon); and

         C.   on January 1, 2015 providing that such Participant is employed by
              the Employer at such time, five percent (5%) of such Participant's
              Initial Allocated AIG Stock (less any withholding taxes required
              thereon).

5.       INCREMENTAL AMOUNT

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

         A.   If any Senior Partner Participant is employed with the Employer at
              the end of the eighth year from the Grant Date and has not reached
              age 65 at such time, an additional amount of AIG Stock equal to
              twenty percent (20%) of such Participant's Initial Allocated AIG
              Stock

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              shall be allocated to the Participant's account to be distributed
              or forfeited as provided in the Plan (such Participant's
              "Incremental Amount" and, together with such Participant's Initial
              Allocated AIG Stock, such Participant's "Allocated AIG Stock").

         B.   Notwithstanding the conditions of section 5 A, if a Senior Partner
              Participant is employed with the Employer at age 65 and retires on
              or thereafter; or dies, or retires because of permanent disability
              or illness prior to age 65, 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, permanent disability or
                   retirement occurs within 6 months from the Grant Date;

              (2)  50% of such amount if death, permanent disability or
                   retirement occurs on or after 6 months but within 12 months
                   from the Grant Date;

              (3)  75% of such amount if death, permanent 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, permanent disability or
                   retirement occurs on or after 18 months from the Grant Date.

         C.   If a Senior 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, 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

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              Compensation Committee may, in 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.

7.       GENERAL RULES

         Each Participant's Allocated AIG Stock (not previously distributed as
an early payout under section 4) 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 such Participant fulfills the employment
conditions and retires on or after reaching age 65.

         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 for any reason (other than
              death or permanent disability) including, but not limited to,
              redundancy or dismissal prior to such retirement at age 65. In the
              event of death or permanent disability occurring prior to age 65
              and while an individual is 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, at the time of such event. "Permanent disability" has
              the meaning defined in the American International Group, Inc.
              Group Long-Term Insurance Policy as in effect on January 1, 2005.

         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. All stock dividends or splits with respect to any
              Allocated AIG Stock occurring after December 31, 2006 shall accrue
              and accumulate as

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              part of the early payout amounts or contingent deferred amounts.
              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. 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.

         C.   Prior to June 30, 2006, the Participant may request to receive any
              remaining distribution to which he/she is entitled under one of
              the following options as stated hereinafter:

              (1)  In a lump sum in shares of the Allocated AIG Stock payable at
                   the close of the first business day of January of the year
                   immediately subsequent to the later of, the year in which the
                   Participant either becomes 65 years of age, or the year of
                   actual retirement.

              (2)  In periodic payments of pro rated amounts of shares of
                   Allocated AIG Stock (adjusted for subsequent stock dividends)
                   over five (5) years or ten (10) years as the Participant may
                   elect, commencing the first business day of January of the
                   year immediately subsequent to the later of, the year in
                   which the Participant becomes 65 years of age or, the year of
                   actual retirement. Such pro rated payments shall be made on
                   each anniversary date after the first payment.

              If the Participant makes no election by June 30, 2006, he/she
              shall become entitled to receive a lump sum distribution of any
              remaining Allocated AIG Stock to which he/she is entitled on the
              first business day of January in the year subsequent to the year
              in which retirement occurs.

         D.   If the Participant does not retire upon reaching age 65, he/she
              shall only become entitled to receive any remaining Allocated AIG
              Stock to which he/she is entitled, its dividends or the right to
              vote such shares, on the first business day of January of the year
              subsequent to his year of actual retirement.

         E.   If the Participant elects to defer the receipt of any remaining
              Allocated AIG Stock to which he/she is entitled over a five (5) or
              ten (10) year period subsequent to reaching age 65 he/she shall
              covenant not to

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              compete in any business in which any Employer engages, and he/she
              shall make himself/herself available from time to time to the
              Employer for consulting services when necessary and requested and
              shall receive no additional compensation for providing such
              consulting services.

         F.   Notwithstanding the foregoing 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.

         G.   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.

         H.   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.

         I.   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.

         J.   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.

         K.   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.

         L.   Notwithstanding any provision to the contrary in the Plan, to the
              extent any distribution to be made to a Participant in connection
              with the Participant's termination of service with the Employer
              would be subject to the additional tax of Section 409A of the
              Internal Revenue

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              Code, the distribution will be delayed until six (6) months after
              a Participant's termination of service with the Employer (or
              earlier death or disability (within the meaning of Section 409A)).

8.       DEATH, DISABILITY OR RETIREMENT IN THE FIRST TWO YEARS OF PLAN

         If a Participant dies, is permanently disabled, 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 at or after the Participant turns
age 65 does not need the consent of the Compensation Committee):

         A.   within the first six months after the Grant Date, the Participant
              will receive upon determination one fourth of the appropriate
              Initial Allocated AIG Stock;

         B.   on or after six months but within one year of the Grant Date, the
              Participant will receive upon determination one half of the
              appropriate Initial Allocated AIG Stock;

         C.   on or after twelve months but within eighteen months of the Grant
              Date, the Participant will receive upon determination three
              fourths of the appropriate Initial Allocated AIG Stock;

         D.   on or after eighteen months from the Grant Date, the Participant
              will receive upon determination one hundred percent (100%) of the
              appropriate Initial Allocated AIG Stock;

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 distribution shall be determined under section 5 B
or C).

         Generally distribution of Allocated AIG Stock shall occur within a
reasonable period after December 31, 2006 when the determination is made as to
whether the EPS Growth Threshold has been satisfied.

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.

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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. 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 with counsel of AIG's choice. 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. The Compensation Committee

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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
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 (1) the persons to become
Participants and (2) whether a Participants employment with Employer has been
terminated (as described in section 11).

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 or termination 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.

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         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 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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                     [Form of Senior Partner Award Letter]

                                               [DATE], 2005

PRIVATE & CONFIDENTIAL
----------------------

[NAME]
[ADDRESS]
[ADDRESS]

   Re: AIG 2005-2006 Deferred Compensation
       Profit Participation Plan
       -----------------------------------

Dear [NAME]:

         I am pleased to advise you that AIG has formally adopted its 2005-2006
Deferred Compensation Profit Participation Plan. As previously communicated, you
have been selected to participate in this plan and have been awarded [_____]
units under the plan. This places you in the "Senior Partner" category of the
2005-2006 Plan. A copy of the Plan is attached.

         If the cumulative earnings per share of AIG common stock (as calculated
in accordance with the 2005-2006 Plan) for 2005 and 2006 exceed cumulative
earnings per share for 2003 and 2004, you will be contingently allocated 16
shares of AIG common stock for each unit granted to you under the plan.
Furthermore, as a "Senior Partner" participant, if you continue to be employed
by AIG on January 1, 2013 and have not reached age 65, you will receive a 20%
increase (or "reload") in the number of AIG shares contingently allocated to
you. At the time any shares are contingently allocated to you, you will be
awarded a restricted stock unit under the AIG 2002 Stock Incentive Plan
reflecting the terms of the 2005-2006 Plan. (You will need to execute an award
agreement at that time to reflect your acceptance of the terms of the award.)

         Generally, your award will be payable as follows: 10% on May 1, 2009,
10% on May 1, 2010, 5% on January 1, 2015 and the remainder upon retirement
after reaching age 65. The shares contingently allocated to you under the plan
will vest when you reach age 65 or have at least 4 years total service with AIG,
whichever is later, except that shares that are paid early will vest when they
are paid. In general, if you cease employment with AIG for any reason, you will
forfeit any unvested shares. However, the Compensation Committee retains the
right to vest AIG shares in its discretion. The Compensation Committee also
retains the right to determine whether your award will be paid in shares of AIG
common stock or in cash.
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[NAME]                                                                Page 2

         The complete terms of your award are set forth in the 2005-2006 Plan.
Of course, if there are any inconsistencies between the summary in this letter
and the Plan, the Plan will control.

         The 2005-2006 Plan is part of AIG's plan to continue to reward and
motivate its key employees, including yourself. AIG senior management and the
Board of Directors appreciate that this has been a difficult time for all AIG
employees. I personally wish to thank each of you for your dedication and hard
work during this period. It is among my highest priorities as your new CEO to
recognize the contributions you have made and continue to make as part of our
common efforts to ensure the future success of AIG.

                                       Sincerely,

                                       Martin J. SullivanEX-10.1

 

EXHIBIT 10.1

PROSIDION LIMITED

SERVICE CONTRACT

This Agreement sets out the particulars of the terms and conditions of your employment with
Prosidion Limited (hereafter referred to as “the Company”), of Watlington Road, Oxford, OX4 6LT as
required by law.

	1	 	NAME: DR ANKER LUNDEMOSE
	 
	2	 	ROLE: CEO AND DIRECTOR OF THE COMPANY, PRESIDENT OF (OSI)
PROSIDION AND EXECUTIVE VICE PRESIDENT OF OSI
PHARMACEUTICALS, INC., PARENT COMPANY OF THE COMPANY.
	 
	2.1	 	Your role is chief executive officer and director of the Company, President of (OSI)
Prosidion, the diabetes and obesity business unit of OSI Pharmaceuticals, Inc. (“OSIP”) the
parent company of the Company, and Executive Vice President of OSIP, pursuant to which OSIP
office, you shall serve on the Executive Management Committee of OSIP.
	 
	3	 	LOCATION
	 
	 	 	Your normal place of work is at the Company’s offices in Oxford, U.K., as set out above or
such other location in the UK as the Company may from time to time require. During the
course of your employment you may be required to work at other locations within the U.K.
You may also be required to travel in the U.K. or overseas as the Company may from time to
time require.
	 
	4	 	DATE OF COMMENCEMENT OF SERVICE CONTRACT: SEPTEMBER 20, 2005
	 
	5	 	REMUNERATION
	 
	5.1	 	Your employment is on a salaried basis. Your base salary is one hundred and seventy five
thousand pounds (£175,000) per annum and will be paid monthly in arrears. All payments are by
credit transfer into your nominated bank or building society account and will be equal to
1/12th of your annual salary for each full month worked. You shall also receive a
car allowance of £1,200 per month.
	 
	5.2	 	Salary reviews will be carried out annually. Your salary may (but will not necessarily) be
increased with effect from the review date. You will be notified in writing of any such
change in salary.
	 
	5.3	 	In addition to your base salary, for each year that you are employed with the Company, you
will be eligible to receive a bonus, determined and payable in accordance with OSIP’s
practices applicable to bonuses paid to its executives. This bonus system is a discretionary
annual performance-based incentive bonus system, approved by OSIP’s Board, and is based upon a
combination of personal and corporate performance contributing to your maximum target.
	 
	5.4	 	The Company shall reimburse you for all of your costs in relation to home telephone expenses,
cellular telephone expenses and home PC high-speed Internet connection (ADSL) upon the
submission of receipts in a timely manner.
	 
	5.5	 	The Company will reimburse you, upon presentation of appropriate documentation, for all
reasonable costs incurred by you in connection with the preparation of your annual UK tax
return for the tax years 2004/ 2005 and 2005/2006.

 

 

	5.6	 	The Company will reimburse you upon presentation of appropriate documentation, for all costs
incurred by you in connection with the seeking of legal and financial advice relating to your
tax affairs as a consequence of relocation to the UK, to a maximum sum of thirty thousand
pounds (£30, 000).
	 
	5.7	 	On each date that annual stock options are granted by OSIP to its executive management group,
so long as you then remain in the employ of the Company or OSIP, OSIP will grant to you an
option (an “Annual Option”) to purchase a number of shares of Common Stock of OSIP to be
determined by the Compensation Committee of the Board of Directors of OSIP based upon your
grade level. The exercise price for each Annual Option will be the fair market value per
share of Common Stock on the date the Annual Option is granted and the other terms and
conditions of the Annual Option will be as set forth in the Plan and Option Agreement
accompanying such Annual Option. Notwithstanding the foregoing, each Annual Option and any
options to purchase shares of Common Stock of OSIP granted as at the date hereof shall
automatically vest and be fully exercisable upon a Change of Control (as hereinafter defined).
	 
	6	 	RIGHT OF ABODE
	 
	 	 	It is the Company’s policy to insist that all employees provide original
documentation proving that they have a right to work in the UK.
	 
	7	 	HOLIDAYS
	 
	7.1	 	The holiday year will run from 1st April to 31st March of the following
year. In addition to normal bank and public holidays in England, you will be entitled in
every holiday year to thirty (30) working days paid holiday (and pro rata to the period
employed in every such year in which your service is for less than the holiday year). This
holiday entitlement is inclusive of your statutory holiday entitlement under the Working Time
Regulations 1998, which shall, in each holiday year, be deemed to be taken first. The Company
reserves the right to require you to take holiday on certain days determined by the Company
and it is agreed that Regulation 15 of the Working Time Regulations 1998 is excluded.
	 
	7.2	 	On termination of your employment you are required to take any unused holiday entitlement
during any period of notice unless notified to the contrary (and in writing) by the Company.
Only if you are unable to take your unused entitlement because of the Company’s requirements
of you during the notice period, or to the extent, if any, that such unused entitlement
exceeds your period of notice, will a payment in lieu of such accrued but untaken holiday
entitlement be made. Deductions from sums due to you on termination of employment will
include a sum in respect of any day’s holiday you may have taken in excess of your actual
holiday entitlement on termination. A day’s pay for the purposes of this clause means
1/260th of your annual salary.

 

 

	8	 	PENSION SCHEME
	 
	 	 	The Company is not contracted out of the State Earnings Related Pension Scheme and all
employees contribute at ordinary rates to the National Insurance Scheme. The Company
operates a group personal pension plan. Eligibility to join the scheme is determined by
the Company and eligible employees may join the Scheme at the earliest opportunity
following the month in which they commence employment. During the term of your
employment, the Company will contribute twelve percent (12%) of your annual salary, on a
pro rated monthly basis, to such plan. You may, at your discretion, make additional
contributions to the plan, subject to statutory limits.
	 
	9	 	PRIVATE MEDICAL INSURANCE
	 
	 	 	You are invited to join a free medical scheme and pay for dependents to be included. The
Company reserves the right to change the provider and the scheme as necessary.
	 
	10	 	PERMANENT HEALTH INSURANCE
	 
	 	 	Subject to you meeting the Insurers eligibility criteria, the Company will provide free
permanent health insurance of seventy five percent (75%) of salary for absences over
twenty-six (26) continuous weeks. The amount will be based on basic salary at the time of
becoming ill and will not be increased during payment. In addition to your salary payments
this benefit also covers your employer pension contribution in place at the time of
becoming ill.
	 
	11	 	LIFE ASSURANCE
	 
	 	 	You will be provided with Life Assurance by the Company to the amount of four (4) times
your current salary at the time.
	 
	12	 	BENEFITS
	 
	12.1	 	If you are absent from work due to sickness or injury, the Company will pay you your normal
remuneration, including benefits, for up to twenty-six (26) weeks in any calendar year.
Thereafter, you may be entitled to continued permanent health insurance payment pursuant to
Paragraph 10 or the Company may, in its discretion, continue payment as above for such longer
period as the Company may, in its discretion, determine.
	 
	13	 	NOTICE
	 
	13.1	 	You are required to give the Company, in writing, the following prior notice to terminate
your employment “without good reason” (as defined in paragraph 21.1(f)): three months
	 
	13.2	 	The Company’s normal retirement age, when your employment will automatically terminate, is 65
for both men and women.

 

 

	14	 	ADOPTION
	 
	 	 	Should you decide to adopt a child from a location outside of the UK, you will notify the
Company of the time period of the adoption process, as soon as you are notified by the
adoption authorities. Should this adoption necessitate that you stay at the location of
the adoption for a prolonged period of time, you will be permitted to undertake the
adoption process from such location for a period of up to six (6) weeks (or such greater
period as is agreed with the Company) provided that you use reasonable endeavours to
perform your duties in the Company during such period.
	 
	15	 	CONFIDENTIAL INFORMATION AND PUBLICATION
	 
	 	 	You undertake that you will not without the prior consent in writing of the Company during
the term of employment by the Company or OSIP (as the case may be), or at any time after
termination of employment either make known or divulge in any manner whatsoever (and will
use reasonable endeavors to prevent disclosure of) any information that you acquire by
reason of your said employment not already generally available to the public
(“Confidential Information”), concerning:

	 	(a)	 	any technical secrets, confidential research work, technical processes,
formulae, inventions, patents,
	 
	 	(b)	 	any transactions, finances or business affairs of the Company or OSIP,
associated companies or of customers of the said Company of OSIP or companies.

	 	 	All notes, memoranda, records, papers, documents, correspondence, writings, drawings,
plans, designs or other such documents which come into your possession relating to the
business of the Company or OSIP, are the property of the Company or OSIP, as the case may
be, and you will deliver them together with any equipment or other property belonging to
the Company or OSIP immediately upon request and in any event on the termination of your
employment and you will not make or keep any copies or extracts of such documents.
	 
	 	 	If you make any discovery or invention or secret process or improvement in procedure
(either alone or with any other person) during your employment which relates to the
business of the Company or OSIP, you shall immediately disclose it in writing to the
Company and it will (except to the extent provided otherwise by Section 39 of the Patents
Act 1977) be the absolute property of the Company or OSIP. You will, on the request and
at the expense of the Company, apply or join with the Company or OSIP, as the case may be,
in applying for a patent, registered design or other appropriate protection in the United
Kingdom, the United States or any other part of the world for any such discovery,
invention, process or improvement and you will execute any documents and do any other
things necessary for vesting absolutely that patent registered design or any other
protection and all right title and interest to it, in the Company or OSIP, as the case may
be. You irrevocably appoint the Company or its designee to be your attorney to execute
and do any such document or thing and generally to use your name for the purpose of giving
the Company and OSIP the full benefit of the provisions of this clause.
	 
	 	 	It is mutually agreed that this undertaking shall in no way affect your right to make use
of the general knowledge and skill that you acquire in the service of the Company or OSIP.
	 
	16	 	COLLECTIVE AGREEMENTS
	 
	 	 	There are no collective agreements applicable to you or which affect your terms of
employment.

 

 

	 
	17	 	DATA PROTECTION
	 
	 	 	By signing this statement you acknowledge and agree that the Company is permitted to hold
personal information about you as part of its personnel and other business records and may
use such information in the course of the Company’s business. You agree that the Company
may disclose such information to third parties (including where such third parties are
based outside the European Economic Area) in the event that such disclosure is in the
Company’s view required for the proper conduct of the Company’s business or that of any
associated company. This Clause applies to information held, used or disclosed in any
medium.
	 
	18	 	HEALTH AND SAFETY
	 
	 	 	Every employee of the Company or OSIP, including you, has a legal duty to take reasonable
care for the health and safety of themselves and of other persons who may be affected by
their acts or omissions at work. You must also co-operate with the Company and OSIP so
that the Company and OSIP can discharge their statutory obligations. You shall not
intentionally or recklessly interfere with, or misuse, anything that is provided in the
interests of health, safety or welfare.
	 
	 	 	You may be required, in order to enable the Company and OSIP to fulfil their statutory
obligations to undergo periodic medical checks and examinations. You shall be deemed to
have agreed to the results of such checks and examinations being released to the Company
and OSIP.
	 
	 	 	Further Health and Safety information can be found on the Company intranet under the
sections entitled Health and Safety and HR Policies.
	 
	 	 	The Company and OSIP each has a non-smoking policy that all employees must observe.
Failure to observe this policy will result in disciplinary action.
	 
	19	 	DUTIES
	 
	 	 	Whilst employed by the Company or OSIP you must:-

	 	(a)	 	during your hours of work devote the whole of your time, attention and
abilities to the business of the Company and OSIP and carry out your duties with due
care and attention;
	 
	 	(b)	 	not, without the Company’s or OSIP’s prior written consent, be in any way
directly or indirectly engaged or concerned with any other business or employment
whether during or outside your hours of work for the Company and OSIP;
	 
	 	(c)	 	use your best efforts to promote and protect the interests of the Company
and OSIP and observe the utmost good faith towards the Company and OSIP; and

 

 

	 	(d)	 	comply with all the Company’s and OSIP’s rules, regulations, policies and
operating procedures from time to time in force. The Company and OSIP each
maintains a section entitled HR Policies on their respective intranets which include
key HR policies and which all employees should regularly review as it is updated from
time to time.

	20	 	TERMINATION OF EMPLOYMENT
	 
	20.1	 	Your employment with the Company shall end upon the earliest of the following to occur:

(a) Your death;

(b) Upon written notice to you of termination as a result of your Permanent Disability.
“Permanent Disability” means your inability, by reason of any physical or mental
impairment, to substantially perform your duties and responsibilities hereunder for a
period of twenty six (26) weeks in any twelve (12) month period, as determined by a
qualified physician with no history of prior dealings with you or the Company, as
reasonably agreed upon by you (or, if you are unable to make such selection, by an adult
member of your immediate family) and the Company. Such physician’s written determination
of your Permanent Disability shall, upon delivery to the Company, be final and conclusive
for purposes of this Agreement. The Company agrees not to terminate your employment where
the effect of such termination would be to prevent you from receiving or continuing to
receive Permanent Health Insurance (“PHI”) benefits in accordance with your entitlement at
paragraph 10 hereof provided there are no other causal factors for such non-eligibility to
receive or continue to receive PHI benefits. In the event of Permanent Disability, if you
are prevented from receiving PHI due to your failure to meet PHI policy criteria and
provided there are no causal factors for such non-eligibility arising from your act or
omission (including without limitation non-disclosure of illnesses under the PHI policy)
(“PHI Non-Eligibility”), the provisions of Paragraph 20.2(c) shall apply;

(c) Termination of your employment by the Company for “cause” as evidenced by, and
effective upon, delivery by the Company to you of a Notice of Termination (as defined in
paragraph 20.1(g) below). “Cause” shall mean, for purposes of this Agreement, (i) an act
of fraud or embezzlement against the Company or OSIP or an unauthorized disclosure of
Confidential Information (as defined in paragraph 15 hereof) of the Company or OSIP, in
each case which is willful and results in material damage to the Company or OSIP, (ii) any
criminal violation of the US Securities Act of 1933 or the US Securities Exchange Act of
1934, (iii) your conviction (or a plea of nolo contendere) of any felony, (iv) your gross
neglect of your duties or your willful and continuing refusal to perform your duties,
provided you have been given written notice of such neglect or refusal and within thirty
(30) days have failed to cure such neglect and refusal, or (v) your material willful
misconduct with respect to the business or affairs of the Company or OSIP;

 

 

(d) Termination of your employment by you for “good reason” by delivering to the Company a
Notice of Termination (as defined in paragraph 20.1(g) below) not less than thirty (30)
days prior to the effective date of such termination. For purposes of this Agreement,
“good reason” shall mean the occurrence of any of the events hereinafter set forth which
are not cured by the Company or OSIP within thirty (30) days after the Company or OSIP has
received written notice from you specifying the particular events or conditions which
constitute “good reason”:

     (i) a material reduction in your duties, title, responsibilities, authority, status,
or reporting responsibilities unless you have previously consented in writing to such
reduction (which consent may be given or withheld in your sole discretion);

     (ii) a material reduction in your base salary;

     (iii) Change of Control (as defined in paragraph 20.3 hereof); or

     (iv) Relocation of your normal place of work to any destination other than the U.K.

(e) Termination of your employment by the Company “without cause” by delivery by the
Company to you of a Notice of Termination (as defined in paragraph 20.1(g) below) not less
than thirty (30) days prior to the effective date of such termination. Your termination
by the Company shall be considered to be “without cause” if you are terminated or
dismissed by the Company for reasons other than death, Permanent Disability (as defined in
paragraph 20.1(b) hereof) or for “cause” (as defined in paragraph 20.1(c) hereof).

(f) Termination of your employment by you “without good reason” by delivery by you to the
Company of a Notice of Termination (as defined in paragraph 20.1(g) below). Your
termination of your employment shall be considered to be “without good reason” unless you
resign for “good reason” (as defined in paragraph 20.1(d) hereof).

(g) Any termination by the Company or by you shall be communicated by a written “Notice of
Termination” to the other party hereto. A “Notice of Termination” shall mean a notice
which indicates a termination date and the specific termination provision in this
Agreement relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination under the provision so indicated.

	20.2	 	Payments Upon Termination.

(a) Upon termination of your employment for any reason you will become entitled to (i) any
accrued and unpaid base salary and contractual benefits up to the date of termination, and
(ii) any accrued and unpaid vacation pay up to the date of termination ((i) and (ii) being
collectively referred to as the “Accrued Compensation”).

The Company reserves the right in its absolute discretion to terminate your employment
immediately or at any time after a Notice of Termination has been served by either party.
Where applicable, the Company also reserves the right to make a payment in lieu of any
notice which may be given by the Company and stated in such Notice of Termination. Such
payment will consist of Accrued Compensation (as defined in paragraph 20.2(a) hereof) and
pay and benefits for the period to the date on which your notice would otherwise have
expired but excluding any payment for holiday accruing during any such unworked notice
period. For the

 

 

avoidance of doubt, the Company’s right to make a payment in lieu of notice does not give
you a right to receive such a payment in lieu of notice.

The Company may, at its absolute discretion, require you not to attend at work and/or not
to undertake all or any of your duties hereunder during any period of notice (whether
given by the Company or you), provided always that the Company shall continue to pay your
salary and contractual benefits as detailed herein. For the avoidance of doubt, there is
no obligation on the Company to provide you with any work during any period of notice and
you will not be entitled to work on your own account or on account of any other person,
firm or company during that period.

(b) Upon termination of your employment due to death, in addition to Accrued Compensation,
your estate will become entitled to an amount equal to the bonus that you would have been
entitled to receive for the fiscal year in which the termination of your employment occurs
had you continued to be employed until the end of such fiscal year, multiplied by a
fraction (i) the numerator of which is the number of days in such fiscal year through to
the date on which your employment terminates and (ii) the denominator of which is 365 (a
“Pro-rata Bonus”).

(c) Upon a termination of your employment (1) by the Company “without cause” (as defined
in paragraph 20.1(e) hereof), (2) by you for “good reason” (as defined in paragraph
20.1(d) hereof) (including upon a “Change of Control” (as defined in paragraph 20.3)
hereof)), or (3) by the Company where PHI Non-Eligibility occurs (as defined in paragraph
20.1(b)), in addition to Accrued Compensation, you will become entitled to (i) a sum
equivalent to your base salary for twelve (12) months following the date of termination,
and (ii) your Pro-rata Bonus.

(d) You shall not be required to mitigate the amount of any payment provided for under
this paragraph by seeking other employment or otherwise and no payment shall be offset or
reduced by the amount of any compensation or benefits provided to you in any subsequent
employment. The Company’s obligation to make the payments provided for in this paragraph
and otherwise perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, set-off, counterclaim, recoupment, defense
or other claim, right or action which the Company may have against you or others.

	20.3	 	Change of Control. For purposes of this Agreement, a “Change of
Control” shall mean the approval by
stockholders of the parent company of the
Company, OSIP (or, in the case of any
transaction involving the share capital or
the assets of the Company, the approval by
OSIP) of (a) a merger or consolidation
involving OSIP if the stockholders of OSIP,
immediately before such merger or
consolidation, do not, as a result of such
merger or consolidation, directly or
indirectly, continue to hold a majority of
the voting power in the resulting entity, or
(b) an agreement for the sale or other
disposition of all or substantially all of
the assets of the Company or (c) any
transaction involving the Company if OSIP
does not, as a result of such transaction,
continue to hold a majority of the voting
power in the Company or any resulting entity.

 

 

	21	 	Entire Agreement.
	 
	 	 	This Service Contract is the entire agreement between the parties as at the date hereof
relating to the subject matter hereof and replaces, supercedes and terminates those
earlier agreements between the parties dated 1st May 2004, 10th
October 2003, 13th May 2003 and 1st February 2003 and those letters
between the parties dated 1st February 2003 (regarding payment of UK national
insurance) and between you and OSIP dated 1st February 2003 (regarding
obtaining of financing), dated 1st February 2003 (regarding subscription for
            shares in the Company) and dated 1st February 2003 (regarding indemnification
for tax in relation to such subscription for shares). For the avoidance of doubt, the
period of employment between the parties commenced on 1st February 2003 and
shall continue until termination of this Service Contract. If any provision of this
Agreement is judicially or administratively determined to be unenforceable, the provision
will be reformed to most nearly approximate the Parties’ original intent, but otherwise
this Agreement will continue in full force and effect.

I acknowledge receipt of this Service Contract, which sets out the principal terms of my
employment.

I am aware that Employee Handbook and certain Company rules, policies and operating procedures that
will apply to my employment can be obtained on the Company intranet under the section entitled HR
Policies and I am aware that these may be changed and updated from time to time. I undertake to
review these policies regularly during my employment.

I confirm that I understand and agree to abide by the terms and conditions contained in this
Service Contract and in those rules and policies and operating procedures that are specifically
stated to form part of my Service Contract.

SIGNED by the said DR ANKER LUNDEMOSE  /s/ Dr. Anker Lundemose

	 	 	 	 	 
	on

	2005	 	 	 

in the presence of:

Witness  /s/                                          

Full Name                                         

Address                                            

                                                            

Occupation                                        

SIGNED for and on behalf of

PROSIDION LIMITED

by  /s/                              

	 	 	 	 	 
	on

	2005

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