Document:

EX-10.3:

 

Ex. 10(3)

EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT (this “Agreement”), is entered into as of June 27, 2005, by and
between American International Group, Inc., a Delaware corporation (the “Company”), and
Steven J. Bensinger (“Executive”).

     WHEREAS, Executive is currently employed by the Company as its Executive Vice President and
Chief Financial Officer pursuant to that certain employment letter dated as of March 16, 2005 (the
“Employment Letter”); and

     WHEREAS, as of the date of this Agreement, the Company wishes to continue Executive’s
employment as Executive Vice President and Chief Financial Officer under the terms of a new
employment agreement on the terms set forth herein, which shall supersede the Employment Letter;
and

     WHEREAS, Executive desires to enter into such agreement; and

     WHEREAS, Executive’s employment as the Company’s Executive Vice President and Chief Financial
Officer is a promotion from his position with the Company prior to March 14, 2005, and the Board of
Directors of the Company (the “Board”) has acknowledged that Executive has been performing
his duties as Executive Vice President and Chief Financial Officer under conditions at the Company
that are demanding both in terms of the time commitment required and the unique circumstances
facing the Company as of the date of this Agreement.

     NOW, THEREFORE, in consideration of the premises and mutual covenants herein and for other
good and valuable consideration, the parties hereby agree as follows:

     1. Term of Employment. Subject to the provisions of Section 9 of this Agreement, this
Agreement shall be effective for a term commencing as of March 14, 2005 (the “Effective
Date”) and ending on the day immediately preceding the third anniversary of the Effective Date
(the “Employment Term”).

     2. Position.

          (a) Executive shall serve as Executive Vice President and Chief Financial Officer of the
Company. In such position, Executive shall have such duties and authority as are consistent
therewith. Executive shall report to the Company’s Chief Executive Officer and to the Audit
Committee of the Board.

          (b) During the Employment Term, Executive will devote his full business time and best efforts
to the performance of his duties hereunder and will not engage in any other business, profession or
occupation for compensation or otherwise which would conflict or interfere with the rendition of
such services, either directly or indirectly, without the prior written consent of the Board;
provided, that nothing herein shall preclude Executive, subject to the prior approval of the Board,
from accepting appointment to or continuing to serve on any

 

 

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board of directors or trustees of any business corporation or any charitable or not-for-profit
organization or from managing his personal, financial and legal affairs; provided, in each case,
and in the aggregate, that such activities do not conflict or interfere with the performance of
Executive’s duties hereunder or conflict with Section 11 of this Agreement in any material respect.

     3. Base Salary and Non-Variable Compensation.

          (a) Base Salary. During the Employment Term, the Company shall pay Executive a base
salary (the “Base Salary”) at the annual rate of $750,000, payable in regular installments
in accordance with the Company’s usual payroll practices. The Base Salary shall be retroactive to
the Effective Date. During the Employment Term, the Compensation Committee of the Board (the
“Compensation Committee”) shall review the Base Salary annually and may increase the Base
Salary, and the term “Base Salary” shall refer to such increased amount.

          (b) Non-Variable Compensation. Executive shall receive an additional cash payment
with respect to each of fiscal years 2005, 2006 and 2007, in addition to any other amounts
described in this Agreement, in an amount equal to the excess, if any, of (i) $750,000 over (ii)
the aggregate of all (A) supplemental quarterly interim cash bonuses in respect of the Company’s
long-term compensation arrangements or otherwise paid in respect of the applicable fiscal year,
which shall be paid consistent with past practice, and (B) cash dividends received in respect of
the fiscal year, or with respect to the prior fiscal year to the extent not previously taken into
account in respect of this clause (B), on common and preferred stock of C.V. Starr & Co., Inc.
(“Starr”) held by Executive, which compensation shall be paid no later than March 31 of the
fiscal year following each of fiscal years 2005, 2006 and 2007. This amount shall be payable in
respect of fiscal year 2007 irrespective of the expiration of the Employment Term on the day
immediately preceding the third anniversary of the Effective Date, if such amount has not been paid
by such time.

     4. Bonuses.

          (a) Transition Bonus. The Company shall pay Executive a transition bonus, in cash, in
an amount equal to $1,000,000 (the “Transition Bonus”), which shall be paid in four equal
installments on, or as soon as reasonably practicable following, each of the following dates,
whether or not Executive is employed by the Company on such dates, unless Executive’s employment
has been terminated by the Company for “Cause” or by Executive without “Good Reason” (as such terms
are defined below): (i) the date Executive and the Company sign this Agreement, and (ii) the last
day of each of the second, third and fourth fiscal quarters of the Company in 2005. If Executive’s
employment is terminated for any reason other than by the Company for Cause or by Executive without
Good Reason before any payment date set forth in the preceding sentence, then, if necessary to
avoid the application of Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), to any such unpaid portion of the Transition Bonus, Executive shall not receive
any such amounts until the first scheduled payroll date that occurs more than six months following
the date of termination of employment (the “First Payment Date”) and, on the First Payment
Date, the Company will pay Executive an amount equal to the sum of all amounts that would have been
payable following termination of

 

 

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employment in respect of the period preceding the First Payment Date but for the delay imposed
on account of the aforementioned Section 409A.

          (b) Annual Bonus. Executive may receive an additional annual cash bonus in respect of
each full or partial fiscal year of the Company during the Employment Term, as determined in the
sole discretion of the Compensation Committee based on its assessment of Company and individual
performance in relation to performance targets, a subjective evaluation of Executive’s performance
and/or such other criteria as may be established by it (the “Annual Bonus”).
Notwithstanding the foregoing, during the Employment Term, Executive shall be eligible, with
respect to each of fiscal years 2006 and 2007, for an annual cash bonus based on the attainment of
targets established by the Compensation Committee, which, together with the target value of any
long-term or equity-based award in respect of such year (as described in Section 5), shall have a
total target value of $5,000,000.

     5. Long-Term and Equity-Based Incentives. During the Employment Term, Executive shall
be eligible to participate in any long-term incentive compensation plans or equity-based
compensation plans maintained by the Company on such basis as may be determined by the Compensation
Committee; provided that, as of a date that is not later than March 31, 2006, Executive shall be
granted awards in respect of fiscal year 2005 having a value, determined at the date of grant, as
reasonably determined by the Compensation Committee, of no less than the excess of (A) $4,000,000
over (B) the sum of (i) the grant date value (as reasonably determined by the Compensation
Committee in the same manner) of Company stock options and other equity awards granted to Executive
no later than December 31, 2005, in respect of fiscal year 2005, (ii) the annualized fiscal year
2005 grant value (as reasonably determined by the Compensation Committee) of any award made to
Executive pursuant to a Company arrangement intended to be in lieu of Executive’s participation in
the Starr International Company, Inc. Deferred Compensation Profit Participation Plan and (iii) the
value (as reasonably determined by the Compensation Committee) of any additional shares of
preferred stock awarded to Executive with respect to fiscal year 2005 by Starr and any growth in
book value in respect of 2005 attributable to any common stock of Starr held by Executive. In the
event that any shares pursuant to clause (iii) of the preceding sentence have not been awarded, or
increase in book value determined, by Starr by March 31, 2006, the Company shall grant Executive a
long-term or equity-based award having a value, as reasonably determined by the Compensation
Committee, equal to the excess of (X) $4,000,000 over (Y) the value of the awards described in
clauses (i) and (ii) of the preceding sentence. Notwithstanding anything to the contrary in this
Section 5, during the Employment Term, Executive shall be eligible, with respect to each of fiscal
years 2006 and 2007, for a long-term or equity-based award, which, together with any annual cash
bonus target in respect of such year (as described in Section 4(b)), shall have a total target
value (as reasonably determined by the Compensation Committee) of $5,000,000. The amount actually
awarded in respect of 2006 and 2007 shall be offset by the value of (I) awards described in clause
(B) of the first sentence of this Section 5, but substituting 2006 or 2007, as applicable, for 2005
in such clause and (II) any shares awarded, or increase in book value determined, in accordance
with such clause (B) in respect of the applicable year but later than March 31 of the subsequent
year.

     6. Employee Benefits. During the Employment Term, Executive shall be

 

 

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entitled to participate in the Company’s employee benefit plans (other than any severance or
change-in-control plan) as in effect from time to time on the same basis as those benefits are
generally made available to other senior executives of the Company. In addition, Executive and the
Company will negotiate in good faith to determine, prior to January 1, 2006, the nature of
Executive’s participation in the Company’s Supplemental Executive Retirement Plan.

     7. Vacation. Executive shall be entitled to four (4) weeks annual paid vacation in
accordance with the vacation policy of the Company.

     8. Business Expenses and Perquisites.

          (a) Expenses. During the Employment Term, reasonable business expenses incurred by
Executive in the performance of his duties hereunder shall be reimbursed by the Company in
accordance with Company policies.

          (b) Perquisites. During the Employment Term, Executive shall be entitled to
participate in all of the Company’s perquisite plans, programs and arrangements that are generally
provided by the Company to other senior executives from time to time, including, without
limitation, the provision of financial and tax planning assistance.

     9. Termination. Notwithstanding any other provision of the Agreement:

          (a) For Cause by the Company. The Employment Term, and Executive’s employment
hereunder, may be terminated at any time by the Company for Cause upon delivery of a “Notice of
Termination” (as defined in Section 9(f)) by the Company to Executive. For purposes of this
Agreement, “Cause” shall mean, whether occurring prior to, or on or after the Effective
Date, (i) Executive’s willful and continued failure to perform substantially his duties with the
Company (other than any such failure resulting from Executive’s incapacity due to physical or
mental illness) for a period of 10 days after a written demand for substantial performance is
delivered to Executive by the Board, which specifically identifies the manner in which the Board
believes that Executive has not substantially performed Executive’s duties, (ii) Executive’s
willful malfeasance or willful misconduct that results in substantial damage to the Company, (iii)
Executive’s willful and material violation of a material provision of the Company’s Code of Conduct
or the Director, Executive Officer and Senior Financial Officer Code of Business Conduct and
Ethics, as such codes of conduct may be in effect from time to time, or other policies regarding
behavior of employees, (iv) conviction of, or entry of a plea of guilty or no contest by Executive
with respect to, a felony or any lesser crime of which fraud or dishonesty is a material element,
(v) any willful failure by Executive to comply with a material provision of Section 11 of this
Agreement, or (vi) Executive’s breach of Section 14 of this Agreement.

          For purposes of this provision, no act or failure to act on the part of Executive, shall be
considered “willful” unless it is done, or omitted to be done, by Executive in bad faith or without
reasonable belief that Executive’s action or omission was in the best interests of the Company.
Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of the Board or the Chief Executive

 

 

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Officer of the Company or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best
interests of the Company. The cessation of employment of Executive shall not be deemed to be for
Cause unless and until there shall have been delivered to Executive a copy of a resolution duly
adopted by the affirmative vote of a simple majority of the members of the Board (other than
Executive, if he is a member of the Board) at a meeting of the Board called and held for such
purpose (after reasonable notice is provided to Executive, and Executive is given an opportunity,
together with counsel, to be heard before the Board), finding that, in the good faith opinion of
the Board, Executive is guilty of the conduct described in clauses (i), (ii), (iii), (v) or (vi)
above, and specifying the particulars thereof in detail; provided, that, no such resolution shall
be required for any termination for Cause due to the conduct described in clause (iv) above.

          If Executive is terminated for Cause pursuant to this Section 9(a), he shall be entitled to
receive only his Base Salary through the date of termination and reimbursement for any unreimbursed
business expenses properly incurred by Executive in accordance with Company policy through the date
of Executive’s termination, and he shall have no further rights to any compensation (including any
Base Salary, Transition Bonus, Annual Bonus (including any Annual Bonus that has been declared but
not yet paid), payments from the Company pursuant to Section 3(b) of this Agreement or any
long-term or equity-based compensation awards) or any other benefits under this Agreement. All
other benefits, if any, due Executive following Executive’s termination of employment for Cause
pursuant to this Section 9(a) shall be determined in accordance with the plans, policies and
practices of the Company; provided, however, that Executive shall not participate in any severance
plan, policy or program of the Company.

          (b) Disability or Death. The Employment Term, and Executive’s employment hereunder,
shall terminate immediately upon Executive’s death or following delivery of a Notice of Termination
by the Company to Executive if Executive becomes physically or mentally incapacitated and is
therefore unable for a period of ninety (90) consecutive days or one-hundred twenty (120) days
during any consecutive six (6) month period to perform his duties with substantially the same level
of quality as immediately prior to such incapacity (such incapacity is hereinafter referred to as
“Disability”). Upon termination of Executive’s employment hereunder for either Disability
or death, Executive or Executive’s estate (as the case may be) shall be entitled to receive (i) his
Base Salary through the last day of the payroll period during which such termination occurs; (ii)
any declared but unpaid Annual Bonus for any fiscal year preceding the year in which the
termination occurs; (iii) reimbursement for any unreimbursed business expenses properly incurred by
Executive in accordance with Company policy through the date of Executive’s termination (the sum of
(i), (ii) plus (iii), the “Accrued Obligations”); (iv) a pro rata portion of any Annual
Bonus that Executive would have been entitled to receive pursuant to Section 4(b) of this Agreement
with respect to the fiscal year of termination based upon the percentage of the fiscal year that
shall have elapsed through the date of Executive’s termination of employment, and determined by
using (X) the Transition Bonus, if such termination occurs during fiscal year 2005, and reducing
the pro rata portion of the Transition Bonus by the aggregate amount of all installments of the
Transition Bonus that have been paid through the date of termination, or (Y) Executive’s target
Annual Bonus for the fiscal year of such termination, if such termination occurs following the end
of fiscal year 2005 (the

 

 

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“Pro-Rata Bonus”), payable as soon as reasonably practicable following the date of
Executive’s termination of employment, and (v) in the case of a termination due to Disability,
continuation of the Base Salary in effect on the date of termination until the earlier of (A) the
second anniversary of the date of termination, and (B) the date Executive is eligible to commence
receiving payments under the Company’s long-term disability policy. Notwithstanding the foregoing,
in the event of Executive’s termination of employment due to Disability, if necessary to avoid the
application of Section 409A of the Code to the amounts payable pursuant to clauses (iv) and (v) of
the preceding sentence, Executive shall not receive any such amounts until the First Payment Date
and, on the First Payment Date, the Company will pay Executive an amount equal to the sum of all
amounts that would have been payable in respect of the period preceding the First Payment Date but
for the delay imposed on account of the aforementioned Section 409A. Executive or Executive’s
estate (as the case may be) shall have no further rights to any compensation (including any Base
Salary, Annual Bonus, payments under Section 3(b) of this Agreement or any long-term or
equity-based compensation awards) or any other benefits under this Agreement. All other benefits,
if any, due Executive following Executive’s termination for Disability or death shall be determined
in accordance with the plans, policies and practices of the Company; provided, however, that
Executive (or his estate, as the case may be) shall not participate in any severance plan, policy
or program of the Company.

          (c) Without Cause by the Company or for Good Reason by Executive. The Employment Term,
and Executive’s employment hereunder, may be terminated by the Company without Cause (other than by
reason of Executive’s Disability) following the delivery by the Company of a Notice of Termination
to Executive or by Executive for Good Reason following the delivery by Executive of a Notice of
Termination to the Company. The expiration of the Employment Term on the date immediately
preceding the third anniversary of the Effective Date shall not be considered a termination without
Cause under this Agreement or otherwise result in the payment of severance or post-employment
benefits pursuant to Section 9(c) of this Agreement if Executive is not otherwise terminated
pursuant to Section 9(c) of this Agreement prior to such date. If Executive’s employment is
terminated by the Company without Cause (other than by reason of Disability) or by Executive for
Good Reason, Executive shall be entitled to receive:

               (i) within five (5) business days following termination, a lump sum payment in an amount equal
to the Accrued Obligations;

               (ii) the Pro-Rata Bonus, payable as soon as reasonably practicable following the date of
Executive’s termination of employment; provided, that, if necessary to avoid the application of
Section 409A of the Code to the Pro Rata Bonus, Executive shall not receive any such Pro Rata Bonus
installment until the First Payment Date;

               (iii) subject to Executive’s continued compliance with Section 11 of this Agreement, an amount
equal to the greater of (A) $7,500,000, and (B) an amount equal to the sum of (I) three times the
Base Salary (at the rate in effect immediately prior to termination) and (II) three times the
actual Annual Bonus paid with respect to the preceding fiscal year (any such amount shall be
referred to in this Agreement as the “Severance”); provided that, for purposes of this
sentence, an Annual Bonus shall be deemed to be “paid” at the time that

 

 

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Executive receives an amount in respect thereof at the time that Annual Bonuses are paid to
other senior executives of the Company. The Severance shall be payable in equal installments
(each, a “Severance Installment”) over the twelve (12) month period (eighteen (18) month
period in the event of a termination by Executive for Good Reason based on the circumstances
described in clause (iv) or clause (v) under the definition of Good Reason in this Section 9(c))
commencing with the second of the Company’s standard payroll dates falling after such termination;
provided, however, that, if necessary to avoid the application of Section 409A of the Code to the
Severance, Executive shall not receive any installment payment until the First Payment Date, and,
on the First Payment Date, the Company will pay Executive an amount equal to the sum of all
Severance Installments that would have been payable in respect of the period preceding the First
Payment Date but for the delay imposed on account of the aforementioned Section 409A;

               (iv) continued health and life insurance benefits for Executive and his spouse and dependents,
if any, for a thirty six (36) month period following the date of Executive’s termination of
employment, on the same basis as such benefits are provided from time to time to actively employed
senior executives of the Company; provided, that the Company’s obligation to provide such health
and life insurance benefits shall cease with respect to such benefits at the time Executive becomes
eligible for such benefits from another employer;

               (v) three years of additional service credit and credit for three years of additional age
under the Company’s employee pension plans, except for under any plan that is qualified or intended
to be qualified under the provisions of Section 401 of the Code, for purposes of benefit accrual,
matching contributions, vesting and eligibility for retirement. For the avoidance of doubt, no
amounts provided in Section 9(c)(ii) or (iii) of this Agreement shall be included in such
calculation, and Executive shall not be entitled to receive any payments pursuant to any
non-qualified pension plan of the Company until expiration of the thirty six (36) month period
following the Executive’s termination of employment under this Section 9(c); and

               (vi) if, as of the date of such termination, (a) Executive is not eligible to participate in
any retiree medical or life insurance program of the Company and (b) Executive would have at least
10 years of service with the Company and reached at least age 55 if credited with three years of
additional age and service, then the Company shall purchase for Executive a medical and/or life
insurance policy, as applicable, that provides coverage that is as comparable as is commercially
available to the coverage under the retiree medical and/or retiree life insurance program of the
Company, as applicable, as in effect as of the date of Executive’s termination of employment. For
the avoidance of doubt, nothing in this Section 9(c)(vi) shall provide Executive with any extra age
or service credit for purposes of eligibility or for any other purpose under any retiree medical or
life insurance program of the Company.

     Notwithstanding anything to the contrary in this Agreement, no further payments or benefits
shall be due under this Section 9(c) if, at any time after Executive’s employment is terminated
pursuant to this Section 9(c) and prior to the time when any payment is made or benefit provided
pursuant to this Section 9(c), the Board determines, in accordance with the procedures set forth in
Section 9(a) of this Agreement, that grounds existed, on or prior to the date of termination of
Executive’s employment with the Company, including prior to the Effective Date, for the Company to
terminate Executive’s employment for Cause; provided,

 

 

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however, that, Executive shall in all events be entitled to receive his Base Salary through
the date of termination and reimbursement for any unreimbursed business expenses properly incurred
by Executive in accordance with Company policy through the date of Executive’s termination.

     Executive shall have no rights to any further compensation (including any Base Salary, Annual
Bonus, payments under Section 3(b) of this Agreement or any long-term or equity-based compensation
awards) or any other benefits under this Agreement. All other benefits, if any, due Executive
following a termination pursuant to this Section 9(c) shall be determined in accordance with the
plans, policies and practices of the Company; provided, however, that Executive shall not
participate in any severance plan, policy or program of the Company. Executive and the Company
acknowledge that any payments and benefits provided to Executive under clauses (ii) through (vi) of
this Section 9(c) relate solely to services rendered by Executive to the Company on and after the
Effective Date.

For purposes of this Agreement, “Good Reason” means:

               (i) any change in the duties or responsibilities (including reporting responsibilities) of
Executive that is inconsistent in any material and adverse respect with Executive’s current
position(s), duties, responsibilities or status with the Company (including any material and
adverse diminution of such duties or responsibilities); provided, however, that Good Reason shall
not be deemed to occur pursuant to this clause (i) solely on account of the Company no longer being
a publicly traded entity or on account of any change to Executive’s duties as a result of his
physical or mental incapacity;

               (ii) a material and adverse change in Executive’s titles or offices (including his position as
Executive Vice President and Chief Financial Officer) with the Company; provided, however, that
Good Reason shall not be deemed to occur pursuant to this clause (ii) on account of any change to
Executive’s titles or offices as a result of his physical or mental incapacity;

               (iii) any material breach of this Agreement by the Company;

               (iv) the failure of the Compensation Committee to adopt, by December 31, 2005 (or such later
date mutually agreed by Executive and the Compensation Committee), an incentive compensation
program in respect of each of the 2006 and 2007 fiscal years setting forth target awards that are,
in the aggregate, no less than $5,000,000 and, as and if appropriate to the award type, performance
metrics and payout schedules for earning target, above-target, or below-target award amounts;

               (v) within 30 days following notice by the Compensation Committee to Executive of adoption of
an incentive compensation program in respect of each of the 2006 and 2007 fiscal years, Executive’s
written notification to the Compensation Committee that such program is not acceptable to
Executive; or

               (vi) the relocation of Executive’s primary office to a location that is more than thirty five
(35) miles from both of (A) the Company’s headquarters in New

 

 

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York, New York, unless such office is moved closer to Executive’s primary residence at the
time of such relocation, and (B) Executive’s residence at the time of such relocation;

provided that, a termination by Executive with Good Reason shall be effective only if, within
thirty (30) days following Executive’s first becoming aware of the circumstances giving rise to
Good Reason, Executive delivers a Notice of Termination for Good Reason by Executive to the
Company, and the Company within thirty (30) days following its receipt of such notification has
failed to cure the circumstances giving rise to Good Reason.

          (d) Termination by Executive without Good Reason. The Employment Term, and
Executive’s employment hereunder, may be terminated by Executive without Good Reason following the
delivery of a Notice of Termination to the Company. Upon a termination by Executive pursuant to
this Section 9(d), Executive shall be entitled to his Base Salary through the date of such
termination and reimbursement for any unreimbursed business expenses properly incurred by Executive
in accordance with Company policy through the date of Executive’s termination, and he shall have no
rights to any further compensation (including any Base Salary, Transition Bonus, Annual Bonus,
payments under Section 3(b) of this Agreement or any long-term or equity-based compensation awards)
or any other benefits under this Agreement. All other benefits, if any, due Executive following
termination pursuant to this Section 9(d) shall be determined in accordance with the plans,
policies and practices of the Company; provided, however, that Executive shall not participate in
any severance plan, policy or program of the Company.

          (e) Release. Notwithstanding any other provision of this Agreement to the contrary,
Executive acknowledges and agrees that any and all payments and benefits to which Executive is
entitled under Section 9(b) or Section 9(c) of this Agreement are conditional upon and subject to
Executive’s execution of a general release and waiver, substantially in the form attached as
Exhibit A hereto, of all claims Executive may have against the Company and its directors, officers
and affiliates, except as to matters covered by provisions of this Agreement that expressly survive
the termination of this Agreement.

          (f) Notice of Termination. Any purported termination of employment by the Company or
Executive, other than any termination due to Executive’s death, shall be communicated by a written
Notice of Termination to Executive or the Company, respectively, delivered in accordance with
Section 15(i) hereof. For purposes of this Agreement, a “Notice of Termination” shall mean
a notice which shall indicate the specific termination provision in the Agreement relied upon, the
date of termination, and shall set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of employment under the provision so indicated. The date of
termination of Executive’s employment shall be the date so stated in the Notice of Termination,
which date, in the event of a termination by Executive pursuant to Section 9(d), shall be no less
than sixty (60) days following the delivery of a Notice of Termination; provided, however, that in
the case of a termination for Cause by the Company, the date of termination shall be the date the
Notice of Termination is delivered in accordance with Section 15(i).

 

 

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          (g) Continuation of Employment; Termination On or After Expiration of Employment Term.
Unless the parties otherwise agree in writing, continuation of Executive’s employment with the
Company beyond the expiration of the Employment Term shall be deemed an employment at will and
shall not be deemed to extend any of the provisions of this Agreement, and Executive’s employment
may thereafter be terminated at will by Executive or the Company. The expiration of the Employment
Term on the date immediately preceding the third anniversary of the Effective Date shall not be
cause for the payment of severance or post-employment benefits pursuant to this Agreement if
Executive is not otherwise terminated pursuant to Section 9 of this Agreement prior to such date.

     10. Certain Additional Payments by the Company.

          (a) If it is determined (as hereafter provided) that any payment or distribution by the
Company to or for the benefit of Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement of the Company, including, without limitation, any
restricted stock, stock option, stock appreciation right or similar right, or the lapse or
termination of any restriction on or the vesting or exercisability of any of the foregoing (a
“Payment”), would be subject to the excise tax imposed by Section 4999 of the Code (or any
successor provision thereto), or to any similar tax imposed by state or local law, or any interest
or penalties with respect to such excise tax (such tax or taxes, together with any such interest
and penalties, are hereafter collectively referred to as the “Excise Tax”), then the
Executive will be entitled to receive an additional payment or payments (a “Gross-Up
Payment”) in an amount such that, after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon
the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.

          (b) Subject to the provisions of Section 10(f) of this Agreement, all determinations required
to be made under this Section 10, including whether an Excise Tax is payable by Executive and the
amount of such Excise Tax and whether a Gross-Up Payment is required and the amount of such
Gross-Up Payment, will be made by a nationally recognized firm of certified public accountants (the
“Accounting Firm”) chosen by the Company. The Company will direct the Accounting Firm to
submit its determination and detailed supporting calculations to both the Company and Executive
within fifteen (15) calendar days after the date of the event giving rise to the Payment or the
date of Executive’s termination of employment, if applicable, and any other such time or times as
may be requested by the Company or Executive. If the Accounting Firm determines that any Excise
Tax is payable by Executive, the Company will pay the required Gross-Up Payment to Executive within
five (5) business days after receipt of such determination and calculations. If the Accounting
Firm determines that no Excise Tax is payable by Executive, it will, at the same time as it makes
such determination, furnish Executive with an opinion that he has substantial authority not to
report any Excise Tax on his federal, state, local income or other tax return. Any determination
by the Accounting Firm as to the amount of the Gross-Up Payment will be binding upon the Company
and Executive. As a result of the uncertainty in the application of Section 4999 of the Code (or
any successor provision thereto) and the possibility of similar uncertainty regarding applicable
state or local tax law at the time of

 

 

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any determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments
which will not have been made by the Company should have been made (an “Underpayment”),
consistent with the calculations required to be made hereunder. In the event that the Company
exhausts or fails to pursue its remedies pursuant to Section 10(f) hereof and Executive thereafter
is required to make a payment of any Excise Tax, Executive will direct the Accounting Firm to
determine the amount of the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and Executive as promptly as possible. Any
such Underpayment will be promptly paid by the Company to, or for the benefit of, Executive within
five (5) business days after receipt of such determination and calculations.

          (c) The Company and Executive will each provide the Accounting Firm access to and copies of
any books, records and documents in the possession of the Company or Executive, as the case may be,
reasonably requested by the Accounting Firm, and otherwise cooperate with the Accounting Firm in
connection with the preparation and issuance of the determination contemplated by Section 10(b) of
this Agreement.

          (d) The federal, state and local income or other tax returns filed by Executive will be
prepared and filed on a consistent basis with the determination of the Accounting Firm with respect
to the Excise Tax payable by Executive. Executive will make proper payment of the amount of any
Excise Tax, and, at the request of the Company, provide to the Company true and correct copies
(with any amendments) of his federal income tax return as filed with the Internal Revenue Service
(the “IRS”) and corresponding state and local tax returns, if relevant, as filed with the
applicable taxing authority, and such other documents reasonably requested by the Company,
evidencing such payment. If prior to the filing of Executive’s federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm determines that the
amount of the Gross-Up Payment should be reduced, Executive will, within five (5) business days pay
to the Company the amount of such reduction.

          (e) The fees and expenses of the Accounting Firm for its services in connection with the
determinations and calculations contemplated by Section 10(b) and Section 10(d) of this Agreement
will be borne by the Company and paid as incurred. If such fees and expenses are initially
advanced by Executive, the Company will reimburse Executive the full amount of such fees and
expenses within five (5) business days after receipt from Executive of a statement therefor and
reasonable evidence of his payment thereof.

          (f) Executive will notify the Company in writing of any claim by the IRS that, if successful,
would require the payment by the Company of a Gross-Up Payment. Such notification will be given as
promptly as practicable but no later than ten (10) business days after Executive actually receives
notice of such claim and Executive will further apprise the Company of the nature of such claim and
the date on which such claim is requested to be paid (in each case, to the extent known by
Executive). Executive will not pay such claim prior to the earlier of (x) the expiration of the
thirty (30) calendar-day period following the date on which he gives such notice to the Company and
(y) the date that any payment of amount with respect to such claim is due. If the Company notifies
Executive in writing prior to the expiration of such period that it desires to contest such claim,
Executive will:

 

 

 12

               (i) provide the Company with any written records or documents in his possession relating to
such claim reasonably requested by the Company;

               (ii) take such action in connection with contesting such claim as the Company will reasonably
request in writing from time to time, including without limitation accepting legal representation
with respect to such claim by an attorney competent in respect of the subject matter and reasonably
selected by the Company;

               (iii) cooperate with the Company in good faith in order effectively to contest such claim; and

               (iv) permit the Company to participate in any proceedings relating to such claim;

     provided, however, that the Company will bear and pay directly all costs and expenses
(including interest and penalties) incurred in connection with such contest and will indemnify and
hold harmless Executive, on an after-tax basis, for and against any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result of such representation
and payment of costs and expenses. Without limiting the foregoing provisions of this Section
10(f), the Company will control all proceedings taken in connection with the contest of any claim
contemplated by this Section 10(f) and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing authority in respect
of such claim (provided that Executive may participate therein at his own cost and expense) and
may, at its option, either direct Executive to pay the tax claimed and sue for a refund or contest
the claim in any permissible manner, and Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company will determine; provided, that if the Company directs
Executive to pay the tax claimed and sue for a refund, the Company will advance the amount of such
payment to Executive on an interest-free basis and will indemnify and hold Executive harmless, on
an after-tax basis, from any Excise Tax or income tax, including interest or penalties with respect
thereto, imposed with respect to such advance; and provided further, that any extension of the
statute of limitations relating to payment of taxes for the taxable year of Executive with respect
to which the contested amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of any such contested claim will be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder, and Executive will be entitled to
settle or contest, as the case may be, any other issue raised by the IRS or any other taxing
authority.

          (g) If, after the receipt by Executive of an amount advanced by the Company pursuant to
Section 10 (f) hereof, Executive receives any refund with respect to such claim, Executive will
(subject to the Company’s complying with the requirements of Section 10(f) hereof) promptly pay to
the Company the amount of such refund (together with any interest paid or credited thereon after
any taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the
Company pursuant to Section 10(f) hereof, a determination is made that Executive will not be
entitled to any refund with respect to such claim and the Company does not notify Executive in
writing of its intent to contest such denial or

 

 

 13

refund prior to the expiration of thirty (30) calendar days after such determination, then
such advance will be forgiven and will not be required to be repaid and the amount of such advance
will offset, to the extent thereof, the amount of Gross-Up Payment required to be paid pursuant to
this Section 10.

          (h) If it is ultimately determined (by IRS private letter ruling or closing agreement, court
decision or otherwise) that any Gross-Up Payments and/or advances and/or Underpayments and/or any
other amounts paid or made by the Company pursuant to this Section 10 were not necessary to
accomplish the purpose of this Section 10, the Executive shall promptly cooperate with the Company
to correct such overpayments (by way of assigning any refund to the Company as provided herein, by
direct repayment or otherwise) in a manner consistent with the purpose of this Section 10, which is
to protect the Executive by making him whole, but not more than whole, on an after-tax basis, from
the application of the Excise Tax.

     11. Restrictive Covenants.

          (a) Non-Competition/Non-Solicitation. Executive acknowledges and recognizes the highly
competitive nature of the businesses of the Company and its subsidiaries and controlled affiliates
and accordingly agrees as follows:

               (i) While employed by the Company and for a period of twelve (12) months (eighteen (18) months
in the event of a termination by Executive for Good Reason based on the circumstances described in
clause (iv) or clause (v) under the definition of Good Reason in Section 9(c) of this Agreement)
following the date Executive ceases to be employed by the Company, if such termination occurs
during the Employment Term (the “Restricted Period”), Executive will not directly or
indirectly, (w) engage in any “Competitive Business” (defined below) for Executive’s own
account, (x) enter the employ of, or render any services to, any person engaged in any Competitive
Business, (y) acquire a financial interest in, or otherwise become actively involved with, any
person engaged in any Competitive Business, directly or indirectly, as an individual, partner,
shareholder, officer, director, principal, agent, trustee or consultant, or (z) interfere with
business relationships (whether formed before or after the Effective Date) between the Company and
customers or suppliers of, or consultants to, the Company.

               (ii) For purposes of this Section 11, a “Competitive Business” means, as of any date,
including during the Restricted Period, any person or entity (including any joint venture,
partnership, firm, corporation or limited liability company) that engages in or proposes to engage
in the following activities in any geographical area in which the Company does business: (A) the
property and casualty insurance business, including commercial insurance, business insurance,
personal insurance and specialty insurance; (B) the life and accident and health insurance
business; (C) the underwriting, reinsurance, marketing or sale of (but not brokerage of) (y) any
form of insurance of any kind that the Company as of such date does, or proposes to, underwrite,
reinsure, market or sell (any such form of insurance, a “Company Insurance Product”), or
(z) any other form of insurance that is marketed or sold in competition with any Company Insurance
Product; (D) retirement services and mutual funds

 

 

 14

services; or (E) any other business that as of such date is a direct and material competitor
of one of the Company’s principal businesses.

               (iii) For purposes of this Section 11, the Company shall be construed to include the Company
and its subsidiaries and controlled affiliates.

               (iv) Notwithstanding anything to the contrary in the Agreement, Executive may (A) directly or
indirectly, own, solely as an investment, securities of any person engaged in the business of the
Company which are publicly traded on a national or regional stock exchange or on the
over-the-counter market if Executive (x) is not a controlling person of, or a member of a group
which controls, such person and (y) does not, directly or indirectly, own one percent (1%) or more
of any class of securities of such person, and (B) during the portion of the Restricted Period
following termination of Executive’s employment, be employed by or provide services to, any private
equity firm or hedge fund, so long as Executive has no participation whatsoever in any fund
invested in any business described in clauses (A) through (C) of Section 11(a)(ii) of this
Agreement.

               (v) During the Restricted Period, Executive will not, directly or indirectly, without the
Company’s written consent, solicit or encourage to cease to work with the Company any person who
holds a position that is designated as a “senior partner” or “partner” for purposes of eligibility
to participate in any deferred compensation profit participation program of the Company (or any
similar designation in any successor or substitute plan or program (each, a “DCPPP Senior
Partner or Partner”), any employee holding the title of Vice President or higher of the Company
or any business unit of the Company, or any employee designated by the Company as a “core employee”
or a similar designation (a “Key Employee”) or any consultant whose primary business
activity consists of providing services to the Company (“Key Consultant”) or who was a Key
Employee of or Key Consultant then under contract with the Company within the six (6) month period
preceding such activity. In addition, during the Restricted Period, Executive will not, without
the Company’s written consent, directly or indirectly hire any person who is or who was, within the
six (6) month period preceding such activity, a DCPPP Senior Partner or Partner.

               (vi) Executive understands that the provisions of this Section 11(a) may limit his ability to
earn a livelihood in a business similar to the business of the Company but he nevertheless agrees
and hereby acknowledges that (A) such provisions do not impose a greater restraint than is
necessary to protect the goodwill or other business interests of the Company, (B) such provisions
contain reasonable limitations as to time and scope of activity to be restrained, (C) such
provisions are not harmful to the general public and (D) such provisions are not unduly burdensome
to Executive. In consideration of the foregoing and in light of Executive’s education, skills and
abilities, Executive agrees that he shall not assert that, and it should not be considered that,
any provisions of Section 11(a) otherwise are void, voidable or unenforceable or should be voided
or held unenforceable.

               (vii) It is expressly understood and agreed that, although Executive and the Company consider
the restrictions contained in this Section 11(a) to be reasonable, if a judicial determination is
made by a court of competent jurisdiction that the time

 

 

 15

or territory or any other restriction contained in this Section 11(a) or elsewhere in this
Agreement is an unenforceable restriction against Executive, the provisions of the Agreement shall
not be rendered void but shall be deemed amended to apply as to such maximum time and territory and
to such maximum extent as such court may judicially determine or indicate to be enforceable.
Alternatively, if any court of competent jurisdiction finds that any restriction contained in this
Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable,
such finding shall not affect the enforceability of any of the other restrictions contained herein.

          (b) Nondisparagement. Executive agrees (whether during or after Executive’s
employment with the Company) not to issue, circulate, publish or utter any false or disparaging
statements, remarks or rumors about the Company or the officers, directors or managers of the
Company other than to the extent reasonably necessary in order to (i) assert a bona fide claim
against the Company arising out of Executive’s employment with the Company, or (ii) respond in a
truthful and appropriate manner to any legal process or give truthful and appropriate testimony in
a legal or regulatory proceeding. The Company agrees to instruct its directors and executives not
to (whether during or after Executive’s employment with the Company) issue, circulate, publish or
utter any false or disparaging statements, remarks or rumors about Executive other than to the
extent reasonably necessary in order to (i) assert a bona fide claim against Executive arising out
of Executive’s employment with the Company, or (ii) respond in a truthful and appropriate manner to
any legal process or give truthful and appropriate testimony in a legal or regulatory proceeding.

          (c) Code of Conduct. Executive agrees to abide by the terms of the Company’s Code of
Conduct or The Director, Executive Officer and Senior Financial Officer Code of Business Conduct
and Ethics.

          (d) Confidentiality/Company Property. Executive shall not, without the prior written
consent of the Company, use, divulge, disclose or make accessible to any other person, firm,
partnership, corporation or other entity, any “Confidential Information” (as defined below) except
while employed by the Company, in furtherance of the business of and for the benefit of the
Company, or any “Personal Information” (as defined below); provided that Executive may disclose
such information when required to do so by a court of competent jurisdiction, by any governmental
agency having supervisory authority over the business of the Company and/or its affiliates, as the
case may be, or by any administrative body or legislative body (including a committee thereof) with
jurisdiction to order Executive to divulge, disclose or make accessible such information; provided,
further, that in the event that Executive is ordered by a court or other government agency to
disclose any Confidential Information or Personal Information, Executive shall (i) promptly notify
the Company of such order, (ii) at the written request of the Company, diligently contest such
order at the sole expense of the Company as expenses occur, and (iii) at the written request of the
Company, seek to obtain, at the sole expense of the Company, such confidential treatment as may be
available under applicable laws for any information disclosed under such order. For purposes of
this Section 11(d), (i) “Confidential Information” shall mean non-public information
concerning the financial data, strategic business plans, product development (or other proprietary
product data), customer lists, marketing plans and other non-public, proprietary and confidential
information relating to the

 

 

 16

business of the Company or its affiliates or customers, that, in any case, is not otherwise
available to the public (other than by Executive’s breach of the terms hereof) and (ii)
“Personal Information” shall mean any information concerning the personal, social or
business activities of the officers or directors of the Company. Upon termination of Executive’s
employment with the Company, Executive shall return all Company property, including, without
limitation, files, records, disks and any media containing Confidential Information or Personal
Information.

          (e) Developments. All discoveries, inventions, ideas, technology, formulas, designs,
software, programs, algorithms, products, systems, applications, processes, procedures, methods and
improvements and enhancements conceived, developed or otherwise made or created or produced by
Executive alone or with others, and in any way relating to the business or any proposed business of
the Company of which Executive has been made aware, or the products or services of the Company of
which Executive has been made aware, whether or not subject to patent, copyright or other
protection and whether or not reduced to tangible form, at any time during the Employment Term
(“Developments”), shall be the sole and exclusive property of the Company. Executive
agrees to, and hereby does, assign to the Company, without any further consideration, all of
Executive’s right, title and interest throughout the world in and to all Developments. Executive
agrees that all such Developments that are copyrightable may constitute works made for hire under
the copyright laws of the United States and, as such, acknowledges that the Company is the author
of such Developments and owns all of the rights comprised in the copyright of such Developments and
Executive hereby assigns to the Company without any further consideration all of the rights
comprised in the copyright and other proprietary rights Executive may have in any such Development
to the extent that it might not be considered a work made for hire. Executive shall make and
maintain adequate and current written records of all Developments and shall disclose all
Developments promptly, fully and in writing to the Company promptly after development of the same,
and at any time upon request.

          (f) Cooperation. During the Employment Term and at any time thereafter, Executive
agrees to cooperate (i) with the Company in the defense of any legal matter involving any matter
that arose during Executive’s employment with the Company and (ii) with all government authorities
on matters pertaining to any investigation, litigation or administrative proceeding pertaining to
the Company. The Company will reimburse Executive for any reasonable travel and out of pocket
expenses incurred by Executive in providing such cooperation. The Company agrees to cooperate with
the Executive in the same manner as described above.

     12. Enforcement. Executive acknowledges and agrees that the Company’s remedies at law
for a breach or threatened breach of any of the provisions of Sections 11(a), (b), (d) and (e) of
this Agreement would be inadequate and, in recognition of this fact, Executive agrees that, in the
event of such a breach or threatened breach, in addition to any remedies at law, the Company,
without posting any bond, shall be entitled to obtain equitable relief in the form of specific
performance, temporary restraining order, temporary or permanent injunction or any other equitable
remedy which may then be available. In addition, the Company shall be entitled to immediately
cease paying any amounts remaining due or providing any benefits to Executive pursuant to Section 9
of this Agreement upon a determination by the Board that Executive has violated any provision of
Section 11 (a), (b), (d), (e) or (f) of this Agreement, subject to payment

 

 

 17

of all such amounts upon a final determination, in accordance with the dispute resolution
mechanism contained in Section 15 of this Agreement, that Executive had not violated Section 11
(a), (b), (d), (e) or (f) of this Agreement.

     13. Indemnification. At all times during and after the Employment Term, the Company
shall indemnify Executive to the fullest extent permitted by the law of the state of the Company’s
incorporation for all actions or omissions taken or made by Executive (whether before or after the
date of this Agreement) in his service to the Company or its affiliated entities for which
Executive has performed or does perform services at the request of the Company, including, to the
fullest extent allowed by law, the advancement to Executive of all reasonable attorneys’ costs and
expenses incurred by Executive in connection with any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or was a director,
officer or employee of the Company, within twenty (20) calendar days after receipt by the Company
of a written request from Executive for such advance. Executive’s request for advancement of
attorneys’ costs and expenses pursuant to the preceding sentence shall include an undertaking by
Executive to repay the amount of such advance if it shall ultimately be determined pursuant to
Section 15(b) of the Agreement that Executive is not entitled to be indemnified against such costs
and expenses. Executive shall have the benefit of continuing directors’ and officers’ insurance
coverage at levels no less favorable than those in effect from time to time for members of the
Board and other members of the Company’s senior management.

     14. Executive Representation and Warranty. Executive hereby represents and warrants
that, as of the date of this Agreement, during Executive’s period of employment with the Company,
Executive has not willfully or grossly negligently breached Executive’s duties as an employee,
officer or director of the Company, has not committed fraud, embezzlement or any other similar
dishonest conduct in the course of his employment and has not willfully violated any material
provision of the Company’s Code of Conduct or the Director, Executive Officer and Senior Financial
Officer Code of Business Conduct and Ethics. As used in this Section 14, the term “willfully”
shall be subject to the same limitations as the term “willful” in Section 9(a) of this Agreement.

     15. Miscellaneous.

          (a) No Mitigation or Offset. In the event of any termination of Executive’s
employment hereunder, Executive shall be under no obligation to seek other employment or otherwise
mitigate the obligations of the Company under this Agreement, and there shall be no offset against
any amounts due under this Agreement on account of any remuneration attributable to any subsequent
employment that Executive may obtain.

          (b) Arbitration. Except as provided in Section 11 of this Agreement, any dispute
between the parties to this Agreement in connection with, arising out of or asserting breach of
this Agreement or any statutory or common law claim by Executive relating to Executive’s employment
under this Agreement or rights under this Agreement (including any tort or discrimination claim),
shall be exclusively resolved by binding statutory arbitration. Such dispute shall be submitted to
arbitration in New York, New York, before a panel of three neutral

 

 

 18

arbitrators in accordance with the Commercial Rules of the American Arbitration Association
then in effect, and the arbitration determination resulting from any such submission shall be final
and binding upon the parties hereto. Judgment upon any arbitration award may be entered in any
court of competent jurisdiction.

          (c) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE WHOLLY PERFORMED
WITHIN THAT STATE, WITHOUT REGARD TO ITS CONFLICT OF LAWS PROVISIONS OR THE CONFLICT OF LAWS
PROVISIONS OF ANY OTHER JURISDICTION WHICH WOULD CAUSE THE APPLICATION OF ANY LAW OTHER THAN THAT
OF THE STATE OF NEW YORK.

          (d) Entire Agreement/Amendments. This Agreement contains the entire understanding of
the parties with respect to the employment of Executive by the Company, and, without limiting the
effect of the foregoing, specifically supersedes the Employment Letter. There are no restrictions,
agreements, promises, warranties, covenants or undertakings between the parties with respect to the
subject matter herein other than those expressly set forth herein. This Agreement may not be
altered, modified or amended except by written instrument signed by the parties hereto. Sections
3, 5, 9, 10, 11, 12, 13 and 15 of this Agreement shall survive the termination of Executive’s
employment with the Company, to the extent specifically stated therein.

          (e) No Waiver. The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive
such party of the right thereafter to insist upon strict adherence to that term or any other term
of this Agreement.

          (f) Severability. In the event that any one or more of the provisions of this
Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions of this Agreement shall not be affected
thereby.

          (g) Successors.

               (i) This Agreement is personal to Executive and shall not be assignable by Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of
and be enforceable by Executive’s legal representatives. This Agreement shall inure to the benefit
of and be binding upon the Company and its successors.

               (ii) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place,
unless such assumption occurs by operation of law. As used

 

 

 19

in this Agreement, “Company” shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.

          (h) Dispute Resolution Costs; Legal Fees. In the event of any contest or dispute
relating to this Agreement or the termination of Executive’s employment hereunder, the Company
shall reimburse 100% of Executive’s reasonable legal fees if Executive substantially prevails in
such contest or dispute. The costs of any arbitration pursuant to Section 15(b) (including the
fees and cost of the arbitrators) shall be paid by the Company.

          (i) Notice. For the purpose of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have been duly given if
delivered personally, if delivered by overnight courier service, if sent by facsimile transmission
or if mailed by United States registered mail, return receipt requested, postage prepaid, addressed
to the respective addresses or sent via facsimile to the respective facsimile numbers, as the case
may be, as set forth below, or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of change of address shall be effective
only upon receipt; provided, however, that (i) notices sent by personal delivery or overnight
courier shall be deemed given when delivered; (ii) notices sent by facsimile transmission shall be
deemed given upon the sender’s receipt of confirmation of complete transmission, and (iii) notices
sent by United States registered mail shall be deemed given two days after the date of deposit in
the United States mail.

	 	 	 	 	 
	 	 	If to Executive, to the
address as shall most currently appear on the records of the Company
	 
	 	 	 	 
	 	 	With a copy to:
	 
	 	 	 	 
	 

	 	 	 	Wachtell, Lipton, Rosen & Katz
	 

	 	 	 	51 West 52nd Street
	 

	 	 	 	New York, NY 10019
	 

	 	 	 	Attn: Adam Chinn, Esq.
	 

	 	 	 	Fax: 212-403-2000
	 
	 	 	 	 
	 	 	If to the Company, to:
	 
	 	 	 	 
	 

	 	 	 	American International Group, Inc.
	 

	 	 	 	70 Pine Street
	 

	 	 	 	New York, NY 10270
	 

	 	 	 	Fax: 212-770-1584
	 

	 	 	 	Attn: General Counsel

 

 

 20

	 	 	 	 	 
	 	 	With a copy to:
	 
	 	 	 	 
	 

	 	 	 	Paul, Weiss, Rifkind, Wharton & Garrison LLP
	 

	 	 	 	1285 Avenue of the Americas
	 

	 	 	 	New York, New York 10019-6064
	 

	 	 	 	Attn: Michael J. Segal, Esq.
	 

	 	 	 	Fax: 212-757-3990

          (j) Withholding Taxes. The Company may withhold from any amounts payable under this
Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any
applicable law or regulation.

          (k) Counterparts. This Agreement may be signed in counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto were upon the same
instrument.

 

 

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

	 	 	 	 	 	 	 
	 	 	EXECUTIVE	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Steven J. Bensinger	 	 
	 	 	 	 	 
	 

	 	Steven
	 	J. Bensinger
	 	 
	 
	 	 	 	 	 	 
	 	 	AMERICAN INTERNATIONAL GROUP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Kathleen E. Shannon	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Kathleen E. Shannon	 	 
	 	 	Title: Senior Vice President, Secretary and Deputy	 	 
	 	 	General Counsel	 	 

 

 

EXHIBIT A

RELEASE OF CLAIMS

1. Release of Claims

     In partial consideration of the payments and benefits described in Section 9 of the employment
agreement (the “Employment Agreement”), effective March 14, 2005, by and between Steven
J.Bensinger (“Executive”) and American International Group, Inc. (the “Company”),
to which Executive agrees Executive is not entitled until and unless he executes this Release,
Executive, for and on behalf of himself and his heirs and assigns, subject to the following two
sentences hereof, hereby waives and releases any employment, compensation or benefit-related common
law, statutory or other complaints, claims, charges or causes of action of any kind whatsoever,
both known and unknown, in law or in equity, which Executive ever had, now has or may have against
the Company and its shareholders (other than C.V. Starr & Co., Inc. and Starr International
Company, Inc.), subsidiaries, successors, assigns, directors, officers, partners, members,
employees or agents (collectively, the “Releasees”) by reason of facts or omissions which
have occurred on or prior to the date that Executive signs this Release, including, without
limitation, any complaint, charge or cause of action arising under federal, state or local laws
pertaining to employment, including the Age Discrimination in Employment Act of 1967
(“ADEA,” a law which prohibits discrimination on the basis of age), the National Labor
Relations Act, the Civil Rights Act of 1991, the Americans With Disabilities Act of 1990, Title VII
of the Civil Rights Act of 1964, all as amended; and all other federal, state and local laws and
regulations. By signing this Release, Executive acknowledges that he intends to waive and release
any rights known or unknown that he may have against the Releasees under these and any other laws;
provided, that Executive does not waive or release claims with respect to the right to enforce the
Employment Agreement (the “Unreleased Claims”). Notwithstanding the foregoing, Executive
does not release, discharge or waive any rights to indemnification that he may have under the
certificate of incorporation, the by-laws or equivalent governing documents of the Company or its
subsidiaries or affiliates, the laws of the State of Delaware or any other state of which such
subsidiary or affiliate is a domiciliary, or any indemnification agreement between Executive and
the Company, or any rights to insurance coverage under any directors’ and officers’ personal
liability insurance or fiduciary insurance policy.

2. Proceedings

     Executive acknowledges that he has not filed any complaint, charge, claim or proceeding,
except with respect to an Unreleased Claim, if any, against any of the Releasees before any local,
state or federal agency, court or other body (each individually a
“Proceeding”). Executive
represents that he is not aware of any basis on which such a Proceeding could reasonably be
instituted. Executive (i) acknowledges that he will not initiate or cause to be initiated on his
behalf any Proceeding and will not participate in any Proceeding, in each case, except as required
by law; and (ii) waives any right he may have to benefit in any manner from any relief (whether
monetary or otherwise) arising out of any Proceeding, including any Proceeding conducted by the
Equal Employment Opportunity Commission (“EEOC”). Further, Executive understands that, by
executing

 

 

2

this Release, he will be limiting the availability of certain remedies that he may have
against the Company and limiting also his ability to pursue certain claims against the Releasees.
Notwithstanding the above, nothing in Section 1 of this Release shall prevent Executive from (i)
initiating or causing to be initiated on his behalf any complaint, charge, claim or proceeding
against the Company before any local, state or federal agency, court or other body challenging the
validity of the waiver of his claims under the ADEA contained in Section 1 of this Release (but no
other portion of such waiver); or (ii) initiating or participating in an investigation or
proceeding conducted by the EEOC.

3. Time to Consider

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

4. Revocation

     Executive hereby acknowledges and understands that Executive shall have seven (7) days from
the date of his execution of this Release to revoke this Release (including, without limitation,
any and all claims arising under the ADEA) and that neither the Company nor any other person is
obligated to provide any benefits to Executive pursuant to Section 9 of the Employment Agreement
until eight (8) days have passed since Executive’s signing of this Release without Executive having
revoked this Release, in which event the Company immediately shall arrange and/or pay for any such
benefits otherwise attributable to said eight- (8) day period, consistent with the terms of the
Employment Agreement. If Executive revokes this Release, Executive will be deemed not to have
accepted the terms of this Release, and no action will be required of the Company under any section
of this Release.

5. No Admission

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

 

 

3

6. General Provisions

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

7. Governing Law

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

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

	 	 	 	 	 
	 
	 	 	 	 
	 

DATE

	 	 

Steven J. BensingerEX-10.4:

 

Ex. 10(4)

AMERICAN INTERNATIONAL GROUP, INC.

EXECUTIVE SEVERANCE PLAN

          American International Group, Inc., a Delaware corporation (the “Company”), has adopted this
American International Group, Inc. Executive Severance Plan (the “Plan”), effective as of June 27,
2005 (the “Effective Date”).

	I.	 	Purpose

          The Plan is maintained primarily for the purpose of providing severance payments and benefits
for a select group of management or highly compensated employees covered by the Plan whose
employment is terminated under the circumstances set forth in the Plan.

	II.	 	Term

          The Plan shall be effective as of the Effective Date and shall continue in effect through and
including the day immediately preceding the third anniversary of the Effective Date, unless further
extended by the Board of Directors of the Company (the “Board”).

	III.	 	Eligibility

          Those executives and employees of the Company or its subsidiaries who hold positions that are
designated as “senior partners” or “partners” for purposes of any deferred compensation profit
participation program of the Company (or any similar designation in any successor or substitute
plan or program (each, a “DCPPP Senior Partner or Partner”)), or similar or successor positions,
and are selected for participation by the Chief Executive Officer of the Company (the “Eligible
Employees”), are eligible to participate in the Plan.

	IV.	 	Severance

          If, during the term of the Plan, an Eligible Employee’s employment is terminated for any
reason other than the Eligible Employee’s (a) death, (b) “Disability” (defined below) (c) voluntary
termination by the Eligible Employee for any reason or (d) termination by the Company or its
subsidiaries for “Cause” (defined below), the Eligible Employee shall be entitled to receive:

     A. Within five business days following termination, a lump sum payment in an amount equal to
(i) the Eligible Employee’s salary through the last day of the payroll period during which such
termination occurs; (ii) any declared but unpaid annual cash bonus for any fiscal year preceding
the year in which the termination occurs; and (iii) reimbursement for any unreimbursed business
expenses properly incurred by the Eligible Employee in accordance with Company policy through the
date of the Eligible Employee’s termination;

 

 

     B. Subject to the Eligible Employee’s continued compliance with Section VI of the Release and
Restrictive Covenant Agreement (defined below) and the remaining provisions of this Section IV, an
amount equal to (i) the Eligible Employee’s annual base salary as of the date of termination plus
the average of any aggregate annual cash bonuses and supplemental quarterly cash bonuses received
by the Eligible Employee from the Company with respect to each of the three fiscal years preceding
the date of termination, divided by (ii) 12, and multiplied by (iii) each full year of the Eligible
Employee’s service with the Company (but no less than six nor more than 24 years) (any such amount
shall be referred to in this Plan as the “Severance”). The Severance shall be payable in equal
installments (each, a “Severance Installment”) over a number of months equal to the six- to
24-month severance multiple described above (the “Severance Period”), in accordance with the
Company’s normal payroll practices and commencing with the second of the Company’s standard payroll
dates falling after such termination; provided, that, in the discretion of the Plan Administrator
(as defined in Section VII of the Plan, below), the Severance may be payable in a single lump sum
payment following termination of employment; and provided, further, that, if necessary to avoid the
application of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), to the
Severance, the Eligible Employee shall not receive any Severance Installment until the first
scheduled payroll date that occurs more than six months following the date of termination of
employment (the “First Payment Date”), and, on the First Payment Date, the Company shall pay the
Eligible Employee an amount equal to the sum of all Severance Installments that would have been
payable in respect of the period preceding the First Payment Date but for the delay imposed on
account of the aforementioned Section 409A;

     C. Continued life and health insurance benefits for the Eligible Employee and his or her
spouse and dependents, if any, until the earlier of the expiration of the Severance Period and the
date the Eligible Employee is eligible to receive such benefits from a subsequent employer. During
the period that the Eligible Employee and any spouse or dependents are receiving benefits pursuant
to this Section IV.C, the Eligible Employee will be required to pay the costs of such coverage on
the same basis as when the Eligible Employee was actively employed (without taking account of the
pre-tax nature, if applicable, of such payments while the Eligible Employee was actively employed).
Coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 shall not commence until
the expiration of the Severance Period; and

     D. Additional service credit and credit for additional age in an amount equal to the number of
months in the Severance Period, under the Company’s employee pension plans, except for under any
plan that is qualified or intended to be qualified under the provisions of Section 401 of the Code,
for purposes of benefit accrual, matching contributions, vesting and eligibility for retirement.
For the avoidance of doubt, no amounts provided in Section IV.B of this Plan shall be included in
the calculation of any benefits to an Eligible Employee under any employee pension plan of the
Company that is not qualified or intended to be qualified under the provisions of Section 401 of
the Code. Eligible Employees are not entitled to receive any payments pursuant to any such
non-qualified pension plan of the Company until the expiration of the Severance Period.

2

 

          Notwithstanding anything to the contrary in the Plan, no further payments or benefits shall be
due under this Section IV if at any time after the Eligible Employee’s employment is terminated and
prior to the time when any payment is made or benefit provided pursuant to this Section IV (i) the
Eligible Employee breaches any of the provisions of Section VI of the Release and Restrictive
Covenant Agreement, or (ii) the Plan Administrator determines that grounds existed, on or prior to
the date of termination of the Eligible Employee’s employment with the Company, including prior to
the Effective Date, for the Company to terminate the Eligible Employee’s employment for Cause;
provided, however, that, the Eligible Employee shall in all events be entitled to receive his or
her base salary through the date of termination and reimbursement for any unreimbursed business
expenses properly incurred by the Eligible Employee in accordance with Company policy through the
date of the Eligible Employee’s termination.

          The Eligible Employee shall have no further rights to any compensation or any other benefits
under this Plan. All other benefits, if any, due an Eligible Employee following a termination of
employment shall be determined in accordance with the plans, policies and practices of the Company
or any subsidiary of the Company.

          For purposes of the Plan, “Disability” shall mean a condition which has entitled an Eligible
Employee to receive benefits under any long-term disability policy of the Company, after taking
into account any applicable waiting period.

          For purposes of the Plan, “Cause” shall mean, whether occurring prior to, or on or after the
Effective Date, (i) the Eligible Employee’s continued failure to perform substantially his or her
duties with the Company or any subsidiary of the Company (other than any such failure resulting
from the Eligible Employee’s incapacity due to physical or mental illness) for a period of 10 days
after a written demand for substantial performance is delivered to the Eligible Employee by the
Company, which specifically identifies the manner in which the Company believes that the Eligible
Employee has not substantially performed the Eligible Employee’s duties, (ii) the Eligible
Employee’s malfeasance or misconduct, (iii) the Eligible Employee’s knowing and material violation
of a material provision of the Company’s Code of Conduct or the Director, Executive Officer and
Senior Financial Officer Code of Business Conduct and Ethics, as such codes of conduct may be in
effect from time to time, or other policies regarding behavior of employees or (iv) conviction of,
or entry of a plea of guilty or no contest by the Eligible Employee with respect to, a felony or
any lesser crime of which fraud or dishonesty is a material element.

	V.	 	Offset/No Mitigation

	 	A.	 	Offset

          Any severance payments due to an Eligible Employee under Section IV of the Plan shall be
offset by reducing such payments (but not below zero) by any severance pay, salary continuation,
termination pay or similar pay or allowance which the Eligible Employee receives or is entitled to
receive under (a) any employment, severance or other agreement between the Eligible Employee and
the Company or a subsidiary of the

3

 

Company, (b) any other plan, policy, practice, program or arrangement of the Company or any
subsidiary of the Company or (c) pursuant to any law or regulatory severance plan or arrangement,
including any such law or regulatory plan or arrangement in a country outside of the United States.
This Plan is not intended to, and shall not, result in any duplication of payments or benefits to
any Eligible Employee.

	 	B.	 	No Mitigation

          In order for an Eligible Employee to receive the payments and other benefits described in the
Plan, the Eligible Employee shall be under no obligation to seek other employment or otherwise
mitigate the obligations of the Company under this Plan, and there shall be no offset against any
amounts due under this Plan on account of any remuneration attributable to any subsequent
employment that the Eligible Employee may obtain.

	VI.	 	Release and Restrictive Covenant Agreement

          All payments and benefits described in Section IV of this Plan are conditional upon and
subject to the Eligible Employee’s execution of the Release and Restrictive Covenant Agreement
substantially in the form attached to this Plan as Exhibit A.

	VII.	 	Plan Administration

     A. The Plan shall be interpreted, administered and operated by the Compensation Committee of
the Board of Directors (the “Compensation Committee”), which shall have the complete authority, in
its sole discretion, subject to the express provisions of the Plan, to interpret the Plan, adopt
any rules and regulations for carrying out the Plan as may be appropriate and decide any and all
matters and make any and all determinations arising under or otherwise necessary or advisable for
the administration of this Plan. All interpretations and decisions by the Compensation Committee
shall be final, conclusive and binding on all parties affected thereby. Notwithstanding the
foregoing, the Compensation Committee shall have the right to delegate to any individual member of
the Compensation Committee or to any executive of the Company any of the Compensation Committee’s
authority under the Plan; provided, that no person shall act as Plan Administrator in any matter
directly relating to his or her eligibility or amount of benefits under the Plan. The Compensation
Committee and/or the member of the Compensation Committee or the executive of the Company delegated
with any authority under this Plan shall be referred to in this Plan as the “Plan Administrator.”

     B. All expenses and liabilities which the Plan Administrator incurs in connection with the
administration of the Plan shall be borne by the Company. The Plan Administrator may employ
attorneys, consultants, accountants, appraisers, brokers or other persons in connection with such
administration, and the Plan Administrator, the Company and the Company’s officers and directors
shall be entitled to rely upon the advice, opinions or valuations of any such persons. No member
of the Compensation Committee or any executive delegated by the Compensation Committee as Plan

4

 

Administrator shall be personally liable for any action, determination or interpretation made
in good faith with respect to the Plan, and all members of the Compensation Committee and any
executive delegated by the Compensation Committee as the Plan Administrator shall be fully
protected by the Company in respect of any such action, determination or interpretation.

	VIII.	 	Termination and Amendment

          The Compensation Committee may terminate or amend the Plan at any time; provided, that no such
action shall adversely affect the payments or benefits to which any Eligible Employee has become
entitled by virtue of a covered employment termination prior to the time of such action.

	IX.	 	Claims and Appeals Procedures

          The following claim review and claim appeal procedures apply to all claims of any nature
related to the Plan. For purposes of this Plan, the “Claims
Administrator” is the Company’s Director of Compensation.

	 	A.	 	Initial Claim

          To the extent that any Eligible Employee believes that he or she is entitled to a benefit
under this Plan that such Eligible Employee has not received, such Eligible Employee may file a
claim for benefits under the Plan, as provided in this Section IX of the Plan.

	 	1.	 	Procedure for Filing a Claim

          An Eligible Employee must submit a claim in writing on the appropriate claim form (or in such
other manner acceptable to the Plan Administrator), along with any supporting comments, documents,
records and other information, to the Plan Administrator in person or by messenger.

          If an Eligible Employee fails to properly file a claim for a benefit under the Plan, the
Eligible Employee will be considered not to have exhausted all administrative remedies under the
Plan, and will not be able to bring any legal action for the benefit. Claims and appeals of denied
claims may be pursued by an Eligible Employee, or if approved by the Plan Administrator, by an
Eligible Employee’s authorized representative.

	 	2.	 	Initial Claim Review

          The Claims Administrator will conduct the initial claim review. The Claims Administrator
will consider the applicable terms and provisions of the Plan and amendments to the Plan, and any
information and evidence presented by you, and any other relevant information.

	 	3.	 	Initial Benefit Determination

5

 

	 	(a)	 	Timing of Notification on Initial Claim

          The Plan Administrator or the Claims Administrator will notify an Eligible Employee about his
or her claim within a reasonable period of time, but, in any event, within 90 days after the Plan
Administrator receives the Eligible Employee’s claim, unless the Claims Administrator determines
that special circumstances require an extension of time for processing the claim. If the Claims
Administrator determines that an extension is needed, the Eligible Employee will be notified before
the end of the initial 90-day period. The notification will say what special circumstances require
an extension of time. The Eligible Employee will be told the date by which the Claims
Administrator expects to render the determination, which in any event will be within 90 days from
the end of the initial 90-day period.

	 	(b)	 	Manner and Content of Notification of Denied Claim

          The Plan Administrator or the Claims Administrator will provide an Eligible Employee with
written or electronic notice of any denial, in accordance with applicable U.S. Department of Labor
regulations. The notification will include:

                    (i) the specific reason or reasons for the denial;

                    (ii) reference to the specific provision(s) of the Plan on which the
determination is based;

                    (iii) a description of any additional material or information necessary for an
Eligible Employee to revise the claim and an explanation of why such material or
information is necessary; and

                    (iv) a description of the Plan’s review procedures and the time limits
applicable to such procedures.

	B.	 	Review of Initial Benefit Denial

	 	1.	 	Procedure for Filing an Appeal of a Denial

          Any appeal of a denial must be delivered to the Plan Administrator within 60 days after an
Eligible Employee receives notice of denial. Failure to appeal within the 60-day period will be
considered a failure to exhaust all administrative remedies under the Plan and will make an
Eligible Employee unable to bring a legal action to recover a benefit under the Plan. An Eligible
Employee’s appeal must be in writing, using the appropriate form provided by the Plan Administrator
(or in such other manner acceptable to the Plan Administrator). The request for an appeal must be
filed with the Plan Administrator in person or by messenger, in either case, evidenced by written
receipt or by first-class postage-paid mail and return receipt requested, to the Plan
Administrator.

	 	2.	 	Review Procedures for Denials

6

 

          The Plan Administrator will provide a review that takes into account all comments, documents,
records and other information submitted by an Eligible Employee without regard to whether such
information was submitted or considered in the initial benefit determination. An Eligible Employee
will have the opportunity to submit written comments, documents, records and other information
relating to the claim and will be provided, upon request and free of charge,
reasonable access to and copies of all relevant documents.

	 	3.	 	Timing of Notification of Benefit Determination on Review

          The Plan Administrator will notify an Eligible Employee of the Plan Administrator’s decision
within a reasonable period of time, but in any event within 60 days after the Plan Administrator
receives the Eligible Employee’s request for review, unless the Plan Administrator determines that
special circumstances require more time for processing the review of the adverse benefit
determination.

          If the Plan Administrator determines that an extension is required, the Plan Administrator
will tell an Eligible Employee in writing before the end of the initial 60-day period. The Plan
Administrator will tell the Eligible Employee the special circumstances that require an extension
of time, and the date by which the Plan Administrator expects to render the determination on
review, which in any event will be within 60 days from the end of the initial 60-day period.

          If such an extension is necessary because an Eligible Employee did not submit the information
necessary to decide the claim, the time period in which the Plan Administrator is required to make
a decision will be frozen from the date on which the notification is sent to the Eligible Employee
until the Eligible Employee responds to the request for additional information. If you fail to
provide the necessary information in a reasonable period of time, the Plan Administrator may, in
its discretion, decide the Eligible Employee’s claim based on the information already provided.

	 	4.	 	Manner and Content of Notification of Benefit Determination on Review

          The Plan Administrator will provide a notice of the Plan’s benefit determination on review, in
accordance with applicable U.S. Department of Labor regulations.

          If an Eligible Employee’s appeal is denied, the notification will set forth:

                    (a) the specific reason or reasons for the denial;

7

 

                    (b) reference to the specific provision(s) of the Plan on which the
determination is based; and

                    (c) a statement that the Eligible Employee is entitled to receive, upon
request and free of charge, reasonable access to and copies of all relevant
documents.

	 	C.	 	Legal Action

          An Eligible Employee cannot bring any arbitration proceedings to recover any benefit under the
Plan if the Eligible Employee does not file a valid claim for a benefit and seek timely review of a
denial of that claim. In addition, no legal action may be brought more than two years after the
later of (a) the date an Eligible Employee’s claim arose, or (b) the date of the Plan
Administrator’s final determination on an Eligible Employee’s claim.

	X.	 	Arbitration

          Except as provided in the Release and Restrictive Covenant Agreement and in Section IX of the
Plan, any dispute in connection with or arising out of the Plan or any statutory or common law
claim by an Eligible Employee relating to the Eligible Employee’s rights under the Plan, shall be
exclusively resolved by binding statutory arbitration. Such dispute shall be submitted to
arbitration in New York, New York, before a panel of three neutral arbitrators in accordance with
the Commercial Rules of the American Arbitration Association then in effect, and the arbitration
determination resulting from any such submission shall be final and binding upon the parties
hereto. Judgment upon any arbitration award may be entered in any court of competent jurisdiction.

	XI.	 	Withholding Taxes

          The Company may withhold from any amounts payable under the Plan such Federal, state, local or
other taxes as may be required to be withheld pursuant to any applicable law or regulation.

	XII.	 	Miscellaneous

	 	A.	 	No Effect on Other Benefits

          Severance payments and benefits shall not be counted as compensation for purposes of
determining benefits under other benefit plans, programs, policies and agreements, except to the
extent expressly provided therein or herein.

	 	B.	 	Unfunded Obligation

          All severance payments and benefits provided under the Plan shall constitute an unfunded
obligation of the Company. Payments and benefits under the Plan are made, when due, entirely by
the Company from its general assets. This Plan shall

8

 

constitute solely an unsecured promise by the Company to provide such benefits to Eligible
Employees to the extent provided herein. For the avoidance of doubt, any pension, health or life
insurance benefits to which an Eligible Employee may be entitled under this Plan shall be provided
under other applicable employee benefit plans of the Company. This Plan does not provide the
substantive benefits under such other employee benefit plans, and nothing in this Plan shall
restrict the Company’s ability to amend, modify or terminate such other employee benefit plans.

	 	C.	 	Employment Status

          The Plan is not a contract of employment, does not guarantee the Eligible Employee employment
for any specified period and does not limit the right of the Company or any subsidiary of the
Company to terminate the employment of the Eligible Employee at any time or to change the status of
any Eligible Employee’s employment or to change any employment policies.

	 	D.	 	Section Headings

          The section headings contained in this Plan are included solely for convenience of reference
and shall not in any way affect the meaning of any provision of this Plan.

	 	E.	 	Governing Law

          It is intended that the Plan be an “employee welfare benefit plan” within the meaning of
Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)
maintained for the purpose of providing benefits for a select group of management or highly
compensated employees, and the Plan shall be administered in a manner consistent with such intent.
The administrator of the Plan will provide any documents relating to the Plan to the Secretary of
the U.S. Department of Labor upon request. The Plan and all rights under the Plan shall be
governed and construed in accordance with ERISA, and, to the extent not preempted by federal law,
with the laws of the state of New York. The Plan shall also be subject to all applicable non-U.S.
laws as to Eligible Employees located outside of the United States. Without limiting the
generality of this Section XII.E, it is intended that the Plan comply with Section 409A of the
Code, and, in the event that the Plan is determined to be a “deferred compensation plan” within the
meaning of Section 409A(d)(1) of the Code, the Compensation Committee shall, as necessary, adopt
such conforming amendments as are necessary to comply with Section 409A of the Code without
reducing the payments and benefits due to the Eligible Employee under the Plan.

	 	F.	 	Assignment

          This Plan shall inure to the benefit of and shall be enforceable by an Eligible Employee’s
personal or legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If an Eligible Employee should die while any amount is still payable to the
Eligible Employee under this Plan had the

9

 

Eligible Employee continued to live, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Plan to the Eligible Employee’s estate. An Eligible
Employee’s rights under this Plan shall not otherwise be transferable or subject to lien or
attachment.

10

 

Exhibit A

RELEASE AND RESTRICTIVE COVENANT AGREEMENT

          This Release and Restrictive Covenant Agreement (the “Agreement”) is entered into by and
between ___(the “Employee”) and American International Group, Inc., a Delaware
Corporation (the “Company”), on
______ ___, 20___.

	I.	 	Release of Claims

          In partial consideration of the payments and benefits described in Section IV of the Company’s
Executive Severance Plan (the “Plan”), to which the Employee agrees the Employee is not entitled
until and unless he executes this Agreement, the Employee, for and on behalf of himself and his
heirs and assigns, subject to the following two sentences hereof, hereby waives and releases any
common law, statutory or other complaints, claims, charges or causes of action of any kind
whatsoever, both known and unknown, in law or in equity, which the Employee ever had, now has or
may have against the Company and its shareholders (other than C.V. Starr & Co., Inc. and Starr
International Company, Inc.), subsidiaries, successors, assigns, directors, officers, partners,
members, employees or agents (collectively, the “Releasees”) by reason of facts or omissions which
have occurred on or prior to the date that the Employee signs this Agreement, including, without
limitation, any complaint, charge or cause of action arising under federal, state or local laws
pertaining to employment, including the Age Discrimination in Employment Act of 1967 (“ADEA,” a law
which prohibits discrimination on the basis of age), the National Labor Relations Act, the Civil
Rights Act of 1991, the Americans With Disabilities Act of 1990, Title VII of the Civil Rights Act
of 1964, all as amended; and all other federal, state and local laws and regulations. By signing
this Agreement, the Employee acknowledges that he intends to waive and release any rights known or
unknown that he may have against the Releasees under these and any other laws; provided, that the
Employee does not waive or release claims with respect to the right to enforce his rights under the
Plan (the “Unreleased Claims”).

	II.	 	Proceedings

          The Employee acknowledges that he has not filed any complaint, charge, claim or proceeding,
except with respect to an Unreleased Claim, if any, against any of the Releasees before any local,
state or federal agency, court or other body (each individually a “Proceeding”). The Employee
represents that he is not aware of any basis on which such a Proceeding could reasonably be
instituted. The Employee (a) acknowledges that he will not initiate or cause to be initiated on
his behalf any Proceeding and will not participate in any Proceeding, in each case, except as
required by law; and (b) waives any right he may have to benefit in any manner from any relief
(whether monetary or otherwise) arising out of any Proceeding, including any Proceeding conducted
by the Equal Employment Opportunity Commission (“EEOC”). Further, the Employee understands that,
by executing this Agreement, he will be limiting the availability of certain remedies that he may
have against the Company and limiting also his ability to pursue certain claims against the
Releasees. Notwithstanding the above, nothing in Section I of this Agreement shall prevent the
Employee from (x) initiating or

 

 

causing to be initiated on his behalf any complaint, charge, claim or proceeding against the
Company before any local, state or federal agency, court or other body challenging the validity of
the waiver of his claims under the ADEA contained in Section I of this Agreement (but no other
portion of such waiver); or (y) initiating or participating in an investigation or proceeding
conducted by the EEOC.

	III.	 	Time to Consider

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

	IV.	 	Revocation

          The Employee hereby acknowledges and understands that the Employee shall have seven days from
the date of the Employee’s execution of this Agreement to revoke this Agreement (including, without
limitation, any and all claims arising under the ADEA) and that neither the Company nor any other
person is obligated to provide any benefits to the Employee pursuant to Section IV of the Plan
until eight days have passed since the Employee’s signing of this Agreement without the Employee
having revoked this Agreement, in which event the Company immediately shall arrange and/or pay for
any such benefits otherwise attributable to said eight-day period, consistent with the terms of the
Plan. If the Employee revokes this Agreement, the Employee will be deemed not to have accepted the
terms of this Agreement, and no action will be required of the Company under any section of this
Agreement.

	V.	 	No Admission

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

	VI.	 	Restrictive Covenants

	 	A.	 	Non-Competition/Non-Solicitation

          The Employee acknowledges and recognizes the highly competitive nature of the businesses of
the Company and its subsidiaries and controlled affiliates and

2

 

accordingly agrees as follows:

          1. During the period commencing on the date of the Employee’s termination of employment and
ending on the earlier of the (i) the one-year anniversary of such date, and (ii) the expiration of
the “Severance Period” (as defined in the Plan) (the “Restricted Period”), the Employee will not,
directly or indirectly, (w) engage in any “Competitive Business” (defined below) for the
Employee’s own account, (x) enter the employ of, or render any services to, any person engaged in
any Competitive Business, (y) acquire a financial interest in, or otherwise become actively
involved with, any person engaged in any Competitive Business, directly or indirectly, as an
individual, partner, shareholder, officer, director, principal, agent, trustee or consultant, or
(z) interfere with business relationships between the Company and customers or suppliers of, or
consultants to, the Company.

          2. For purposes of this Section VI, a “Competitive Business” means, as of any date, including
during the Restricted Period, any person or entity (including any joint venture, partnership, firm,
corporation or limited liability company) that engages in or proposes to engage in the following
activities in any geographical area in which the Company does business: (A) the property and
casualty insurance business, including commercial insurance, business insurance, personal insurance
and specialty insurance; (B) the life and accident and health insurance business; (C) the
underwriting, reinsurance, marketing or sale of (y) any form of insurance of any kind that the
Company as of such date does, or proposes to, underwrite, reinsure, market or sell (any such form
of insurance, a “Company Insurance Product”), or (z) any other form of insurance that is marketed
or sold in competition with any Company Insurance Product; (D) the investment and financial
services business, including retirement services and mutual funds services; or (E) any
other business that as of such date is a direct and material competitor of one of the Company’s
principal businesses.

          3. For purposes of this Section VI, the Company shall be construed to include the Company and
its subsidiaries and controlled affiliates.

          4. Notwithstanding anything to the contrary in this Agreement, the Employee may directly or
indirectly, own, solely as an investment, securities of any person engaged in the business of the
Company which are publicly traded on a national or regional stock exchange or on the
over-the-counter market if the Employee (A) is not a controlling person of, or a member of a group
which controls, such person and (B) does not, directly or indirectly, own one percent (1%) or more
of any class of securities of such person.

          5. During the Restricted Period, the Employee will not, directly or indirectly, without the
Company’s written consent, solicit or encourage to cease to work with the Company any person who
holds a position that is designated as a “senior partner” or “partner” for purposes of eligibility
to participate in any deferred

3

 

compensation profit participation program of the Company (or any similar designation in any
successor or substitute plan or program (each, a “DCPPP Senior Partner or Partner”), any employee
holding the title of Vice President or higher of the Company or any business unit of the Company,
or any employee designated by the Company as a “core employee” or a similar designation (a “Key
Employee”) or any consultant whose primary business activity consists of providing services to the
Company (“Key Consultant”) or who was a Key Employee of or Key Consultant then under contract with
the Company within the six-month period preceding such activity. In addition, during the
Restricted Period, the Employee will not, without the Company’s written consent, directly or
indirectly hire any person who is or who was, within the six-month period preceding such activity,
a DCPPP Senior Partner or Partner.

          6. The Employee understands that the provisions of this Section VI.A may limit the Employee’s
ability to earn a livelihood in a business similar to the business of the Company but the Employee
nevertheless agrees and hereby acknowledges that (A) such provisions do not impose a greater
restraint than is necessary to protect the goodwill or other business interests of the Company, (B)
such provisions contain reasonable limitations as to time and scope of activity to be restrained,
(C) such provisions are not harmful to the general public and (D) such provisions are not unduly
burdensome to the Employee. In consideration of the foregoing and in light of the Employee’s
education, skills and abilities, the Employee agrees that he shall not assert that, and it should
not be considered that, any provisions of Section VI.A. otherwise are void, voidable or
unenforceable or should be voided or held unenforceable.

          7. It is expressly understood and agreed that, although the Employee and the Company consider
the restrictions contained in this Section VI.A to be reasonable, if a judicial determination is
made by a court of competent jurisdiction that the time or territory or any other restriction
contained in this Section VI.A or elsewhere in this Agreement is an unenforceable restriction
against the Employee, the provisions of the Agreement shall not be rendered void but shall be
deemed amended to apply as to such maximum time and territory and to such maximum extent as such
court may judicially determine or indicate to be enforceable. Alternatively, if any court of
competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and
such restriction cannot be amended so as to make it enforceable, such finding shall not affect the
enforceability of any of the other restrictions contained herein.

	 	B.	 	Nondisparagement

          The Employee agrees (whether during or after the Employee’s employment with the Company) not
to issue, circulate, publish or utter any false or disparaging statements, remarks or rumors about
the Company or the officers, directors or managers of the Company other than to the extent
reasonably necessary in order to (i) assert a bona fide claim against the Company arising out of
the Employee’s employment with the Company, or (ii) respond in a truthful and appropriate manner to
any legal process or give truthful and appropriate testimony in a legal or regulatory
proceeding. 

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	 	C.	 	Code of Conduct

          The Employee agrees to abide by the terms of the Company’s Code of Conduct or the Director,
Executive Officer and Senior Financial Officer Code of Business Conduct and Ethics.

	 	D.	 	Confidentiality/Company Property

          The Employee shall not, without the prior written consent of the Company, use, divulge,
disclose or make accessible to any other person, firm, partnership, corporation or other entity,
any “Confidential Information” (as defined below) except while employed by the Company, in
furtherance of the business of and for the benefit of the Company, or any “Personal Information”
(as defined below); provided that the Employee may disclose such information when required to do so
by a court of competent jurisdiction, by any governmental agency having supervisory authority over
the business of the Company and/or its affiliates, as the case may be, or by any administrative
body or legislative body (including a committee thereof) with jurisdiction to order the Employee to
divulge, disclose or make accessible such information; provided, further, that in the event that
the Employee is ordered by a court or other government agency to disclose any Confidential
Information or Personal Information, the Employee shall (i) promptly notify the Company of such
order, (ii) at the written request of the Company, diligently contest such order at the sole
expense of the Company as expenses occur, and (iii) at the written request of the Company, seek to
obtain, at the sole expense of the Company, such confidential treatment as may be available under
applicable laws for any information disclosed under such order. For purposes of this Section VI.D,
(i) “Confidential Information” shall mean non-public information concerning the financial data,
strategic business plans, product development (or other proprietary product data), customer lists,
marketing plans and other non-public, proprietary and confidential information relating to the
business of the Company or its affiliates or customers, that, in any case, is not otherwise
available to the public (other than by the Employee’s breach of the terms hereof) and (ii)
“Personal Information” shall mean any information concerning the personal, social or business
activities of the officers or directors of the Company. Upon termination of the Employee’s
employment with the Company, the Employee shall return all Company property, including, without
limitation, files, records, disks and any media containing Confidential Information or Personal
Information.

	 	E.	 	Developments

          All discoveries, inventions, ideas, technology, formulas, designs, software, programs,
algorithms, products, systems, applications, processes, procedures, methods and improvements and
enhancements conceived, developed or otherwise made or created or produced by the Employee alone or
with others, and in any way relating to the business or any proposed business of the Company of
which the Employee has been made aware, or the products or services of the Company of which the
Employee has been made aware, whether or not subject to patent, copyright or other protection and
whether or not reduced to tangible form, at any time during the Employee’s employment with the

5

 

Company or any subsidiary of the Company (“Developments”), shall be the sole and exclusive
property of the Company. The Employee agrees to, and hereby does, assign to the Company, without
any further consideration, all of the Employee’s right, title and interest throughout the world in
and to all Developments. The Employee agrees that all such Developments that are copyrightable may
constitute works made for hire under the copyright laws of the United States and, as such,
acknowledges that the Company is the author of such Developments and owns all of the rights
comprised in the copyright of such Developments, and the Employee hereby assigns to the Company
without any further consideration all of the rights comprised in the copyright and other
proprietary rights the Employee may have in any such Development to the extent that it might not be
considered a work made for hire. The Employee shall make and maintain adequate and current written
records of all Developments and shall disclose all Developments promptly, fully and in writing to
the Company promptly after development of the same, and at any time upon request.

	 	F.	 	Cooperation

          At any time after the date of the Employee’s termination of employment, the Employee agrees to
cooperate (i) with the Company in the defense of any legal matter involving any matter that arose
during the Employee’s employment with the Company and (ii) with all government authorities on
matters pertaining to any investigation, litigation or administrative proceeding pertaining to the
Company. The Company will reimburse the Employee for any reasonable travel and out of pocket
expenses incurred by the Employee in providing such cooperation.

	VII.	 	Enforcement

          The Employee acknowledges and agrees that the Company’s remedies at law for a breach or
threatened breach of any of the provisions of Sections VI.A, B, D and E of this Agreement would be
inadequate, and, in recognition of this fact, the Employee agrees that, in the event of such a
breach or threatened breach, in addition to any remedies at law, the Company, without posting any
bond, shall be entitled to obtain equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction or any other equitable remedy which may then
be available. In addition, the Company shall be entitled to immediately cease paying any amounts
remaining due or providing any benefits to the Employee pursuant to Section IV of the Plan upon a
determination by the “Plan Administrator” (as defined in the Plan) that the Employee has violated
any provision of Section VI of this Agreement, subject to payment of all such amounts upon a final
determination, in accordance with the dispute resolution mechanism contained in Section X of the
Plan, that the Employee had not violated Section VI of this Agreement.

	VIII.	 	General Provisions

	 	A.	 	No Waiver; Severability

          A failure of the Company or any of the Releasees to insist on strict

6

 

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

	 	B.	 	Governing Law

          THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE WHOLLY PERFORMED WITHIN THAT STATE, WITHOUT REGARD
TO ITS CONFLICT OF LAWS PROVISIONS OR THE CONFLICT OF LAWS PROVISIONS OF ANY OTHER JURISDICTION
WHICH WOULD CAUSE THE APPLICATION OF ANY LAW OTHER THAN THAT OF THE STATE OF NEW YORK.

	 	C.	 	Counterparts

          This Agreement may be signed in counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the same instrument.

	 	D.	 	Notice

          For the purpose of this Agreement, notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given if delivered personally,
if delivered by overnight courier service, if sent by facsimile transmission or if mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to the respective
addresses or sent via facsimile to the respective facsimile numbers, as the case may be, as set
forth below, or to such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective only upon receipt;
provided, however, that (i) notices sent by personal delivery or overnight courier shall be deemed
given when delivered; (ii) notices sent by facsimile transmission shall be deemed given upon the
sender’s receipt of confirmation of complete transmission, and (iii) notices sent by United States
registered mail shall be deemed given two days after the date of deposit in the United States mail.

If to Executive, to the address as shall most currently

     appear on the records of the Company

If to the Company, to:

     American International Group, Inc.

     70 Pine Street

     New York, NY 10270

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     Fax: 212-770-1584

     Attn: ___

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

	 	 	 	 	 
	 	 	EMPLOYEE
	 

 
	 	 	 	 
	 	 	 
	 

 
	 	 	 	 
	 	 	AMERICAN INTERNATIONAL GROUP, INC.
	 

 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

8

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