Document:

Exhibit 10.22

Exhibit 10.22

INDEMNIFICATION AGREEMENT

This Indemnification Agreement is dated as of
 _____, 2011 (this
“Agreement”) and is between AMH Investment Holdings Corp., a Delaware corporation formerly
known as Carey Investment Holdings Corp. (“Holdings”), AMH Intermediate Holdings Corp., a
Delaware corporation formerly known as Carey Intermediate Holdings Corp. (“Intermediate”),
and Associated Materials, LLC, a Delaware limited liability company (“Associated,” and
together with Holdings and Intermediate, the “Companies”), and
 _____ 

(“Indemnitee”).

WHEREAS, Indemnitee is a director and/or officer of one or more of the Companies and may also
serve as a director, officer, partner, member, manager, employee, consultant, fiduciary or agent
(collectively, the “Indemnifiable Positions”) of other corporations, limited liability
companies, partnerships, joint ventures, trusts, employee benefit plans or other enterprises
controlled by the Companies (collectively, the “Controlled Entities”);

WHEREAS, in order to induce Indemnitee to continue to serve as a director and/or officer of
the Companies and/or in other Indemnifiable Positions of the Controlled Entities, the Companies
wish to provide for the indemnification of, and the advancement of Expenses (as defined herein) to,
Indemnitee to the maximum extent permitted by law;

WHEREAS, the Certificates of Incorporation of Holdings and Intermediate (as amended from time
to time, the “Charters”) provide for the indemnification of the directors and officers of
Holdings and Intermediate to the fullest extent permitted under the Delaware General Corporation
Law (the “DGCL”);

WHEREAS, the Bylaws of Holdings and Intermediate (as amended from time to time, the
“Bylaws”) provide certain indemnification rights to the directors and officers of Holdings
and Intermediate; and

WHEREAS, the Limited Liability Company Agreement of Associated (as amended from time to time,
the “LLC Agreement”) provides for the indemnification of the directors and officers of
Associated to the fullest extent permitted under the Delaware Limited Liability Company Act (the
“LLC Act”);

WHEREAS, the Stockholders Agreement, dated as of October 13, 2010 (as amended from time to
time, the “Stockholders Agreement”), by and among the Companies, Hellman & Friedman Capital
Partners VI, L.P., a Delaware limited partnership, Hellman & Friedman Capital Partners VI
(Parallel), L.P., a Delaware limited partnership, Hellman & Friedman Capital Executives VI, L.P., a
Delaware limited partnership, Hellman & Friedman Capital Associates VI, L.P., a Delaware limited
partnership, and the other parties thereto provides certain indemnification rights to certain of
the parties thereto, including certain of the Companies’ directors and officers;

WHEREAS, the Companies and Indemnitee desire to enter into this Agreement to set forth their
agreement regarding indemnification and the advancement of Expenses and to clarify the priority of
the indemnification and advancement of Expenses with respect to certain Jointly Indemnifiable
Claims (as defined herein).

 

 

 

NOW, THEREFORE, in consideration of Indemnitee’s service or continued service to the Companies
and/or the Controlled Entities and the covenants and agreements set forth below, and for other good
and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows.

Section 1. Indemnification.

To the fullest extent permitted by the DGCL:

(a) The Companies, jointly and severally, shall indemnify Indemnitee if Indemnitee was or is
made or is threatened to be made a party to, or is otherwise involved in, as a witness or
otherwise, any threatened, pending or completed Action, Suit or Proceeding (brought in the right of
any of the Companies or otherwise), whether civil, criminal, administrative or investigative and
whether formal or informal, including appeals.

(b) The indemnification provided by this Section 1 shall be from and against all loss
and liability suffered and Expenses (including attorneys’ fees), Judgments, Fines and Amounts Paid
in Settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with
such Action, Suit or Proceeding, including any appeals.

Section 2. Payment of Expenses. To the fullest extent permitted by the DGCL,
Expenses (including attorneys’ fees) incurred by Indemnitee in appearing at, participating in or
defending any Action, Suit or Proceeding or in connection with an enforcement action as
contemplated by Section 3(d), shall be paid, jointly and severally, by the Companies in
advance of the final disposition of such Action, Suit or Proceeding or such enforcement action
within 15 days after receipt by the Companies of a statement or statements from Indemnitee
requesting such advance or advances from time to time. The Indemnitee hereby undertakes to repay
any amounts advanced (without interest) to the extent that it is ultimately determined that
Indemnitee is not entitled under this Agreement to be indemnified by the Companies in respect of
such Action, Suit or Proceeding or such enforcement action as contemplated by Section 3(d).
No other form of undertaking shall be required of Indemnitee other than the execution of this
Agreement. This Section 2 shall be subject to Section 3(b) and shall not apply to
any claim made by Indemnitee for which indemnity is excluded pursuant to Section 6(a).

Section 3. Procedure for Indemnification; Notification and Defense of Claim.

(a) Promptly after receipt by Indemnitee of notice of the commencement of any Action, Suit or
Proceeding, Indemnitee shall, if a claim in respect thereof is to be made or could be made against
the Companies hereunder, notify the Companies in writing of the commencement thereof. The failure
to promptly notify the Companies of the commencement of the Action, Suit or Proceeding, or of
Indemnitee’s request for indemnification, will not relieve the Companies from any liability that
they may have to Indemnitee hereunder, except to the extent the Companies are actually and
materially prejudiced (through the forfeiture of substantive rights or defenses) in their defense
of such Action, Suit or Proceeding as a result of such failure. To obtain indemnification under
this Agreement, Indemnitee shall submit to the Companies a written request therefor including such
documentation and information as is
reasonably available to Indemnitee and is reasonably necessary to enable the Companies to
determine whether and to what extent Indemnitee is entitled to indemnification. In addition,
Indemnitee shall reasonably cooperate with the Companies and shall give the Companies such
additional information as the Companies may reasonably require.

 

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(b) With respect to any Action, Suit or Proceeding of which the Companies are so notified as
provided in this Agreement, the Companies shall, subject to the last two sentences of this
paragraph and subject to the Companies’ prior determination pursuant to Section 3(c) to
grant Indemnitee’s indemnification request with respect to such Action, Suit or Proceeding, be
entitled to assume the defense of such Action, Suit or Proceeding, with counsel reasonably
acceptable to Indemnitee (which acceptance shall not be unreasonably withheld or delayed), upon the
delivery to Indemnitee of written notice of its election to do so. After delivery of such notice,
approval of such counsel by Indemnitee and the retention of such counsel by the Companies, the
Companies will not be liable to Indemnitee under this Agreement for any subsequently-incurred fees
of separate counsel engaged by or on behalf of Indemnitee with respect to the same Action, Suit or
Proceeding unless the Companies do not continue to retain such counsel to defend such Action, Suit
or Proceeding. Notwithstanding the foregoing, if Indemnitee, based on the advice of his or her
counsel, shall have reasonably concluded (with written notice being given to the Companies setting
forth the basis for such conclusion) that, in the conduct of any such defense, there is or is
reasonably likely to be a conflict of interest or position between any of the Companies and
Indemnitee with respect to a significant issue, then the Companies will not be entitled, without
the written consent of Indemnitee, to assume such defense. In addition, the Companies will not be
entitled, without the written consent of Indemnitee, to assume the defense of any claim brought by
or in the right of any of the Companies.

(c) The determination whether to grant Indemnitee’s indemnification request shall be made
promptly and in any event within 30 days following the Companies’ receipt of a request for
indemnification in accordance with Section 3(a). If the Companies determine that
Indemnitee is entitled to such indemnification, the Companies will make payment to Indemnitee of
the indemnifiable amount within such 30 day period. If the Companies’ determination of whether to
grant Indemnitee’s indemnification request shall not have been made within such 30 day period, the
requisite determination of entitlement to indemnification shall, subject to Section 6,
nonetheless be deemed to have been made and Indemnitee shall be entitled to such indemnification,
absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact
necessary to make Indemnitee’s statement not materially misleading, in connection with the request
for indemnification, or (ii) a prohibition of such indemnification under the DGCL.

(d) In the event that (i) the Companies determine in accordance with this Section 3
that Indemnitee is not entitled to indemnification under this Agreement, (ii) the Companies deny a
request for indemnification, in whole or in part, or fails to respond or make a determination of
entitlement to indemnification within 30 days following receipt of a request for indemnification as
described above, (iii) payment of indemnification is not made within such 30 day period, (iv)
advancement of Expenses is not timely made in accordance with Section 2, or (v) any of the
Companies or any other person takes or threatens to take any action to declare this Agreement void
or unenforceable, or institutes any litigation or other action or proceeding
designed to deny, or to recover from, the Indemnitee the benefits provided or intended to be
provided to Indemnitee hereunder, Indemnitee shall be entitled to an adjudication in any court of
competent jurisdiction of his or her entitlement to such indemnification or advancement of
Expenses. To the extent not already advanced pursuant to Section 2, Indemnitee’s Expenses
(including attorneys’ fees) incurred in connection with successfully establishing Indemnitee’s
right to indemnification or advancement of Expenses, in whole or in part, in any such proceeding or
otherwise shall also be indemnified, jointly and severally, by the Companies; provided that
to the extent Indemnitee is successful in part and unsuccessful in part in establishing
Indemnitee’s right to indemnification or advancement of Expenses hereunder, Indemnitee shall be
entitled to partial indemnification of Expenses in accordance with Section 20.

 

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(e) Indemnitee shall be presumed to be entitled to indemnification and advancement of Expenses
under this Agreement upon submission of a request therefor in accordance with Section 2 or
Section 3 of this Agreement, as the case may be. The Companies shall have the burden of
proof in overcoming such presumption, and such presumption shall be used as a basis for a
determination of entitlement to indemnification and advancement of Expenses unless the Companies
overcome such presumption by clear and convincing evidence. Neither the failure of the Companies
to have made a determination prior to the commencement of any action pursuant to this Agreement
that indemnification is proper in the circumstances because Indemnitee has met the applicable
standard of conduct, nor an actual determination by the Companies that Indemnitee has not met such
applicable standard of conduct, shall be a defense to the action or create a presumption that
Indemnitee has not met the applicable standard of conduct.

Section 4. Insurance and Subrogation.

(a) To the extent the Companies maintain a policy or policies of insurance providing
directors’ and officers’ liability insurance, Indemnitee shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum extent of the coverage provided to
any other director or officer of the Companies. If, at the time the Companies receive from
Indemnitee any notice of the commencement of an Action, Suit or Proceeding, the Companies have such
insurance in effect which would reasonably be expected to cover such Action, Suit or Proceeding,
the Companies shall give prompt notice of the commencement of such Action, Suit or Proceeding to
the insurers in accordance with the procedures set forth in such policy or policies. The Companies
shall thereafter take all necessary or reasonably desirable action to cause such insurers to pay,
on behalf of Indemnitee, all amounts payable as a result of such Action, Suit or Proceeding in
accordance with the terms of such policy or policies.

(b) Subject to Section 9(b), in the event of any payment by the Companies under this
Agreement, the Companies shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee with respect to any insurance policy. Indemnitee shall execute all papers
required and take all action necessary to secure such rights, including execution of such documents
as are necessary to enable the Companies to effectively bring suit to enforce such rights in
accordance with the terms of such insurance policy. The Companies, jointly and severally, shall
pay or reimburse all Expenses actually and reasonably incurred by Indemnitee in connection with
such subrogation.

 

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(c) Subject to Section 9(b), the Companies shall not be liable under this Agreement to
make any payment of amounts otherwise indemnifiable hereunder (including, but not limited to,
Judgments, Fines and Amounts Paid in Settlement, and ERISA excise taxes or penalties) if and to the
extent that Indemnitee has otherwise actually received such payment under this Agreement or any
insurance policy, contract, agreement or otherwise.

Section 5. Certain Definitions. For purposes of this Agreement, the following
definitions shall apply:

(a) The term “Action, Suit or Proceeding” shall be broadly construed and shall
include, without limitation, the investigation, preparation, prosecution, defense, settlement,
arbitration and appeal of, and the giving of testimony in, any threatened, pending or completed
claim, action, suit, arbitration, investigation, inquiry, alternative dispute mechanism or
proceeding, whether civil (including intentional and unintentional tort claims), criminal,
administrative or investigative, in each case, by reason of the service of Indemnitee as a director
and/or officer of any of the Companies and/or in other Indemnifiable Positions of the Controlled
Entities, or by reason of any action alleged to have been taken or omitted in any such capacity.

(b) The term “Expenses” shall include all out-of-pocket costs of any type or nature
whatsoever (including, without limitation, all attorneys’ fees and related disbursements), in each
case, actually and reasonably incurred by or on behalf of Indemnitee in connection with either the
investigation, defense or appeal of an Action, Suit or Proceeding or establishing or enforcing a
right to indemnification under this Agreement or otherwise incurred in connection with a claim that
is indemnifiable hereunder.

(c) The term “Judgments, Fines and Amounts Paid in Settlement” shall be broadly
construed and shall include, without limitation, all direct and indirect payments of any type or
nature whatsoever, as well as any penalties or excise taxes assessed on a person with respect to an
employee benefit plan.

Section 6. Limitation on Indemnification. Notwithstanding any other provision herein
to the contrary, the Companies shall not be obligated pursuant to this Agreement:

(a) Claims Initiated by Indemnitee. To indemnify or advance Expenses to Indemnitee
with respect to any threatened, pending or completed claim, action, suit, arbitration,
investigation, inquiry, alternative dispute mechanism or proceeding, whether civil (including
intentional and unintentional tort claims), criminal, administrative or investigative, however
denominated, initiated or brought voluntarily by Indemnitee whether by way of defense, counterclaim
or cross claim or otherwise, other than (i) an action brought to establish or enforce a right to
indemnification or advancement of Expenses under this Agreement (which shall be governed by the
provisions of Section 6(b) of this Agreement), (ii) a claim, action, suit, arbitration,
investigation, inquiry, alternative dispute mechanism or proceeding that was authorized or
consented to by the Boards of Directors of the Companies, it being understood and agreed that such
authorization or consent shall not be unreasonably withheld in connection with any compulsory
counterclaim brought by Indemnitee in response to an Action, Suit or Proceeding otherwise
indemnifiable under this Agreement or (iii) as otherwise required under the DGCL.

 

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(b) Action for Indemnification. To indemnify Indemnitee for any Expenses incurred by
Indemnitee with respect to an action instituted by Indemnitee to enforce or interpret this
Agreement if Indemnitee is not successful in such enforcement action in establishing Indemnitee’s
right, in whole or in part, to indemnification or advancement of Expenses hereunder;
provided that to the extent Indemnitee is successful in part and unsuccessful in part in
establishing Indemnitee’s right to indemnification or advancement of Expenses hereunder, Indemnitee
shall be entitled to partial indemnification of Expenses in accordance with Section 20.

(c) Section 16(b) Matters. To indemnify Indemnitee on account of any Action, Suit or
Proceeding in which judgment is rendered against Indemnitee for disgorgement of profits made from
the purchase or sale by Indemnitee of securities of any of the Companies pursuant to the provisions
of Section 16(b) of the Securities Exchange Act of 1934, as amended.

(d) Fraud or Willful Misconduct. To indemnify Indemnitee on account of conduct by
Indemnitee where such conduct has been determined (which determination has not been reversed or
overturned on appeal) to have been knowingly fraudulent or constitute willful misconduct by a
judgment or other adjudication of a court or arbitration or administrative body of competent
jurisdiction; provided, however, that Indemnitee shall be entitled to
indemnification from the Companies pursuant to this Agreement pending the outcome of an appeal of
any such judgment or other adjudication if Indemnitee posts a cost bond, supersedeas bond or any
other appeal bond or its equivalent that is reasonably satisfactory to the Companies at
Indemnitee’s sole cost and expense, including any premium, security for and other costs relating
thereto.

(e) Prohibited by Law. To indemnify Indemnitee in any circumstance where such
indemnification has been determined to be prohibited by law by a final (not interlocutory) judgment
or other adjudication of a court or arbitration or administrative body of competent jurisdiction as
to which there is no further right or option of appeal or the time within which an appeal must be
filed has expired without such filing.

(f) Unauthorized Settlement. To indemnify Indemnitee for any amounts paid in
settlement of any Action, Suit or Proceeding without the Companies’ prior written consent. The
Companies will not unreasonably withhold or delay their consent to any proposed settlement.

Section 7. Certain Settlement Provisions. The Companies shall be permitted to settle
any Action, Suit or Proceeding, except that it shall not settle any Action, Suit or Proceeding in
any manner that would impose any penalty (unless the only penalty imposed is a monetary amount that
will be paid in full by the Companies (or its insurers)) or limitations or constitute any admission
of wrongdoing or which may compromise, or may adversely affect, the defense of the Indemnitee in
any other Action, Suit or Proceeding, whether civil or criminal, without Indemnitee’s prior written
consent. Indemnitee will not unreasonably withhold or delay his or her consent to any proposed
settlement.

 

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Section 8. Savings Clause. If any provision or provisions (or portion thereof) of
this Agreement shall be invalidated on any ground by any court of competent jurisdiction, then the
Companies shall nevertheless indemnify Indemnitee if Indemnitee was or is made or is
threatened to be made a party or is otherwise involved in any threatened, pending or completed
Action, Suit or Proceeding (brought in the right of any of the Companies or otherwise), whether
civil, criminal, administrative or investigative and whether formal or informal, including appeals,
from and against all loss and liability suffered and Expenses (including attorneys’ fees),
Judgments, Fines and Amounts Paid in Settlement actually and reasonably incurred by or on behalf of
Indemnitee in connection with such Action, Suit or Proceeding, including any appeals, to the
fullest extent permitted by any applicable portion of this Agreement that shall not have been
invalidated.

Section 9. Contribution/Jointly Indemnifiable Claims.

(a) In order to provide for just and equitable contribution in circumstances in which the
indemnification provided for herein is held by a court of competent jurisdiction to be unavailable
to Indemnitee in whole or in part, it is agreed that, in such event, the Companies shall, jointly
and severally, to the fullest extent permitted by law, contribute to the payment of all of
Indemnitee’s loss and liability suffered and Expenses (including attorneys’ fees), Judgments, Fines
and Amounts Paid in Settlement actually and reasonably incurred by or on behalf of Indemnitee in
connection with any Action, Suit or Proceeding, including any appeals, in an amount that is just
and equitable in the circumstances; provided, that, without limiting the generality of the
foregoing, such contribution shall not be required where such holding by the court is due to any
limitation on indemnification set forth in Section 4(c), 6 or 7 hereof.

(b) Given that certain Jointly Indemnifiable Claims may arise by reason of the service of
Indemnitee as a director of the Companies and/or in other Indemnifiable Positions of the Controlled
Entities, or by reason of any action alleged to have been taken or omitted in any such capacity,
the Companies acknowledge and agree that the Companies shall, jointly and severally, and to the
extent applicable shall cause the Controlled Entities to, be fully and primarily responsible for
the payment to the Indemnitee in respect of indemnification or advancement of Expenses in
connection with any such Jointly Indemnifiable Claim, pursuant to and in accordance with (as
applicable) the terms of (i) the DGCL, (ii) the LLC Act, (iii) the Charters, (iv) the Bylaws, (v)
the LLC Agreement, (vi) the Stockholders Agreement, (vii) this Agreement, (viii) any other
agreement between any of the Companies or any Controlled Entity and the Indemnitee pursuant to
which the Indemnitee is indemnified, (ix) the laws of the jurisdiction of incorporation or
organization of any Controlled Entity and/or (x) the certificate of incorporation, certificate of
organization, bylaws, partnership agreement, operating agreement, certificate of formation,
certificate of limited partnership or other organizational or governing documents of any Controlled
Entity ((i) through (x) collectively, the “Indemnification Sources”), irrespective of any
right of recovery the Indemnitee may have from the Indemnitee-Related Entities. Under no
circumstance shall the Companies or any Controlled Entity be entitled to any right of subrogation
or contribution by the Indemnitee-Related Entities and no right of advancement or recovery the
Indemnitee may have from the Indemnitee-Related Entities shall reduce or otherwise alter the rights
of the Indemnitee or the obligations of the Companies or any Controlled Entity under the
Indemnification Sources. In the event that any of the Indemnitee-Related Entities shall make any
payment to the Indemnitee in respect of indemnification or advancement of Expenses with respect to
any Jointly Indemnifiable Claim,

 

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(i) the Companies, jointly and severally, shall, and to the extent
applicable shall cause the Controlled Entities to, reimburse the Indemnitee-Related Entity making such payment to the extent of such payment
promptly upon written demand from such Indemnitee-Related Entity, (ii) to the extent not previously
and fully reimbursed by the Companies and/or any Controlled Entity pursuant to clause (i), the
Indemnitee-Related Entity making such payment shall be subrogated to the extent of the outstanding
balance of such payment to all of the rights of recovery of the Indemnitee against the Companies
and/or any Controlled Entity, as applicable, and (iii) Indemnitee shall execute all papers
reasonably required and shall do all things that may be reasonably necessary to secure such rights,
including the execution of such documents as may be necessary to enable the Indemnitee-Related
Entities effectively to bring suit to enforce such rights. The Companies and Indemnitee agree that
each of the Indemnitee-Related Entities shall be third-party beneficiaries with respect to this
Section 9(b), entitled to enforce this Section 9(b) as though each such
Indemnitee-Related Entity were a party to this Agreement. The Companies shall cause each of the
Controlled Entities to perform the terms and obligations of this Section 9(b) as though
each such Controlled Entity was one of the “Companies” under this Agreement. For purposes of this
Section 9(b), the following terms shall have the following meanings:

(i) The term “Indemnitee-Related Entities” means any corporation, limited
liability company, partnership, joint venture, trust, employee benefit plan or other
enterprise (other than the Companies, any Controlled Entity or the insurer under and
pursuant to an insurance policy of the Companies or any Controlled Entity) from whom an
Indemnitee may be entitled to indemnification or advancement of Expenses with respect to
which, in whole or in part, the Companies or any Controlled Entity may also have an
indemnification or advancement obligation.

(ii) The term “Jointly Indemnifiable Claims” shall be broadly construed and
shall include, without limitation, any Action, Suit or Proceeding for which the Indemnitee
shall be entitled to indemnification or advancement of Expenses from both (i) any of the
Companies and/or any Controlled Entity pursuant to the Indemnification Sources, on the one
hand, and (ii) any Indemnitee-Related Entity pursuant to any other agreement between any
Indemnitee-Related Entity and the Indemnitee pursuant to which the Indemnitee is
indemnified, the laws of the jurisdiction of incorporation or organization of any
Indemnitee-Related Entity and/or the certificate of incorporation, certificate of
organization, bylaws, partnership agreement, operating agreement, certificate of formation,
certificate of limited partnership or other organizational or governing documents of any
Indemnitee-Related Entity, on the other hand.]1

Section 10. Form and Delivery of Communications. All notices, requests, demands and
other communications under this Agreement shall be in writing and shall be deemed to have been duly
given if (a) delivered by hand, upon receipt by the party to whom said notice or other
communication shall have been directed, (b) mailed by certified or registered mail with postage
prepaid, on the third business day after the date on which it is so mailed, (c) mailed by reputable
overnight courier, one day after deposit with such courier and with written verification of receipt
or (d) sent by email or facsimile transmission, with receipt of oral confirmation that such
transmission has been received. Addresses for notice to either party are shown on the
signature page of this Agreement, or as subsequently modified by written notice.

 

			
	1	 	Included in agreements for non-employee directors only.

 

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Section 11. Nonexclusivity. The provisions for indemnification and advancement of
Expenses set forth in this Agreement shall not be deemed exclusive of any other rights which
Indemnitee may have under any provision of law, in any court in which a proceeding is brought,
other agreements or otherwise, and Indemnitee’s rights hereunder shall inure to the benefit of the
heirs, executors and administrators of Indemnitee. No amendment or alteration of the Charters or
Bylaws or the Stockholders Agreement or any other agreement shall adversely affect the rights
provided to Indemnitee under this Agreement.

Section 12. No Construction as Employment Agreement; Duration of Agreement. Nothing
contained herein shall be construed as giving Indemnitee any right to be retained as a director
and/or officer of any of the Companies or in other Indemnifiable Positions of the Controlled
Entities or in the employ of any of the Companies or any of the Controlled Entities. For the
avoidance of doubt, the indemnification and advancement of Expenses provided under this Agreement
shall continue as to the Indemnitee even though he may have ceased to be a director and/or officer
of the Companies and/or in other Indemnifiable Positions of the Controlled Entities.

Section 13. Interpretation of Agreement. It is understood that the parties hereto
intend this Agreement to be interpreted and enforced so as to provide indemnification to Indemnitee
to the fullest extent now or hereafter permitted by the DGCL or the LLC Act, as applicable,
notwithstanding that such indemnification may not be specifically authorized by the Charters,
Bylaws or LLC Agreement, as applicable, or by statute as of the date hereof. In the event of any
change after the date of this Agreement in any applicable law, statute or rule which expands the
right of a Delaware corporation or limited liability company to indemnify a member of its board of
directors or an officer, employee, consultant, fiduciary or agent, it is the intent of the parties
hereto that Indemnitee shall enjoy by this Agreement the greater benefits afforded by such change.
In the event of any change in any applicable law, statute or rule which narrows the right of a
Delaware corporation or limited liability company to indemnify a member of its board of directors
or an officer, employee, consultant, fiduciary or agent, such change, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement, shall have no effect on this
Agreement or the parties’ rights and obligations hereunder.

Section 14. Entire Agreement. Without limiting any of the rights of Indemnitee under
any of the Indemnification Sources, this Agreement and the documents expressly referred to herein
constitute the entire agreement between the parties hereto with respect to the matters covered
hereby, and any other prior or contemporaneous oral or written understandings or agreements with
respect to the matters covered hereby are expressly superseded by this Agreement.

Section 15. Modification and Waiver. No supplement, modification, waiver or
amendment of this Agreement shall be binding unless executed in writing by both the Companies and
the Indemnitee. No waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver. For the avoidance of doubt, this Agreement may not be
terminated by the Companies without Indemnitee’s prior written consent.

 

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Section 16. Successor and Assigns. All of the terms and provisions of this Agreement
shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto
and their respective successors, assigns, spouses, heirs, executors, administrators and legal
representatives. The Companies shall require and cause any direct or indirect successor (whether
by purchase, merger, consolidation or otherwise) to all or substantially all of the business or
assets of any of the Companies, by written agreement in form and substance reasonably satisfactory
to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to
the same extent that the Companies would be required to perform if no such succession had taken
place.

Section 17. Service of Process and Venue. The Companies and Indemnitee hereby
irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in
connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware
(the “Delaware Court”), and not in any other state or federal court in the United States of
America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of
the Delaware Court for purposes of any action or proceeding arising out of or in connection with
this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding
in the Delaware Court, and (iv) waive, and agree not to plead or to make, any claim that any such
action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient
forum.

Section 18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware. If a court of competent jurisdiction shall make
a final determination that the provisions of the law of any state other than Delaware govern
indemnification by the Companies of Indemnitee, then the indemnification provided under this
Agreement shall in all instances be enforceable to the fullest extent permitted under such law,
notwithstanding any provision of this Agreement to the contrary.

Section 19. Injunctive Relief. The parties hereto agree that each party hereto may
enforce this Agreement by seeking specific performance hereof, without any necessity of showing
irreparable harm or posting a bond, which requirements are hereby waived, and that by seeking
specific performance, Indemnitee shall not be precluded from seeking or obtaining any other relief
to which he or she may be entitled.

Section 20. Partial Indemnification. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Companies for some or a portion of loss and liability
suffered and Expenses (including attorneys’ fees), Judgments, Fines and Amounts Paid in Settlement
actually and reasonably incurred by or on behalf of Indemnitee in connection with an Action, Suit
or Proceeding, including any appeals, but not, however, for the total amount thereof, the Companies
shall nevertheless indemnify Indemnitee for the portion of such amounts otherwise payable
hereunder.

 

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Section 21. Mutual Acknowledgement. Both the Companies and Indemnitee acknowledge
that in certain instances, federal law or applicable public policy may prohibit the
Companies from indemnifying their directors, officers, employees, consultants, fiduciaries or
agents under this Agreement or otherwise. Indemnitee understands and acknowledges that the
Companies may be required to submit the question of indemnification to a court in certain
circumstances for a determination of the Companies’ right, under public policy, to indemnify
Indemnitee.

Section 22. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument, notwithstanding that both parties are not signatories to
the original or same counterpart.

Section 23. Headings. The section and subsection headings contained in this
Agreement are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

 

[Signature Page Follows]

11

 

This Indemnification Agreement has been duly executed and delivered to be effective as of the
date stated above.

	 	 	 	 	 	 	 	 	 
	 	 	AMH INVESTMENT HOLDINGS CORP.	 	 
	 	 	AMH INTERMEDIATE HOLDINGS CORP.	 	 
	 	 	ASSOCIATED MATERIALS, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Stephen E. Graham	 	 
	 

	 	 	 	Title:
	 	Vice President — Chief
Financial Officer,	 	 
	 

	 	 	 	 	 	 Treasurer and Secretary	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	3773 State Road	 	 
	 

	 	 	 	 	 	Cuyahoga Falls, Ohio 44223	 	 
	 	 	Attention:	 	Stephen E. Graham	 	 
	 	 	Facsimile:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	INDEMNITEE	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 	 	Address:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Facsimile:	 	 	 	 

[Signature Page to Indemnification Agreement]exv10w1

Exhibit 10.1

	 	 	 

	

	 	DEPARTMENT OF THE TREASURY

WASHINGTON, D.C. 20220

April 1, 2011

Jeffrey J. Hurd, Esq.

Senior Vice President —

     Human Resources and Communications

American International Group, Inc.

180 Maiden Lane

22nd Floor

New York, NY 10038-4925

			
	           Re:	 	Compensation Payments and Structures for Senior Executive Officers and Most 

Highly Compensated Employees (“Covered Employees 1 — 25”)

Dear Mr. Hurd:

     Pursuant to the Department of the Treasury’s Interim Final Rule on TARP Standards for
Compensation and Corporate Governance,1 the Office of the Special Master has completed
its review of the 2011 compensation submission by American International Group, Inc. (“AIG”), on
behalf of its senior executive officers and next 20 most highly compensated employees (“Covered
Employees 1 — 25” or “Covered Employees”). Attached as Annex A is a determination memorandum
(accompanied by Exhibits I and II) providing the determinations of the Office of the Special Master
with respect to 2011 compensation for Covered Employees 1 — 25. 31 C.F.R. § 30.16(a)(3)(i).

     The Interim Final Rule requires the Office of the Special Master to determine whether the
compensation structure for each Covered Employee 1 — 25 “will or may result in payments that are
inconsistent with the purposes of Section 111 of EESA or TARP,2 or are otherwise
contrary to the public interest” (as applied to Covered Employees of exceptional assistance
recipients, the “public interest standard”). Id. The Office of the Special Master must make such
determinations by applying six principles: avoid incentives to take excessive risk, maximize the
company’s ability to repay the taxpayer, appropriately allocate the components of compensation, use
performance-based compensation, employ pay structures and amounts that are consistent with those at
comparable entities, and base pay on the employee’s contribution to the value of the TARP recipient
enterprise. Id. These principles are discussed in further detail in Annex A.

 

			
	1	 	The Interim Final Rule and all determination letters issued by the Office of the
Special Master are available at www.financialstability.gov (click on “About Financial Stability”,
then click on “Plan”, then scroll down to the second-to-last link and click on “Executive
Compensation Guidance”).
	 
	2	 	These purposes are “maximization of overall returns to the taxpayers of the United
States and providing stability and preventing disruptions to financial markets”. 31 C.F.R. §
30.16(b)(1).

 

 

          To apply the six principles and ensure that compensation structures satisfy the public
interest standard, the Office of the Special Master developed practical guidelines (“guidelines”),
which were identified in the determination letters issued by the Office of the Special Master on
October 22, 2009, and March 23, 2010, relating to 2009 and 2010 compensation, respectively.3
Compensation in 2011 at the four remaining recipients of exceptional assistance must continue
to comport with these guidelines, which generally include the following:

	 	•	 	Limit guaranteed cash. The majority of each Covered Employee’s base salary should be paid
in the form of stock that will immediately vest as earned, but will be redeemable only in three
equal, annual installments beginning on the second anniversary of the date stock salary is
earned (or the first anniversary if the TARP recipient has begun to repay its obligations).
Although the Interim Final Rule limits incentives to one-third of annual compensation, the use
of stock salary, as contemplated by the Interim Final Rule, provides a performance component
for a portion of the employee’s base compensation.
Base salary paid in cash should in most cases not exceed $500,000.
	 
	 	•	 	Require that incentives be contingent on performance. Incentive compensation should be
based on measurable performance goals that are designed by, and the achievement of which is
determined by, the company’s independent compensation committee.
	 
	 	•	 	Focus on long-term value creation. A significant amount of compensation should reflect a
company’s long-term performance and value. In most circumstances a large proportion of
compensation should be held or deferred for a period of at least three years.
	 
	 	•	 	Minimal perquisites. Compensation structures that are not aligned with shareholder and
taxpayer interests in the firm should be minimized or eliminated.

In applying the above guidelines, the Office of the Special Master has implemented certain
restrictions on practices that present conflicting incentives. For example, Covered Employees are
prohibited from engaging in any hedging or derivative transactions involving company stock that
would undermine the long-term performance incentives created by the approved compensation
structures.

          Finally, the determinations of the Office of the Special Master take into account the
requirements of the Interim Final Rule that generally apply to all TARP recipients whether or not
they are subject to the jurisdiction of the Office of the Special Master: (a) prohibition of all
bonuses and incentives, including cash bonuses and stock options (the only exception to the
fixed-compensation-only rule is the ability to award a bonus in the form of long-term restricted

 

			
	3	 	In this determination letter, the terms “public interest standard”, “principles”
and “guidelines” have distinct meanings. The term “public interest standard” refers to the
determination standard laid out in the Interim Final Rule. The term “principles” refers to the six
principles (listed above and further described in Annex A) that the Interim Final Rule instructs
the Office of the Special Master to apply in determining whether compensation meets the public
interest standard. The term “guidelines” refers to the practical guidelines developed by the Office
of the Special Master to implement the principles and ensure satisfaction of the public interest
standard. In addition, the term “Office of the Special Master” is used consistently to refer to the
Office or the defined term “Special Master” as used in the Interim Final Rule.

2

 

stock that does not exceed one-third of compensation in the year of grant, has a minimum
vesting period of two years and cannot be transferred by the employee, even if fully vested,
earlier than pursuant to a schedule that reflects the company’s actual repayment of TARP
obligations in 25% increments), (b) requirement of a “clawback” of any bonus that is later
determined to have been awarded based on materially inaccurate performance criteria, (c) limitation
of golden parachute payments and (d) prohibition of tax gross-ups.

          AIG’s compensation submission generally is consistent with these important principles and
guidelines, but certain modifications were necessary to ensure that compensation for AIG’s Covered
Employees 1 — 25 satisfies the public interest standard. The Office of the Special Master’s
determinations are described in detail in the attached determination memorandum.

          Pursuant
to the Interim Final Rule, AIG. may, within 30 days of the date hereof, request in
writing that the Office of the Special Master reconsider the determinations set forth in the
determination memorandum. If AIG does not request reconsideration within 30 days, these initial
determinations will be treated as final determinations. Id.
§ 30.16(c)(1).

Very truly yours,

Patricia Geoghegan

Office of the Special Master

for TARP Executive Compensation

	 	 	 

	Enclosures
	 
	 	 
	cc:

	 	Mitchell D. Schultz
	 

	 	Jacqueline Aguanno
	 

	 	Marc R. Trevino, Esq.

3

 

ANNEX A

DETERMINATION MEMORANDUM

I. Introduction

          The Emergency Economic Stabilization Act of 2008, as amended by the American Recovery and
Reinvestment Act of 2009 (“EESA”), requires the Secretary of the Treasury to establish standards
related to executive compensation and corporate governance for institutions receiving financial
assistance under the Troubled Asset Relief Program (“TARP”). Emergency Economic Stabilization Act
of 2008, 12 U.S.C. §5221 (2010). Through the Department of the Treasury’s Interim Final Rule on
TARP Standards for Compensation and Corporate Governance (the “Rule”), the Secretary delegated to
the Office of the Special Master for TARP Executive Compensation (the “Office of the Special
Master”) responsibility for reviewing compensation structures of certain employees at institutions
that received exceptional financial assistance under TARP (“Exceptional Assistance
Recipients”).4 31 C.F.R. § 30.16(a); id. § 30.16(a)(3). For these employees, the Office
of the Special Master must determine whether the compensation structure will or may result in
payments “inconsistent with the purposes of Section 111 of EESA or TARP, or...otherwise contrary to
the public interest.” Id. § 30.16(a)(3)(i).

          American International Group, Inc. (“AIG” or the “Company”), one of four remaining Exceptional
Assistance Recipients, has submitted to the Office of the Special Master proposed 2011 compensation
structures (the “Proposed Structures”) for review pursuant to Section 30.16(a)(3)(i) of the Rule.
These compensation structures apply to five employees that the Company has identified for 2011 as
senior executive officers (the “Senior Executive Officers,” or “SEOs”) for purposes of the Rule,
and 18 employees the Company has identified as among the most highly compensated employees of the
Company for purposes of the Rule (the “Most Highly Compensated Employees,” and, together with the
SEOs, the “Covered Employees”). Two employees who otherwise would have been included in the Covered
Employee group have departed the Company (or have scheduled an impending departure), but remain
subject to the applicable rules for Covered Employees who have left the Company.

          The Office of the Special Master has completed the review of the Company’s Proposed Structures
for the Covered Employees pursuant to the principles set forth in the Rule. Id. § 30.16(b)(1). This
Determination Memorandum sets forth the determinations of the Office of the Special Master,
pursuant to Section 30.16(a)(3)(i) of the Rule, with respect to the Covered Employees.

II. Background

          On June 15, 2009, the Department of the Treasury (“Treasury”) promulgated the Rule,
creating the Office of the Special Master and delineating its responsibilities. The Rule requires

 

			
	4	 	The Interim Final Rule on TARP Standards for Compensation and Corporate
Governance, technical corrections to the Rule and all Prior Determinations are available on the
Department of the Treasury website at
http://www.treasury.gov/initiatives/financial-stability/about/Recipient_Guidance/executive-compensation/Pages/default.aspx.

A1

 

that each Exceptional Assistance Recipient submit proposed compensation structures for each
Senior Executive Officer and Most Highly Compensated Employee. 31 C.F.R. § 30.16(a)(3)(i).

          On October 22, 2009, and on March 23, 2010, in each case after reviewing submissions of
proposed compensation structures and amounts from AIG, the Office of the Special Master issued
determinations regarding AIG’s compensation structures, and amounts potentially payable thereunder,
for AIG’s senior executive officers and certain most highly compensated employees (the “Prior
Determinations”). The Prior Determinations were made in light of six principles defined in the Rule
and discussed in Part III below (the “principles”), and proposed compensation structures for
Covered Employees were modified as needed to ensure that compensation would not “result in payments
that are inconsistent with the purposes of Section 111 of EESA or TARP, or are otherwise contrary
to the public interest” (as applied to Covered Employees of Exceptional Assistance Recipients, the
“public interest standard”). 31 C.F.R. § 30.16(a)(3)(i). To apply the principles and ensure that
compensation structures satisfy the public interest standard, the Office of the Special Master
developed practical guidelines (the “guidelines”), which informed the Prior Determinations and are
described in the cover letter accompanying this Determination Memorandum.5 The Prior
Determinations applied only to those individuals identified by the Company as subject to the Office
of the Special Master’s mandatory jurisdiction to review and approve compensation structures and
payments, see id., for the period under review and only with respect to compensation for services
provided to AIG for that period.

          On January 3, 2011, the Office of the Special Master requested from each remaining Exceptional
Assistance Recipient, including AIG, certain data and documentary information necessary to
facilitate the Office of the Special Master’s review of the Company’s 2011 compensation structures.
The request required AIG to submit data describing its proposed compensation structures, and the
payments that would result from the proposals, concerning each Covered Employee.

          In addition, the Rule authorizes the Office of the Special Master to request information from
an Exceptional Assistance Recipient “under such procedures as the Special Master shall determine.”
Id. § 30.16(d). AIG was required to submit competitive market data indicating how the amounts
payable under AIG’s proposed compensation structures relate to the amounts paid to persons in
similar positions or roles at similar entities. AIG was also required to submit a range of
documentation, including information related to proposed performance metrics, internal policies
designed to curb excessive risk, and certain previously existing compensation plans and agreements.

          AIG submitted this information to the Office of the Special Master on January 31, 2011.
Following a preliminary review of the submission, on February 11, 2011, the Office of the Special
Master determined that AIG’s submission was substantially complete for purposes of the Rule. Id. §
30.16(a)(3)(i). The Office of the Special Master then commenced a formal review of

 

			
	5	 	For a further discussion of the guidelines, see pages 9 — 10 of the September
10, 2010, Final Report of Special Master Kenneth R. Feinberg, available at
http://www.treasury.gov/initiatives/financial-stability/about/Recipient_Guidance/executive-compensat
ion/Documents/Final%20Report%20of%20Kenneth%20Feinberg%20-%20FINAL.PDF.

A2

 

AIG’s proposed compensation structures for the Covered Employees. The Rule provides that the
Office of the Special Master is required to issue a compensation determination within 60 days of
receipt of a substantially complete submission. Id.

          The Office of the Special Master’s review of the Company’s proposals was aided by analysis
from a number of internal and external sources, including:

	 	•	 	Treasury personnel with significant experience related to executive compensation
detailed to the Office of the Special Master;
	 
	 	•	 	Competitive market data provided by the Company in connection with its submission to
the Office of the Special Master;
	 
	 	•	 	External information on comparable compensation structures
extracted from the U.S. Mercer Benchmark Database-Executive; and
	 
	 	•	 	Equilar’s ExecutiveInsight database (which includes information drawn from publicly
filed proxy statements).

          The Office of the Special Master has also considered national and global developments in the
regulation of executive compensation. In July 2010, Congress passed the Dodd-Frank Wall Street
Reform and Consumer Protection Act (the “Dodd-Frank Act”), directing further regulation on
incentive-based compensation. In February 2011, the FDIC approved a joint proposed rulemaking with
six other agencies under the Dodd-Frank Act, mandating, among other things, the deferral of half of
large banks’ top executive bonuses. The SEC recently approved its version of the proposed
rule.6 The Office of the Special Master continues to monitor evolving standards for
executive compensation.

          The Office of the Special Master considered all the sources above, in light of the statutory
and regulatory standards described in Part III below, when evaluating the Company’s proposed
compensation structures for the Covered Employees for 2011.

III. Statutory and Regulatory Standards

          The Rule requires that the Office of the Special Master determine for each of the Covered
Employees whether AIG’s proposed compensation structure, including amounts payable or potentially
payable under the compensation structure, “will or may result in payments that are inconsistent
with the purposes of Section 111 of EESA or TARP, or are otherwise contrary to the public
interest.” 31 C.F.R. § 30.16(a)(3). The Rule requires that, in making these compensation
determinations, the Office of the Special Master shall apply six principles that are intended to be

 

			
	6  	 	See SEC Press Release No. 2011-77 (March 30, 2011). Internationally, the EU
adopted a directive on remuneration policies which was further implemented in guidelines released
in December 2010. The UK issued its final regulations under those guidelines in the same month.
These developments may be considered a response to the meeting of the G20 in April 2009, and also
more broadly as a response to the financial crisis and changing views on the regulation of
executive compensation. Generally, the principles underlying the emerging regulations are
consistent with the objectives of the Office of the Special Master.

A3

 

consistent with sound compensation practices appropriate for TARP recipients and to advance
the purposes and considerations described in EESA, including the maximization of overall returns to
the taxpayers of the United States and providing stability and preventing disruptions to financial
markets. EESA, Pub. L. No. 110-343 §2, §103 (2008). These principles are:

	 	(1)	 	Avoidance of incentives to take excessive risk. The compensation structure should avoid
incentives that encourage employees to take unnecessary or excessive risks that could threaten
the value of the Exceptional Assistance Recipient, including incentives that reward employees
for short-term or temporary increases in value or performance, or similar measures that may
undercut the long-term value of the Exceptional Assistance Recipient. Compensation packages
should be aligned with sound risk management. Id. § 30.16(b)(1)(i).
	 
	 	(2)	 	Taxpayer return. The compensation structure and amount payable should reflect the need for
the Exceptional Assistance Recipient to remain a competitive enterprise, to retain and recruit
talented employees who will contribute to the recipient’s future success, so that the Company
will ultimately be able to repay its TARP obligations. Id. § 30.16(b)(1)(ii).
	 
	 	(3)	 	Appropriate allocation of components of compensation. The compensation structure should
appropriately allocate the components of compensation such as salary and short-term and
long-term performance incentives, as well as the extent to which compensation is provided in
cash, equity, or other types of compensation such as executive pensions, or other benefits, or
perquisites, based on the specific role of the employee and other relevant circumstances,
including the nature and amount of current compensation, deferred compensation, or other
compensation and benefits previously paid or awarded. Id. § 30.16(b)(1)(iii).
	 
	 	(4)	 	Performance-based compensation. An appropriate portion of the compensation should be
performance-based over a relevant performance period. Performance-based compensation should be
determined through tailored metrics that encompass individual performance and/or the performance
of the Exceptional Assistance Recipient or a relevant business unit taking into consideration
specific business objectives. Performance metrics may relate to employee compliance with
relevant corporate policies. In addition, the likelihood of meeting the performance metrics
should not be so great that the arrangement fails to provide an adequate incentive for the
employee to perform, and performance metrics should be measurable, enforceable, and actually
enforced if not met. Id. § 30.16(b)(1)(iv).
	 
	 	(5)	 	Comparable structures and payments. The compensation structure, and amounts payable where
applicable, should be consistent with, and not excessive taking into account, compensation
structures and amounts for persons in similar positions or roles at similar entities that are
similarly situated, including, as applicable, entities competing in the same markets and
similarly situated entities that are financially distressed or that are contemplating or
undergoing reorganization. Id. § 30.16(b)(1)(v).

A4

 

	 	(6)	 	Employee contribution to TARP recipient value. The compensation structure and amount payable
should reflect the current or prospective contributions of an employee to the value of the
Exceptional Assistance Recipient, taking into account multiple factors such as revenue
production, specific expertise, compliance with company policy and regulation (including risk
management), and corporate leadership, as well as the role the employee may have had with
respect to any change in the financial health or competitive position of the recipient. Id. §
30.16(b)(1)(vi).

          The Rule provides that the Office of the Special Master shall have discretion to determine the
appropriate weight or relevance of a particular principle depending on the facts and circumstances
surrounding the compensation structure or payment for a particular employee. Id. § 30.16(b). To the
extent two or more principles may appear inconsistent in a particular situation, the Rule requires
that the Office of the Special Master exercise discretion in determining the relative weight to be
accorded to each principle. Id.

          The Rule provides that the Office of the Special Master may, in the course of applying these
principles, take into account other compensation structures and other compensation earned, accrued,
or paid, including compensation and compensation structures that are not subject to the
restrictions of Section 111 of EESA. For example, the Office of the Special Master may consider
payments obligated to be made by the Company pursuant to certain legally binding rights under valid
written employment contracts entered into prior to enactment of the statute and the accompanying
Rule. Id. § 30.16(a)(3).

IV. Compensation Structures and Payments

A. AIG Proposals

          AIG has provided the Office of the Special Master with detailed information concerning its
proposed 2011 compensation structures for the Covered Employees, including amounts proposed to be
paid under the compensation structure for each Covered Employee (the “Proposed Structures”).

          AIG supported its proposal with detailed assessments of each Covered Employee’s tenure and
responsibilities at the Company and historical compensation structure. The submission also included
market data that, according to the Company, indicated that the amounts potentially payable to each
employee were comparable to the compensation payable to persons in similar positions or roles at a
“peer group” of entities selected by the Company.7 Twelve of the employees listed as
Covered Employees in 2010 remain on the list of Covered Employees for 2011, and eleven employees
are new entrants to the group.8

 

			
	7	 	As disclosed in its 2010 proxy materials as filed with the SEC, among the
companies included in the market data submitted by AIG with respect to one or more of its Covered
Employees were Aetna Inc., AFLAC Incorporated, The Allstate Corporation, Bank of America
Corporation, The Chubb Corporation, CIGNA Corporation, Citigroup Inc., Hartford Financial Services
Group, MetLife Inc. and Prudential Financial.
	 
	8	 	As described in a supplemental determination letter dated August 3, 2010, one employee
was inadvertently omitted from the 2010 list of senior executive officers and next 20 most highly
paid employees. Approved compensation for

A5

 

          In 2009 and 2010, the proposed compensation structures for Covered Employees who were
employees of AIG Financial Products (“AIGFP”) included features that differed from the proposed
structures for the other Covered Employees. Accordingly, the Prior Determinations discussed the
proposals for the AIGFP employees, and retention payments made to them, separately from the
proposals for the other Covered Employees. For 2011, however, AIG has generally proposed no
distinct features with respect to the Proposed Structures for AIGFP employees. In addition, AIG has
indicated that no retention payments will be made in 2011 to any Covered Employee. Only four
Covered Employees in 2011 serve as employees of AIGFP, and AIG has indicated that two of these
employees are moving to its asset management group and one is expected to leave AIG in 2011.
Therefore, the proposals for all Covered Employees are discussed together in the sections that
follow.

          1. Cash Salary

          The Proposed Structures for Covered Employees include cash salaries of more than $500,000 for
five Covered Employees (the same number as in 2010). In addition, AIG proposed raising cash
salaries for two Covered Employees.9 AIG asserted that these increases could be
justified by the greatly expanded roles and increased responsibilities of these employees and by
reference to the compensation of persons in similar positions or roles at similar entities. AIG
also noted that total direct compensation for these employees decreased significantly from 2010 to
2011.

          2. Stock Salary

          In the Prior Determinations, AIG proposed stock salary structures that reflected the value of
a “basket”. In 2009, the “basket” reflected the value of four AIG insurance companies and, in 2010,
it reflected the value of AIG common stock and a “hybrid” security. In light of the
recapitalization of AIG in January 2011,10 AIG has proposed the use of AIG common stock
or common stock units for 2011 stock salary.

          As required by the Rule, the common stock or common stock units proposed to be used for stock
salary would be fully vested upon grant.

 

			
	 	 	this employee, therefore, did not appear in Exhibit I to the 2010 determination memorandum
dated March 23, 2010. For purposes of this Determination Memorandum, we have treated this employee
as included in the Covered Employee group in both 2010 and 2011. See Letter to Jeffrey J. Hurd,
Esq. (August 3, 2010), available at http://www.treasury.gov/initiatives/financial-stability/about/Recipient_Guidance/executive-compensation/Documents/20100803%20AIG%20Supplemental%20Determination.pdf.
	 
	9	 	The Office of the Special Master previously reviewed the employment agreement of
another employee new to the 2011 Covered Employee group and approved the 2010 and 2011 cash salary
set forth in the agreement. See Letter to Robert H. Benmosche (February 5, 2010), available at
http://www.treasury.gov/initiatives/financial-stability/about/Recipient_Guidance/executive-compensation/Documents/exec_comp20100208AIGLetter.pdf.
	 
	10	 	See Treasury press release (January 14, 2011), available at
http://www.treasury.gov/press-center/press-releases/Pages/tg1024.aspx.

A6

 

          3. Annual Long-Term Incentive Awards

          AIG proposed target annual long-term incentive awards for most Covered Employees representing
10% of their total 2011 compensation and payable in long-term restricted stock units that generally
vest only if the Covered Employee remains employed by the Company on the third anniversary of the
grant date. As required by the Rule, these awards would become payable only in 25% installments for
each 25% of AIG’s TARP obligations that are repaid.

          4. “Other” Compensation and Perquisites

          AIG proposed payments of “other” compensation, as well as perquisites, to the Covered
Employees. These proposed payments varied in value.

B. Determinations of the Office of the Special Master

          The Office of the Special Master has reviewed the Proposed Structures in detail by application
of the six principles set forth in the Rule and described in Part III above. The Office of the
Special Master’s review also made use of the resources described in Part II. In order to
consistently apply the principles and ensure the satisfaction of the public interest standard, the
Office of the Special Master has determined that the guidelines established in 2009, and applied in
2010, must continue to govern compensation in 2011.

          After reviewing the Proposed Structures, the Office of the Special Master has concluded that
they are in most respects consistent with the guidelines. However, certain aspects of the Proposed
Structures and amounts potentially payable under the Proposed Structures require modification to
ensure that they are consistent with the public interest standard.11

          The Office of the Special Master has determined, in light of the considerations that follow,
that the compensation structures described in Exhibits I and II to this Determination Memorandum
will not, by virtue of either their structural design or the amounts potentially payable under
them, result in payments inconsistent with the public interest standard.

	1.	 	Cash Salary

 

			
	11	 	To the extent the Office of the Special Master previously approved compensation
packages proposed in employment agreements submitted to the Office of the Special Master by the
Company in 2010, the Office of the Special Master’s 2011 determinations reflect the previously
approved structures and amounts. See Letter to Jeffrey J. Hurd, Esq. (August 3, 2010), available at
http://www.treasury.gov/initiatives/financial-stability/about/Recipient_Guidance/executive-compensation/Documents/20100803%20AIG%20Supplemental%20Determination.pdf; Letter to Jeffrey J. Hurd,
Esq. (May 18, 2010), available at
http://www.treasury.gov/initiatives/financial-stability/about/Recipient_Guidance/executive-compensat
ion/Documents/20100518+AIG+Letter.PDF; Letter to Robert H. Benmosche, (February 5, 2010),
available at
http://www.treasury.gov/initiatives/financial-stability/about/Recipient_Guidance/executive-compensat
ion/Documents/exec_comp20100208AIGLetter.pdf. See also Letter to the AIG Compensation
Management and Resources Committee (October 9, 2009), available at
http://www.treasury.gov/initiatives/financial-stability/about/Recipient_Guidance/executive-compensat
ion/Documents/RobertBenmoscheDeterminationLetter.pdf.

A7

 

          The Office of the Special Master reviewed AIG’s proposed cash salaries in light of the
principle that compensation structures should generally be comparable to “compensation structures
and amounts for persons in similar positions or roles at similar entities,” 31 C.F.R. §
30.16(b)(1)(v). Based in part upon this principle, the Office of the Special Master has concluded
that cash salaries generally should target the 50th percentile as compared to persons in similar
positions or roles at similar entities, because such levels of cash salaries balance the need to
attract and retain talent with the need for compensation structures that reflect the circumstances
of Exceptional Assistance Recipients.

          The Office of the Special Master also reviewed AIG’s proposed cash salaries in light of the
principle that compensation structures should be “performance-based over a relevant performance
period.” Id. § 30.16(b)(1)(iv). Based in part upon this principle, the Office of the Special Master
has determined that, other than in exceptional cases for good cause shown, a Covered Employee’s
cash salary should not exceed $500,000.

          After reviewing AIG’s proposal, the Office of the Special Master has determined that, in
general, the proposed cash salaries target the 50th percentile of cash salaries paid to
persons in similar positions or roles at similar entities. The Office of the Special Master has
also concluded that the proposed cash salary increases are appropriate in light of the enhanced
responsibilities and expanded roles of the affected employees and the cash salaries paid to
individuals in their peer group. The Office of the Special Master has determined, however, that the
full amount of the proposed increases was not justified. The cash salaries that the Office of the
Special Master has determined are consistent with the public interest standard for the Covered
Employees are set forth in Exhibit I.

          2. Stock Salary

          The Office of the Special Master reviewed the amount of stock salary AIG proposed to pay the
Covered Employees in light of the principles that compensation structures should generally be
comparable to “compensation structures and amounts for persons in similar positions or roles at
similar entities,” id. § 30.16(b)(1)(v), and that a “compensation structure, and amount
payable...should reflect the current or prospective contributions of an employee to the value of the
[Company].” Id. § 30.16(b)(1)(vi). The Office of the Special Master found that the amounts of stock
salary proposed by AIG generally would place the Covered Employees around the 50th
percentile of compensation for persons in similar roles at similar entities. However, in light of
the principle that “an appropriate portion of the compensation should be performance-based over a
relevant performance period”, id. § 30.15(b)(1)(iv), the Office of the Special Master concluded
that, in certain cases, the proposed stock salary amount was not justified and that a portion of
compensation should be reallocated from stock salary to the long-term incentive award. (See item 3
below.) The stock salaries that the Office of the Special Master has determined are consistent with
the public interest standard for 2011 are set forth in Exhibit I.

          The Office of the Special Master reviewed the structure of AIG’s proposal for stock salary in
light of the principle that compensation structures should align performance incentives with
long-term value creation rather than short-term profits. See id. § 30.16(b)(1)(i). In light of

A8

 

this principle, the guidelines provide that stock salary may be redeemable only in three equal,
annual installments beginning on the first anniversary of grant.12 The Proposed
Structures are consistent with this requirement. In addition, AIG’s proposal to use common stock or
common stock units for 2011 stock salary awards, rather than a “basket” of units or securities, is
consistent with the structure of stock salary payable by the other Exceptional Assistance
Recipients. Moreover, most employers that provide equity compensation do so in common stock or in a
form that is measured by common stock.

          3. Annual Long-Term Incentive Awards

          The Office of the Special Master reviewed AIG’s proposed target annual long-term incentive
awards in light of the principle that performance-based compensation should be payable “over a
relevant performance period.” Id. § 30.16(b)(1)(iv). Based in part upon this principle, long-term
incentives must be paid in the form of long-term restricted stock, and may be paid if, and only if,
objective performance metrics are achieved and the employee continues to provide services to the
company for three years following the date of grant.13

          The structure of AIG’s proposed annual long-term incentive awards generally satisfies these
requirements. Under the Proposed Structures, annual long-term incentive awards for 2011 will be
payable only upon the achievement of specified, objective performance criteria to be provided to
the Office of the Special Master and generally only if the employee continues to provide services
to the Company for three years following the date of grant. In addition, as required by the Rule,
these awards may be redeemed only in 25% installments for each 25% of AIG’s TARP obligations that
are repaid.

          The Office of the Special Master also reviewed the target amounts of annual long-term
incentive awards AIG proposed for the Covered Employees in light of the principle that an
“appropriate portion of the compensation should be performance-based,” id. § 30.16(b)(1)(iv), and
“performance metrics should be measurable, enforceable, and actually enforced if not met.” Id. In
the case of a number of Covered Employees, the Proposed Structures failed to satisfy these
principles because they allocated no more than 10% of a Covered Employee’s compensation to
long-term restricted stock that is based on the achievement of performance measures. In the case of
certain Covered Employees, however, the Office of the Special Master acknowledged that a lower
allocation of long-term restricted stock was appropriate. The target annual long-term incentive
awards that the Office of the Special Master has determined are consistent with the public interest
standard for 2011 are set forth in Exhibit I.

 

			
	12	 	As described in the 2010 Determination, AIG completed a corporate transaction
that resulted in a partial repayment to the Federal Reserve Bank of New York. In accordance with
the guidelines, stock salary granted in 2011 may be redeemed beginning on the first (rather than
the second) anniversary of grant.
	 
	13	 	In line with the proposed rulemaking under the Dodd-Frank Act referenced above, and
in conformity with the minimum two-year vesting requirement of the Rule, pro rata vesting of
long-term incentive awards for 2011 services will be permitted after two years, allowing two-thirds
of the award to vest after two years, with the last third vesting on the third anniversary of the
date of grant.

A9

 

          4. “Other” Compensation and Perquisites

          Perquisites and “other” compensation provided to a Covered Employee must be limited to $25,000
on an annual basis. The Proposed Structures are consistent with this requirement. As described in
Exhibit II, any exceptions to this limitation will require that the Company provide to the Office
of the Special Master an independent justification for the payment that is satisfactory to the
Office of the Special Master.14 To the extent that payments exceeding this limitation
have already been made to a Covered Employee in 2011, those amounts should be promptly returned to
the Company.

          5. Non-Qualified Deferred Compensation

          Covered Employees must not accrue in 2011 additional amounts under supplemental executive
retirement plans and other “non-qualified deferred compensation” plans, as described in Exhibit II.

          6. Severance Plans

          The Company must ensure that 2011 compensation structures for Covered Employees do not result
in an increase in the amounts payable pursuant to severance arrangements.

          7. Departed Employees

          Two employees who would have been Covered Employees had they remained employed by the Company
have departed the Company (or have scheduled an impending departure). With respect to these
individuals, the Office of the Special Master has determined that the payment of stock salaries and
cash salaries at the rates in effect on January 1, 2011, through the date of the termination of
employment, and payment of up to $25,000 in perquisites and “other” compensation are consistent
with the public interest standard. No other payments of total direct compensation to these
employees for 2011 would be consistent with the public interest standard. Any exceptions to this
limitation will require that the Company provide to the Office of the Special Master an independent
justification for the payment that is satisfactory to the Office of the Special Master. For the
avoidance of doubt, as mentioned in Part I, these employees remain subject to the applicable
provisions of the Rule, and any other compensation they have accrued remains subject to the above
provisions of this Part IV (or, if applicable, the corresponding provisions of the Prior
Determinations) and Exhibit II.

V. Corporate Governance

          As noted in Part III above, the Rule requires the Office of the Special Master to
consider the extent to which compensation structures are “performance-based over a relevant
performance

 

			
	14	 	AIG has identified certain employees subject to expatriate arrangements
providing for the payment of certain “other” compensation in excess of this limitation. The Office
of the Special Master has previously reviewed these arrangements and has concluded that such
payments, not to exceed $350,000 per employee, in addition to payments to these employees pursuant
to “tax equalization agreements” as defined in the Rule, are consistent with the public interest
standard.

A10

 

period,” 31 C.F.R. § 30.16(b)(1)(iv). In light of the importance of this principle, as in the
Prior Determinations, the Office of the Special Master requires that AIG take certain corporate
governance steps to ensure that the compensation structures for the Covered Employees, and the
amounts payable or potentially payable under those structures, are consistent with the public
interest standard. Among other requirements, AIG must:

	 	•	 	Ensure that employees are prohibited from engaging in any hedging or derivative
transaction with respect to Company stock that would undermine the long-term performance
incentives created by the compensation structures set forth in Exhibits I and II.
	 
	 	•	 	Maintain a compensation committee composed exclusively of independent directors, which
must discuss, evaluate, and review with AIG’s senior risk officers any risks that could
threaten the value of AIG. Id. § 30.4; id. § 30.5.
	 
	 	•	 	Ensure that the compensation committee discloses to Treasury an annual narrative
description of whether AIG, its board of directors, or the committee has engaged a
compensation consultant during the past three years and, if so, the types of services
provided by the compensation consultant or any affiliate, including any “benchmarking” or
comparisons employed to identify certain percentile levels of pay. Id. § 30.11(c).
	 
	 	•	 	Provide to Treasury an annual disclosure of any perquisite whose total value for AIG’s
fiscal year exceeds $25,000 for each of the Covered Employees, as well as a narrative
description of the amount and nature of these perquisites, the recipient of these
perquisites and a justification for offering these perquisites (including a justification
for offering the perquisite, and not only for offering the perquisite with a value that
exceeds $25,000). Id. § 30.11(b).
	 
	 	•	 	Ensure that any incentive award paid to a Covered Employee is subject to a clawback if
the award was based on materially inaccurate financial statements (which term includes, but
is not limited to, statements of earnings, revenues, or gains) or any other materially
inaccurate performance metric criteria. AIG must exercise its clawback rights except to the
extent that it is unreasonable to do so. Id. § 30.8.
	 
	 	•	 	AIG was required to adopt an excessive or luxury expenditures policy, provide that
policy to Treasury, and post it on AIG’s website. If AIG’s board of directors makes any
material amendments to this policy, within ninety days of the adoption of the amended
policy, the board of directors must provide the amended policy to Treasury and post the
amended policy on its Internet website. Id. § 30.12.
	 
	 	•	 	Except as explicitly permitted under the Rule, AIG is prohibited from providing
(formally or informally) tax gross-ups to any of the Covered Employees. Id. § 30.11(d).
	 
	 	•	 	AIG’s chief executive officer and chief financial officer must provide written
certification of the Company’s compliance with the various requirements of Section 111
of EESA. The precise nature of the required certification is identified in the Rule. Id. §
30.15 Appx. B.

A11

 

VI. Conclusion

          The Office of the Special Master has reviewed the Proposed Structures for the Covered
Employees for 2011 and, in light of the principles, applied the guidelines in order to ensure the
satisfaction of the public interest standard. On the basis of that review, the Office of the
Special Master has determined that the Proposed Structures submitted by AIG are to a great extent
consistent with the Prior Determinations but require certain modifications in order to meet the
public interest standard.

          The Office of the Special Master has reviewed the compensation structures set forth in
Exhibits I and II in light of the principles set forth at 31 C.F.R. § 30.16(b). Pursuant to the
authority vested in the Office of the Special Master by the Rule, and in accordance with Section
30.16(a)(3) thereof, the Office of the Special Master hereby determines that the compensation
structures set forth in Exhibits I and II, including the amounts payable or potentially payable
under such compensation structures, will not result in payments that are inconsistent with the
purposes of Section 111 of EESA or TARP, and will not otherwise be contrary to the public interest.

          Pursuant to the Interim Final Rule, AIG may, within 30 days of the date hereof, request in
writing that the Office of the Special Master reconsider the determinations set forth in this
Determination Memorandum. The request for reconsideration must specify a factual error or relevant
new information not previously considered, and must demonstrate that such error or lack of
information resulted in a material error in the initial determinations. If AIG does not request
reconsideration within 30 days, the determinations set forth herein will be treated as final
determinations. Id. § 30.16(c)(1).

          The foregoing determinations are limited to the compensation structures and employees
described in Exhibits I and II, and shall not be relied upon with respect to any other employee.
The determinations are limited to the authority vested in the Office of the Special Master by
Section 30.16(a)(3)(i) of the Rule, and shall not constitute, or be construed to constitute, the
judgment of the Office of the Special Master or Treasury with respect to the compliance of any
compensation structure with any other provision of the Rule. Moreover, this Determination
Memorandum has relied upon, and is qualified in its entirety by, the accuracy of the materials
submitted by the Company to the Office of the Special Master, and the absence of any material
misstatement or omission in such materials.

          Finally, the foregoing determinations are limited to the compensation structures described
herein, and no further compensation of any kind payable to any Covered Employee without the prior
approval of the Office of the Special Master would be consistent with the public interest standard.

A12

 

EXHIBIT I

COVERED EMPLOYEES

2011 Compensation

Company Name: American International Group, Inc.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Stock Salary	 	Long-Term Restricted Stock	 	 
	 	 	 	 	 	 	(Performance based: The	 	(Performance based: Awarded	 	 
	 	 	 	 	 	 	stock vests at grant and is	 	based on achievement of	 	Total Direct
	 	 	 	 	 	 	redeemable in three equal,	 	objective performance goals.	 	Compensation
	 	 	 	 	 	 	annual installments	 	Generally vests after 3 years of	 	(Cash salary + stock
	 	 	 	 	 	 	beginning on the first	 	service. Transferability dependent	 	salary + long-term
	Employee ID	 	Cash Salary	 	anniversary of grant.)	 	on TARP repayment.)	 	restricted stock.)
	1

	 	$	3,000,000	 	 	$	7,500,000	 	 	$	0	 	 	$	10,500,000	 
	101

	 	$	500,000	 	 	$	2,087,500	 	 	$	862,500	 	 	$	3,450,000	 
	108

	 	$	500,000	 	 	$	1,750,000	 	 	$	750,000	 	 	$	3,000,000	 
	127

	 	$	500,000	 	 	$	1,900,000	 	 	$	800,000	 	 	$	3,200,000	 
	133

	 	$	450,000	 	 	$	5,550,000	 	 	$	0	 	 	$	6,000,000	 
	134

	 	$	700,000	 	 	$	3,050,000	 	 	$	1,250,000	 	 	$	5,000,000	 
	157

	 	$	125,000	 	 	$	3,375,000	 	 	$	0	 	 	$	3,500,000	 
	163

	 	$	495,000	 	 	$	4,734,000	 	 	$	1,071,000	 	 	$	6,300,000	 
	182

	 	$	450,000	 	 	$	1,762,500	 	 	$	737,500	 	 	$	2,950,000	 
	188

	 	$	450,000	 	 	$	1,762,500	 	 	$	737,500	 	 	$	2,950,000	 
	206

	 	$	700,000	 	 	$	5,300,000	 	 	$	2,000,000	 	 	$	8,000,000	 
	219

	 	$	500,000	 	 	$	1,750,000	 	 	$	750,000	 	 	$	3,000,000	 
	237

	 	$	495,000	 	 	$	4,070,234	 	 	$	934,766	 	 	$	5,500,000	 
	244

	 	$	500,000	 	 	$	1,750,000	 	 	$	750,000	 	 	$	3,000,000	 
	261

	 	$	475,000	 	 	$	4,525,000	 	 	$	0	 	 	$	5,000,000	 
	265

	 	$	500,000	 	 	$	2,750,000	 	 	$	0	 	 	$	3,250,000	 
	267

	 	$	495,000	 	 	$	5,315,000	 	 	$	1,190,000	 	 	$	7,000,000	 
	278

	 	$	500,000	 	 	$	7,500,000	 	 	$	0	 	 	$	8,000,000	 
	526

	 	$	400,000	 	 	$	800,000	 	 	$	300,000	 	 	$	1,500,000	 
	684

	 	$	500,000	 	 	$	1,375,000	 	 	$	625,000	 	 	$	2,500,000	 
	1076

	 	$	500,000	 	 	$	5,500,000	 	 	$	0	 	 	$	6,000,000	 
	1077

	 	$	1,800,000	 	 	$	4,400,000	 	 	$	800,000	 	 	$	7,000,000	 
	1087

	 	$	975,000	 	 	$	3,225,000	 	 	$	1,200,000	 	 	$	5,400,000	 

Comparison of 2011 compensation to prior year compensation for the employees listed
above

• Overall: Overall cash decreased $7.8 million or 33% and total direct compensation decreased $2.2
million or 2.0%.

• The 12 executives remaining in the top 25 from 2010: Cash salaries increased
approximately $83,000 or 1.0% and total direct compensation increased approximately $36,000 or
0.1%.

• The 11 executives new to the top 25 in 2011: Overall cash compensation decreased $7.9
million or 52% and total direct compensation decreased $2.3 million or 4.5% from 2010.

Note 1: The terms of stock salary delivered to Employee 1, the CEO, are provided in a letter
agreement the Office of the Special Master approved in a determination dated October 2, 2009. This
stock salary may not be redeemed until the fifth anniversary of the effective date of the
agreement.

Note 2: The total number of Covered Employees may be less than 25 because of separations from
service since January 1, 2011.

E1

 

EXHIBIT II

TERMS AND CONDITIONS OF PAYMENTS AND STRUCTURES

CONSISTENT WITH THE PUBLIC INTEREST STANDARD

          The following general terms and conditions shall govern the compensation structures
described in Exhibit I. The Office of the Special Master’s determination that those structures are
consistent with the public interest standard is qualified in its entirety by the Company’s
adherence to these terms and conditions.

	•	 	Salary payments. Cash and stock base salaries reflect the annual rate for the employee
and are effective as of January 1, 2011, and in the case of stock salary are payable on a nunc
pro tunc basis from that date. To the extent the Office of the Special Master’s determinations
for 2011 reduce an employee’s previous cash or stock salary rate, payments in excess of that
rate prior to the date hereof must be offset by reductions to prospective 2011 cash salary
payments or to any stock salary payable with respect to 2011.

	•	 	Stock compensation generally. For purposes of the Determination Memorandum, “stock”
compensation includes common stock and stock units. Notwithstanding any transferability
restrictions applicable to any stock compensation described in the Determination Memorandum,
(1) an amount of stock sufficient to cover an employee’s tax withholding obligations may
become immediately transferable to the extent necessary to satisfy the employee’s obligations,
and (2) to the extent permitted by the Rule, stock may become immediately transferable upon an
employee’s death or separation from service resulting from disability, as defined in the
Company’s broad-based long-term disability plan.

	•	 	Stock salary. Stock salary must be determined as a dollar amount through the date salary
is earned, be accrued at the same time or times as the salary would otherwise be paid in cash,
and vest immediately upon grant, with the number of shares based on the fair market value on
the date of award. Stock granted as stock salary may only be redeemed in three equal, annual
installments as described in the Determination Memorandum. Whether a nunc pro tunc grant or
payment that is labeled stock salary is considered salary or a bonus for purposes of the Rule
is determined based on all the facts and circumstances.

	•	 	Long-term restricted stock. Long-term restricted stock for 2011 services may only be
granted upon the achievement of objective performance criteria developed and reviewed in
consultation with the Office of the Special Master. The compensation committee must certify
(1) the achievement of such criteria, and (2) that the grant of incentives is appropriate in
light of the Company’s overall circumstances at the time. Such stock must be forfeited unless
conditioned upon the employee’s continued employment through the third anniversary of grant,
unless a termination of employment results from death or disability; provided, however, that
(a) pro rata vesting is permitted after two years, allowing two-thirds of the grant to vest
after two years, with the last third vesting on the third anniversary, and (b) all or a
portion of such stock may, for good cause certified by the Company’s compensation committee,
continue to vest if the employee retires on or after the second anniversary of the grant date.
The term “retirement” must meet an objective standard established in consultation with the
Office of the Special Master.

	•	 	Other compensation and perquisites. No more than $25,000 in total other compensation and
perquisites (as defined by pertinent SEC regulations) may be provided to any Covered Employee,
absent exceptional circumstances for good cause shown.

	•	 	Supplemental executive retirement plans and non-qualified deferred compensation plans.
No amounts may be accrued under supplemental executive retirement plans, and no Company
contributions may be made to other “non-qualified deferred compensation” plans, as defined by
pertinent SEC regulations, for 2011. For the avoidance of doubt, the foregoing limitation does
not (1) apply to employee-funded elective deferral arrangements or (2) preclude continuing
recognition of age and service credit for Company employees for the purpose of vesting in
previously accrued benefits under any plans referred to in this paragraph.

	•	 	Qualified Plans. For the avoidance of doubt, the Office of the Special Master has
determined that participation by the Covered Employees in broad-based, tax-qualified
retirement and health and welfare plans is consistent with the public interest standard, and
amounts payable under such plans are not counted against the $25,000 limit on other
compensation and perquisites.

E2

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