\n
UNCONDITIONAL CAPITAL MAINTENANCE AGREEMENT<\/p>\n
BETWEEN<\/p>\n
AMERICAN INTERNATIONAL GROUP, INC.<\/p>\n
AND<\/p>\n
AMERICAN GENERAL LIFE INSURANCE COMPANY<\/p>\n
\n
This Unconditional Capital Maintenance Agreement (this “Agreement”), is made,
\nentered into and effective as of March 30, 2011, by and between American
\nInternational Group, Inc., a corporation organized under the laws of the State
\nof Delaware (“AIG”), and American General Life Insurance Company, a corporation
\norganized under the laws of the Texas (the “Company”).<\/p>\n<\/p>\n
WITNESSETH:<\/p>\n<\/p>\n
WHEREAS, the Company is a life insurer subject to certain capital
\nrequirements of the insurance laws and regulations of Texas (the “Domiciliary
\nState”);<\/p>\n<\/p>\n
WHEREAS, the Company is an indirect wholly owned subsidiary of AIG; and<\/p>\n<\/p>\n
WHEREAS, AIG has an interest in unconditionally maintaining and enhancing the
\nCompany153s financial condition:<\/p>\n<\/p>\n
NOW, THEREFORE, in consideration of the mutual promises herein contained, the
\nparties hereto agree as follows:<\/p>\n<\/p>\n
1. In the event that the Company153s Total Adjusted Capital for
\neach of the Company153s first and third fiscal quarters (as determined based on
\nthe Company153s first and third fiscal quarterly filed statutory financial
\nstatements, respectively, subject to any adjustments or modifications thereto
\nrequired by the Domiciliary State153s insurance department or the Company153s
\nindependent auditors) falls below the Specified Minimum Percentage of the
\nCompany153s projected Company Action Level RBC (in each case as estimated by the
\nCompany as of the end of each such first and third fiscal quarters, as the case
\nmay be), AIG shall, within the respective time periods set forth under paragraph
\n4, in accordance with paragraph 5 and in compliance with applicable law, provide
\nto the Company cash, cash equivalents, securities or other instruments that
\nqualify (as admitted assets) for purposes of calculating the Company153s Total
\nAdjusted Capital, as a contribution and not as a loan, in an amount such that
\nthe Company153s Total Adjusted Capital as of the end of each of the<\/p>\n
\n
<\/p>\n
\n
Company153s second and fourth fiscal quarter, as the case may be, will be
\nprojected to be at least equal to the Specified Minimum Percentage of the
\nCompany153s Company Action Level RBC. Notwithstanding the foregoing, AIG may, at
\nany time as it deems necessary in its sole discretion and in compliance with
\napplicable law, make a contribution to the Company in such amount as is required
\nfor the Company153s Total Adjusted Capital to equal a percentage of its Company
\nAction Level RBC determined to be appropriate by the Company and AIG.<\/p>\n<\/p>\n
2. In the event that the Company153s Total Adjusted Capital (a) for
\neach of the Company153s first, second and third fiscal quarters (as determined
\nbased on the Company153s first, second and third fiscal quarterly filed statutory
\nfinancial statements, respectively, subject to any adjustments or modifications
\nthereto required by the Domiciliary State153s insurance department or the
\nCompany153s independent auditors) is in excess of the Specified Minimum Percentage
\nof the Company153s projected Company Action Level RBC (in each case as estimated
\nby the Company as of the end of each such first, second and third fiscal
\nquarters, as the case may be) or (b) as of each fiscal year end (as shown in the
\nCompany153s fiscal year-end filed statutory financial statements, together with
\nany adjustments or modifications thereto required by the Domiciliary State153s
\ninsurance department or the Company153s independent auditors) is in excess of the
\nSpecified Minimum Percentage of the Company153s Company Action Level RBC (as shown
\nin such fiscal year-end statutory financial statements), the Company shall,
\nwithin the respective time periods set forth under paragraph 4, in accordance
\nwith paragraph 5 and subject to approval by the Company153s board of directors as
\nrequired by the laws of the Domiciliary State, declare and pay dividends ratably
\nto its equity holders in an aggregate amount equal to the lesser<\/u> of
\n(i) the amount necessary to reduce the Company153s projected or actual Total
\nAdjusted Capital as of each of the end of the Company153s fiscal quarter or fiscal
\nyear, as the case may be, to a level equal to or not materially greater than the
\nSpecified Minimum Percentage of the Company153s Company Action Level RBC or
\n(ii) the maximum amount permitted by the Domiciliary State153s law to be paid as
\nan ordinary dividend less<\/u> an amount that the Company and AIG agree is
\nappropriate to protect the Company from exceeding such maximum amount allowed by
\nsuch Domiciliary State153s law as a result of potential audit adjustments or
\nadjustments to the projections on which such dividend amount is based. For the
\navoidance of doubt, this paragraph shall only require the Company to pay
\nordinary dividends; under no circumstances shall the Company be required to pay
\nany dividend which would trigger the<\/p>\n
\n
<\/p>\n
\n
extraordinary dividend provisions of Section 823.107 of the Insurance Law of
\nthe Domiciliary State or that is otherwise prohibited by the Domiciliary State.
\nNotwithstanding the foregoing, this Agreement does not prohibit the payment of
\nextraordinary dividends to reduce the Company153s projected or actual Total
\nAdjusted Capital to a level equal to or not materially greater than the
\nSpecified Minimum Percentage of the Company153s Company Action Level RBC.<\/p>\n
\n
3. For the avoidance of doubt, the terms “Total Adjusted
\nCapital”, “Company Action Level RBC”, and “Surplus to Policyholders” shall have
\nthe meanings ascribed thereto under the insurance laws and regulations of the
\nDomiciliary State, or, with respect to “Total Adjusted Capital” and “Company
\nAction Level RBC”, if not defined therein, shall have the meanings ascribed
\nthereto in the risk-based capital (“RBC”) instructions promulgated by the
\nNational Association of Insurance Commissioners (“NAIC”). The term “Specified
\nMinimum Percentage” shall be equal to the percentage set forth on Schedule 1
\nattached hereto, which shall be agreed to by AIG and the Company at least once
\nevery year beginning upon the date of the filing of the Company153s 2010 Annual
\nStatement with the Domiciliary State153s insurance department and following review
\nagainst the capital adequacy standards and criteria (“Agency Criteria”) of each
\nof Standard & Poor153s Corp. (“S&P”), Moody153s Investors Service
\n(“Moody153s”) and A.M. Best Company (“A.M. Best”). Notwithstanding the obligation
\nof the Company and AIG to review the Specified Minimum Percentage on an annual
\nbasis, the parties hereto agree to review and revise the Specified Minimum
\nPercentage on a more frequent basis, if the parties agree it is appropriate, to
\ntake into account (a) any material changes after the date hereof to any Agency
\nCriteria adopted by any of S&P, Moody153s or A.M. Best, on the one hand, or to
\nthe law of the Domiciliary State or NAIC RBC rules or instructions, on the other
\nhand, which causes the results under the Agency Criteria to diverge from that
\nunder the law of the Domiciliary State or NAIC RBC rules or instructions,
\n(b) the Company completes a material transaction that is treated materially
\ndifferently by the Agency Criteria, on the one hand, and the NAIC RBC rules or
\ninstructions, on the other hand, or (c) any other material development or
\ncircumstance affecting the Company which AIG and the Company agree merits a
\nreevaluation of the Specified Minimum Percentage then in effect.<\/p>\n<\/p>\n
4. The Company and AIG agree that any contribution to be made
\nunder paragraph 1 will take place within the following two time periods per
\nyear, as applicable: (a) during the time beginning on the first business day
\nafter the filing of the Company153s first fiscal<\/p>\n
\n
3<\/p>\n
<\/p>\n
\n
quarterly statutory financial statements and ending on the last business day
\nprior to the end of the Company153s second fiscal quarter; and (b) during the time
\nbeginning on the first business day after the filing of the Company153s third
\nfiscal quarterly statutory financial statements and ending on the last business
\nday prior to the end of the Company153s fourth fiscal quarter. Notwithstanding the
\nforegoing, in compliance with applicable law, any capital contribution provided
\nfor under paragraph 1 may be made by AIG after the close of any fiscal quarter
\nor fiscal year of the Company but prior to the filing by the Company of its
\nstatutory financial statements for such fiscal quarter or fiscal year,
\nrespectively, and contributions of this nature shall be recognized as capital
\ncontributions receivable as of the balance sheet date of the yet to be filed
\nquarterly or annual financial statement (as the case may be), pursuant to
\nparagraph 8 of Statement of Statutory Accounting Principles No. 72, to the
\nextent approved by the Domiciliary State. The Company and AIG further agree
\nthat any dividends to be made under paragraph 2 will take place as soon as
\npracticable after the filing by the Company of the relevant fiscal quarter-end
\nor fiscal year-end statutory financial statements or such earlier time as may be
\nagreed by the Company and AIG.<\/p>\n<\/p>\n
5. At the time that any contribution is due under paragraph 4,
\nAIG agrees that it will either (a) make such contribution to the Company153s
\ndirect parent and cause such direct parent to then contribute such funds,
\nsecurities or instruments so contributed by AIG to the Company, or (b) make such
\ncontribution directly to the Company without receiving any capital stock or
\nother ownership interest in exchange therefor, subject in either case to any
\nrequired regulatory approvals. At any time any dividends are due under
\nparagraph 4, the Company agrees that it will make such dividend to the Company153s
\ndirect parent and will use its best efforts to cause such direct parent to then
\ndividend or otherwise provide such funds to AIG. All contributions and
\ndividends contemplated under this Agreement shall be approved, declared and
\nmade, as applicable, in compliance with applicable law, including, without
\nlimitation, approval by the board of directors of each applicable entity
\n(including the Company) and any prior notice requirements specified under
\napplicable rules and regulations of the Domiciliary State.<\/p>\n<\/p>\n
6. Subject to the requirements of applicable law and the
\napproval, to the extent required, by any or all of the Company153s senior
\nmanagement, relevant management committees, board of directors, and of any
\ninsurance regulator, the Company hereby acknowledges that, in a manner
\nconsistent with past practice and<\/p>\n
\n
<\/p>\n
\n
any other reasonable requirements of AIG, it will comply with all financial
\nand budgetary planning, risk mitigation, derisking or pricing, corporate
\ngovernance, investment, informational and procedural requirements set forth by
\nAIG.<\/p>\n
\n
7. AIG hereby waives any failure or delay on the part of the
\nCompany in asserting or enforcing any of its rights or in making any claims or
\ndemands hereunder.<\/p>\n<\/p>\n
8. Unless earlier terminated in accordance with this paragraph 8, 9. Any policyholder holding a policy issued by the Company prior \n 5<\/p>\n <\/p>\n \n Agreement; provided, however, <\/em>that no policyholder of the Company 10. This Agreement is not, and nothing herein contained and nothing 11. Any notice, instruction, request, consent, demand or other If to AIG:<\/p>\n<\/p>\n American International Group, Inc.<\/p>\n 180 Maiden Lane<\/p>\n New York, New York 10038<\/p>\n Attention: Secretary<\/p>\n<\/p>\n If to the Company:<\/p>\n<\/p>\n American General Life Insurance Company<\/p>\n c\/o SunAmerica Financial Group, Inc.<\/p>\n 2727-A Allen Parkway<\/p>\n \n <\/p>\n \n Houston, Texas 77019<\/p>\n Attention: Chief Financial Officer<\/p>\n<\/p>\n with a copy (which shall not constitute notice) to:<\/p>\n<\/p>\n American General Life Insurance Company<\/p>\n c\/o SunAmerica Financial Group, Inc.<\/p>\n 1999 Avenue of the Stars<\/p>\n Los Angeles, CA 90067<\/p>\n Attention: General Counsel<\/p>\n<\/p>\n 12. The covenants, representations, warranties and agreements 13. This Agreement shall be governed by and construed in accordance 14. If any provision of this Agreement shall be declared null, void 15. This Agreement constitutes the entire agreement between the 16. This Agreement may be signed by the parties in one or more [signature page follows]<\/p>\n \n 7<\/p>\n <\/p>\n \n IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly AMERICAN INTERNATIONAL GROUP, INC.<\/p>\n<\/p>\n By:<\/p>\n<\/td>\n \/s\/ Brian T. Schreiber<\/p>\n<\/td>\n Name: Brian T. Schreiber<\/p>\n<\/td>\n Title: Executive Vice President<\/p>\n<\/td>\n By:<\/p>\n<\/td>\n \/s\/ Robert A. Gender<\/p>\n<\/td>\n Name: Robert A. Gender<\/p>\n<\/td>\n Title: Senior Vice President and Treasurer<\/p>\n<\/td>\n AMERICAN GENERAL LIFE INSURANCE COMPANY<\/p>\n<\/p>\n By:<\/p>\n<\/td>\n \/s\/ Don W. Cummings<\/p>\n<\/td>\n Name: Don W. Cummings<\/p>\n<\/td>\n Title: Senior Vice President and Chief Financial Officer<\/p>\n<\/td>\n \n <\/p>\n \n SCHEDULE 1<\/p>\n<\/p>\n The Specified Minimum Percentage shall initially equal 350% of the Company153s \n
\nthis Agreement shall continue indefinitely. AIG shall have the absolute right
\nto terminate this Agreement upon thirty (30) days153 prior written notice to the
\nCompany, which notice shall state the effective date of termination (the
\n“Termination Date”); provided, however<\/em>, that AIG agrees not to
\nterminate this Agreement unless (a) AIG significantly modifies the corporate
\nstructure or ownership of the Company, or (b) AIG sells the Company to an
\nacquirer (i) having a rating from at least one of S&P, Moody153s, A.M. Best or
\na substitute agency, which is a nationally recognized statistical rating
\norganization, that is at least equal to the lower of (x) AIG153s then-current
\nrating from such agency or (y) the Company153s then-current rating as supported by
\nthis Agreement from such agency; or (ii) such that, immediately on the effective
\ndate of the sale by AIG of the Company, the Company153s capitalization is
\nconsistent with the minimum capital adequacy standards and criteria of at least
\none of S&P, Moody153s, A.M. Best or a substitute agency, which is a nationally
\nrecognized statistical rating organization, for a rating that is equal to or
\nbetter than the Company153s then-current rating on the date immediately preceding
\nsuch sale. To the extent not terminated previously by AIG pursuant to the
\nforegoing, this Agreement will terminate automatically one year after the
\nclosing of any sale of the Company by AIG, and all provisions hereof will be of
\nno further force and effect. For the avoidance of doubt, the termination of
\nthis Agreement pursuant to this paragraph 8 shall not relieve either party of
\nany obligation it may owe to the other party hereunder that existed prior to,
\nand remains outstanding as of, the Termination Date.<\/p>\n<\/p>\n
\nto the termination of this Agreement shall have the right to demand that the
\nCompany enforce the Company153s rights under paragraphs 1, 4 and 5 of this
\nAgreement, and, if the Company fails or refuses to take timely action to enforce
\nsuch rights or the Company defaults in any claim or other payment owed to any
\nsuch policyholder when due, such policyholder may proceed directly against AIG
\nto enforce the Company153s rights under paragraphs 1, 4 and 5 of this<\/p>\n
\n
\nmay take any action authorized under this paragraph 9 unless and until (a) such
\npolicyholder has given AIG written notice of its intent to enforce the terms of
\nthis Agreement as provided in this paragraph 9, which notice shall specify in
\nreasonable detail the nature of and basis for the policyholder153s complaint and
\n(b) AIG has failed to comply with this Agreement within sixty (60) days after
\nsuch notice is given; and, provided, further<\/em>, that upon termination of
\nthis Agreement in accordance with paragraph 8 hereof, the rights of any
\npolicyholder as provided for under this paragraph 9 shall terminate effective as
\nof the Termination Date, except with respect to the obligation of AIG (if any)
\nto make capital contributions to the Company pursuant to paragraphs 1, 4 and 5
\nof this Agreement solely to the extent such obligation arose prior to, and
\nremained unsatisfied as of, the Termination Date (it being understood that upon
\nAIG153s satisfaction of all such obligations after the Termination Date, no such
\npolicyholder shall have any rights against the Company or AIG, as the case may
\nbe, under this paragraph 9).<\/p>\n<\/p>\n
\ndone pursuant hereto by AIG shall constitute or be construed or deemed to
\nconstitute, an evidence of indebtedness or an obligation or liability of AIG as
\nguarantor, endorser, surety or otherwise in respect of any obligation,
\nindebtedness or liability, of any kind whatsoever, of the Company. This
\nAgreement does not provide, and is not intended to be construed or deemed to
\nprovide, any policyholder of the Company with recourse to or against any of the
\nassets of AIG.<\/p>\n<\/p>\n
\ncommunication required or contemplated by this Agreement shall be in writing,
\nshall be given or made or communicated by United States first class mail,
\naddressed as follows:<\/p>\n<\/p>\n
\n
\nherein set forth shall be mutually binding upon and inure to the mutual benefit
\nof AIG and its successors and the Company and its successors.<\/p>\n<\/p>\n
\nwith the laws of New York, without giving effect to the principles of conflict
\nof laws.<\/p>\n<\/p>\n
\nor unenforceable in whole or in part by any court, arbitrator or governmental
\nagency, said provision shall survive to the extent it is not so declared and all
\nthe other provisions of this Agreement shall remain in full force and effect
\nunless, in each case, such declaration shall serve to deprive any of the parties
\nhereto of the fundamental benefits of or rights under this Agreement.<\/p>\n<\/p>\n
\nparties hereto with respect to the subject matter hereof and supersedes all
\nprior and contemporaneous agreements, understandings, negotiations and
\ndiscussion, whether oral or written, of the parties. This Agreement may be
\namended at any time by written agreement or instrument signed by the parties
\nhereto.<\/p>\n<\/p>\n
\ncounterparts which together shall constitute one and the same agreement among
\nthe parties.<\/p>\n<\/p>\n
\n
\nexecuted by their respective authorized officers as of the day and year first
\nabove written.<\/p>\n<\/p>\n\n\n
\n \n \n \n<\/td>\n<\/tr>\n \n \n<\/td>\n \n \n<\/td>\n<\/tr>\n \n \n<\/td>\n \n \n<\/td>\n<\/tr>\n \n \n<\/td>\n \n<\/td>\n \n<\/td>\n<\/tr>\n \n \n<\/td>\n \n<\/td>\n \n<\/td>\n<\/tr>\n \n \n \n \n<\/td>\n<\/tr>\n \n \n<\/td>\n \n \n<\/td>\n<\/tr>\n \n \n<\/td>\n \n \n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/p>\n \n\n
\n \n \n \n<\/td>\n<\/tr>\n \n \n<\/td>\n \n \n<\/td>\n<\/tr>\n \n \n<\/td>\n \n \n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
\n
\nCompany Action Level RBC.<\/p>\n
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