US_ACTIVE:\44209636\2\14430.

0119
IN THE UNITED STATES COURT OF FEDERAL CLAIMS
-----------------------------------------------------------------------x
STARR INTERNATIONAL COMPANY, INC.,
Individually and on Behalf of All Others Similarly
Situated, and derivatively on behalf of AMERICAN
INTERNATIONAL GROUP, INC.,
Plaintiff,
v.
THE UNITED STATES OF AMERICA,
Defendant,
and
AMERICAN INTERNATIONAL GROUP, INC., a
Delaware corporation,
Nominal Defendant.
:
:
:
:
:
:
:
:
:
:
No. 11-CV-779
(Judge T. Wheeler)
-----------------------------------------------------------------------x
MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS
BY NOMINAL DEFENDANT AMERICAN INTERNATIONAL GROUP, INC.
Of Counsel:
Joseph S. Allerhand
Stephen A. Radin
Jamie L. Hoxie
April 5, 2013
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, NY 10153
(212) 310-8000 (Telephone)
(212) 310-8007 (Fax)
Attorneys for Nominal Defendant
American International Group, Inc.
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 1 of 51
i
US_ACTIVE:\44209636\2\14430.0119
TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT .....................................................................................................1
QUESTIONS PRESENTED ............................................................................................................4
STATEMENT OF THE CASE ........................................................................................................6
A. The Parties ...............................................................................................................6
B. AIG’s Board of Directors .........................................................................................7
C. Starr’s New York Action .........................................................................................8
D. Starr’s Claim That Demand Was Not Excused and Starr’s Agreement to
Make a Demand .......................................................................................................8
E. AIG’s Refusal of Starr’s Demand ............................................................................8
ARGUMENT .................................................................................................................................10
STARR LACKS STANDING TO ASSERT DERIVATIVE CLAIMS IN AIG’S NAME ..........10
I. DEMAND WAS NOT WRONGFULLY REFUSED .......................................................13
A. Demand Is Wrongfully Refused Only Where A Shareholder Alleges Facts
Overcoming the Business Judgment Rule Presumption That Directors Are
Faithful to Their Fiduciary Duties – An “Obstacle” That “Few, If Any,
Plaintiffs Surmount” ..............................................................................................13
B. Plaintiff Does Not Allege Particularized Facts Overcoming the Business
Judgment Rule Presumption ..................................................................................16
1. Starr’s Allegations Concerning the “Strength of Starr’s Case” Do
Not Overcome the Business Judgment Rule Presumption ........................17
2. Starr’s Allegations Concerning Government Threats and
Intimidation and a Government-Sponsored Public Relations
Campaign Do Not Overcome the Business Judgment Rule
Presumption ...............................................................................................22
3. Starr’s Allegations That AIG’s Directors Refused the Demand Too
Quickly Do Not Overcome the Business Judgment Rule
Presumption ...............................................................................................23
4. Starr’s Allegations That AIG’s Directors Lacked Disinterestedness
and Independence Do Not Overcome the Business Judgment Rule
Presumption ...............................................................................................24
a. The Making of a Demand Waives Any Claim That
Directors Lack Disinterestedness and Independence .....................24
b. Starr Alleges No Facts Showing that AIG’s Board Lacked
Disinterestedness and Independence ..............................................26
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 2 of 51
ii
US_ACTIVE:\44209636\2\14430.0119
(i) The Government’s Alleged Control of the Election
of AIG Directors Does Not Establish A Lack of
Disinterestedness or Independence ....................................26
(ii) Nothing About the Trust that Held the
Government’s AIG Shares Establishes A Lack of
Disinterestedness or Independence ....................................29
(iii) Starr’s Allegations Concerning the Participation of
Directors Who Approved the Transactions
Underlying the Litigation Do Not Create A Lack of
Disinterestedness or Independence ....................................32
(iv) The Board’s Retention of Counsel Familiar With
the Transactions Underlying the Litigation Does
Not Create A Lack of Disinterestedness or
Independence .....................................................................33
II. DEMAND IS NOT EXCUSED .........................................................................................33
A. Demand Is Never Excused Where A Demand Has Been Made ............................34
B. Demand Would Not Be Excused Even If Starr Had Not Made A Demand ..........34
1. Demand Is Excused Only Under Very Narrow Circumstances,
Requiring Particularized Allegations, and Not “Group” Allegations ........34
2. Plaintiff Does Not Allege Particularized Allegations Excusing
Demand ......................................................................................................36
a. Demand Is Not Excused Because the Government Is
Alleged to Have Controlled the Election of AIG’s Directors ........36
b. Demand Is Not Excused Because AIG Did Not Commence
This Action Before Starr Commenced the Action .........................37
c. Demand Is Not Excused Because AIG’s Board Refused
Starr’s Demand or By Any Other Event Following Starr’s
Demand ..........................................................................................38
CONCLUSION ..............................................................................................................................40
APPENDIX
1. AIG Board Won’t Sue Over Terms of Rescue, Wall St. J., Jan. 9, 2013 ..................... A003
2. AIG May Join Bailout Lawsuit Against U.S. Government, Reuters, Jan. 8, 2013 ....... A007
3. Lawsuit Fiasco Mars AIG ‘Thank You’ Campaign, Politico, Jan. 15, 2013 ................ A010
4. Washington’s Jaw Drops at Possibility of AIG Lawsuit, Politico, Jan. 8, 2013 .......... A014
5. How About Charging AIG With Treason?, Market Watch, Jan. 8, 2013 ..................... A018
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 3 of 51
iii
US_ACTIVE:\44209636\2\14430.0119
6. Mar. 18, 2013 Starr 2d Cir. Motion to Take Judicial Notice ........................................ A020
7. Dec. 11, 2012 Dep’t of the Treasury Press Release ...................................................... A027
8. Dec. 14, 2012 AIG Press Release ................................................................................. A030
9. Apr. 5, 2012 AIG Proxy Statement (pages 1-2, 12-18) ................................................ A032
10. Jan. 24, 2013 AIG Form 8-K ........................................................................................ A043
11. M&A Law Prof Blog, Jan. 24, 2013 ............................................................................. A054
12. David Boies, Give AIG Shareholders Their Day In Court, USA Today, Jan. 8,
2013............................................................................................................................... A056
13. AIG, the Fed and the Long Litigation Tail of Government Bailouts, Reuters,
Mar. 15, 2013 ................................................................................................................ A058
14. AIG Sues Federal Reserve Vehicle in Dispute Over Lawsuit Rights, Wall St. J.,
Jan. 11, 2003 ................................................................................................................. A061
15. AIG Sues NY Fed Over Right to Sue Bank of America, Others, Reuters, Jan. 11,
2003............................................................................................................................... A064
16. AIG Credit Facility and Trust Agreement, dated January 16, 2009 ............................. A066
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 4 of 51
iv
US_ACTIVE:\44209636\2\14430.0119
TABLE OF AUTHORITIES
Page(s)
CASES
In re Am. Int’l Grp., Inc. Derivative Litig.,
415 F. App’x 285 (2d Cir. 2011) .............................................................................................13
Andreae v. Andreae,
1992 WL 43924 (Del. Ch. Mar. 3, 1992).................................................................................27
Aronson v. Lewis,
473 A.2d 805 (Del. 1984) .................................................12, 13, 14, 26, 27, 29, 32, 34, 35, 36,
............................................................................................................................................37, 39
AtraZeneca Pharm. L.P. v. Apotex Corp.,
669 F.3d 1370 (Fed. Cir. 2012)..................................................................................................8
Beam v. Stewart,
845 A.2d 1040 (Del. 2004) ..............................................................2, 13, 15, 26, 27, 28, 35, 37
Bell/Heery v. United States,
106 Fed. Cl. 300 (2012) .............................................................................................................6
Benihana of Tokyo, Inc. v. Benihana, Inc.,
891 A.2d 150 (Del. Ch. 2005)..................................................................................................31
Blasband v. Rales,
971 F.2d 1034 (3d Cir. 1992)...................................................................................................38
Boeing Co. v. Shrontz,
1992 WL 81228 (Del. Ch. Apr. 20, 1992) ...............................................................................25
In re Boston Scientific Corp. S’holders Litig.,
2007 WL 1696995 (S.D.N.Y. June 13, 2007) ...................................................................15, 16
Brehm v. Eisner,
746 A.2d 244 (Del. 2000) ........................................................................................................32
Burks v. Lasker,
441 U.S. 471 (1979) ...................................................................................................................2
Carlton Invs. v. TLC Beatrice Int’l Holdings, Inc.,
1997 WL 305829 (Del. Ch. May 30, 1997) .............................................................................18
Cede & Co. v. Technicolor, Inc.,
634 A.2d 345 (Del. 1993) ........................................................................................................31
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 5 of 51
v
US_ACTIVE:\44209636\2\14430.0119
In re Citigroup Inc. S’holder Derivative Litig.,
964 A.2d 106 (Del. Ch. 2009)..................................................................................................35
In re Citigroup Inc. S’holder Derivative Litig.,
788 F. Supp. 2d 211 (S.D.N.Y. 2011) ......................................................................................36
Conrad v. Blank,
940 A.2d 28 (Del. Ch. 2007)....................................................................................................36
In re Consumers Power Co. Derivative Litig.,
132 F.R.D. 455 (E.D. Mich. 1990) ..........................................................................................18
Cramer v. Gen. Tel. & Elecs. Corp.,
582 F.2d 259 (3d Cir. 1978).....................................................................................................17
In re Delta & Pine Land Co. S’holders Litig.,
2000 WL 875421 (Del. Ch. June 21, 2000) .............................................................................37
In re Delta & Pine Land Co. S’holders Litig.,
2000 WL 1010584 (Del. Ch. July 17, 2000)............................................................................18
Desimone v. Barrows,
924 A.2d 908 (Del. Ch. 2007)............................................................................................35, 37
In re Dollar Thrifty S’holder Litig.,
14 A.3d 573 (Del. Ch. 2010)....................................................................................................14
In re Dow Chem. Co. Derivative Litig.,
2010 WL 66769 (Del. Ch. Jan. 11, 2010) ................................................................................28
Ferre v. McGrath,
2007 WL 1180650 (S.D.N.Y. Feb. 16, 2007) ..........................................................................19
First Hartford Corp. Pension Plan & Trust v. United States,
54 Fed. Cl. 298 (2002) .............................................................................................................10
FLI Deep Marine LLC v. McKim,
2009 WL 1204363 (Del. Ch. Apr. 21, 2009) ...............................................................25, 26, 34
Gamoran v. Neuberger, Berman LLC,
2013 WL 1286133 (S.D.N.Y. Mar. 29, 2013) ...............................................2, 5, 16, 17, 18, 34
Gantler v. Stephens,
965 A.2d 695 (Del. 2009) ........................................................................................................14
Gaubert v. Fed. Home Loan Bank Bd.,
863 F.2d 59 (D.C. Cir. 1988) ...................................................................................................11
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 6 of 51
vi
US_ACTIVE:\44209636\2\14430.0119
Gomes v. Am. Century Cos.,
2013 WL 1235258 (8th Cir. Mar. 28, 2013) ............................................................................39
Gonzalez Turul v. Rogatol Distribs., Inc.,
951 F.2d 1 (1st Cir. 1991) ........................................................................................................39
Gordon v. Goodyear,
2012 WL 2885695 (N.D. Ill. July 13, 2012) ............................................................................12
Grimes v. Donald,
673 A.2d 1207 (Del. 1996) ...............................................................1, 15, 17, 25, 32, 33, 34 35
Halebian v. Berv,
590 F.3d 195 (2d Cir. 2009)...............................................................................................11, 12
Halpert Enters., Inc. v. Harrison,
2007 WL 486561 (S.D.N.Y. Feb. 14, 2007),
aff’d, 2008 WL 4585466 (2d Cir. Oct. 15, 2008) ..............................................................11, 16
Hampshire Group, Ltd. v. Kuttner,
2010 WL 2739995 (Del. Ch. July 12, 2010)............................................................................31
Harris v. Carter,
582 A.2d 222 (Del. Ch. 1990)..................................................................................................38
In re IAC/InterActiveCorp Sec. Litig.,
478 F. Supp. 2d 574 (S.D.N.Y. 2007) ......................................................................................26
In re InfoUSA, Inc. S’holders Litig.,
953 A.2d 963 (Del. Ch. 2007)............................................................................................18, 36
Kamen v. Kemper Fin. Servs., Inc.,
500 U.S. 90 (1991) ...............................................................................................1, 2, 10, 11, 12
Kamen v. Kemper Fin. Servs., Inc.,
939 F.2d 458 (7th Cir. 1991) .............................................................................................17, 38
Kaplan v. Peat, Marwick, Mitchell & Co.,
540 A.2d 726 (Del. 1988) ........................................................................................................11
Kautz v. Sugarman,
456 F. App’x 16 (2d Cir. 2011) ...............................................................................................38
Khanna v. McMinn,
2006 WL 1388744 (Del. Ch. May 9, 2006) .............................................................................27
La. Mun. Police Emps. Ret. Sys. v. Morgan Stanley & Co.,
2011 WL 773316 (Del. Ch. Mar. 4, 2011)...............................................................................16
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 7 of 51
vii
US_ACTIVE:\44209636\2\14430.0119
La. Mun. Police Emps. Ret. Sys. v. Pyott,
46 A.3d 313 (Del. Ch. 2012),
rev’d on other grounds, 2013 WL ____ (Del. Apr. 4, 2013)
(not yet available on Westlaw) ................................................................................................31
Lambrecht v. O’Neal,
2012 WL 6013440 (2d Cir. Dec. 4, 2012) .................................................................................2
Levine v. Smith,
1989 WL 150784 (Del. Ch. Nov. 27, 1989),
aff’d, 591 A.2d 194 (Del. 1991) ..............................................................................................12
Levine v. Smith,
591 A.2d 194 (Del. 1991) ............................................................................................15, 21, 25
Lewis v. Graves,
701 F.2d 245 (2d Cir. 1983).....................................................................................................39
Love Terminal Partners v. United States,
97 Fed. Cl. 355 (2011) ...............................................................................................................6
Loveman v. Lauder,
484 F. Supp. 2d 259 (S.D.N.Y. 2007) ......................................................................................27
In re Massey Energy Co.,
2011 WL 2176479 (Del. Ch. May 31, 2011) ...........................................................................31
In re Merrill Lynch & Co., Sec., Derivative & ERISA Litig.,
773 F. Supp. 2d 330 (S.D.N.Y. 2011),
aff’d sub nom. Lambrecht v. O’Neal, 2012 WL 6013440 (2d Cir. Dec. 4, 2012)
..............................................................................................................................2, 5, 16, 17, 26
In re Mortg. & Realty Trust Sec. Litig.,
787 F. Supp. 84 (E.D. Pa. 1991) ..............................................................................................39
Mount Moriah Cemetery v. Moritz,
1991 WL 50149 (Del. Ch. Apr. 4, 1991),
aff’d, 599 A.2d 413 (Del. 1991) ..............................................................................................21
N.J. Carpenters Pension Fund v. InfoGroup, Inc.,
2011 WL 4825888 (Del. Ch. Sept. 30, 2011) ....................................................................13, 32
Oliver v. Boston Univ.,
2006 WL 1064169 (Del. Ch. Apr. 14, 2006) ...........................................................................31
Orman v. Cullman,
794 A.2d 5 (Del. Ch. 2002)......................................................................................................32
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 8 of 51
viii
US_ACTIVE:\44209636\2\14430.0119
Pirelli Armstrong Tire Corp. Retire Med. Benefits Trust v. Raines,
534 F.3d 779 (D.C. Cir. 2008) ...........................................................................................13, 36
Piven v. Ryan,
2006 WL 756043 (N.D. Ill. Mar. 23, 2006) .............................................................................38
Rahbari v. Oros,
732 F. Supp. 2d 367 (S.D.N.Y. 2010) ......................................................................................36
Rales v. Blasband,
634 A.2d 927 (Del. 1993) ................................................................................14, 24, 34, 35, 36
RCM Sec. Fund, Inc. v. Stanton,
928 F.2d 1318 (2d Cir. 1991)...........................................................................................2, 5, 16
Robert F. Booth Trust v. Crowley,
687 F.3d 314 (7th Cir. 2012) ...................................................................................................38
Ross v. Bernhard,
396 U.S. 531 (1970) ...................................................................................................................1
Ryan v. Gifford,
918 A.2d 341 (Del. Ch. 2007)..................................................................................................36
S. Muoio & Co. LLC v. Hallmark Entm’t Invs. Co.,
2011 WL 863007 (Del. Ch. Mar. 9, 2011),
aff’d, 35 A.3d 419 (Del. 2011) ................................................................................................27
Sagarra Inversiones, S.L. v. Cementos Portland Valderrivas, S.A.,
2011 WL 3371493 (Del. Ch. Aug. 5, 2011),
aff’d, 34 A.3d 1074 (Del. 2011) ..............................................................................................31
Sagarra Inversiones, S.L. v. Cementos Portland Valderrivas, S.A.,
34 A.3d 1074 (Del. 2011) ........................................................................................................12
Scalisi v. Fund Asset Mgmt., L.P.,
380 F.3d 133 (2d Cir. 2004).....................................................................................................11
Scattered Corp. v. Chi. Stock Exch., Inc.,
701 A.2d 70 (Del. 1997) ........................................................................................15, 21, 24, 34
Sebastian v. United States,
185 F.3d 1368 (Fed. Cir. 1999)..................................................................................................6
Simmonds v. Credit Suisse Sec. (USA) LLC,
638 F.3d 1072 (9th Cir. 2011),
vacated and remanded, 132 S. Ct. 1414 (2012) .......................................................................34
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 9 of 51
ix
US_ACTIVE:\44209636\2\14430.0119
Sinclair Oil Corp. v. Levien,
280 A.2d 717 (Del. 1971) ........................................................................................................14
In re Smith & Wesson Holding Corp. Derivative Litig.,
743 F. Supp. 2d 14 (D. Mass. 2010) ........................................................................................37
In re Smurfit-Stone Container Corp. S’holder Litig.,
2011 WL 2028076 (Del. Ch. May 20, 2011) ..........................................................................14
In re S. Peru Copper Corp. S’holder Derivative Litig.,
30 A.3d 60 (Del. Ch. 2011),
aff’d sub nom. Ams. Mining Corp. v. Theriault, 51 A.3d 1213 (Del. 2012) ...........................27
In re Sonus Networks, Inc., S’holder Derivative Litig.,
499 F.3d 47 (1st Cir. 2007) ................................................................................................25, 28
Spiegel v. Buntrock,
571 A.2d 767 (Del. 1990) ......................................................................................14, 15, 25, 34
Starr Int’l Co. v. Fed. Reserve Bank of N.Y.,
2012 WL 5834852 (S.D.N.Y. Nov. 16, 2012) ...........................................5, 6, 8, 27, 29, 30, 36
Starr Int’l Co. v. United States,
106 Fed. Cl. 50 (2012),
motion for reconsideration denied, 107 Fed. Cl. 374 (2012) .......................................11, 19, 20
Terry v. United States,
103 Fed. Cl. 645 (2012) .............................................................................................................6
In re VistaCare, Inc., Derivative Litig.,
2007 WL 2460610 (D. Ariz. Aug. 23, 2007) ...........................................................................18
In re Walt Disney Co. Derivative Litig.,
906 A.2d 27 (Del. 2006) ................................................................................................2, 13, 14
Weinstein Enters., Inc. v. Orloff,
870 A.2d 499 (Del. 2005) ........................................................................................................26
In re W. Nat’l Corp. S’holders Litig.,
2000 WL 710192 (Del. Ch. May 22, 2000) .............................................................................29
Wood v. Baum,
953 A.2d 136 (Del. 2008) ......................................................................................11, 32, 35, 36
Zapata Corp. v. Maldonado,
430 A.2d 779 (Del. 1981) ............................................................................................14, 17, 18
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 10 of 51
x
US_ACTIVE:\44209636\2\14430.0119
STATUTES &RULES
RCFC 23.1 .................................................................................................................1, 2, 4, 5, 8, 10
Fed. R. Civ. P. 12(b)(6)..............................................................................................................6, 12
Fed. R. Civ. P. 23.1 ................................................................................................10, 11, 12, 17, 39
Fed. R. Evid. 201 .............................................................................................................................6
Model Bus. Corp. Act § 7.42 .........................................................................................................38
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 11 of 51
US_ACTIVE:\44209636\2\14430.0119
PRELIMINARY STATEMENT
This is one of two lawsuits filed by Plaintiff Starr International Group, Inc.
(“Starr”) alleging claims against the United States of America (the “Government”) in this Court
and against the Federal Reserve Bank of New York (“FRBNY”) in the Southern District of New
York. The lawsuits challenge the Government’s September 2008 rescue of American Interna-
tional Group, Inc. (“AIG”) and subsequent related events, including claims involving Maiden
Lane III (“ML III”), a special purpose vehicle used to resolve AIG obligations to credit default
swap counterparties in the aftermath of the Government’s September 2008 rescue of AIG.
Starr alleges that its claims are derivative claims brought on behalf of AIG and
direct claims brought on behalf of Starr and two classes of AIG shareholders. This brief
addresses only Starr’s standing under Rule 23.1 of the Rules of the Court of Federal Claims
(“RCFC”) and the governing substantive Delaware law to bring alleged derivative claims on
AIG’s behalf. AIG is not a party to Starr’s alleged direct claims.
Starr’s derivative claims should be dismissed under RCFC 23.1 because Starr has
not alleged facts showing that AIG’s board wrongfully refused Starr’s demand that AIG bring
the claims and has not alleged facts showing that demand was excused.
* * *
Unlike an action brought on one’s own behalf to enforce a personal claim, a
shareholder derivative action is brought “‘to enforce a corporate cause of action.’” Kamen v.
Kemper Fin. Servs., Inc., 500 U.S. 90, 95 (1991) (quoting Ross v. Bernhard, 396 U.S. 531, 534
(1970)) (emphasis in original). “Although named a defendant,” the corporation “is the real party
in interest, the stockholder being at best the nominal plaintiff.” Ross, 396 U.S. at 538. The
claim “belongs to the corporation.” Grimes v. Donald, 673 A.2d 1207, 1215 (Del. 1996).
The pre-suit demand requirement “implements ‘the basic principle of corporate
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 12 of 51
2
US_ACTIVE:\44209636\2\14430.0119
governance that the decisions of a corporation – including the decision to initiate litigation –
should be made by the board of directors or the majority of shareholders.’” Kamen, 500 U.S. at
101 (citation omitted). The law recognizes that “[t]here may well be situations in which the
independent directors could reasonably believe that the best interests of the shareholders call for
a decision not to sue.” Burks v. Lasker, 441 U.S. 471, 485 (1979). Starr made a demand, and
AIG’s board of directors determined to refuse the demand following extensive written and oral
presentations from Starr, the Government and FRBNY.
The business judgment rule – a presumption that directors are “faithful to their
fiduciary duties” (Beam v. Stewart, 845 A.2d 1040, 1048 (Del. 2004)) – protects a board deci-
sion to refuse a shareholder demand unless the decision “cannot be ‘attributed to any rational
business purpose.’” In re Walt Disney Co. Derivative Litig., 906 A.2d 27, 74 (Del. 2006) (cita-
tion omitted). “[F]ew, if any, plaintiffs surmount this obstacle.” RCM Sec. Fund, Inc. v. Stan-
ton, 928 F.2d 1318, 1328 (2d Cir. 1991), quoted in In re Merrill Lynch & Co., Sec., Derivative &
ERISA Litig., 773 F. Supp. 2d 330, 345 (S.D.N.Y. 2011), aff’d sub nom. Lambrecht v. O’Neal,
2012 WL 6013440 (2d Cir. Dec. 4, 2012) and Gamoran v. Neuberger, Berman LLC, 2013 WL
1286133, at *5 (S.D.N.Y. Mar. 29, 2013).
This case is no exception to this rule. Starr has alleged no facts – much less par-
ticularized facts, as required by RCFC 23.1 – that, if true, would overcome the business judg-
ment rule presumption that directors are faithful to their fiduciary duties. Starr has alleged no
facts showing that the AIG board’s decision to refuse Starr’s demand cannot be attributed to a
rational business purpose. In reaching its decision with the assistance of counsel, AIG’s board
considered, among other factors, the merits of the case, the amount (if any) likely to be recovered
if the claims succeed, and indemnification claims AIG would face from the Government.
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 13 of 51
3
US_ACTIVE:\44209636\2\14430.0119
Whatever Starr may think, it was not irrational for AIG’s board to conclude that the claims Starr
seeks to bring in AIG’s name are not the “slam dunk” “easy winners” Starr portrays; to the
contrary, AIG’s board was advised by its counsel (and experts on constitutional law and financial
regulation) that Starr’s likelihood of success is in fact low. AIG’s directors also recognized that
AIG would face incalculable harm to AIG’s corporate brand and image and relationships with
shareholders, customers, regulators and elected officials if AIG pursued litigation against the
Government, and that this harm threatened to nullify the herculean efforts AIG and its employees
have made to rebuild AIG’s name and reputation following the events of September 2008 and
repay the entire amount AIG owed the Government (plus a profit for the Government). Far from
being irrational, these concerns were confirmed for the board by the wave of negative publicity
triggered by the board’s mere consideration of Starr’s demand.
1
Starr may not be concerned about the harm AIG will suffer if AIG pursues claims
against the Government, but the balancing of potential benefits and potential harms of AIG’s
pursuit of this litigation is a business judgment for AIG’s board of directors, not Starr. AIG’s
directors had every right to decide, in the exercise of their business judgment, that suing the
1
See, e.g., AIG Board Won’t Sue Over Terms of Rescue, Wall St. J., Jan. 9, 2013 (“[n]ews of
AIG’s consideration of the matter this week unleashed a torrent of criticism that the insurer
appeared ungrateful toward taxpayers for the government’s rescue effort”) (Ex. 1); AIG May
Join Bailout Lawsuit Against U.S. Government, Reuters, Jan. 8, 2013 (“American International
Group Inc., the insurer rescued by the U.S. government in 2008, drew angry condemnation from
lawmakers on Tuesday after saying it may join a lawsuit that alleges the bailout terms were
unfair”; “[t]he move would be something of a shock, given that AIG just launched a high-profile
television ad campaign called ‘Thank You America,’ in which it offers the public its gratitude for
the bailout”) (Ex. 2); Lawsuit Fiasco Mars AIG ‘Thank You’ Campaign, Politico, Jan. 15, 2013
(“[t]he episode . . . drew fierce criticism all around” and “[t]he blowback to even the notion of
suing the government was fierce and . . . a setback . . . for AIG”) (Ex. 3); Washington’s Jaw
Drops at Possibility of AIG Lawsuit, Politico, Jan. 8, 2013 (quoting White House aide David
Axelrod’s “[d]efinition of Chutzpah: AIG, saved by taxpayers, contemplating suit’” and report-
ing possibility “if AIG pursues the litigation” of “hearings on Capitol Hill”) (Ex. 4); How About
Charging AIG With Treason?, MarketWatch, Jan. 8, 2013 (“AIG suing the government is like a
patient who is suing his doctor for saving his life”) (Ex. 5).
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 14 of 51
4
US_ACTIVE:\44209636\2\14430.0119
Government for its rescue of AIG is not the right thing for AIG to do, and that AIG’s interests
are better served by focusing on the future and not joining litigation concerning the past. Under
well settled Delaware law, Starr cannot usurp the right of AIG’s board to make this business
judgment.
Starr also cannot claim, as it tries, that the demand it made was not required and
that the Court should pretend that the events of the last six months never happened. Starr made
the demand, thereby waiving its claim that the demand was not required as a matter of law. A
shareholder cannot file a derivative action alleging that a demand is excused, make a demand ten
months later, participate in an unprecedented four month decision-making process including
written and oral presentations to the corporation’s board, and then, after the board does not make
the hoped-for decision, say “never mind” and go back to the shareholder’s original claim that
demand was excused. It is absurd to hold that demand is excused where it has been made and
refused in a manner protected by the business judgment rule.
Finally, demand would not be excused even if Starr is correct that its “demand
excused” argument is not waived and even if the Court is prepared to ignore the fact that the
demand was made and refused. Unlike the situation in cases where demand is excused, Starr
alleges no wrongdoing by AIG’s directors and no facts suggesting that any – much less a
majority – of AIG’s directors are willing to risk their professional reputations rather than do what
they think is right with respect to whether a lawsuit by AIG against the Government would serve
the best interests of AIG and its shareholders.
QUESTIONS PRESENTED
1. Has Starr pled particularized facts – as required by RCFC 23.1 and sub-
stantive Delaware law – showing that the decision by AIG’s board of directors to refuse Starr’s
demand that AIG pursue this litigation against the Government is not protected by the business
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 15 of 51
5
US_ACTIVE:\44209636\2\14430.0119
judgment rule presumption that directors are faithful to their fiduciary duties to act in good faith
and in the best interests of the corporation they serve, where (i) AIG’s board was advised by
counsel and experts on constitutional and financial regulation issues with respect to the merits
and the likelihood of recovery for AIG, (ii) AIG faced indemnification clams by the Govern-
ment, (iii) pursuit of this litigation threatened substantial damage to AIG’s corporate brand and
image, and relationships with shareholders, customers, regulators and elected officials, and (iv)
the reputational harm AIG would suffer by pursuing claims against the Government was
confirmed the media and congressional reaction to the board’s consideration of Starr’s demand?
The answer is no. The business judgment rule protects board decisions to refuse
shareholder demands so long as the decision can be attributed to a rational business purpose.
“[F]ew, if any, plaintiffs surmount this obstacle.” RCM, 928 F.2d at 1328; Merrill Lynch, 773 F.
Supp. 2d at 345; Gamoran, 2013 WL 1286133, at *5. This case is no exception.
2. Has Starr pled particularized facts – as required by RCFC 23.1 and sub-
stantive Delaware law – showing that the demand Starr made on AIG’s board was excused,
where (i) Starr made the demand, (ii) none of AIG’s directors is alleged to have engaged in
wrongdoing, and (iii) Starr has alleged no facts suggesting any – much less a majority – of AIG’s
directors are more willing to risk their professional reputations than do what they think is right
with respect to whether a lawsuit by AIG against the Government would serve the best interests
of AIG and its shareholders?
The answer is no, as the court in Starr’s New York action has already correctly
held. “Missing is any allegation tending to show that any outside director of AIG . . . , let alone a
majority, had an individual interest that would make him or her not disinterested with respect to
a decision whether to sue [the Government].” Starr Int’l Co. v. Fed. Reserve Bank of N.Y., 2012
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 16 of 51
6
US_ACTIVE:\44209636\2\14430.0119
WL 5834852, at *47 (S.D.N.Y. Nov. 16, 2012).
2
STATEMENT OF THE CASE
A. The Parties
Plaintiff Starr alleges that it is a Panama corporation with its principal place of
business in Switzerland and a shareholder of AIG. 2d Am. Compl. ¶ 28.
AIG, on whose behalf Starr asserts its derivative claims, is a Delaware corpora-
tion with its principal executive offices in New York City. AIG provides insurance and financial
services throughout the United States and internationally. 2d Am. Compl. ¶ 30.
Defendant United States of America (the “Government”) “includes the Depart-
ment of the Treasury and its agents acting at its direction.” 2d Am. Compl. ¶ 29. Following the
events of September 2008 and subsequent months, the Government owned over 90% of AIG’s
common stock. Dec. 11, 2012 Dep’t of the Treasury Press Release (Ex. 7). As of December
2012, the Government had sold its shares and no longer owns AIG stock. Id.; Dec. 14, 2012
AIG Press Release (Ex. 8).
2
“The court may take judicial notice of publicly available documents which represent ‘a public
record for the fact that the statements were made’” and “[t]his includes facts and documents
which are ‘not subject to reasonable dispute.’” Mar. 18, 2013 Starr 2d Cir. Motion to Take Judi-
cial Notice at 2 (Ex. 6); see also Feb. 11, 2013 Starr 2d Cir. Brief at 3 n.3 (courts “may take
judicial notice of facts outside the record that are ‘not subject to reasonable dispute’”); Sebastian
v. United States, 185 F.3d 1368, 1374 (Fed. Cir. 1999) (“[i]n deciding whether to dismiss a com-
plaint under Rule 12(b)(6), the court may consider matters of public record”); Bell/Heery v.
United States, 106 Fed. Cl. 300, 307 (2012) (“[i]t is well established that . . . the court ‘must con-
sider . . . matters of which a court may take judicial notice’”) (citation omitted); Terry v. United
States, 103 Fed. Cl. 645, 652 (2012) (“matters of public record” may be considered on motion to
dismiss); Love Terminal Partners v. United States, 97 Fed. Cl. 355, 385 (2011) (“matters of
public record” “fall within the ‘narrowly defined category of materials a court can consider
without converting a[n FRCP] 12(b)(6) motion to one for summary judgment”); Fed. R. Evid.
201 (permitting judicial notice of facts “not subject to reasonable dispute” that “can be accurately
and readily determined from sources whose accuracy cannot reasonably be questioned”).
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 17 of 51
7
US_ACTIVE:\44209636\2\14430.0119
B. AIG’s Board of Directors
AIG’s directors are not named as defendants in this action and face no prospect of
personal liability if the derivative claims are pursued. SEC filings show that the following 12
individuals serve on AIG’s board:
Director Joined Board Experience and Qualifications
Robert H. Benmosche Aug. 10, 2009 President and Chief Executive Officer,
American International Group, Inc.
W. Don Cornwell May 11, 2011 Former Chairman of the Board and Chief
Executive Officer, Granite Broadcasting
Corporation
John H. Fitzpatrick May 11, 2011 Secretary General and Managing Director,
The Geneva Association
Former Chief Financial Officer and Head of the
Life and Health Business Group and Head of
Financial Services, Swiss Re
Christopher S. Lynch June 30, 2009 Former National Partner in Charge of Financial
Services, KPMG LLP
Arthur C. Martinez June 30, 2009 Former Chairman of the Board, President and
Chief Executive Officer, Sears, Roebuck and Co.
George L. Miles, Jr. 2005 Executive Chairman, Chester Engineers, Inc.
Former President and Chief Executive Officer,
WQED Multimedia
Henry S. Miller Apr. 7, 2010 Chairman, Marblegate Asset Management
Former Chairman and Managing Director, Miller
Buckfire & Co., LLC
Robert S. Miller June 30, 2009 Chief Executive Officer, Hawker Beechcraft, Inc.
Former Executive Chairman, Delphi Corporation
Suzanne Nora Johnson 2008 Former Vice Chairman, The Goldman Sachs
Group, Inc.
Morris W. Offit 2005 Chairman, Offit Capital Advisors LLC
Founder and Former Chief Executive Officer,
OFFITBANK
Ronald A. Rittenmeyer Apr. 1, 2010 President and Chief Executive Officer, NCO
Group, Inc.
Former Chairman, Chief Executive Officer and
President, Electronic Data Systems Corporation
Former Chairman, Chief Executive Officer and
President, Safety-Kleen Corp.
Douglas M. Steenland June 30, 2009 Former President and Chief Executive Officer,
Northwest Airlines Corporation
Apr. 5, 2012 AIG Proxy Statement at 12-18 (Ex. 9).
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 18 of 51
8
US_ACTIVE:\44209636\2\14430.0119
C. Starr’s New York Action
On November 16, 2012, the court in Starr’s New York action dismissed Starr’s
derivative claims against FRBNY in the New York action on several grounds, including plain-
tiff’s failure to make a demand. Starr Int’l Co. v. Fed. Reserve Bank of N.Y., 2012 WL
5834852, at *47-48 (S.D.N.Y. Nov. 16, 2012). An appeal is fully briefed.
D. Starr’s Claim That Demand Was Not Excused and Starr’s Agreement to
Make a Demand
Starr’s complaint and amended complaint alleged that a demand on AIG’s board
was excused. Compl. ¶ 167 (Dkt. No. 1); Am. Compl. ¶ 167 (Dkt. No. 22). Starr and AIG sub-
sequently agreed that Starr would make a demand and that Starr (and the Government) would be
provided opportunities to make written and oral submissions to AIG’s board. Dkt. Nos. 57 at 4,
85 at 22. Starr reserved the right to later claim that the demand was not required, and AIG
reserved all arguments to the contrary. Dkt. No. 64-1 at 4.
E. AIG’s Refusal of Starr’s Demand
On January 9, 2013, AIG’s board refused Starr’s demand, and on January 23,
2013 AIG sent a letter to Starr’s counsel (and filed the letter with this Court and the SEC) setting
forth the process by which the board considered Starr’s demand and the board’s rationale for its
unanimous determination to refuse that demand. Dkt. Nos. 86, 87, 87-1.
3
3
The demand refusal is properly before the Court because it is a public record (see footnote 2
above) filed in this Court and referred to in this Court’s March 1, 2013 decision (Dkt. Nos. 86,
87, 87-1, 99 at 2) and filed with the SEC (Jan. 24, 2013 AIG Form 8-K, Ex. 10 (without volum-
inous exhibits included in Dkt. Nos. 87-3 through 87-26)). The demand refusal is also before the
Court as an integral part of Starr’s second amended complaint (2d Am. Compl. ¶¶ 181, 191, 192,
219), as required by RCFC 23.1(b), which states that the complaint in a derivative action “must
. . . state with particularity . . . any effort by the plaintiff to obtain the desired action from the
directors . . . and . . . the reasons for not obtaining the action” (emphasis added), and pursuant to
cases such as AtraZeneca Pharm. L.P. v. Apotex Corp., 669 F.3d 1370, 1378 n.5 (Fed. Cir. 2012)
(courts “examine documents ‘integral to or explicitly relied upon in the complaint’ in evaluating
motions to dismiss”) (citation omitted).
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 19 of 51
9
US_ACTIVE:\44209636\2\14430.0119
The letter states that AIG’s board, advised by counsel, including independent
counsel, provided Starr, the Government and FRBNY an opportunity “to make their case” to the
board through three rounds of briefing totaling 184 pages (plus voluminous exhibits) during the
late fall of 2012. Then, on January 9, 2013, the board met with representatives of Starr, the
Government and FRBNY. Starr’s chairman, Maurice R. (Hank) Greenberg, was present as
Starr’s counsel spoke for 45 minutes, Treasury’s counsel spoke for 30 minutes, FRBNY’s coun-
sel spoke for 30 minutes, Starr’s counsel replied for 15 minutes, and Treasury, FRBNY and then
Starr presented 2 minute closing statements. Dkt. Nos. 87-1 at 6 and 87-26 at 4-111 (transcript
of presentations).
Starr, the Government and FRBNY then left the meeting, members of the board
and management who had participated in the events underlying the demand commented on
factual assertions made during the presentations, and the board discussed the presentations and
formulated follow-up questions for Starr, Treasury and FRBNY. The board was informed that at
least one state insurance regulator had called AIG during the meeting to recommend strongly that
AIG not join the suit in light of potential harm to AIG customers. Dkt. No. 87-1 at 6.
Starr, Treasury and FRBNY then returned to the meeting, answered questions
from the Board for approximately 40 minutes. Dkt. Nos. 87-1 at 6 and 87-26 at 111-4 (transcript
of questions and answers). At the conclusion of the parties’ presentations, Starr’s counsel stated
that he could not think of “anything that we haven’t said in general terms that would be material”
to the board’s decision. Dkt. No. 87-26 at 142.
AIG’s letter refusing Starr’s demand summarizes the conclusion of the board’s
deliberations as follows:
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 20 of 51
10
US_ACTIVE:\44209636\2\14430.0119
Mr. R. Miller, the Chairman of the Board, suggested that the directors each state
their individual views with respect to the Demand based on all of the information
the Board had now been provided.
Each director spoke, and each director stated his or her view that the Demand
should be refused for one or more of multiple reasons, including the low likeli-
hood of success on the merits, the realistic potential damages, the uncertainty in
allocating any potential damages among the direct and derivative claims, the
potential harm to AIG’s goodwill and the positive image that AIG had worked so
hard to restore since September 2008 (consistent with the negative reaction by the
public, the media, regulators and elected officials even to the Board’s considera-
tion of the Demand), the fact that “a deal is a deal,” and AIG’s potential indemni-
fication obligations. Mr. Benmosche, AIG’s chief executive officer, stated his
view that AIG had no choice but to honor the deal AIG struck with FRBNY, that
suing the United States or FRBNY was not the right thing to do, and that AIG
should continue to focus on the future, not the past.
Dkt. No. 87-1 at 6-7. The board unanimously refused the demand. Dkt. No. 87-1 at 7.
ARGUMENT
STARR LACKS STANDING TO ASSERT DERIVATIVE CLAIMS IN AIG’S NAME
Starr lacks standing to assert derivative claims on AIG’s behalf because Starr has
not complied with the pre-suit demand requirement. RCFC 23.1 requires that a plaintiff in a
shareholder derivative action “state with particularity . . . any effort by plaintiff to obtain the
desired action from the directors . . . and . . . the reasons for not obtaining the action or not mak-
ing the effort.” RCFC 23.1(b)(3) (emphasis added). “This Court is comfortable . . . in looking to
cases involving Federal Rule 23.1, which contains identical language to RCFC 23.1, to assist in
its interpretation of RCFC 23.1.” First Hartford Corp. Pension Plan & Trust v. United States, 54
Fed. Cl. 298, 303 n.9 (2002); see also RCFC rules committee notes 2002 (“[t]his version of
RCFC 23.1 is in conformity with the corresponding FRCP”).
Rule 23.1 “does not create a demand requirement.” Kamen, 500 U.S. at 96 (em-
phasis in original). Rather, Rule 23.1 governs “‘the specificity of facts alleged with regard to
efforts made to urge a corporation’s directors to bring the action in question,’ but ‘the adequacy
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 21 of 51
11
US_ACTIVE:\44209636\2\14430.0119
of those efforts is to be determined by state law.’” Halebian v. Berv, 590 F.3d 195, 204, 206 n.7
(2d Cir. 2009) (citation omitted); see also Kamen, 500 U.S. at 96-97 (demand requirement “is a
matter of ‘substance,’ not ‘procedure’”). Accordingly, Rule 23.1 “outlines the procedural rules
with which a derivative action in federal court must comply,” and “state law provides the sub-
stantive law governing a Board’s refusal of a demand.” Halpert Enters., Inc. v. Harrison, 2007
WL 486561, at *4 (S.D.N.Y. Feb. 14, 2007), aff’d, 2008 WL 4585466 (2d Cir. Oct. 15, 2008).
Likewise, “[t]he substantive law which determines whether demand is, in fact, futile is provided
by the state of incorporation.” Scalisi v. Fund Asset Mgmt., L.P., 380 F.3d 133, 138 (2d Cir.
2004).
AIG is a Delaware corporation. 2d Am. Compl. ¶ 30. Delaware law thus
governs. Under Delaware law, “[a] stockholder may not pursue a derivative suit to assert a claim
of the corporation unless the stockholder: (a) has first demanded that the directors pursue the
corporate claim and the directors have wrongfully refused to do so; or (b) establishes that pre-
suit demand is excused because the directors are deemed incapable of making an impartial
decision regarding the pursuit of the litigation.” Wood v. Baum, 953 A.2d 136, 140 (Del. 2008).
This demand requirement reflects the “‘basic principle of corporate governance
that the decisions of a corporation – including the decision to initiate litigation – should be made
by the board of directors or the majority of shareholders.’” Kamen, 500 U.S. at 101 (citation
omitted); see also Starr Int’l Co. v. United States, 106 Fed. Cl. 50, 66 (2012) (“[t]he purpose of
the demand requirement is to protect the ‘directors’ power to manage the affairs of the corpora-
tion’”), motion for reconsideration denied, 107 Fed. Cl. 374 (2012) (quoting Kaplan v. Peat,
Marwick, Mitchell & Co., 540 A.2d 726, 730 (Del. 1988)); Gaubert v. Fed. Home Loan Bank
Bd., 863 F.2d 59, 65 (D.C. Cir. 1988) (“at its most fundamental, the demand requirement ‘fur-
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 22 of 51
12
US_ACTIVE:\44209636\2\14430.0119
thers a principle basic to corporate organization, that the management of the corporation be
entrusted to its board of directors’”) (citation omitted); Aronson v. Lewis, 473 A.2d 805, 811
(Del. 1984) (it is a “cardinal precept of the General Corporation Law of the State of Delaware
. . . that directors, rather than shareholders, manage the business and affairs of the corporation”).
The demand requirement thus “‘afford[s] the directors an opportunity to exercise
their reasonable business judgment and ‘waive a legal right vested in the corporation in the belief
that its best interests will be promoted by not insisting on such right’’” and “protect[s] the direc-
tors’ prerogative to take over the litigation or to oppose it.” Kamen, 500 U.S. at 96, 101 (cita-
tions omitted); see also Halebian, 590 F.3d at 205 (“‘[t]he rationale behind the demand require-
ment is that, as a basic principle of corporate governance, the board of directors or majority of
shareholders should set the corporation’s business policy, including the decision whether to pur-
sue a lawsuit’”) (citation omitted); Sagarra Inversiones, S.L. v. Cementos Portland Valderrivas,
S.A., 34 A.3d 1074, 1082 (Del. 2011) (“the presuit demand requirement serves a core function of
substantive corporation law, in that it allocates, as between directors and shareholders, the auth-
ority to sue on behalf of the corporation”).
For these reasons, “[u]nlike its Rule 12(b)(6) counterpart, a motion to dismiss
under Rule 23.1 is not intended to test the legal sufficiency of the plaintiff’s substantive claim.
Rather, its purpose is to determine who is entitled, as between the corporation and its share-
holders, to assert the plaintiff’s underlying substantive claim on the corporation’s behalf.”
Levine v. Smith, 1989 WL 150784, at *5 (Del. Ch. Nov. 27, 1989), aff’d, 591 A.2d 194 (Del.
1991), quoted in, e.g., Gordon v. Goodyear, 2012 WL 2885695, at *5 (N.D. Ill. July 13, 2012).
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 23 of 51
13
US_ACTIVE:\44209636\2\14430.0119
I. DEMAND WAS NOT WRONGFULLY REFUSED
A. Demand Is Wrongfully Refused Only Where A Shareholder Alleges Facts
Overcoming the Business Judgment Rule Presumption That Directors Are
Faithful to Their Fiduciary Duties – An “Obstacle” That “Few, If Any,
Plaintiffs Surmount”
The business judgment rule – “the foundation and core of Delaware corporate
law” (N.J. Carpenters Pension Fund v. InfoGroup, Inc., 2011 WL 4825888, at *8 (Del. Ch. Sept.
30, 2011)) – is “a presumption that [directors] were faithful to their fiduciary duties” and “pre-
sumes that ‘in making a business decision the directors of a corporation acted on an informed
basis, in good faith, and in the honest belief that the action taken was in the best interests of the
company.’” Beam, 845 A.2d at 1048; Disney, 906 A.2d at 52 (quoting Aronson, 473 A.2d at
812); see also Pirelli Armstrong Tire Corp. Retire Med. Benefits Trust v. Raines, 534 F.3d 779,
791 (D.C. Cir. 2008) (under Delaware law “[t]he business judgment rule establishes a ‘pre-
sumption that in making a business decision the directors of a corporation acted on an informed
basis, in good faith and in the honest belief that the action taken was in the best interests of the
company’”) (citation omitted).
The Delaware Supreme Court has emphasized the importance of the presumption
of the business judgment rule in derivative litigation, as follows:
The key principle upon which this area of our jurisprudence is based is that the
directors are entitled to a presumption that they were faithful to their fiduciary
duties. In the context of presuit demand, the burden is upon the plaintiff in a
derivative action to overcome that presumption.
Beam, 845 A.2d at 1048-49 (emphasis in original; footnotes omitted); see also In re Am. Int’l
Grp., Inc. Derivative Litig., 415 F. App’x 285, 286 (2d Cir. 2011) (“[u]nder applicable Delaware
law, ‘directors are entitled to a presumption that they were faithful to their fiduciary duties,’ and
a shareholder seeking to bring a derivative suit bears the burden of ‘overcom[ing] that presump-
tion’”) (quoting Beam).
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 24 of 51
14
US_ACTIVE:\44209636\2\14430.0119
The business judgment rule presumptions that shareholders “must overcome . . .
before they will be permitted to pursue [a] derivative claim” are “powerful.” Rales v. Blasband,
634 A.2d 927, 933 (Del. 1993). “[W]here business judgment presumptions are applicable, the
board’s decision will be upheld unless it cannot be ‘attributed to any rational business purpose.’”
Disney, 906 A.2d at 74 (quoting Sinclair Oil Corp. v. Levien, 280 A.2d 717, 720 (Del. 1971));
see also Gantler v. Stephens, 965 A.2d 695, 706 (Del. 2009) (under the business judgment rule,
“‘a court will not substitute its judgment for that of the board if the . . . decision can be ‘attrib-
uted to any rational business purpose’’”) (citations omitted); In re Smurfit-Stone Container Corp.
S’holder Litig., 2011 WL 2028076, at *11 (Del. Ch. May 20, 2011) (“[t]his standard of review is
respectful to director prerogatives to manage the business of a corporation; in cases where it
applies, courts must give ‘great deference’ to directors’ decisions and, as long as the court can
discern a rational business purpose for the decision, it must ‘not invalidate the decision . . .
examine its reasonableness, [or] substitute [its] views for those of the board’”) (citation omitted);
In re Dollar Thrifty S’holder Litig., 14 A.3d 573, 597 (Del. Ch. 2010) (“business judgment rule
review reflect[s] a policy of maximal deference to disinterested board decisionmaking”).
The Delaware Supreme Court has stated no fewer than five times that a board’s
decision to refuse a shareholder demand is protected by the business judgment rule. See
x Zapata Corp. v. Maldonado, 430 A.2d 779, 784 n.10 (Del. 1981) (“when stock-
holders, after making demand and having their suit rejected, attack the board’s
decision as improper, the board’s decision falls under the ‘business judgment’
rule”);
x Aronson v. Lewis, 473 A.2d 805, 813 (Del. 1984) (“where demand on a board has
been made and refused, we apply the business judgment rule in reviewing the
board’s refusal to act pursuant to a stockholder’s demand”);
x Spiegel v. Buntrock, 571 A.2d 767, 775-76 (Del. 1990) (“stockholders who, like
Spiegel, make a demand which is refused, subject the board’s decision to judicial
review according to the traditional business judgment rule”);
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 25 of 51
15
US_ACTIVE:\44209636\2\14430.0119
x Levine v. Smith, 591 A.2d 194, 212 (Del. 1991) (“the board’s refusal is subject to
‘judicial review according to the traditional business judgment rule’”) (quoting
Spiegel);
x Grimes v. Donald, 673 A.2d 1207, 1219 (Del. 1996) (“[i]f a demand is made and
rejected, the board rejecting the demand is entitled to the presumption of the
business judgment rule”).
As this Court stated in its March 1, 2013 decision, under Delaware law “the determination
whether or not to pursue litigation is a business decision entitled to deference under the business
judgment rule.” Dkt. No. 99 at 3.
To survive a motion to dismiss, a shareholder plaintiff must “allege facts with
particularity creating a reasonable doubt that the board is entitled to the benefit of the presump-
tion.” Grimes, 673 A.2d at 1219 (emphasis added). The term “reasonable doubt” requires “a
‘reasonable belief’” that the board’s decision is “not protected by the business judgment rule.”
Id. at 1217 n.17. The “reasonable doubt” cannot be “based on mere suspicions or stated in
conclusory terms.” Id. at 1217. The term “reasonable doubt” does not “weaken” or “water[ ]
down the pleading threshold set forth in [Delaware] jurisprudence.” Beam, 845 A.2d at 1050
n.26. The plaintiff must “overcome th[e] presumption” and must do so “at the pleading stage.”
Id. at 1049. Plaintiffs “are not entitled to discovery to assist their compliance with the particu-
larized pleading requirement.” Scattered Corp. v. Chi. Stock Exch., Inc., 701 A.2d 70, 77 (Del.
1997). As this Court stated in its March 1, 2013 decision: “‘Federal courts routinely evaluate
allegations of wrongful refusal of shareholder demand at the pleadings stage and in the context
of a motion to dismiss. . . . [A]ffording discovery, and allowing the case to proceed beyond the
pleadings stage, would frustrate the purposes behind Delaware’s substantive law regarding
demand-refusal, and its recognition that the determination of whether or not to pursue litigation
is a business decision entitled to deference under the business judgment rule.” Dkt. No. 99 at 3
(quoting In re Boston Scientific Corp. S’holders Litig., 2007 WL 1696995, at *5 (S.D.N.Y. June
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 26 of 51
16
US_ACTIVE:\44209636\2\14430.0119
13, 2007)).
This is a “highly deferential standard,” and a shareholder “faces long odds in
showing that the refusal was wrongful.” La. Mun. Police Emps. Ret. Sys. v. Morgan Stanley &
Co., 2011 WL 773316, at *7-8 (Del. Ch. Mar. 4, 2011); see also Gamoran, 2013 WL 1286133, at
*5 (plaintiff’s allegations must “rise to the level of specificity required to overcome the strong
deference owed to a board under the business judgment rule”). “[F]ew, if any, plaintiffs sur-
mount this obstacle.” RCM, 928 F.2d at 1328, quoted in Halpert, 2007 WL 486561, at *5 n.4,
Boston Scientific, 2007 WL 1696995, at *5, Merrill Lynch, 773 F. Supp. 2d at 345 and Gam-
oran, 2013 WL 1286133, at *5 (all construing Delaware law).
B. Plaintiff Does Not Allege Particularized Facts Overcoming the Business
Judgment Rule Presumption
Starr has alleged no facts – and certainly no particularized facts – that would
overcome the “long odds” Starr faces (La. Mun., 2011 WL 773316, at *8) or making this case
the exception to the rule that “few, if any, plaintiffs surmount th[e] obstacle” (RCM, 928 F.2d at
1328) of the business judgment rule presumption in a case where a board has refused a demand.
AIG’s board followed an exemplary process, to our knowledge unparalleled in the history of
corporate America and that law school professors are already using in their classes.
4
4
See Brian J.M. Quinn, Demand . . . refused, M&A Law Prof Blog, Jan. 24, 2013 (Ex. 11):
For all you law students out there who are mystified by the procedural niceties of
derivative litigation (actually, I should include a pile of politicians and media
types in this group as well), AIG has filed a copy of its demand refusal with the
SEC. It’s right here. You’ll also find a copy of the plaintiff’s demand letter that
kicked this whole thing off. I'll probably be using these materials in the future
when I next walk through derivative litigation.
What does the filing tell us? Well, after plaintiffs filed their demand that the
board took its time and didn’t rush its decision with respect to the litigation.
When it took up the litigation, it had informed itself of the issues and decided that
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 27 of 51
17
US_ACTIVE:\44209636\2\14430.0119
1. Starr’s Allegations Concerning the “Strength of Starr’s Case” Do Not
Overcome the Business Judgment Rule Presumption
Starr alleges that “[t]he AIG Board’s wrongful refusal of Starr’s demand is evi-
denced by the strength of Starr’s case.” 2d Am. Compl. ¶ 192. But “Delaware law does not
‘permit a plaintiff to overcome the business judgment rule simply by asserting that the substance
of a board of director’s decision was wrong.’” Gamoran, 2013 WL 1286133, at *5 (quoting
Merrill Lynch, 773 F. Supp. 2d at 346-47). “[D]isagree[ment] with the Board’s conclusion” does
not state a claim. Grimes, 673 A.2d at 1220. A complaint that “generally asserts that the refusal
could not have been the result of an adequate, good faith investigation since the Board decided
not to act on the demand” likewise fails. Id. “Such conclusory, ipse dixit, assertions are incon-
sistent with the requirements of . . . Rule 23.1.” Id.
Even if this case were the “easy winner” Starr portrays in its lengthy recitation of
alleged (albeit without citations) “undisputed facts and admissions of the Government” (2d Am.
Compl. ¶¶ 192-204), Starr’s wrongful refusal claim would still fail as a matter of law. “Con-
scientious managers may conclude that legal action is unjustified because not meritorious, or
because it would subject the firm to injury.” Kamen v. Kemper Fin. Servs., Inc., 939 F.2d 458,
462 (7th Cir. 1991). A board may decide against bringing an action even if the suit has “some
merit” where “the litigation costs and the adverse effect on the business relationship between the
corporation and the potential defendant might outweigh any potential recovery in the lawsuit.”
Cramer v. Gen. Tel. & Elecs. Corp., 582 F.2d 259, 275 (3d Cir. 1978). Many decisions re-affirm
this principle. See, e.g.,
x Zapata Corp. v. Maldonado, 430 A.2d 779, 788 (Del. 1981) (“the final substantive
judgment whether a particular lawsuit should be maintained requires a balance of
pursuing Starr’s claims in any form wouldn’t be in the best interests of the corpo-
ration. That’s pretty straightforward.
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 28 of 51
18
US_ACTIVE:\44209636\2\14430.0119
many factors – ethical, commercial, promotional, public relations, employee rela-
tions, fiscal as well as legal”) (emphasis added, citation omitted), quoted in Gam-
oran, 2013 WL 1286133, at *5;
x In re Delta & Pine Land Co. S’holders Litig., 2000 WL 875421, at *7 (Del. Ch.
June 21, 2000) (“[i]n forming their business judgment about whether to sue,
Delta’s board should consider all adverse consequences that might result from
bringing a suit, such as the cost of litigation, the potential to temporarily paralyze
the company and . . . the possibility that such a suit will strain existing contractual
relations”) (emphasis added);
x In re InfoUSA, Inc. S’holders Litig., 953 A.2d 963, 986 (Del. Ch. 2007) (“A
board may in good faith refuse a shareholder demand to begin litigation even if
there is substantial basis to conclude that the lawsuit would eventually be success-
ful on the merits. It is within the bounds of business judgment to conclude that a
lawsuit, even if legitimate, would be excessively costly to the corporation or harm
its long-term strategic interests.”) (emphasis added);
x Carlton Invs. v. TLC Beatrice Int’l Holdings, Inc., 1997 WL 305829, at *11 (Del.
Ch. May 30, 1997): (“[T]he [corporation] is not required to attempt to maximize
returns from the lawsuit. The whole point of recognizing the board’s authority and
responsibility in this context is to allow the board’s judgment concerning what is
in the long-run best interest of the corporation to be acted upon. That may not be
the same as maximizing the return from the law suit. The [corporation] can legiti-
mately sacrifice present compensation . . . if its good faith, informed judgment
indicates to it that that course is best for the corporation.”) (emphasis added);
x In re Consumers Power Co. Derivative Litig., 132 F.R.D. 455, 485 (E.D. Mich.
1990) (“two areas of consideration are relevant: (1) the merits of the case . . . . (2)
Even if there is a meritorious suit against the directors of a corporation, should
such an action be maintained in light of other factors? In other words, once other
factors are evaluated, might bringing the derivative action work a potentially
greater harm to the corporation than any possible gain from that action?”) (em-
phasis added).
The board’s right to determine whether litigation will serve the best interests of the corporation
and its shareholders thus “holds true even if meritorious claims are made in a demand; a board
may forego litigation if, in exercising its business judgment, the board decides that it is best for
the company not to do so.” In re VistaCare, Inc., Derivative Litig., 2007 WL 2460610, at *2 (D.
Ariz. Aug. 23, 2007) (Delaware law). Accordingly, “[i]f the derivative plaintiff fails to meet [its]
pleading burden” with respect to the demand requirement, “the complaint must be dismissed,
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 29 of 51
19
US_ACTIVE:\44209636\2\14430.0119
even if the claims asserted appear to have merit.” Ferre v. McGrath, 2007 WL 1180650, at *3
(S.D.N.Y. Feb. 16, 2007) (Delaware law).
On this ground alone, the AIG board’s refusal of Starr’s demand was plainly
rational. The board’s letter refusing Starr’s demand shows consideration of the substantial harm
AIG might suffer pursuing the action, including damage to AIG’s corporate brand and image,
relationships with shareholders, customers, regulators and elected officials and the impact on
AIG’s “Thank You America” television and newspaper campaign highlighting AIG’s repayment
of federal loans and the profit the United States earned in connection with those loans. Dkt. No.
87-1 at 5-6. Id. at 6. Pursuing claims against the Government plainly threatened to destroy
much of the work that AIG and its employees had done rebuilding AIG and its name and
reputation since 2008, and AIG’s directors noted media coverage and statements by elected
officials highly critical of AIG for even considering the demand. Starr’s allegation that “[n]or
did the Board identify or value the harm, if any, that would result from simply permitting this
litigation to proceed” (2d Am. Compl. ¶ 214) is absurd: AIG’s letter refusing Starr’s demand
identifies all of these harms. Ex. 87-1 at 5-6, 7. There was no need to formally “value” these
obviously incalculable harms.
This case also is simply not the “easy winner” Starr portrays. This Court has not,
as Starr’s counsel claims, “already ruled as a matter of law that the government had no right to
exact AIG’s equity as a condition of loaning the company money – or to take AIG assets to con-
duct ‘backdoor bailouts’ of other favored companies.” David Boies, Give AIG Shareholders
Their Day In Court, USA Today, Jan. 8, 2013 (Ex. 12). This Court has simply denied a motion
to dismiss in a decision that “emphasizes that it makes no determinations as to the ultimate
merits of Starr’s claims” and acknowledges “the complexity of this case.” Starr, 106 Fed. Cl. at
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 30 of 51
20
US_ACTIVE:\44209636\2\14430.0119
69 and 107 Fed. Cl. at 377.
Unlike this Court on a motion to dismiss, AIG’s board was not required to accept
the truth of Starr’s factual allegations concerning the events of September 2008 and subsequent
months. AIG’s board could – and did – evaluate the available evidence, marshaled in Starr’s
presentations to the board (Dkt. Nos. 87-5, 87-9, 87-13, 87-24 and 87-26 at 4-39) and assess
what Starr likely could ultimately prove. The board’s letter refusing Starr’s demand shows that
the board considered Starr’s and the Government’s competing legal positions, assisted by its own
counsel and prominent constitutional and financial regulation experts, including Erwin Chemer-
insky, the dean of the University of California Irvine School of Law and one of the leading
constitutional law scholars in the United States, and John Coates, Professor of Law and Eco-
nomics at Harvard Law School and a leading expert on the regulation of financial institutions.
See Ex. 87-1 at 3-5, describing board’s discussion of
x “the thoughtful decisions issued by the judges in the Court of Federal Claims
Action and New York Action,”
x “consideration” of the fact that Starr “has already survived a motion to dismiss in
the Court of Federal Claims Action,”
x the views of Dean Chemerinsky and Professor Coates concerning the merits of
Starr claims,
x “potential damages,”
x the Government’s claim that AIG is obligated to indemnify the Government for
defense costs and any judgment in AIG’s favor,
x defenses to Starr’s claims, including a severability provision stating that equiva-
lent value would be paid in another form if the Government’s contractual right to
receive a 79.9% equity interest in AIG was invalid, and the Government’s
contention that equity and fairness precludes AIG from enjoying the benefits of
$185 billion in federal assistance and then asserting that the assistance was
unlawful, and
x with respect to Starr’s ML III claims, AIG management’s view that the ML III
transaction served AIG’s best interests by resolving AIG’s credit default swap
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 31 of 51
21
US_ACTIVE:\44209636\2\14430.0119
issue and preventing further downgrades and collateral calls, AIG’s negotiation of
the profit split with FRBNY in ML III that Starr has questioned, and the fact that
the releases Starr challenges that AIG provided to counterparties in the ML III
transaction had limited, if any, value, due to representations, disclaimers and other
language in the credit default swap contracts AIG had entered into with its
counterparties).
Under Delaware law, the court “must presume” each statement in a letter refusing
a demand “to be true absent a particularized allegation rebutting this statement.” Scattered, 701
A.2d at 76 n.24; see also Levine, 591 A.2d at 214 (affirming grant of motion to dismiss where
“GM’s letter reply ‘is inconsistent with, and thus diminishes the force of, plaintiff’s allegation
that the Board ‘did nothing’”) (citation omitted); Mount Moriah Cemetery v. Moritz, 1991 WL
50149, at *4 (Del. Ch. Apr. 4, 1991) (“the letter from counsel to the Special Committee that was
attached to the complaint states that there was a ‘full discussion’ of the Special Committee’s
Report,” and “[a]lthough plaintiff may not agree with this description, there is nothing in its
complaint to contradict it”), aff’d, 599 A.2d 413 (Del. 1991). Starr alleges no facts – much less
particularized facts – rebutting any of these statements in AIG’s letter refusing Starr’s demand.
For sure, no one has a crystal ball concerning the outcome of this litigation and
knows how Starr’s derivative claims would fare if tried and appeals heard. But AIG’s board did
know that Starr has a challenging road to travel before obtaining any recovery on its derivative
claims. The business judgment rule protects a decision to refuse a shareholder demand unless
the decision cannot be attributed to any rational business purpose. The AIG’s board’s decision to
refuse Starr’s demand was obviously rational, on any number of grounds. AIG’s board was
advised by its counsel and experts that Starr’s likelihood of success on the merits is low. AIG
faces substantial indemnification claims by the Government under various of AIG’s loan and
other agreements with the Government. And AIG’s pursuit of claims against the Government
threatens harm to AIG’s corporate brand and image, and relationships with shareholders, cus-
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 32 of 51
22
US_ACTIVE:\44209636\2\14430.0119
tomers, regulators and elected officials, as confirmed by the widespread media and congressional
reaction to even the possibility that AIG would sanction such a suit.
2. Starr’s Allegations Concerning Government Threats and Intimidation
and a Government-Sponsored Public Relations Campaign Do Not
Overcome the Business Judgment Rule Presumption
Starr alleges that “[t]he Government . . . threatened the AIG Board with the pur-
pose and effect of intimidating AIG and its directors into acting to halt this litigation” and
“mounted a campaign . . . to intimidate the AIG Board that condemned the AIG Board for even
considering, much less accepting, the demand.” 2d Am. Compl. ¶¶ 208-09. But Starr alleges no
facts – much less with particularity – showing Government involvement in the news reports and
media attention to the AIG board’s consideration of Starr’s demand that Starr calls “intimida-
tion.”
Even if Starr did allege such facts, those facts would not transform a rational
board decision into an irrational one. The board’s concern that pursuing claims against the
Government “threatened to destroy much of the good work that AIG and its employees had done
rebuilding AIG and its name and reputation following the September 2008 financial crisis and
FRBNY loan” (Ex. 87-1 at 6) was an obvious factor for the AIG’s board consideration – and that
the board was focused on from the start of the demand process. Ex. 87-4 at 4, Oct. 1, 2012
Protocol Question 3(b). What rational director would not consider the reputational and other
harm AIG would face if it sued the Government and AIG’s principal regulator? The media
coverage of AIG’s January 9, 2013 board meeting and statements made by elected officials and
regulators highly critical of AIG for even considering the demand simply confirmed the impor-
tance of these concerns.
Starr also alleges that the Government threatened AIG’s board by “indicat[ing]”
that the Government would “terminate any cooperative relationship with AIG” and “heavily
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 33 of 51
23
US_ACTIVE:\44209636\2\14430.0119
scrutinize AIG’s SEC, tax, and other filings” if AIG sued the Government (or allowed Starr to
sue the Government in AIG’s name). 2d Am. Compl. ¶ 208. Again, Starr offers no particular-
ized facts in support of this allegation. Treasury’s counsel, during the Government’s January 9,
2013 presentation to AIG’s board (the transcript of which is attached to AIG’s letter refusing the
demand), stated that if AIG endorses this litigation “the government will be your adversary”
because AIG will “be positioning itself in direct opposition” to and “attacking” the Department
of Treasury and FRBNY, and that “the cooperative relationship” AIG now enjoys with those
institutions “will be terminated.” Dkt. No. 87-26 Tr. at 61. Treasury’s counsel added that
“another wave of congressional investigations” could follow in which “AIG employees and AIG
Board members could be called to testify before Congress and justify the decision to pursue a
lawsuit asking the U.S. taxpayers to return billions of dollars to AIG.” Id. at 62. Starr may
characterize these statements as “threats,” but they are simply facts that AIG’s board had a
fiduciary duty to consider in determining whether a suit by AIG against the Government would
serve the best interests of AIG and its shareholders.
3. Starr’s Allegations That AIG’s Directors Refused the Demand Too
Quickly Do Not Overcome the Business Judgment Rule Presumption
Starr alleges that the board’s refusal of Starr’s demand is not protected by the
business judgment rule because AIG’s board acted “too quickly.” According to Starr, the board
“did not take the several weeks it had stated to this Court it would take to make a considered
decision following the presentations to it on January 9, 2013” and instead “rejected the demand
. . . less than three hours after those presentations ended.” 2d Am. Compl. ¶ 216.
AIG’s board undertook an unprecedented four month process involving extensive
written submissions and oral presentations on January 9, 2013 concerning Starr’s demand and
informed the Court at the outset that a decision was “expected by the end of January 2013” (Dkt.
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 34 of 51
24
US_ACTIVE:\44209636\2\14430.0119
No. 57 at 4) – not, as Starr alleges, it would take “several weeks . . . to make a considered deci-
sion.” 2d Am. Compl. ¶ 216. On January 8, 2013, following receipt of three rounds of briefing
totaling 184 pages (plus voluminous exhibits), AIG’s board met with counsel and discussed the
submissions the board had received, and also considered the media and congressional reaction to
the board’s consideration of the demand. Ex. 87-1 at 6. The board determined to “carefully con-
sider the parties’ presentations” the next day, and, then, “in light of the scrutiny AIG was re-
ceiving regarding the Demand, . . . make a determination and announce the determination as
promptly as practicable.” Id.
The board was not required to extend “by several weeks” an already four-month
long process – and further extend the delay Starr’s belated demand was creating for this Court in
this litigation – to think more about a decision the directors believed was in AIG’s interest to be
made as promptly as practicable in light of the public, congressional and regulatory reaction to
the board’s consideration of the demand. Courts all the time decide motions and other disputes
on written submissions or during oral arguments, without waiting “several weeks” to make a
decision the courts consider themselves ready before or during oral argument. A board consider-
ing a shareholder demand need do no more.
4. Starr’s Allegations That AIG’s Directors Lacked Disinterestedness
and Independence Do Not Overcome the Business Judgment Rule
Presumption
a. The Making of a Demand Waives Any Claim That Directors
Lack Disinterestedness and Independence
The Delaware Supreme Court has held – repeatedly – that “[w]here a demand has
actually been made, the stockholder making the demand concedes the independence and disinter-
estedness of a majority of the board to respond.” Rales, 634 A.2d at 936 n.12; see also Scattered,
701 A.2d at 74 (“[i]f the stockholders make a demand, . . . they are deemed to have waived any
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 35 of 51
25
US_ACTIVE:\44209636\2\14430.0119
claim they might otherwise have had that the board cannot independently act on the demand”);
Grimes, 673 A.2d at 1215 (“The Court of Chancery held that, by ‘making demand upon the
board, plaintiff has in effect conceded that the board was in a position to consider and act upon
his demand.’ . . . We agree.”) (citation omitted); Levine, 591 A.2d at 212 (“[a] shareholder
plaintiff, by making a demand upon a board before filing suit, tacitly concedes the independence
of a majority of the board to respond’”) (quoting Spiegel, 571 A.2d at 777).
On this point, “Delaware law could hardly be clearer.” FLI Deep Marine LLC v.
McKim, 2009 WL 1204363, at *3 (Del. Ch. Apr. 21, 2009); see also Lambrecht v. O’Neal, 2012
WL 6013440, at *3 (“[b]y making a demand upon the Board, [Lambrecht] has conceded the
Board’s independence”) (2d Cir. Dec. 4, 2012); In re Sonus Networks, Inc., S’holder Derivative
Litig., 499 F.3d 47, 67 n.11 (1st Cir. 2007) (“by making a demand, the shareholder concedes that
the board was sufficiently disinterested and independent to consider the demand”).
Starr alleges that “Starr agreed to make a demand . . . subject to a stipulation with
AIG on September 5, 2012 that provided that Plaintiff could still assert that ‘the demand was
wrongfully refused and/or not required as a matter of law.’” 2d Am. Compl. ¶ 190; see also id.
¶ 219 (“Plaintiff and AIG stipulated that Plaintiff reserved all rights concerning demand”). The
stipulation also provided that “AIG may respond with any and all arguments” (Dkt. No. 64-1 at
4), and, under Delaware law, a shareholder cannot preserve its right “to, in essence, cover all the
bases” by arguing that demand was both excused and wrongfully refused. Boeing Co. v.
Shrontz, 1992 WL 81228, at *5 (Del. Ch. Apr. 20, 1992) (decision by now Delaware Supreme
Court Justice Carolyn Berger).
Accordingly, by making a demand, Starr has “conclusively conceded the
independence of the Board” and is “precluded from now arguing that demand should be excused
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 36 of 51
26
US_ACTIVE:\44209636\2\14430.0119
because the directors are conflicted.” FLI, 2009 WL 1204363, at *3, quoted in Merrill Lynch,
773 F. Supp. 2d at 346. This Court need go no further in addressing Starr’s claim that AIG’s
directors lacked the independence required to consider Starr’s demand that AIG sue the
Government.
b. Starr Alleges No Facts Showing that AIG’s Board Lacked
Disinterestedness and Independence
(i) The Government’s Alleged Control of the Election of
AIG Directors Does Not Establish A Lack of
Disinterestedness or Independence
Starr contends that AIG’s board lacked disinterestedness and independence
because the Government held a majority of AIG’s voting shares until December 14, 2012 and
thus controlled the election of AIG directors when this action was filed on November 21, 2011.
2d Am. Compl. ¶ 183. Delaware law is clear and to the contrary. “[E]ven proof of majority
ownership of a company does not strip the directors of the presumptions of independence.”
Aronson, 473 A.2d at 815, quoted in Beam, 845 A.2d at 1054 n.37; see also Weinstein Enters.,
Inc. v. Orloff, 870 A.2d 499, 512 (Del. 2005) (“[a] controlling interest or majority stock own-
ership does not deprive the corporation’s directors of the ‘presumptions of independence, and
that their acts have been taken in good faith and in the best interests of the corporation’”) (quot-
ing Aronson); In re IAC/InterActiveCorp Sec. Litig., 478 F. Supp. 2d 574, 600 (S.D.N.Y. 2007)
(“Delaware courts have repeatedly held that majority voting power, without more, is not enough
to ‘strip the directors of the presumptions of independence’”) (quoting Aronson).
Even “overwhelming voting control” is not enough by itself. The Delaware
Supreme Court in Beam held that demand was not excused in a case involving Martha Stewart,
the chairman, chief executive officer and 94% shareholder of Martha Stewart Living Omni-
media, Inc., who “personifie[d]” the corporation’s brands and was its “primary creative force.”
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 37 of 51
27
US_ACTIVE:\44209636\2\14430.0119
Beam, 845 A.2d at 1045 n.3, 1054. In Loveman v. Lauder, 484 F. Supp. 2d 259 (S.D.N.Y.
2007), the court likewise held, under Delaware law, that “[t]he fact that the Lauder family has
voting control of ELC [Estee Lauder Companies Inc.], without more, does not overcome the
presumption of director independence.” Id. at 269.
Accordingly, as the court in Starr’s New York Action correctly recognized (2012
WL 5834852, at *47), “it is not enough to charge that a director was nominated by or elected at
the behest of those controlling the outcome of a corporate election.” Aronson, 473 A.2d at 816,
quoted in In re S. Peru Copper Corp. S’holder Derivative Litig., 30 A.3d 60, 69 n.14 (Del. Ch.
2011), aff’d sub nom. Ams. Mining Corp. v. Theriault, 51 A.3d 1213 (Del. 2012). “That is the
usual way a person becomes a corporate director.” Id.; see also S. Muoio & Co. LLC v. Hall-
mark Entm’t Invs. Co., 2011 WL 863007, at *10 (Del. Ch. Mar. 9, 2011) (“[t]he mere nomina-
tion of a director by a majority stockholder . . . is insufficient to demonstrate lack of indepen-
dence”), aff’d, 35 A.3d 419 (Del. 2011). Allegations that directors “took their seats” at a con-
trolling shareholder’s “behest” do “not ‘sterilize’ a director’s judgment with respect to demand”
and “do not cast suspicion on the independence of directors without additional facts.” Khanna v.
McMinn, 2006 WL 1388744, at *15 (Del. Ch. May 9, 2006).
Rather, “[i]t is the care, attention and sense of individual responsibility to the per-
formance of one’s duties, not the method of election, that generally touches on independence.”
Aronson, 473 A.2d at 816, quoted in S. Peru, 30 A.3d at 69 n.14; see also Andreae v. Andreae,
1992 WL 43924, at *5 (Del. Ch. Mar. 3, 1992) (“the relevant inquiry is not how the director got
his position, but rather how he comports himself in that position”). “[A] plaintiff must plead
facts that would support the inference that because of . . . circumstances other than the interested
director’s stock ownership or voting power, the non-interested director would be more willing to
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 38 of 51
28
US_ACTIVE:\44209636\2\14430.0119
risk his or her reputation than risk the relationship with the interested director.” Beam, 845 A.2d
at 1052 (emphasis added); see also In re Sonus, 499 F.3d at 67-68 (Delaware law; “[a] director’s
independence may be compromised by financial, familial or social ties to other persons who are
interested in the board’s decision, but only if the plaintiffs plead facts that would support the
inference that the director would be more willing to risk his or her reputation than to risk the
relationship with the interested person”); In re Dow Chem. Co. Derivative Litig., 2010 WL
66769, at *14 n.89 (Del. Ch. Jan. 11, 2010) (“[a] plaintiff ‘must plead facts that would support
the inference that because of the nature of the relationship . . . the non-interested director would
be more willing to risk his or her reputation than risk the relationship with the interested direc-
tor’”) (quoting Beam).
Starr alleges no facts that begin to suggest that AIG’s directors – all prominent
members of the business community (see Statement of the Case Point B) – did not approach their
duties on AIG’s board with “care, attention and sense of individual responsibility” and instead
were more willing to risk their professional reputations than do what they think is right with
respect to whether a lawsuit by AIG against the Government would serve the best interests of
AIG and its shareholders. Nor could they, in light of the process the board undertook.
Equally significant, the Government has sold all its AIG stock and is no longer a
shareholder of AIG. AIG’s recently much publicized suit against Maiden Lane II, LLC, an entity
controlled by FRBNY, makes clear that AIG and its board will sue the Government when AIG
believes it serves AIG’s best interest to do so. See AIG, the Fed and the Long Litigation Tail of
Government Bailouts, Thomson Reuters, Mar. 15, 2013 (“the very same AIG that is supposedly
in the government’s pocket . . . sued the Fed in January”) (Ex. 13); AIG Sues Federal Reserve
Vehicle in Dispute Over Lawsuit Rights, Wall St. J., Jan. 11, 2003 (Ex. 14); AIG Sues NY Fed
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 39 of 51
29
US_ACTIVE:\44209636\2\14430.0119
Over Right to Sue Bank of America, Others, Reuters, Jan. 11, 2003 (Ex. 15). The Government
controls AIG no more than it controls any other corporation in America.
(ii) Nothing About the Trust that Held the Government’s
AIG Shares Establishes A Lack of Disinterestedness or
Independence
The Government’s alleged control of the trust entered into on January 16, 2009 to
hold the Government’s AIG stock, and the fact that the trust held the stock “for the sole benefit
of the United States Treasury,” does not establish control by the Government over AIG, as Starr
alleges. 2d Am. Compl. ¶¶ 83-88, 184-187.
First, the trust is utterly irrelevant: it was dissolved on January 14, 2011 (2d Am.
Compl. ¶ 84) – five months before the May 11, 2011 election of the board on which Starr claims
demand was excused.
Second, the court in Starr’s New York action correctly rejected Starr’s allegations
“that the trustees were selected by FRBNY” and that “two of the three trustees had previous pro-
fessional affiliations with FRBNY before being appointed as trustees.” Starr, 2012 WL
5834852, at *21. The court held “[a]s a matter of law that these allegations “fall short” of
alleging interestedness because Starr does not allege that either of these trustees “was employed
by FRBNY or had any financial incentive to act in FRBNY’s interest” “during his or her tenure
as a trustee,” and “[n]or does Starr allege that either trustee had improper communication with,
or improperly took direction from, FRBNY.” Id. The court cited Delaware cases holding that “a
director’s past employment with the company on whose board he sits does not alone establish
that director’s lack of independence’” and that “[i]t is not enough to charge that a director was
nominated or elected at the behest of those controlling the outcome of the corporate election.”
Id. (quoting In re W. Nat’l Corp. S’holders Litig., 2000 WL 710192, at * 17 (Del. Ch. May 22,
2000), and Aronson, 473 A.2d at 816).
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 40 of 51
30
US_ACTIVE:\44209636\2\14430.0119
Third, the provisions of the trust agreement Starr relies on – Sections 3.03(a) and
2.04(d) – do not support Starr’s characterizations of these provisions. As the court in Starr’s
New York action recognized, Starr “selectively quotes” and “cherrypicks” the trust agreement.
Starr, 2012 WL 5834852, at *21. The trust did not require, as Starr claims, that the trustees
“only take actions that are ‘in or not opposed to the best interests of the Treasury.’” 2d Am.
Compl. ¶ 187. The trust did not make the trustees “duty bound to elect only Board members
who similarly will act only ‘in or not opposed to the best interests of the Treasury.’” Id.
To the contrary, sections 3.03(a) and 2.04(d) on their face bind the trustees of the
trust, not the AIG directors elected by the trustees. Section 3.03(a) required that when exercising
their voting rights “the trustees could only take actions that are ‘in or not opposed to the best
interests of the Treasury.’” 2d Am. Compl. ¶ 187 (emphasis added). Section 2.04(d) required
that “the Trustees ‘shall exercise all such Voting and other similar rights’” in accordance with
Section 3.03(a). Id. (emphasis added). And, as the court in Starr’s New York action noted,
Section 2.04(d) itself described these provisions as “nonbinding views” to be kept “in mind” by
trustees who had “full discretionary power” to vote the trust’s stock as they deemed appropriate.
Starr, 2012 WL 5834852, at *22 (emphasis in original); Ex. 16 §§ 2.04(a), 3.03(a) (attaching
copy of trust). The court in Starr’s New York action also noted “numerous other provisions in
the Trust Agreement which are inconsistent with the thesis that the Trust was controlled by
FRBNY.” Starr, 2012 WL 5834852, at *21-23 (quoting three of these provisions); Ex. 16 at 2
§§ 2.04(e), 2.04(g).
Thus, the most the trustees could do was to appoint directors who they hoped
would act “in or not opposed to the best interests of the Treasury.” 2d Am. Compl. ¶ 187. The
directors’ legal duty, however, was to AIG and all of its shareholders – not to the trust, because
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 41 of 51
31
US_ACTIVE:\44209636\2\14430.0119
“[t]he duty of loyalty mandates that the best interest of the corporation and its shareholders takes
precedence over any interest possessed by a director, officer or controlling shareholder and not
shared by the stockholders generally.” Cede & Co. v. Technicolor, Inc., 634 A.2d 345, 361 (Del.
1993); see also Sagarra Inversiones, S.L. v. Cementos Portland Valderrivas, S.A., 2011 WL
3371493, at *5 (Del. Ch. Aug. 5, 2011) (“[t]he duty of loyalty mandates ‘that a ‘controlling’
shareholder not act, or cause its representatives to act, in such a manner as to deal unfairly with
the minority shareholders’”), aff’d, 34 A.3d 1074 (Del. 2011) (quoting Oliver v. Boston Univ.,
2006 WL 1064169, at *18 (Del. Ch. Apr. 14, 2006)); Benihana of Tokyo, Inc. v. Benihana, Inc.,
891 A.2d 150, 191 (Del. Ch. 2005) (“No safe-harbor exists for divided loyalties in Delaware.
The duty of loyalty, in essence, ‘mandates that the best interest of the corporation and its share-
holders take precedence over any interest possessed by a director, officer or controlling share-
holder and not shared by the stockholders generally.’”) (quoting Cede), aff’d, 906 A.2d 114 (Del.
2006) (quoting Cede). Nothing in the trust required – or could legally have required – the elec-
tion of directors who would not comply with their fiduciary duties to AIG, because “‘[u]nder
Delaware law, a fiduciary may not choose to manage an entity in an illegal fashion.’” La. Mun.
Police Emps. Ret. Sys. v. Pyott, 46 A.3d 313, 352 (Del. Ch. 2012) rev’d on other grounds, 2013
WL _____ (Del. Apr. 4, 2013) (not yet available on Westlaw) (citation omitted); see also In re
Massey Energy Co., 2011 WL 2176479, at *20 (Del. Ch. May 31, 2011) (“Delaware corpora-
tions only pursue ‘lawful business’ by ‘lawful acts’”); Hampshire Group, Ltd. v. Kuttner, 2010
WL 2739995, at *30 n.258 (Del. Ch. July 12, 2010) (“[u]nder Delaware law, corporations are
only chartered by the state to conduct lawful business by lawful means”).
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 42 of 51
32
US_ACTIVE:\44209636\2\14430.0119
(iii) Starr’s Allegations Concerning the Participation of
Directors Who Approved the Transactions Underlying
the Litigation Do Not Create A Lack of Disinterested-
ness or Independence
Starr also alleges that AIG’s refusal of its demand was wrongful because three of
the 12 directors on AIG’s board who unanimously refused Starr’s demand served on AIG’s
board in 2008 and had participated in the board’s consideration of the transactions underlying
this litigation. 2d Am. Compl. ¶ 206. This argument fails, on two grounds.
First, a disqualifying interest requires that “a majority” of directors lack disinter-
estedness or independence. N.J. Carpenters, 2011 WL 4825888, at *8; Orman v. Cullman, 794
A.2d 5, 22 (Del. Ch. 2002). Three of 12 is not a majority.
Second, Starr’s demand does not seek action on behalf of AIG against any AIG
director – it seeks action against the Government for unconstitutional takings and illegal
exaction, claims Starr assured the board did not require wrongdoing by directors. Dkt. No. 87-5
at 5-6. Alleging that directors approved or participated in challenged wrongdoing would not
establish a lack of disinterestedness or independence on the part of the directors even if the
directors were themselves sued. See, e.g., Wood, 953 A.2d at 142 (“Delaware law on this point
is clear: board approval of a transaction, even one that later proves to be improper, without
more, is an insufficient basis to infer culpable knowledge or bad faith on the part of individual
directors”); Brehm v. Eisner, 746 A.2d 244, 257 n.34 (Del. 2000) (“[i]t is no answer to say that
. . . directors . . . approved the underlying transaction”); Grimes, 673 A.2d at 1216 n.8 (“a plain-
tiff cannot necessarily disqualify all directors simply by attacking a transaction in which all par-
ticipated”); Aronson, 473 A.2d at 817 (directors not interested in subject matter of demand by
“mere directorial approval of a transaction”). A fortiori, alleging that directors approved or par-
ticipated in challenged wrongdoing does not establish a lack of disinterestedness or indepen-
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 43 of 51
33
US_ACTIVE:\44209636\2\14430.0119
dence where the directors have not been sued.
(iv) The Board’s Retention of Counsel Familiar With the
Transactions Underlying the Litigation Does Not Create
A Lack of Disinterestedness or Independence
Starr similarly challenges the refusal of its demand because AIG’s board was
advised by law firms that had advised AIG or AIG’s board in connection with the transactions
underlying the litigation and somehow had “a vested interest in providing the Board with post
hoc rationalizations for past actions.” 2d Am. Compl. ¶¶ 205, 207, 211. Just as directors who
participated in a transaction that later becomes the subject of litigation do not lack disinterested-
ness and independence on that ground alone, nor do attorneys who counsel directors in connec-
tion with the transaction lack disinterestedness or independence on that ground alone.
AIG’s letter refusing Starr’s demand also states that AIG’s board was counseled
by two firms, one of which, Seitz Ross Aronstam & Moritz LLP – entirely ignored by Starr – is a
leading Delaware law firm that had never previously represented AIG or AIG’s board, except as
independent counsel to the board in connection with a 2011 shareholder demand concerning
subprime losses and that the board retained to ensure that the board received independent advice
in connection with the demand. Starr alleges no facts to the contrary.
II. DEMAND IS NOT EXCUSED
Starr also alleges that the Court should ignore the demand Starr made and the AIG
board’s refusal of the demand. As Starr would have it, Starr’s demand, Starr’s participation in
the four month process by which AIG’s board considered Starr’s demand, and the board’s refusal
of Starr’s demand never happened. That is neither common sense nor the law. “After investing
the time and resources to consider and decide whether or not to take action in response to the
demand, the Board is entitled to have its decision analyzed under the business judgment rule
unless the presumption of that rule can be rebutted.” Grimes, 673 A.2d at 1220.
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 44 of 51
34
US_ACTIVE:\44209636\2\14430.0119
A. Demand Is Never Excused Where A Demand Has Been Made
The Delaware Supreme Court has held – repeatedly – that “[a] shareholder who
makes a demand can no longer argue that demand is excused.” Spiegel, 571 A.2d at 775. “[I]f a
demand is made, the stockholder has spent one . . . ‘arrow’ in the ‘quiver’” – “the right to claim
that demand is excused.” Grimes, 673 A.2d at 1218-19, quoted in Scattered, 701 A.2d at 74; see
also Grimes, 673 A.2d at 1215 (“the Chancellor held that Grimes waived his right to argue that
demand was excused . . . because he had already made demand. . . . We agree.”). As the Ninth
Circuit recently observed:
Delaware courts have repeatedly held that a shareholder concedes that a demand
is not futile by submitting a demand to the board. “Delaware law could hardly be
clearer” in holding that shareholders may not invoke the futility exception after
submitting a demand to the board.”
Simmonds v. Credit Suisse Sec. (USA) LLC, 638 F.3d 1072, 1094 (9th Cir. 2011), vacated and
remanded on other grounds, 132 S. Ct. 1414 (2012) (quoting FLI, 2009 WL 1204363, at *3); see
also Gamoran, 2013 WL 1286133, at *4 (“[a] shareholder who makes a demand can no longer
argue that demand is excused”).
Accordingly, by making its demand Starr has conceded that demand is not ex-
cused and Starr’s contention that demand is excused is moot. Starr’s contention that it “reserved
all rights” when it make its demand (2d Am. Compl. ¶¶ 190, 219) fails for the reasons discussed
in Point I B 4 a above.
B. Demand Would Not Be Excused Even If Starr Had Not Made A Demand
1. Demand Is Excused Only Under Very Narrow Circumstances,
Requiring Particularized Allegations, and Not “Group” Allegations
Where demand has not been made, Delaware law uses two tests to determine
whether demand is excused: the Aronson test, where board action is challenged, and the Rales
test, where board action is not challenged. As discussed above, “[t]he key principle upon which
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 45 of 51
35
US_ACTIVE:\44209636\2\14430.0119
this area of our jurisprudence is based is that the directors are entitled to a presumption that they
were faithful to their fiduciary duties.” Beam, 845 A.2d at 1048-49. Under both tests, “facts
specific to each director” are required. Desimone v. Barrows, 924 A.2d 908, 943 (Del. Ch.
2007) (emphasis in original). The “‘group’ accusation mode of pleading demand futility” fails.
In re Citigroup Inc. S’holder Derivative Litig., 964 A.2d 106, 121 n.36, 134 n.95 (Del. Ch.
2009).
“The Aronson test applies to claims involving a contested transaction, i.e., where
it is alleged that the directors made a conscious business decision in breach of their fiduciary
duties.” Wood, 953 A.2d at 140. This test “requires that the plaintiff allege particularized facts
creating a reason to doubt that (1) ‘the directors are disinterested and independent’” or (2) “‘the
challenged transaction was otherwise the product of a valid exercise of business judgment.’” Id.
(quoting Aronson, 473 A.2d at 814) (emphasis added). The term “reasonable doubt” requires “a
‘reasonable belief’” that the board’s decision is “not protected by the business judgment rule”
and cannot be “based on mere suspicions or stated solely in conclusory terms,” Grimes, 673 A.2d
at 1217 & n.17, and does not “weaken” or “water[ ] down the pleading threshold set forth in
[Delaware] jurisprudence.” Beam, 845 A.2d at 1050 n.26.
The Rales test applies “where the subject of a derivative suit is not a business
decision of the Board.” Wood, 953 A.2d at 140. “[T]he absence of board action . . . makes it
impossible” to assess the second prong of Aronson – i.e., “whether the directors have acted in
conformity with the business judgment rule in approving the challenged transaction.” Rales, 634
A.2d at 933. Accordingly, the Rales test focuses on the first prong of Aronson, requiring that
“plaintiff allege particularized facts establishing a reason to doubt that ‘the board of directors
could have properly exercised its independent and disinterested business judgment in responding
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 46 of 51
36
US_ACTIVE:\44209636\2\14430.0119
to a demand.’” Wood, 953 A.2d at 140 (quoting Rales, 634 A.2d at 934) (emphasis added).
Under Aronson or Rales, alleging that demand is excused is “a difficult feat.”
Ryan v. Gifford, 918 A.2d 341, 352 n.23 (Del. Ch. 2007). “[T]he bar is high, the standards are
stringent, and the situations where demand will be excused are rare.” Pirelli, 534 F.3d at 782-83;
see also InfoUSA, 953 A.2d at 990 (“[t]he standard is difficult to meet, and the vast majority of
plaintiffs’ allegations fail to rise to this considerable level”) (footnotes omitted).
Rales governs here because Starr challenges conduct by the Government, not
AIG’s board. See In re Citigroup Inc. S’holder Derivative Litig., 788 F. Supp. 2d 211, 215
(S.D.N.Y. 2011) (“Rales applies . . . ‘where the subject of the derivative suit is not a business
decision of the board’”) (quoting Rales); Rahbari v. Oros, 732 F. Supp. 2d 367, 376 (S.D.N.Y.
2010) (“Rales . . . applies ‘where the subject of a derivative suit is not a business decision of the
board’”) (quoting Wood, 953 A.2d 140); Conrad v. Blank, 940 A.2d 28, 37 (Del. Ch. 2007)
(“[s]ince the challenged transaction was not made by the board . . . the test articulated in Rales is
the proper standard”).
2. Plaintiff Does Not Allege Particularized Allegations Excusing Demand
The court in Starr’s New York action correctly held that Starr’s claim that AIG’s
directors lack disinterestedness and independence fails as a matter of law. Starr, 2012 WL
5834852, at *47-48. “Missing is any allegation tending to show that any outside director of AIG
. . . , let alone a majority, had an individual interest that would make him or her not disinterested
with respect to a decision whether to sue [the Government].” Id. at *47.
a. Demand Is Not Excused Because the Government Is Alleged to
Have Controlled the Election of AIG’s Directors
Starr incorrectly contends that demand is excused because the Government
controlled the election of AIG directors at the time this action was filed (and until December 14,
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 47 of 51
37
US_ACTIVE:\44209636\2\14430.0119
2012). 2d Am. Compl. ¶ 183. As discussed above, “[e]ven proof of majority ownership of a
company does not strip the directors of the presumptions of independence.” Aronson, 473 A.2d
at 815, quoted in Beam, 845 A.2d at 1054 n.37; see also cases cited in Point I B 4 b (i). “A
stockholder’s control of a corporation does not excuse presuit demand on the board without par-
ticularized allegations of relationships between the directors and the controlling stockholder
demonstrating that the directors are beholden to the stockholder.” Beam, 845 A.2d at 1054.
Starr alleges no facts that begin to suggest that the prominent members of the business commun-
ity who make up AIG’s board were more willing to risk their professional reputations than do the
right thing. Beam, 845 A.2d at 1052. Certainly no “facts specific to each director” are alleged;
Starr, rather, relies solely on the discredited “‘group’ accusation mode of pleading demand
futility.” Desimone, 924 A.2d at 943; Citigroup, 964 A.2d at 121 n.36, 134 n.95. As also dis-
cussed above, the terms of the trust that held the Government’s AIG stock “for the sole benefit of
the United States Treasury” do not alter these principles of law. See Point I B 4 b (ii) above.
b. Demand Is Not Excused Because AIG Did Not Commence This
Action Before Starr Commenced the Action
Starr also alleges that the demand it made was excused because Starr “repeatedly
inquired of AIG representatives” before commencing this action “whether AIG would institute
proceedings” and “[t]hose inquiries demonstrated that any demand on the AIG Board of
Directors would be futile.” 2d Am. Compl. ¶ 182.
“It is fundamental Delaware law that a shareholder may not commence a deriva-
tive proceeding until a written demand is made upon the board to take suitable action.” In re
Delta & Pine Land Co. S’holders Litig., 2000 WL 1010584, at *4 (Del. Ch. July 17, 2000)
(emphasis added); see also In re Smith & Wesson Holding Corp. Derivative Litig., 743 F. Supp.
2d 14, 18-19 (D. Mass. 2010) (under Nevada law, which “look[s] to Delaware for guidance on
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 48 of 51
38
US_ACTIVE:\44209636\2\14430.0119
issues of corporate law,” “before filing a derivative action, a plaintiff must either present a writ-
ten demand to the Board or explain why demand would be futile”) (emphasis added); Piven v.
Ryan, 2006 WL 756043, at *2 (N.D. Ill. Mar. 23, 2006) (under Delaware law, “before filing a
derivative action, the shareholder must make a written pre-suit demand on the corporation’s
board”) (emphasis added); Model Bus. Corp. Act § 7.42 (requiring “written demand”) (emphasis
added). Starr’s unwritten “requests” to unspecified corporate representatives did not constitute a
written demand on AIG’s board.
Demand futility also means that “the board is personally interested in the matter,”
and not that disinterested and independent directors “will not institute suit for sound reasons.”
Harris v. Carter, 582 A.2d 222, 228 n.12 (Del. Ch. 1990). The fact that “if [plaintiffs] had made
a demand, conscientious directors acting in investors’ interests would have nixed this suit” is “a
reason to require demand, not to excuse it.” Robert F. Booth Trust v. Crowley, 687 F.3d 314,
320 (7th Cir. 2012) (Delaware law; emphasis in original). Accordingly, “a board’s failure to take
action, even if it is aware of wrongdoing, does not demonstrate futility.” Blasband v. Rales, 971
F.2d 1034, 1052 (3d Cir. 1992) (Delaware law); see also Kamen, 939 F.2d at 462 (“no state
treats the directors’ failure to capitulate in the lawsuit as forfeiting the firm’s entitlement to
demand”).
c. Demand Is Not Excused Because AIG’s Board Refused Starr’s
Demand or By Any Other Event Following Starr’s Demand
Demand also is not excused because AIG’s refusal of Starr’s belated demand
“confirmed the futility of making any demand.” 2d Am. Compl. ¶¶ 180, 181, 191. The refusal
of a demand “cannot form the basis for an assertion of demand futility.” Kautz v. Sugarman, 456
F. App’x 16, 19 (2d Cir. 2011) (collecting Delaware cases). “[T]o equate opposition with futility
would lead to the illogical result that plaintiffs could avoid the demand requirement simply by
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 49 of 51
39
US_ACTIVE:\44209636\2\14430.0119
virtue of the weakness of their claims.” In re Mortg. & Realty Trust Sec. Litig., 787 F. Supp. 84,
88 (E.D. Pa. 1991).
Starr’s other post-complaint allegation – an alleged “‘promise’ that AIG made to
the Government” that was “revealed for the first time in January 2013” that Starr does not iden-
tify but says “evidences demand futility” (2d Am. Compl. ¶ 189) – fails for the same reason.
“[F]utility is gauged by the circumstances existing at the commencement of a derivative suit.”
Aronson, 473 A.2d at 810. “[P]ost-complaint events are not relevant.” Lewis v. Graves, 701
F.2d 245, 250 (2d Cir. 1983); see also Gomes v. Am. Century Cos., 2013 WL 1235258, at *3
(8th Cir. Mar. 28, 2013) (“whether demand is futile ‘must be gauged at the time the derivative
action is commenced, not afterward with the benefit of hindsight’”) (quoting Lewis). “‘The
stockholder may not plead in general terms, hoping that, by discovery or otherwise, he can later
establish a case. Indeed, if the [pleading] requirement [of Rule 23.1] could be met otherwise, it
would be meaningless.’” Gonzalez Turul v. Rogatol Distribs.,Inc., 951 F.2d 1, 2 (1st Cir. 1991)
(citation omitted).
The alleged promise that “AIG’s permitting these claims to proceed would violate
a ‘promise’ that AIG had made to the Government” also fails to excuse demand because the
promise is not stated – much less stated with particularity – and appears to refer to nothing more
than AIG’s promise in September 2008 to repay the loan it was given by the Government. See
Dkt. 87-26 at 40-41 (Treasury’s counsel tells AIG board that “to allow a lawsuit to proceed in the
name of the company demanding that the U.S. taxpayers return . . . repaid money . . . could be
perceived as AIG going back on its promises”). Suffice it to say, AIG’s promise to repay the
Government’s loan – as, of course, the loan required – hardly creates an interest or lack of inde-
pendence that disqualifies AIG’s directors from considering Starr’s demand.
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 50 of 51
40
US_ACTIVE:\44209636\2\14430.0119
CONCLUSION
For the reasons stated above, the Court should dismiss Starr’s derivative claims
due to Starr’s failure to allege particularized facts showing a wrongful refusal of demand or that
demand is excused.
Dated: New York, New York
April 5, 2013 Respectfully submitted,
WEIL, GOTSHAL & MANGES LLP
By: /s/ Joseph S. Allerhand
Joseph S. Allerhand
Stephen A. Radin
Jamie L. Hoxie
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
joseph.allerhand@weil.com
stephen.radin@weil.com
jamie.hoxie@weil.com
Attorneys for Nominal Defendant
American International Group, Inc.
Case 1:11-cv-00779-TCW Document 110 Filed 04/05/13 Page 51 of 51


APPENDIX
A001
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 1 of 91


Exhibits to Memorandum of Law in Support of Motion to Dismiss
by Nominal Defendant American International Group, Inc.


Exhibit Page Document
1. A003 AIG Board Won`t Sue Over Terms oI Rescue, Wall St. J., Jan 9, 2013

2. A007 AIG May Join Bailout Lawsuit Against U.S. Government, Reuters,
Jan. 8, 2013

3. A010 Lawsuit Fiasco Mars AIG Thank You` Campaign, Politico, Jan. 15,
2013

4. A014 Washington`s Jaw Drops at Possibility oI AIG Lawsuit, Politico, Jan.
8, 2013
5. A018 How About Charging AIG With Treason?, Market Watch, Jan. 8,
2013
6. A020 Mar. 18, 2013 Starr 2d Cir. Motion to Take Judicial Notice
7. A027 Dec. 11, 2012 Dep`t oI the Treasury Press Release
8. A030 Dec. 14, 2012 AIG Press Release
9. A032 Apr. 5, 2012 AIG Proxy Statement (pages 1-2, 12-18)
10. A043 Jan. 24, 2013 AIG Form 8-K
11. A054 M&A Law ProI Blog, Jan. 24, 2013
12. A056 David Boies, Give AIG Shareholders Their Day In Court, USA
Today, Jan. 8, 2013
13. A058 AIG, the Fed and the Long Litigation Tail oI Government Bailouts,
Reuters, Mar. 15, 2013
14. A061 AIG Sues Federal Reserve Vehicle in Dispute Over Lawsuit Rights,
Wall St. J., Jan. 11, 2003
15. A064 AIG Sues NY Fed Over Right to Sue Bank oI America, Others,
Reuters, Jan. 11, 2003
16. A066 AIG Credit Facility and Trust Agreement, dated January 16, 2009
A002
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 2 of 91








EXHIBIT 1
A003
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 3 of 91
A004
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 4 of 91
A005
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 5 of 91
A006
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 6 of 91








EXHIBIT 2
A007
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 7 of 91
A008
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 8 of 91
A009
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 9 of 91








EXHIBIT 3
A010
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 10 of 91
dyn.politico.com/printstory.cfm?uuid=209AF2DA-A04D-4EC9-9C85-3B08027784F4 1/3
Lawsuit fiasco mars AIG ‘Thank You’ campaign
By: MJ Lee and Anna Palmer
January 15, 2013 04:38 AM EST
American International Group isn’t suing the government, but that doesn’t mean it is off the
hook in Washington.
The episode, which drew fierce criticism all around, is surely something the insurance
company would like to forget.
But the public relations debacle has reopened lines of attack for critics of Washington
bailouts and the tax breaks AIG has received. It has also upset other banking and insurance
industry players who have worked hard to move beyond the financial crisis and repair
relationships on Capitol Hill.
Sen. Jeff Merkley, a member of the Senate Banking Committee, was one of the many
members of Congress to express outrage at AIG’s consideration of joining the suit.
“It shows that some of the former masters of the universe — those who were bringing this
idea forward — have no shame,” the Oregon Democrat said.
The insurer considered and ultimately decided not to join a lawsuit against the U.S.
government over the terms of the bailout.
The blowback to even the notion of suing the government was fierce and was a setback not
only for AIG but also for other firms trying to restore Wall Street’s reputation with regulators
and lawmakers.
“Other banks and financial institutions aren’t pleased,” one industry lobbyist said of the AIG
kerfuffle.
Bruce Haynes, who advised BP after the 2010 oil spill and specializes in corporate
reputation campaigns, said he believes AIG can eventually recover if the firm demonstrates
unfailing consistency in its gratitude to the taxpayers.
But distancing itself from the recent scandal could take a long time.
“How much longer are we going to talk about the bailouts? If other companies have problems
— GM for instance — AIG’s going to get dragged into some of those stories as a guilt-by-
association thing,” Haynes said. “You’re not going to have a bailout story that doesn’t have
AIG in it.”
The lawsuit dustup came after the Treasury Department just last month sold its remaining
shares in the company and AIG began running “Thank You America” commercials and
advertisements. A011
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 11 of 91
2/26/13 Lawsuit fiasco mars AIG ‘Thank You’ campaign - POLITICO.com Print View
2/3
The timing wasn’t lost on lawmakers.
“They’re saying in an ad campaign, ‘Thank you.’ And then they’re saying, ‘But you know what?
The lifeline should have been woven out of gold, not nylon. And that’s outrageous,” Merkley
told POLITICO.
Republican PR consultant Ron Bonjean said the lawsuit “basically took the millions of dollars
they put toward advertising and thanking the American people for bailing them out and threw
it in the trash.”
“It has created a negative effect out there in America and will likely affect their operations on
Capitol Hill,” Bonjean said.
Recovery will take longer than just a few days or weeks, according to Bonjean, who said the
firm should more forcefully divorce itself from the lawsuit and take the opportunity to keep
pressing how much they appreciate the bailout.
Rep. Joe Courtney (D-Conn.), who last week had laughed off AIG’s consideration of the
lawsuit as “Olympic-sized chutzpah,” reacted to the decision to skip the lawsuit with
skepticism and questioned the insurance company’s motives for refusing to participate in the
litigation.
Warning that AIG is far from “out of the woods,” Courtney suggested that the firm’s ultimate
decision was in large part a public relations move.
“No question that there was blowback that reverberated within the corporate halls there,” he
said. “I’m sure their communications people were having heart attacks.”
AIG has said it had to consider the lawsuit as part of its legal and fiduciary responsibilities
and, with those obligations met, dismissed the idea.
But the blunder over the lawsuit, or at least how it was managed, seemed to signal a lack of
internal coordination at AIG, Haynes said, as the company tries to improve its reputation.
“Brand and marketing, corporate communications and general counsel, and legal and
investor relations all have to work seamlessly together,” said Haynes, a founding partner of
Purple Strategies. “If they operate in silos, you end up in a situation like this … that ends up
as a crisis on the desk of the poor corporate communications person who isn’t responsible
for any of it.”
The PR blunder gives advocates of tougher Wall Street regulations one more outrage to point
to when building their case.
“Until we complete the circle of setting up a safer system of financial regulations, there’s
going to be a lot of mistrust out there about companies like AIG which still is engaged in
pretty exotic forms of financial transactions,” Courtney said. “That chapter has not been
completely finished yet.”
Indeed, just as the government sold its last shares of AIG, House Republicans as recently as
December were loudly criticizing the bailout.
“New York was no longer considered the financial capital of the world. Washington, D. C.,

A012
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 12 of 91
2/26/13 Lawsuit fiasco mars AIG ‘Thank You’ campaign - POLITICO.com Print View
dyn.politico.com/printstory.cfm?uuid=209AF2DA-A04D-4EC9-9C85-3B08027784F4 3/3

continues to be,” said Rep. Scott Garrett (R-N.J.), chairman of the subcommittee on Capital
Markets and Government Sponsored Enterprises, at the time.
Whether the insurance giant will face any actual legislation or regulatory scrutiny as a result of
considering the suit is unclear.
Republicans have mostly held their fire for now.
A spokesman for the House Financial Services Committee said panel leaders haven’t made
a decision about upcoming hearings, AIG-related or otherwise.
Some lawmakers have signaled they are ready to move on.
“They made the right decision,” said Rep. Carolyn Maloney (D-N.Y.), who sits on the House
Financial Services Committee. “The decision has been made, it was the right decision, and
we’ve got enough challenges out there with the mortgages and other things. … So we’re
moving forward.”
© 201 3 POLITICO LLC
A013
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 13 of 91








EXHIBIT 4
A014
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 14 of 91
2/26/13 Washington' s jaw drops at possibility of AIG lawsuit - POLITICO.com Print View
dyn.politico.com/printstory.cfm?uuid=0786831C-C0D7-4280-A80E-AD8CFD0ADB01 1/3
Washington's jaw drops at possibility of AIG lawsuit
By: Ben White and Anna Palmer
January 8, 2013 05:09 PM EST
Remember when AIG took a $182 billion bailout only to turn around and hand out seven-figure
bonuses to the same guys who tanked their company?
Grab the pitchforks — it gets better.
Today the insurance organization considered whether to join a lawsuit against the U.S.
government over the terms of the bailout — saying the deal that saved the company cheated
shareholders.
(Also on POLITICO: AIG ad thanks taxpayers for bailout)
After a media backlash, the board decided against joining the suit, The Associated Press
reports.
Treasury Secretary Timothy Geithner — who faced calls for his firing over the AIG bailout —
and Federal Reserve Chairman Ben Bernanke were furious when AIG was considering the
move, according to one Democratic lawyer. Other officials inside the agencies were angered
by the news, too, sources in the department told POLITICO.
Neil Barofsky, former inspector general for the Wall Street bailout said AIG’s possible lawsuit
would have been a “giant middle finger to the taxpayer.”
(PHOTOS: Who won, lost with fiscal cliff deal)
One of President Barack Obama’s top aides agreed: “Definition of Chutzpah: AIG, saved by
taxpayers, contemplating suit,” David Axelrod tweeted.
Many Treasury and Fed insiders have long believed the terms of the AIG bailout — which only
wrapped in recent weeks — were far too generous, not too punitive as the lawsuit is
expected to contend.
(Also on POLITICO: Silver lining: Delay in hitting debt limit)
This week, the AIG board will consider whether to join a $25 billion lawsuit over whether the
terms of the bailout were unfair to shareholders, who claim they were deprived of billions of
dollars.
AIG began airing ads in recent weeks that say "thank you" to Americans for the rescue — a
sentiment AIG's CEO Robert H. Benmosche assured is sincere in a statement the company
released Tuesday night.
A015
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 15 of 91
2/26/13 Washington' s jaw drops at possibility of AIG lawsuit - POLITICO.com Print View
dyn.politico.com/printstory.cfm?uuid=0786831C-C0D7-4280-A80E-AD8CFD0ADB01 2/3
“AIG has paid back its debt to America with a profit, and we mean it when we say thank you
to the American people,” said Benmosche.
He went on to explain that the company has no choice but to consider suing the government.
“At the same time, the board of directors has fiduciary and legal obligations to the company
and its shareholders to consider the demand served on us and respond in a fair, appropriate,
and timely manner. Tomorrow’s board meeting is about listening to all of the parties involved
and gaining a thorough understanding of the issues. We anticipate making a decision in the
next several weeks.”
The Treasury and the Fed haven’t released official responses to the news of the potential
lawsuit, first reported by The New York Times.
One former administration official, who worked on the AIG bailout, was in a state of disbelief.
“I can’t imagine that they will actually do it. Because whatever recovery they might possibly
gain would be totally swamped by the enormous hit to their reputation,” the former official
said. “What I don’t understand is why they have not ruled it out already. They have had plenty
of opportunity to do so.”
Word swept across Washington from Capitol Hill to K Street and the administration — and
the response wasn’t positive
“AIG should thank American taxpayers for their help, not bite the hand that fed them for
helping them out in a crisis,” Sen. Elizabeth Warren (D-Mass.) said in a statement.
“Taxpayers across this country saved AIG from ruin, and it would be outrageous for this
company to turn around and sue the federal government because they think the deal wasn’t
generous enough. Even today, the government provides an ongoing, stealth bailout, propping
up AIG with special tax breaks — tax breaks that Congress should stop.”
Warren served on a congressional task force that helped provide oversight of the $700 billion
Wall Street bailout law.
Rep. Elijah Cummings (D-Md.), ranking member on the House oversight committee, agreed.
“[The] idea that AIG might sue the govt is an unbelievable insult to our nation’s taxpayers, who
cleaned up the mess this firm created,” Cummings said, according to a tweet by
@OversightDems.
“It highlights the worst about what people think of the financial services industry,” said one
senior Democratic House aide. “It undermines any sliver of credibility they may have had.”
The aide said if AIG pursues the litigation he would expect hearings on Capitol Hill.
The company’s board of directors is set to hear arguments by the government and Starr
International, once one of the largest investors in AIG that is led by former AIG CEO Hank
Greenberg, according to The Wall Street Journal.
Dennis Kelleher, chief executive of the financial reform group Better Markets, called the
notion of AIG suing taxpayers over the terms its own bailout absurd, but he believes there
may be an unintended and beneficial impact of pulling back the curtain on where the bailout
money went, including to AIG’s Wall Street counterparties. The idea that the AIG rescue was
a “backdoor bailout” for Wall Street has long been a rallying cry for progressive groups.
A016
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 16 of 91
2/26/13 Washington' s jaw drops at possibility of AIG lawsuit - POLITICO.com Print View
dyn.politico.com/printstory.cfm?uuid=0786831C-C0D7-4280-A80E-AD8CFD0ADB01 3/3
“The idea of AIG, which got this sweetheart bailout deal with no strings attached, forcing
Treasury and the Fed to parade into a board meeting and explain the terms of that deal is
incredible,” Kelleher said. “But a lawsuit that actually explains exactly what went on with this
mess might be a great public service.”
Scott Harrington, a professor at Wharton School of Business, said that the company actually
benefited from the government bailout beyond just the financial investment.
“AIG was able to keep a lot of its commercial property casualty business especially because
of government bailout. Those clients would have moved to other major insurers,” Harrington
said, leaving a smaller business portfolio if the company had to go into bankruptcy. “The fact
that AIG was backed up by the government allowed them to retain business that they probably
should have lost given what occurred.”
This article first appeared on POLITICO Pro at 5:01 p.m. on January 8, 2013.
© 201 3 POLITICO LLC
A017
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 17 of 91








EXHIBIT 5
A018
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 18 of 91
A019
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 19 of 91








EXHIBIT 6
A020
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 20 of 91
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
Thurgood Marshall U.S. Courthouse 40 Foley Square, New York, NY 10007 Telephone: 212-857-8500
MOTION INFORMATION STATEMENT
Docket Number(s): Caption [use short title]
Motion for:
Set forth below precise, complete statement of relief sought:




MOVING PARTY: OPPOSING PARTY:
9 Plaintiff 9 Defendant
9 Appellant/Petitioner 9 Appellee/Respondent
MOVING ATTORNEY: OPPOSING ATTORNEY:
[name of attorney, with firm, address, phone number and e-mail]




Court-Judge/Agency appealed from:
Please check appropriate boxes: FOR EMERGENCY MOTIONS, MOTIONS FOR STAYS AND
INJUNCTIONS PENDING APPEAL:
Has movant notified opposing counsel (required by Local Rule 27.1): Has request for relief been made below? 9 Yes 9 No
9 Yes 9 No (explain): Has this relief been previously sought in this Court? 9 Yes 9 No
Requested return date and explanation of emergency:
Opposing counsel’s position on motion:
9 Unopposed 9 Opposed 9 Don’t Know
Does opposing counsel intend to file a response:
9 Yes 9 No 9 Don’t Know
Is oral argument on motion requested? 9 Yes 9 No (requests for oral argument will not necessarily be granted)
Has argument date of appeal been set? 9 Yes 9 No If yes, enter date:__________________________________________________________
Signature of Moving Attorney:
___________________________________Date: ___________________ Service by: 9 CM/ECF 9 Other [Attach proof of service]

ORDER
IT IS HEREBY ORDERED THAT the motion is GRANTED DENIED.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE, Clerk of Court
Date: _____________________________________________ By: ________________________________________________
Form T-1080 (rev. 7-12)
12-5022
Judicial Notice
Appellant requests that the Court take judicial notice
of Starr's Second Amended Complaint in the
Starr International Company, Inc. v. Federal
Reserve Bank of New York
parallel proceeding before the Court of Federal
Claims.

Starr International Company, Inc. Federal Reserve Bank of New York

BOIES, SCHILLER & FLEXNER LLP
John S. Kiernan
DEBEVOISE & PLIMPTON LLP
333 Main Street, Armonk, New York 10504 919 Third Avenue, New York, New York 10022
(914) 749-8200 (212) 909-6692
dboies@bsfllp.com jskiernan@debevoise.com
U.S. District Court for the Southern District of New York / Hon. Paul A. Engelmayer






/s/ David Boies March 18, 2013
David Boies
Case: 12-5022 Document: 90-1 Page: 1 03/18/2013 879701 6
1 of 95
A021
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 21 of 91
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
STARR INTERNATIONAL COMPANY,
INC., INDIVIDUALLY AND
DERIVATIVELY ON BEHALF OF
AMERICAN INTERNATIONAL GROUP,
INC.,
Plaintiff – Appellant,
v.
FEDERAL RESERVE BANK OF NEW
YORK,
Defendant – Appellee,
and AMERICAN INTERNATIONAL
GROUP, INC., a Delaware corporation,
Nominal Defendant – Appellee.
ON APPEAL FROM THE UNITED
STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK
Case No. 12-5022
MOTION OF PLAINTIFF-APPELLANT
STARR INTERNATIONAL COMPANY, INC.
TO TAKE JUDICIAL NOTICE
Plaintiff-Appellant Starr International Company, Inc. (“Starr”) respectfully
moves this Court to take judicial notice of the Second Amended Complaint filed on
March 11, 2013 in Starr International Company, Inc. v. United States, No. 00779-
TCW (Fed. Cl.), Starr’s related lawsuit against the United States Government in
1
Case: 12-5022 Document: 90-1 Page: 2 03/18/2013 879701 6
2 of 95
A022
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 22 of 91
the Court of Federal Claims. The Second Amended Complaint has been attached
as Exhibit A to the Declaration of David Boies for the Court’s convenience.
As stated in detail in Starr’s February 11, 2013 Motion for Leave to File a
Supplemental Addendum and its March 7, 2013 Reply, the Court may take judicial
notice of publicly available documents which represent “a public record for the
fact that the statements were made.” See Muller-Paisner v. TIAA, 289 F. App’x
461, 466 n.5 (2d Cir. 2008) (citing Roth v. Jennings, 489 F.3d 499, 509 (2d Cir.
2007)). This includes facts and documents which are “not subject to reasonable
dispute”—such as the fact that Starr filed a Second Amended Complaint in the
Court of Federal Claims on March 11, 2013 and the fact that Starr alleged certain
facts in that Second Amended Complaint. Fed. R. Evid. 201(b).
Indeed, appellate courts routinely take judicial notice of publicly available
filings in related litigation. See, e.g., Int’l Strategies Group, Ltd. v. Ness, 645 F.3d
178, 180 (2d Cir. 2011) (taking judicial notice of filings, including complaints, in
related lawsuits); McKinney v. Waterman S.S. Corp., 925 F.2d 1, 5 (1st Cir. 1991)
(“We also take judicial notice of the proceedings in the bankruptcy court, and the
documents filed therein.”); Paul v. Dade County, Fla., 419 F.2d 10, 12 (5th Cir.
1969) (taking judicial notice of a “prior state case” and “the pleadings therein”).
This Court has expressly acknowledged that courts may take judicial notice
of filings in other cases, such as complaints, for the fact “that assertions were made
2
Case: 12-5022 Document: 90-1 Page: 3 03/18/2013 879701 6
3 of 95
A023
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 23 of 91
in lawsuits.” Staehr v. Hartford Fin. Servs. Grp., Inc., 547 F.3d 406, 425 (2d Cir.
2008). In reviewing a dismissal under Rule 12(b)(6), an appellate court may take
notice of facts showing that the complaint plausibly states a claim so long as those
facts are “not inconsistent with the allegations of the complaint.” Orthmann v.
Apple River Campground, Inc., 757 F.2d 909, 915 (7th Cir. 1985). Here, the
Second Amended Complaint contains details and undisputed discovery materials
concerning events at issue in this appeal that are consistent with Starr’s Complaint
in the Southern District, and these details and discovery materials demonstrate that
the Southern District Complaint “should not have been dismissed on its face.” Id.
Starr’s Second Amended Complaint includes facts concerning FRBNY’s
control over AIG and demand futility/wrongful refusal that are relevant to this
appeal. For example, in paragraphs 184-187 of the Second Amended Complaint,
Starr alleges facts concerning whether the Trust and Trustees were independent,
including the extensive reliance of the Trustees on FRBNY for assistance and
information about AIG. Paragraph 194 sets forth allegations concerning FRBNY’s
coercion of AIG in September 2008. Paragraph 195 includes Starr’s allegations
regarding FRBNY’s control over AIG, such as FRBNY’s unilateral firing of
Robert Willumstad as AIG’s CEO and selection of Edward Liddy as his
replacement, and the degree to which FRBNY’s monitoring team was involved in
AIG’s day-to-day activities. Paragraph 197 contains allegations that the
3
Case: 12-5022 Document: 90-1 Page: 4 03/18/2013 879701 6
4 of 95
A024
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 24 of 91
Government has conceded repeatedly that it did not have statutory authority to
acquire AIG’s stock, and paragraph 199 contains allegations concerning FRBNY’s
status as AIG’s majority shareholder, including the admission of FRBNY officials
in September 2008 that “The Federal Reserve is now the largest shareholder in the
company.” Paragraphs 200-201 allege facts showing that FRBNY acted to AIG’s
detriment in structuring ML III, and that FRBNY negotiated with AIG’s
counterparties without AIG’s involvement. Finally, paragraphs 179-219
demonstrate that demand on AIG’s Board was excused and/or wrongfully refused.
All of these allegations directly shed light on how Starr’s Complaint in the
Southern District plausibly states a claim for relief.
In accordance with Local Rule 27.1(b) of the Court of Appeals for the
Second Circuit, Starr gave notice on March 15, 2013 to counsel for Defendant-
Appellee FRBNY and Nominal Defendant-Appellee AIG of Starr’s intention to
file this Motion to Take Judicial Notice. Counsel for AIG informed Starr that it
takes no position on this Motion and does not intend to file a response. Counsel
for FRBNY informed Starr that it opposes this Motion and intends to file a
response.
For the reasons stated above, Plaintiff-Appellant Starr International
Company, Inc. respectfully submits that the Court should take judicial notice of the
4
Case: 12-5022 Document: 90-1 Page: 5 03/18/2013 879701 6
5 of 95
A025
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 25 of 91
5
Second Amended Complaint filed in the Court of Federal Claims on March 11,
2013.
Dated: New York, New York
March 18, 2013
Respectfully submitted,
s/ David Boies
David Boies
BOIES, SCHILLER & FLEXNER LLP
333 Main Street
Armonk, NY 10504
Tel. (914) 749-8200
Fax (914) 749-8300
Email: dboies@bsfllp.com
Robert J. Dwyer
BOIES, SCHILLER & FLEXNER LLP
575 Lexington Avenue
New York, New York 10022
Tel. (212) 556-2300
Fax (212) 446-2350
Email: rdwyer@bsfllp.com
John Gardiner
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
Four Times Square
New York, New York 10036
Tel. (212) 735-3000
Fax (917) 777-2442
Email: john.gardiner@skadden.com
Attorneys for Plaintiff-Appellant Starr
International Company, Inc.

Case: 12-5022 Document: 90-1 Page: 6 03/18/2013 879701 6
6 of 95
A026
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 26 of 91








EXHIBIT 7
A027
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 27 of 91
Press Center
Treasury Sells Final Shares of AIG Common Stock, Positive Return on Overall AIG
Commitment Reaches $22.7 Billion
12/11/2012
WASHINGTON – Today, the U.S. Department of the Treasury announced that it has agreed to sell all of its
remaining 234,169,156 shares of American International Group, Inc. (AIG) common stock at $32.50 per share in
an underwritten public offering. The aggregate proceeds to Treasury from the common stock offering are expected
to total approximately $7.6 billion.
Giving effect to today's offering, the overall positive return on the Federal Reserve and Treasury's combined $182
billion commitment to stabilize AIG during the financial crisis is now $22.7 billion. To date, giving effect to the
offering, Treasury has realized a positive return of $5.0 billion and the Federal Reserve has realized a positive
return of $17.7 billion.
Max Combined
Commitment
Repayments,
Canceled/Reduced
Commitments,
Interest/Fees/Gains
Positive Return
Federal Reserve $112.5 billion $130.2 billion +$17.7 billion
Fed Loans to AIG¹ $35.0 billion $41.8 billion +$6.8 billion
AIA/ALICO SPV,
Preferred Interests
$25.0 billion $26.4 billion +$1.4 billion
Maiden Lane II & III $52.5 billion $62.0 billion +$9.5 billion
Treasury $69.8 billion $74.8 billion +$5.0 billion
Common Stock $47.5 billion $51.6 billion +$4.1 billion
Preferred Stock $22.3 billion $23.2 billion +$0.9 billion
Total $182.3 billion $205.0 billion +$22.7 billion
ϝ
As part of its overall $5.0 billion positive return to date, Treasury realized a $4.1 billion positive return on its
common stock holdings and a $0.9 billion positive return on its preferred stock holdings. Included in the Federal
Reserve's $17.7 billion positive return to date is a $6.8 billion positive return on the Federal Reserve Bank of New
York's (FRBNY) loans to AIG [1]; a $1.4 billion positive return on preferred interests in the AIA Aurora and ALICO
special purpose vehicles that held AIG's largest foreign life insurance subsidiaries; and a combined $9.5 billion
positive return on the Maiden Lane II & III special purpose vehicles.
The combined profit of $9.5 billion from the Maiden Lane II and III special purpose vehicles, which purchased
mortgage-related assets from AIG and its counterparties, represented the largest portion of the overall $22.7 billion
positive return.
Since the financial crisis, AIG has undertaken a dramatic restructuring effort, which put it in a stronger position to
repay taxpayers. The size of the company has been cut nearly in half as it sold non-core assets and focused on its
core insurance operations. AIG's Financial Products unit (AIGFP) is continuing to be wound down and has cut its
legacy derivatives exposure by more than 93 percent to date.
Over the last 19 months, Treasury has conducted six public offerings of AIG common stock, selling a total of
1,655,037,962 shares (originally 92 percent of AIG’s outstanding common stock) at an average price of $31.18 per
share. Treasury's $20.7 billion AIG common stock offering in September 2012 alone represented the largest single
U.S. common stock offering in history [2].
After the closing of today's offering, Treasury will continue to hold warrants to purchase approximately 2.7 million
shares of AIG common stock – the sale of which will provide an additional positive return to taxpayers.
Today’s announcement is part of Treasury’s ongoing efforts to wind down the Troubled Asset Relief Program
(TARP). Giving effect to today’s offering, more than 90 percent ($380 billion) of the $418 billion funds disbursed for
TARP have already been recovered to date through repayments and other income. For more details on Treasury’s
lifetime cost estimates for TARP programs, please visit Treasury’s Monthly 105(a) Report to Congress on TARP at
this link.
Greenhill & Co. served as Treasury’s financial agent with respect to the management and disposition of Treasury’s
investment in AIG.
BofA Merrill Lynch, Citigroup, Deutsche Bank Securities Inc., Goldman, Sachs & Co. and J.P. Morgan Securities
LLC have been retained as joint bookrunners for the offering.
AIG has filed a registration statement (including a prospectus) with the Securities and Exchange Commission
(SEC) for the offering to which this communication relates. Before you invest, you should read the prospectus in
that registration statement and other documents that AIG has filed with the SEC for more complete information
about AIG and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at
www.sec.gov. Alternatively, AIG, any underwriter or any dealer participating in the offering will arrange to send you
the prospectus if you request it from from (i) BofA Merrill Lynch, 222 Broadway, New York, NY 10038, Attn:
Prospectus Department, or by emailing dg.prospectus_requests@baml.com,(ii) Citigroup, c/o Broadridge Financial
Solutions, 1155 Long Island Avenue, Edgewood, NY 11717 (Tel: 800-831-9146), (iii) Deutsche Bank Securities
Inc., Attn: Prospectus Group, 60 Wall Street, New York, NY 10005-2836, by calling 800-503-4611, or by
emailingprospectus.cpdg@db.com, (iv) Goldman, Sachs & Co., Attn: Prospectus Department, 200 West Street,
New York, NY 10282, by calling toll-free 866-471-2526, by faxing 212-902-9316 or by emailing prospectus-
ny@ny.gmail.gs.com, or (v) J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island
Avenue, Edgewood, NY 11717, by calling 866-803-9204.
###
Page 1 of 2 Treasury Sells Final Shares of AIG Common Stock, Positive Return on Overall AIG Com...
4/2/2013 http://www.treasury.gov/press-center/press-releases/Pages/tg1796.aspx
A028
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 28 of 91
1 The original $85 billion commitment was reduced to $60 billion in November 2008 in connection with the $40
billion TARP investment in AIG. The credit facility commitment was further reduced to $35 billion in December
2009 in connection with AIG’s transfer of the AIA Aurora LLC and ALICO Holdings.
2 Source: Dealogicϝ
Page 2 of 2 Treasury Sells Final Shares of AIG Common Stock, Positive Return on Overall AIG Com...
4/2/2013 http://www.treasury.gov/press-center/press-releases/Pages/tg1796.aspx
A029
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 29 of 91
EXHIBIT 8
A030
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 30 of 91
AIG Announces Completion of the U.S. Treasury`s $7.6 Billion Offering of AIG Common Stock
December 14, 2012 11:16 AM ET
Full Resolution of America`s Financial Support of AIG
NEW YORK--(BUSINESS WIRE)--Dec. 14, 2012-- American International Group, Inc. (NYSE: AIG) announced today the
completion oI an oIIering oI approximately 234.2 million shares oI AIG common stock by the U.S. Department oI the Treasury
(Treasury). Treasury received proceeds oI approximately $7.6 billion Irom the sale. The sale oI these shares the last oI
Treasury`s remaining shares oI AIG marks the Iull resolution oI America`s Iinancial support oI AIG.
'Today oIIicially begins a new chapter at AIG, ¨ said AIG President and ChieI Executive OIIicer Robert H. Benmosche. 'We are
proud to make America whole on its investment in AIG plus a substantial proIit and grateIul Ior the opportunity. Thank you
America. Let`s bring on tomorrow.¨
Since September 2008, America committed a total oI $182.3 billion in connection with stabilizing AIG during the Iinancial crisis.
Since then, through asset sales and other actions by AIG, the Federal Reserve, and Treasury, America recovered its $182.3
billion plus a combined positive return oI $22.7 billion. Beginning in May 2011, Treasury successIully sold approximately 1.7
billion shares oI AIG common stock in six public oIIerings Ior total proceeds oI approximately $51 billion, including approximately
$13 billion purchased by AIG. Treasury continues to hold warrants to purchase approximately 2.7 million shares oI AIG common
stock the sale oI which is expected to provide an additional positive return to taxpayers.
American International Group, Inc. (AIG) is a leading international insurance organization serving customers in more than 130
countries and jurisdictions. AIG companies serve commercial, institutional, and individual customers through one oI the most
extensive worldwide property-casualty networks oI any insurer. In addition, AIG companies are leading providers oI liIe insurance
and retirement services in the United States. AIG common stock is listed on the New York Stock Exchange and the Tokyo Stock
Exchange.
Additional inIormation about AIG can be Iound at www.aig.com , YouTube: www.youtube.com/aig ,Twitter:
¸AIG¸LatestNews, LinkedIn: http://www.linkedin.com/company/aig,
Source: American International Group, Inc.
American International Group, Inc.
Media:
Jon Diat, 917-239-9241
jon.diat¸aig.com
or
Jim Ankner, 917-882-7677
james.ankner¸aig.com
or
Investors:
Liz Werner, 212-770-7074
elizabeth.werner¸aig.com
Page 1/1
A031
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 31 of 91








EXHIBIT 9
A032
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 32 of 91
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a−6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to §240.14a−12
American International Group, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
No fee required.
Fee computed on table below per Exchange Act Rules 14a−6(i)(1) and 0−11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0−11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act Rule 0−11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
A033
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 33 of 91
Table of Contents
AMERICAN INTERNATIONAL GROUP, INC.
180 Maiden Lane, New York, N.Y. 10038
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 16, 2012
April 5, 2012
To the Shareholders of
AMERICAN INTERNATIONAL GROUP, INC.:
The Annual Meeting of Shareholders of AMERICAN INTERNATIONAL GROUP, INC. (AIG) will be held at 180 Maiden Lane, New York,
New York, on May 16, 2012, at 11:00 a.m., for the following purposes:
1. To elect the thirteen nominees specified under “Election of Directors” as directors of AIG to hold office until the next annual election
and until their successors are duly elected and qualified;
2. To vote upon a non−binding shareholder resolution to approve executive compensation;
3. To act upon a proposal to ratify the selection of PricewaterhouseCoopers LLP as AIG’s independent registered public accounting
firm for 2012; and
4. To transact any other business that may properly come before the meeting.
Shareholders of record at the close of business on March 21, 2012 will be entitled to vote at the meeting.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on May 16,
2012. The Proxy Statement, Annual Report to Shareholders and other Soliciting Material are available in the Investor Information
section of AIG’s corporate website at www.aig.com.
By Order of the Board of Directors
JEFFREY A. WELIKSON
Secretary
If you plan on attending the meeting, please remember to bring photo identification with you. In addition, if you hold shares in
“street name” and would like to attend the meeting, you must bring an account statement or other acceptable evidence of
ownership of AIG Common Stock as of the close of business on March 21, 2012. If you cannot be present at the meeting, please
sign and date your proxy and return it at once or vote your shares by telephone or through the internet.
A034
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 34 of 91
Table of Contents
AMERICAN INTERNATIONAL GROUP, INC.
180 Maiden Lane, New York, N.Y. 10038
PROXY STATEMENT
April 5, 2012
TIME AND DATE 11:00 a.m. on Wednesday, May 16, 2012.
PLACE 180 Maiden Lane, New York, New York 10038.
MAILING DATE This Proxy Statement, 2011 Annual Report and proxy card or voting instructions were either made
available to you over the internet or mailed to you on or about April 5, 2012.
ITEMS OF BUSINESS • To elect the thirteen nominees specified under “Election of Directors” as directors of AIG to hold office
until the next annual election and until their successors are duly elected and qualified;
• To vote upon a non−binding shareholder resolution to approve executive compensation;
• To act upon a proposal to ratify the selection of PricewaterhouseCoopers LLP as AIG’s independent
registered public accounting firm for 2012; and
• To transact any other business that may properly come before the meeting.
RECORD DATE You can vote if you were a shareholder of record at the close of business on March 21, 2012.
INSPECTION OF LIST OF
SHAREHOLDERS OF
RECORD
A list of the shareholders of record as of March 21, 2012 will be available for inspection during ordinary
business hours during the ten days prior to the meeting at AIG’s offices, 180 Maiden Lane, New York,
New York 10038.
ADDITIONAL INFORMATION Additional information regarding the matters to be acted on at the meeting is included in this proxy
statement.
PROXY VOTING YOU CAN VOTE YOUR SHARES OVER THE INTERNET OR BY TELEPHONE. IF YOU RECEIVED A
PAPER PROXY CARD BY MAIL, YOU MAY ALSO VOTE BY SIGNING, DATING AND RETURNING THE
PROXY CARD IN THE ENVELOPE PROVIDED.
A035
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 35 of 91
Table of Contents
ELECTION OF DIRECTORS
Thirteen directors are to be elected at the Annual Meeting to hold office until the next annual election and until their successors are duly
elected and qualified. It is the intention of the persons named in the accompanying form of proxy to vote for the election of the nominees listed
below. All of the nominees are currently members of AIG’s Board of Directors. It is not expected that any of the nominees will become
unavailable for election as a director, but if any should become unavailable prior to the Annual Meeting, proxies will be voted for such persons
as the persons named in the accompanying form of proxy may determine in their discretion. Directors will be elected by a majority of the votes
cast by the shareholders of the AIG Common Stock, which votes are cast “for” or “against” election. Pursuant to AIG’s By−laws and Corporate
Governance Guidelines, each nominee has submitted to the Board an irrevocable resignation from the Board that would become effective
upon (1) the failure of such nominee to receive the required vote at the shareholder meeting and (2) Board acceptance of such resignation. In
the event that a nominee who is currently a director of AIG fails to receive the required vote, AIG’s Nominating and Corporate Governance
Committee will then make a recommendation to the Board on the action to be taken with respect to the resignation. The Board will accept
such resignation unless the Board determines (after consideration of the Nominating and Corporate Governance Committee’s
recommendation) that the best interests of AIG and its shareholders would not be served by doing so.
In accordance with AIG’s Corporate Governance Guidelines that provide that directors will not stand for election as a director after
reaching the age of 75, Mr. Offit will retire from the Board of Directors effective at the time that the directors are elected at the Annual Meeting.
The principal occupation or affiliation of the nominees for director and any directorships held by such nominee during the past five years
are set forth below.
ROBERT H. BENMOSCHE
Director since 2009
President and Chief Executive Officer, AIG
Age 67
Mr. Benmosche has been AIG’s President and Chief Executive Officer since August 2009. Previously, he served as Chairman and Chief
Executive Officer of MetLife, Inc. from September 1998 to March 2006. He served as President of MetLife, Inc. from September 1999 to June
2004, President and Chief Operating Officer from November 1997 to June 1998, and Executive Vice President from September 1995 to
October 1997. He served as an Executive Vice President of PaineWebber Group Incorporated from 1989 to 1995. Mr. Benmosche is currently
a director of Credit Suisse Group AG, where he is a member of the Compensation Committee. In the past five years, Mr. Benmosche has
served as a director of MetLife, Inc. In light of Mr. Benmosche’s experience managing large, complex, international institutions and his
professional experience across industries including insurance, financial services, and operations and technology, AIG’s Board has concluded
that Mr. Benmosche should be re−elected to the Board.
12
A036
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 36 of 91
Table of Contents
W. DON CORNWELL
Director since 2011
Former Chairman of the Board and Chief Executive Officer of
Granite Broadcasting Corporation
Age 64
Mr. Cornwell was Chairman of the Board and Chief Executive Officer of Granite Broadcasting Corporation from 1988 until his retirement in
August 2009, and Vice Chairman until December 2009. Mr. Cornwell spent 17 years at Goldman, Sachs & Co. where he served as Chief
Operating Officer of the Corporate Finance Department from 1980 to 1988 and Vice President of the Investment Banking Division from 1976
to 1988. Mr. Cornwell is currently a director of Avon Products, Inc., where he is a member of the Finance Committee and the Audit
Committee, and Pfizer, Inc., where he is Chairman of the Audit Committee and a member of the Compensation and Regulatory and
Compliance Committees. Mr. Cornwell was Chairman of the Board and Chief Executive Officer of Granite Broadcasting when it filed for
voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code in December 2006 and emerged from its restructuring in June 2007.
In the past five years, Mr. Cornwell has also served as a director of CVS Caremark Corporation from 1994 until 2007. In light of Mr. Cornwell’s
experience in finance and restructuring, as well as his professional experience across the financial services industry, AIG’s Board has
concluded that Mr. Cornwell should be re−elected to the Board.
JOHN H. FITZPATRICK
Director since 2011
Chairman of Oak Street Management Co., LLC; Former Chief
Financial Officer, Head of the Life and Health Business Group
and Head of Financial Services of Swiss Re
Age 55
Mr. Fitzpatrick has been Chairman of Oak Street Management Co., LLC, a manager of commercial real estate funds, and Oak Family
Advisors, LLC, a private wealth management firm since 2010. From 2006 to 2010, Mr. Fitzpatrick was a partner at Pension Corporation and a
director of Pension Insurance Corporation Ltd. From 1998 to 2006, he was a member of Swiss Re’s Executive Board Committee and served
at Swiss Re as Chief Financial Officer, Head of the Life and Health Business Group, and Head of Financial Services. From 1996 to 1998,
Mr. Fitzpatrick was a partner in insurance private equity firms sponsored by Zurich Financial Services, Credit Suisse and Swiss Re. From
1990 to 1996, Mr. Fitzpatrick served as the Chief Financial Officer and a Director of Kemper Corporation, a NYSE−listed insurance and
financial services organization where he started his career in corporate finance in 1978. From February 2010 until March 2011, Mr. Fitzpatrick
was a director of Validus Holdings, Ltd., where he served on the Audit and Finance Committees. Mr. Fitzpatrick is a Certified Public
Accountant and a Chartered Financial Analyst. In light of Mr. Fitzpatrick’s broad experience in the insurance and reinsurance industry, AIG’s
Board has concluded that Mr. Fitzpatrick should be re−elected to the Board.
13
A037
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 37 of 91
Table of Contents
LAURETTE T. KOELLNER
Director since 2009
Former President, Boeing International;
Former Executive Vice President of
The Boeing Company
Age 57
Ms. Koellner is the former President of Boeing International, a division of The Boeing Company, serving from 2006 to 2008. Prior to that,
Ms. Koellner served as President of Connexion by Boeing from 2004 to 2006. She also served as Executive Vice President, Chief
Administration and Human Resources Officer of Boeing from 2002 to 2004 and was a member of the Office of the Chairman from 2002 to
2003. She served as Senior Vice President and President of Shared Services Group of Boeing from 2001 to 2002. She served as Vice
President and Corporate Controller of Boeing from 1999 to 2000. Ms. Koellner spent 19 years at McDonnell Douglas Corp., where she served
as Division Director of Human Resources as well as Vice President of Internal Audit. Ms. Koellner is currently a director of Celestica Inc.,
where she is a member of the Audit, Nominating and Corporate Governance and Compensation Committees, and Sara Lee Corporation,
where she is Chairman of the Audit Committee and a member of the Executive and Corporate Governance, Nominating and Policy
Committees. In light of Ms. Koellner’s experience in managing large, complex, international institutions, and in finance, accounting and risk
management, as well as her professional experience in the aircraft and the operations and technology industries, AIG’s Board has concluded
that Ms. Koellner should be re−elected to the Board.
DONALD H. LAYTON
Director since 2010
Former Chairman and Chief Executive Officer, E*TRADE Financial
Corporation; Former Vice Chairman, J.P. Morgan Chase & Co.
Age 61
Mr. Layton is the former Chairman and Chief Executive Officer of E*TRADE Financial Corporation, serving from 2008 to 2009, and
non−executive Chairman of the Board, serving from 2007 to 2008. Previously, he was employed by J.P. Morgan Chase & Co. and its
predecessors for twenty−nine years, retiring in 2004. Prior to his retirement, Mr. Layton was Vice Chairman and served as a member of J.P.
Morgan Chase & Co.’s three person Office of the Chairman. He was Head of Chase Financial Services, the consumer and middle market
banking business, from 2002 to 2004, Co−Chief Executive Officer of J.P. Morgan, the investment bank of J.P. Morgan Chase & Co., from
2000 to 2002, and Head of Global Markets, the worldwide capital markets and trading division, of the predecessor Chase Manhattan
Corporation from 1996 to 2000. He was also Head of Treasury & Securities Services from 1999 through 2004. Mr. Layton was a Senior
Adviser to the Securities Industry and Financial Markets Association and is currently a director of Assured Guaranty Ltd., where he serves on
the Compensation Committee and is Chairman of the Risk Oversight Committee. In light of Mr. Layton’s experience in managing large,
complex, international businesses, his experience in finance as well as his professional experience across the financial services industry,
AIG’s Board has concluded that Mr. Layton should be re−elected to the Board.
14
A038
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 38 of 91
Table of Contents
CHRISTOPHER S. LYNCH
Director since 2009
Former National Partner in charge of Financial Services, KPMG
LLP
Age 54
Mr. Lynch has been an independent consultant since 2007, providing a variety of services to public and privately held financial intermediaries,
including risk management, strategy, governance, financial accounting and regulatory reporting and troubled−asset management. Mr. Lynch
is the former National Partner in Charge of KPMG LLP’s Financial Services Line of Business and Banking and Finance Practice. He held a
variety of positions with KPMG from 1979 to 2007, including chairing KPMG’s Americas Financial Services Leadership team and being a
member of the Global Financial Services Leadership and the U.S. Industries Leadership teams. Mr. Lynch has experience as an audit signing
partner under Sarbanes Oxley for some of KPMG’s largest financial services clients. He also served as a Partner in KPMG’s Department of
Professional Practice and as a Practice Fellow at the Financial Accounting Standards Board. Mr. Lynch is a member of the National Audit
Committee Chair Advisory Council of the National Association of Corporate Directors. Mr. Lynch is currently Non−Executive Chairman of the
Federal Home Loan Mortgage Corporation, where he is also a member of the Audit and Compensation Committees. In light of Mr. Lynch’s
experience in finance, accounting and risk management and restructuring, as well as his professional experience across the financial services
industry, AIG’s Board has concluded that Mr. Lynch should be re−elected to the Board.
ARTHUR C. MARTINEZ
Director since 2009
Former Chairman of the Board, President and Chief Executive
Officer, Sears, Roebuck and Co.
Age 72
Mr. Martinez is the former Chairman of the Board, President and Chief Executive Officer of Sears, Roebuck and Co., serving from 1995 to
2000. Mr. Martinez was Chairman and Chief Executive Officer of the former Sears Merchandise Group from 1992 to 1995. He served as Chief
Financial Officer of Saks Fifth Avenue from 1980 to 1984, as Executive Vice President from 1984 to 1987 and then as Vice Chairman from
1990 to 1992. Mr. Martinez also served as Chairman of the Board of the Federal Reserve Bank of Chicago from 2000 to 2002. Mr. Martinez is
currently a director of HSN, Inc., where he is Non−Executive Chairman and Chairman of the Governance and Nominating Committee,
IAC/InterActiveCorp, where he is Chairman of the Compensation and Human Resources Committee, International Flavors & Fragrances Inc.,
where he is the Lead Director and a member of the Audit and the Nominating and Governance Committees, Liz Claiborne, Inc., where he is
Chairman of the Compensation Committee and a member of the Audit Committee, and PepsiCo, Inc., where he is Chairman of the
Compensation Committee and a member of the Nominating and Corporate Governance Committee. In the past five years, Mr. Martinez has
also served as a director of ABN AMRO Holding N.V. from 2002 to 2010 and was also Chairman from 2006 until 2010. Shortly after joining
the Board in 2009, Mr. Martinez committed to AIG that, in accordance with AIG’s Corporate Governance Guidelines, he would reduce the
number of public company boards on which he serves as director (other than AIG) to no more than four within the following 12 months. Since
then, Mr. Martinez reduced his board memberships by one and his commitment to further reduce his board memberships was extended, with
Board approval. In May 2012, Mr. Martinez will not stand for re−election to one of the Boards of Directors on which he serves. In light of
Mr. Martinez’s experience in finance and restructuring, AIG’s Board has concluded that Mr. Martinez should be re−elected to the Board.
15
A039
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 39 of 91
Table of Contents
GEORGE L. MILES, JR.
Director since 2005
Executive Chairman, Chester Engineers, Inc.; Former President
and Chief Executive Officer, WQED Multimedia
Age 70
Mr. Miles has been the Executive Chairman of Chester Engineers, Inc. since 2011 and the former President and Chief Executive Officer of
WQED Multimedia, serving from 1994 to 2010. Mr. Miles served as an Executive Vice President and Chief Operating Officer of
WNET/Thirteen from 1984 to 1994. Prior to WNET/Thirteen, he was Business Manager and Controller of KDKA−TV and KDKA Radio in
Pittsburgh; Controller and Station Manager of WPCQ in Charlotte; Vice President and Controller of Westinghouse Broadcasting Television
Group in New York; and Station Manager of WBZ−TV in Boston. Mr. Miles is currently a director of HFF, Inc., where he is Chairman of the
Audit Committee and serves on the Compensation Committee, Harley−Davidson, Inc., where he serves on the Audit and Nominating and
Corporate Governance Committees, WESCO International, Inc., where he serves on the Nominating and Corporate Governance Committee,
and EQT Corporation, where he serves on the Executive Committee and as Chairman of the Corporate Governance Committee. Mr. Miles is
a Certified Public Accountant. In light of Mr. Miles’ experience in accounting as well as his professional experience across the operations and
technology industry, AIG’s Board has concluded that Mr. Miles should be re−elected to the Board.
HENRY S. MILLER
Director since 2010
Chairman, Marblegate Asset Management; Former Chairman and
Managing Director, Miller Buckfire & Co., LLC
Age 66
Mr. Miller has been Chairman of Marblegate Asset Management since 2009. Mr. Miller was co−founder, Chairman and a Managing Director
of Miller Buckfire & Co., LLC, an investment bank from 2002 to 2011 and Chief Executive Officer from 2002 to 2009. Prior to founding Miller
Buckfire & Co., LLC, Mr. Miller was Vice Chairman and a Managing Director at Dresdner Kleinwort Wasserstein and its predecessor company
Wasserstein Perella & Co., where he served as the global head of the firm’s financial restructuring group. Prior to that, Mr. Miller was a
Managing Director and Head of both the Restructuring Group and Transportation Industry Group of Salomon Brothers Inc. From 1989 to
1992, Mr. Miller was a managing director and from 1990 to 1992, co−head of investment banking at Prudential Securities. In light of
Mr. Miller’s experience in restructuring as well as his professional experience across the financial services industry, AIG’s Board has
concluded that Mr. Miller should be re−elected to the Board.
16
A040
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 40 of 91
Table of Contents
ROBERT S. MILLER
Director since 2009
Chief Executive Officer, Hawker Beechcraft, Inc.
Age 70
Mr. Miller is Chief Executive Officer of Hawker Beechcraft, Inc., a manufacturer of aircraft since February 2012. Mr. Miller has also been
Chairman of MidOcean Partners, a leading middle market private equity firm, since December 2009. Mr. Miller also served as the Executive
Chairman of the Delphi Corporation from 2007 to 2009. He was previously Chairman and Chief Executive Officer of Delphi Corporation from
2005 to 2007. Prior to joining Delphi Corporation, Mr. Miller served in a number of corporate restructuring situations, including as Chairman
and Chief Executive Officer of Bethlehem Steel Corporation, Chairman and Chief Executive Officer of Federal Mogul Corporation, Chairman
and Chief Executive Officer of Waste Management, Inc., and Executive Chairman of Morrison Knudsen Corporation. He has also served as
Vice Chairman and Chief Financial Officer of Chrysler Corporation. Mr. Miller is a director of Symantec Corporation, where he is a member of
the Audit and Nominating and Governance Committees. In the past five years, Mr. Miller has also served as a director of Delphi Corporation
and UAL Corporation (United Airlines). Mr. Miller was Chairman and Chief Executive Officer of Delphi Corporation when it filed for Chapter 11
bankruptcy in October 2005. In light of Mr. Miller’s experience in managing large, complex, international institutions, his experience in finance,
accounting and risk management and restructuring, as well as his professional experience across the financial services industry, AIG’s Board
has concluded that Mr. Miller should be re−elected to the Board.
SUZANNE NORA JOHNSON
Director since 2008
Former Vice Chairman, The Goldman Sachs Group, Inc.
Age 54
Ms. Nora Johnson is a former Vice Chairman of The Goldman Sachs Group, Inc., serving from 2004 to 2007. During her 21 years at Goldman
Sachs, she also served as the Chairman of the Global Markets Institute, Head of the Global Investment Research Division and Head of the
Global Investment Banking Healthcare Business. Ms. Nora Johnson is currently a director of Intuit Inc., where she serves on the Acquisitions
and Audit and Risk Committees, Pfizer Inc., where she serves on the Audit, Compensation and Science and Technology Committees, and
Visa Inc., where she serves on the Compensation Committee and chairs the Nominating and Corporate Governance Committee. In light of
Ms. Nora Johnson’s experience in managing large, complex, international institutions, her experience in finance as well as her professional
experience across the financial services industry, AIG’s Board has concluded that Ms. Nora Johnson should be re−elected to the Board.
17
A041
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 41 of 91
Table of Contents
RONALD A. RITTENMEYER
Director since 2010
President and Chief Executive Officer of NCO Group, Inc.; Former
Chairman, Chief Executive Officer and President, Electronic Data
Systems Corporation
Age 64
Mr. Rittenmeyer is President and Chief Executive Officer of NCO Group, Inc., a global provider of business process outsourcing services
since 2011. Mr. Rittenmeyer is also the former Chairman, Chief Executive Officer and President of Electronic Data Systems Corporation,
serving from 2005 to 2008. Prior to that, Mr. Rittenmeyer was a Managing Director of the Cypress Group, a private equity firm, serving from
2004 to 2005. Mr. Rittenmeyer also served as Chairman, Chief Executive Officer and President of Safety−Kleen Corp. from 2001 to 2004.
Among his other leadership roles, Mr. Rittenmeyer served as President and Chief Executive Officer of AmeriServe Food Distribution Inc. from
2000 to 2001, Chairman, Chief Executive Officer and President of RailTex, Inc. from 1998 to 2000, President and Chief Operating Officer of
Ryder TRS, Inc. from 1997 to 1998, President and Chief Operating Officer of Merisel, Inc. from 1995 to 1996 and Chief Operating Officer of
Burlington Northern Railroad Co. from 1994 to 1995. Mr. Rittenmeyer is currently a director of Tenet Healthcare Corporation, where he serves
on the Audit Committee and Compensation Committee. In the past five years, Mr. Rittenmeyer served as a director of Electronic Data
Systems Corporation and RH Donnelly Corporation (presently Dex One Corporation). In light of Mr. Rittenmeyer’s experience in managing
large, complex, international institutions, his experience in finance and restructuring as well as his professional experience across the financial
services industry and railroad industry, AIG’s Board has concluded that Mr. Rittenmeyer should be re−elected to the. Board.
DOUGLAS M. STEENLAND
Director since 2009
Former President and Chief Executive Officer, Northwest Airlines
Corporation
Age 60
Mr. Steenland is the former Chief Executive Officer of Northwest Airlines Corporation, serving from 2004 to 2008, and President, serving from
2001 to 2004. Prior to that, he served in a number of Northwest Airlines executive positions after joining Northwest Airlines in 1991, including
Executive Vice President, Chief Corporate Officer and Senior Vice President and General Counsel. Mr. Steenland retired from Northwest
Airlines upon its merger with Delta Air Lines, Inc. Prior to joining Northwest Airlines, Mr. Steenland was a senior partner at a Washington, D.C.
law firm that is now part of DLA Piper. Mr. Steenland is currently a director of Digital River, Inc., where he serves on the Compensation
Committee and Finance Committee, Travelport Limited, where he serves on the Compensation Committee, Audit Committee and Executive
Committee, and International Lease Finance Corporation, an AIG subsidiary, where he is Non−Executive Chairman. In the past five years,
Mr. Steenland has also served as a director of Delta Air Lines, Inc. and Northwest Airlines Corporation. Mr. Steenland was President and
Chief Executive Officer of Northwest Airlines Corporation when it filed for Chapter 11 bankruptcy in 2005. In light of Mr. Steenland’s
experience in managing large, complex, international institutions and his experience in restructuring as well as his professional experience in
the airline industry, AIG’s Board has concluded that Mr. Steenland should be re−elected to the Board.
All of these nominees have lengthy direct experience in the oversight of public companies as a result of their service on AIG’s Board
and/or those of other public companies and their involvement in the other organizations described above. This diverse and complementary set
of skills, experience and backgrounds creates a highly qualified and independent Board of Directors.
18
A042
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 42 of 91








EXHIBIT 10
A043
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 43 of 91


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 8-K


CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): 1anuary 23, 2013


AMERICAN INTERNATIONAL GROUP, INC.
(Exact name of registrant as specified in its charter)



Delaware 1-8787 13-2592361
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
180 Maiden Lane
New York, New York 10038
(Address of principal executive offices)
Registrant`s telephone number, including area code: (212) 770-7000
(Former name or former address, if changed since last report.)


Check the appropriate box below iI the Form 8-K Iiling is intended to simultaneously satisIy the Iiling obligation oI the registrant under any oI
the Iollowing provisions ( see General Instruction A.2. below):

… Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

… Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

… Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

… Pre-commencement communications pursuant to Rule 13e4(c) under the Exchange Act (17 CFR 240.13e-4(c))



A044
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 44 of 91


Section 7 - Regulation FD
Item 7.01. Regulation FD Disclosure.
On January 23, 2013, American International Group, Inc. ('AIG¨) Iiled in the Court oI Federal Claims a report (the 'Filing¨) concerning the
unanimous reIusal by AIG`s Board oI Directors oI the demand made by Starr International Company, Inc. ('Starr¨) with respect to suits Starr
has commenced against the United States oI America and the Federal Reserve Bank oI New York. The Filing attaches a letter to Starr`s counsel
and related exhibits describing the process by which the Board considered and reIused Starr`s demand and stating the reasons Ior the Board`s
determination. A copy oI the Filing with its attachments is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by
reIerence herein.
Section 9 - Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.


99.1 Filing, dated January 23, 2013 (Iurnished and not Iiled Ior purposes oI Item 7.01).
A045
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 45 of 91


SIGNATURES
Pursuant to the requirements oI the Securities Exchange Act oI 1934, the registrant has duly caused this report to be signed on its behalI
by the undersigned hereunto duly authorized.

AMERICAN INTERNATIONAL GROUP, INC.
(Registrant)

Date: January 24, 2013
By:
/s/ James J. Killerlane III
Name: James J. Killerlane III
Title: Associate General Counsel and Assistant Secretary
A046
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 46 of 91





100 S. West Street, Suite 400
Wilmington, DE 19801
Telephone 302.576.1600
Facsimile 302.576.1100
www.seitzross.com



Collins 1. Seitz, 1r.
cseitz¸seitzross.com
302.576.1601
January 23, 2013
BY EMAIL (dboies¸bsIllp.com)
AND BY HAND,
RETURN RECEIPT REQUESTED
David Boies
Boies, Schiller & Flexner LLP
333 Main Street
Armonk, NY 10504
Re: AIG Shareholder Demand
Dear Mr. Boies:
We write on behalI oI the Board oI Directors (the 'Board¨) oI American International Group, Inc. ('AIG¨) in response to your September 21,
2012 letter (the 'Demand¨) on behalI oI Starr-International Company Inc. ('Starr¨). The Demand asks that AIG`s Board pursue (or allow Starr
to pursue derivatively on AIG`s behalI) claims belonging to AIG against the United States oI America (the 'United States¨) and the Federal
Reserve Bank oI New York ('FRBNY¨) alleged in lawsuits captioned Starr Int`l Co . v. United States , No. 11-cv-00779 (TCW) (Court oI
Federal Claims Iiled Nov. 21, 2011) (the 'Court oI Federal Claims Action¨), and Starr Int`l Co . v. Federal Reserve Bank oI N.Y ., No.
11-cv-08422 (PAE) (S.D.N.Y. Iiled Nov. 21, 2011) (the 'New York Action¨) concerning the United States`s and FRBNY`s September 2008
rescue oI AIG and related subsequent events.
The lawsuits allege both 'direct¨ claims, which Starr alleges on behalI oI itselI and an alleged class oI AIG shareholders, and 'derivative¨
claims, which Starr alleges on behalI oI AIG.
The Demand involves Starr`s derivative claims. AIG has considered the Demand in accordance with Delaware law and AIG`s commitments to
the courts in the two lawsuits.
For the reasons stated below, the Board has determined unanimously to reIuse the Demand in its entirety.
A047
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 47 of 91


AIG`s Board and Starr`s Demand
AIG`s Board includes the Iollowing 12 directors: Robert H. Benmosche, W. Don Cornwell, John H. Fitzpatrick, Christopher S. Lynch, Arthur
C. Martinez, George L. Miles, Jr., Henry S. Miller, Robert S. Miller (Chair), Suzanne Nora Johnson, Morris W. OIIit, Ronald A. Rittenmeyer
and Douglas M. Steenland. Mr. Benmosche is AIG`s president and chieI executive oIIicer. The 11 remaining directors are outside,
non-management, non-employee directors.
The Demand does not allege wrongdoing by any AIG director or any personal interest on the part oI any director with respect to the subject
matter oI the Demand. The United States, including the Department oI Treasury ('Treasury¨), is no longer a shareholder oI AIG.
September 21, 2012 to January 4, 2013
The Board`s Regulatory, Compliance and Public Policy Committee (the 'Committee¨), consisting oI Messrs. H. Miller, OIIit and Steenland
(Chair), assisted the Board in its consideration oI the Demand. The Committee retained Simpson Thacher & Bartlett LLP ('Simpson¨) and
Seitz Ross Aronstam & Moritz LLP ('Seitz Ross¨) to serve as counsel to the Board in its consideration oI the Demand. Simpson has served as
independent counsel to the Board Ior many years, including at the time oI the events underlying the Demand. Seitz Ross has never previously
represented AIG or AIG`s Board, except as independent counsel to the Board in connection with a 2011 shareholder demand concerning AIG`s
subprime losses.
On October 1, 2012, aIter receiving input Irom Starr, Treasury and FRBNY, AIG circulated a protocol with respect to submissions to the Board
by Starr, the United States Department oI Justice ('Justice¨) (as counsel to the United States), Treasury and FRBNY concerning the Demand.
In accordance with the protocol, Starr, Justice, Treasury and FRBNY provided AIG`s Board three rounds oI brieIings totaling 184 pages Irom
November 2, 2012, through December 5, 2012. These submissions were sent to all members oI the Board as they were received.
On November 1, 2012, December 5, 2012, December 18, 2012, and January 5, 2013, the Committee met to discuss the parties` written
submissions and consider what additional inIormation and materials would assist the Board in considering the Demand.
On December 10 and 21, 2012, additional protocols were sent to the parties concerning oral presentations to the Board on January 9, 2013. The
Committee also determined that the Board should meet on January 8, 2013, to discuss the Demand beIore the January 9, 2013 Board meeting.
On December 21, 2012, we sent a package oI materials to the Board, consisting oI (1) a chronology, (2) a chart entitled 'Summary oI the
Parties` Respective Positions¨ discussing Iactors the Board may consider in assessing the Demand, and (3) a presentation entitled 'Summary oI
Underlying Legal Claims, DeIenses, Facts and Rulings,¨ including a chart comparing the July 2, 2012 and September 17, 2012 ruling in the
Court oI Federal Claims Action denying the United States`s motion to dismiss with the November 19, 2012 ruling in the New York Action
granting FRBNY`s motion to dismiss. The Board had previously received copies oI the rulings in the two actions.

2
A048
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 48 of 91


Also on December 21, 2012, we provided Starr, Justice, Treasury and FRBNY speciIic questions on behalI oI the Committee concerning
statements made and positions taken in the parties` written submissions and asked that the parties devote attention to these issues in their oral
presentations to the Board. Those questions were distributed to the Board as well.
On January 4, 2013, Starr and Treasury provided AIG presentation materials Starr and Treasury planned to use during their January 9, 2013
oral presentations. The Board received copies oI these materials, along with a letter dated January 4, 2013, Irom Justice.
The Board`s January 8, 2013 Meeting
On January 8, 2013, the Board met to discuss the Demand and the materials that had been submitted to the Board in preparation Ior the Board`s
January 9, 2013 meeting.
During the meeting, Mr. Curnin discussed and answered questions concerning the Demand, the Board`s Iiduciary duties in connection with the
Demand, the diIIerence between Starr`s direct and derivative claims, and the unusual circumstance that the court in the Court oI Federal Claims
Action has ruled that Starr`s claims with respect to a 79.9° equity interest in AIG had both a direct and derivative component and Starr intends
to pursue the direct aspect oI the claims even iI the Board reIuses the Demand. Mr. Curnin noted all oI the inIormation the Board had received
concerning the subject matter oI the Demand and reviewed the Iactors the Board may consider in addressing the Demand, including but not
limited to Starr`s likelihood oI success, potential damages, potential costs to AIG, such as attorneys` Iees, indemniIication obligations, the
impact the suit might have on other litigation, relations with regulators and elected oIIicials, potential harm to AIG`s corporate brand and
image, and any other Iactor the Board deems relevant. Mr. Curnin advised the Board that the Board is entitled to attach as much or as little
weight to any one or more Iactors as the Board deems appropriate.
Mr. Curnin then discussed and answered questions concerning the merits oI Starr`s claims, the United States`s and FRBNY`s deIenses, and the
thoughtIul decisions issued by the judges in the Court oI Federal Claims Action and New York Action. Mr. Curnin stated that likelihood oI
success on the merits Iollowing a trial and appeals, while important, is just one oI the Iactors the Board could consider in evaluating the
Demand. Mr. Curnin reported that, in the view oI all counsel advising AIG and the Board, Starr`s claims had a tow likelihood oI success on the
merits. He stated that, iI it was helpIul to the Board`s consideration oI the Demand, he would quantiIy Starr`s likelihood oI success at no more
than 20°, and that given the diIIiculties oI predicting litigation outcomes he would add or subtract 5° on either side oI his estimate. Mr.
Curnin stated that this estimate took into consideration the Iact that Starr is well Iinanced and well represented, and has already survived a
motion to dismiss in the Court oI Federal Claims Action.
With respect to Starr`s claim that the Government improperly took a 79.9° equity interest in AIG, Mr. Curnin discussed and answered
questions concerning the requirement that a constitutional taking be involuntary. Mr. Curnin stated that the Court oI Federal Claims had
accepted alleged Iacts as true Ior the purpose oI the United States`s motion to dismiss. Mr. Curnin stated that the Board had now received
multiple written presentations Irom the parties (and would be receiving oral presentations on January 9, 2013) concerning disputed Iacts and
was not required

3
A049
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 49 of 91


to accept the truth oI Starr`s allegations. Rather, the Board could evaluate the available evidence and assess what Starr could prove.
Mr. Curnin stated that the evidence reviewed by counsel, including more than 3000 pages oI exhibits accompanying the parties` submissions,
evidence in the public record, and evidence Irom various litigations, does not support Starr`s assertion that the United States or FRBNY
coerced AIG`s Board into accepting the FRBNY`s loan to AIG in September 2008. Among other things, Mr. Curnin stated, Robert Willumstad,
AIG`s chieI executive oIIicer at the time, has testiIied that there was no private sector alternative to FRBNY`s loan, contrary to Starr`s claim.
Mr. Curnin stated that there was no evidence that the United States or FRBNY had sought to undermine a private sector solution, and that the
evidence available to AIG shows that FRBNY was encouraging a private sector solution, including (according to at least one government
report) an FRBNY oIIer on September 15, 2008, to contribute $40 billion toward a deal involving private banks. Mr. Curnin stated that Starr
had not cited and neither the Board`s counsel nor John Coates, ProIessor oI Law and Economics at Harvard Law School and a leading expert
on the regulation oI Iinancial institutions whom Mr. Curnin had engaged, has been able to identiIy any institution similarly situated to AIG that
was granted access to the Federal Reserve`s discount window prior to the FRBNY loan to AIG in September 2008.
Mr. Curnin also reported that he had engaged Erwin Chemerinsky, the dean oI the University oI CaliIornia Irvine School oI Law and one oI the
leading constitutional law scholars in the United States. Dean Chemerinsky`s opinion, inIormed by his review oI the parties` submissions, the
motion to dismiss decisions in the Court oI Federal Claims Action and the New York Action, his own research, and his expertise in the law
governing constitutional takings, is that Treasury`s and FRBNY`s hard negotiating position with AIG does not constitute a taking, even iI
Treasury or FRBNY had taken any action that worsened AIG`s predicament. Dean Chemerinsky agreed with the court`s decision in the New
York Action that the Board`s acceptance oI the Government Iacility was voluntary because 'a choice between rock and hard place is still a
choice.¨
With respect to Starr`s illegal exaction claim, Mr. Curnin also reported our view that Starr had a low likelihood oI success. Mr. Curnin
discussed Starr`s contention that FRBNY lacked authority to condition a loan on the issuance oI equity. Mr. Curnin reported that ProIessor
Coates`s view, inIormed by his review oI the parties` submissions, the rulings in the Court oI Federal Claims Action and the New York Action,
his own research, and his expertise regarding regulation oI Iinancial institutions, is that Treasury and FRBNY acted within their powers. Mr.
Curnin also noted the United States`s contention that the illegal exaction claim Iails because the Board voluntarily approved the FRBNY loan
and Starr`s contention to the contrary. Mr. Curnin advised the Board that, even assuming Starr did not have to prove involuntariness, Starr`s
probability oI success remained low because, as ProIessor Coates opined, Treasury and FRBNY`s actions were within their authority and not
illegal.
Mr. Curnin discussed and answered questions concerning two oI the Government`s deIenses to Starr`s claims: (1) a severability provision
requiring that iI the contractual right to receive a 79.9° equity interest is invalid then equivalent value must be paid in another Iorm, and (2)
principles oI equity and Iairness that the United States and FRBNY contend should not allow Starr or AIG to wait years while enjoying all the
beneIits oI $ 185 billion in Iederal assistance, and then, when the assistance was no longer needed, assert that the assistance was unlawIul.

4
A050
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 50 of 91


Mr. Curnin discussed and answered questions concerning our view, developed in consultation with Cornerstone Research, a leading economic
consulting Iirm, concerning potential damages. Mr. Curnin reported that Cornerstone Research disagreed with Starr`s damage theory, which
Starr appears to premise on AIG`s stock price aIter AIG`s announcement oI the FRBNY loan and aIter AIG had received Iederal Iunds. In
Cornerstone`s view, the Iair market value oI 79.9° oI AIG`s equity prior to announcement oI the FRBNY loan, to the extent it had any value
prior to the loan, was Iar below the value claimed by Starr. In Cornerstone`s opinion, debt and equity markets were assuming a high likelihood
oI an AIG bankruptcy, which could have impaired AIG`s debt and eliminated all value oI AIG`s equity. Mr. Curnin Iurther stated that the value
oI the FRBNY loan was consideration AIG received Irom FRBNY and, to account Ior that value, there would have to be an oIIset to the value
oI the 79.9° equity interest. Mr. Curnin added that any damage award would be Iurther reduced by any damages allocable to Starr`s direct
claims and would likely be Iurther reduced by attorneys` Iees payable to Starr`s counsel.
Mr. Curnin turned to Starr`s ML III claim, and discussed and answered questions concerning our view that Starr had not presented the Board
evidence supporting that claim. Mr. Cumin summarized evidence suggesting that AIG`s credit deIault swap counterparties would not have
taken less than par to unwind swaps. Mr. Curnin stated that only one counterparty (UBS) had expressed a willingness to take any deduction
(just 2°), but only iI all other counterparties would do the same. The evidence suggests they would not.
Members oI AIG management who participated in the ML III negotiations, and Joseph S. Aller-hand oI Weil, Gotshal & Manges LLP, counsel
to AIG, discussed this subject Iurther, including management`s view that, Irom AIG`s perspective, the ML III transaction had served AIG`s
interests by resolving AIG`s credit deIault swap issue and preventing Iurther downgrades and collateral calls, which was critical at the time.
Mr. Allerhand also discussed Iacts demonstrating that the proIit split with FRBNY in ML III that Starr has questioned was negotiated by AIG
and that the releases AIG provided to counterparties in the ML III transaction had limited, iI any, value, due to representations, disclaimers and
other language in the credit deIault swap contracts AIG had entered into with its counterparties. Mr. Curnin noted that Dean Chemerinsky and
ProIessor Coates also viewed the ML III claims negatively, Dean Chemerinsky because there was no evidence oI involuntariness, and
ProIessor Coates because the transaction was within the FRBNY`s power.
Mr. Allerhand discussed and answered questions concerning AIG`s obligation to indemniIy the United States and FRBNY Ior deIense costs
and any judgment and potential contractual and public policy limits on AIG`s obligation to indemniIy. Mr. Allerhand also discussed and
answered questions concerning the Government`s contention that AIG would lose billions oI dollars in net operating losses iI Starr prevails.
Members oI the Board then discussed their views concerning the Demand based on the parties` extensive written submissions and our brieIing,
including likelihood oI success on the merits, potential damages, potential costs to the company, including potential indemniIication
obligations, and the harm AIG might suIIer pursuing the action or allowing Starr to pursue the action in AIG`s name, including damage to
AIG`s corporate brand and image, employee morale, shareholder relations, customer relations, relations with regulators and elected oIIicials,
and the impact on AIG`s 'Thank You America¨ television and newspaper campaign highlighting AIG`s

5
A051
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 51 of 91


repayment oI Iederal loans and the proIit the United States earned in connection with those loans. Members oI the Board expressed their
concern that pursuing claims against the United States and FRBNY threatened to destroy much oI the good work that AIG and its employees
had done rebuilding AIG and its name and reputation Iollowing the September 2008 Iinancial crisis and FRBNY loan. Members oI the Board
noted that this concern was consistent with the media coverage and statements made by elected oIIicials highly critical oI AIG Ior even
considering the Demand (though the law requires the Board to do so).
The Board concluded that it would careIully consider the parties` presentations on January 9, 2013, including the parties` responses to the
speciIic questions raised by the Committee beIore making a determination concerning the Demand. The Board also concluded that, in light oI
the scrutiny AIG was receiving regarding the Demand, the Board should make a determination and announce the determination as promptly as
practicable Iollowing the January 9, 2013 presentations.
The Board`s January 9, 2013 Meeting
On January 9, 2013, the Board met with Starr, Treasury and FRBNY. Starr`s counsel spoke Ior 45 minutes, Treasury`s counsel spoke Ior 30
minutes, FRBNY`s counsel spoke Ior 30 minutes, Starr`s counsel replied Ior 15 minutes, and Treasury, FRBNY and then Starr presented 2
minute closing statements. Starr`s oral presentation, like its written presentations, devoted little attention to Starr`s claims in the New York
Action, which had been dismissed with prejudice and which Starr`s counsel had previously told the court in the Court oI Federal Claims Action
were 'basically¨ 'encompass|ed|¨ by the Court oI Federal Claims Action.
Starr, Treasury and FRBNY leIt the meeting and the Board discussed the presentations and Iormulated Iollow-up questions the Board wished to
ask Starr, Treasury and FRBNY. Among other things, the Board, management and counsel discussed potential damages, the legal requirements
oI an illegal exaction claim, FRBNY`s authority under Section 13(3) oI the Federal Reserve Act, the voluntariness oI the Board`s decisions
with respect to the FRBNY loan and ML III, and the rulings in the Court oI Federal Claims Action and the New York Action. Members oI the
Board and management who had participated in the events underlying the Demand commented on Iactual assertions made by the parties.
During the discussion, the Board was inIormed that at least one state insurance regulator had called AIG during the meeting to recommend
strongly that AIG not join the suit in light oI potential harm to AIG customers.
Starr, Treasury and FRBNY were invited back into the meeting, and answered questions Irom the Board Ior approximately 40 minutes.
Starr, Treasury and FRBNY were then given a Iinal opportunity to say anything Iurther to the Board concerning the Demand.
The Board then met by itselI once again to discuss the Demand. We were asked iI we had heard anything that changed any oI the views we had
expressed during the Board`s January 8, 2013 meeting on Starr`s likelihood oI success on the merits and the amount oI damages realistically at
issue, and we replied that we had not. Following Iurther discussion, Mr. R. Miller, the Chairman

6
A052
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 52 of 91


oI the Board, suggested that the directors each state their individual views with respect to the Demand based on all oI the inIormation the Board
had now been provided.
Each director spoke, and each director stated his or her view that the Demand should be reIused Ior one or more oI multiple reasons, including
the low likelihood oI success on the merits, the realistic potential damages, the uncertainty in allocating any potential damages among the direct
and derivative claims, the potential harm to AIG`s goodwill and the positive image that AIG had worked so hard to restore since September
2008 (consistent with the negative reaction by the public, the media, regulators and elected oIIicials even to the Board`s consideration oI the
Demand), the Iact that 'a deal is a deal,¨ and AIG`s potential indemniIication obligations. Mr. Benmosche, AIG`s chieI executive oIIicer,
stated his view that AIG had no choice but to honor the deal AIG struck with FRBNY, that suing the United States or FRBNY was not the right
thing to do, and that AIG should continue to Iocus on the Iuture, not the past.
The Board took two votes, one including the Iull Board and one including the Iull Board other than Messrs. Miles and OIIit and Ms. Nora
Johnson, who had served on AIG`s Board in September 2008, and unanimously reIused the Demand in its entirety in both votes. The Board
determined that AIG should announce the Board`s determination immediately in light oI the public scrutiny surrounding the Board`s
consideration oI the Demand, and that counsel should draIt a detailed letter stating the Board`s reasoning. A press release was issued a short
time later, and this letter was subsequently prepared.
We are enclosing a binder containing the protocols sent by AIG to the parties on October 1, 2012, December 10, 2012, and December 21, 2012,
the written submissions to the Board by Starr, Justice, Treasury and FRBNY Irom November 2, 2012, through December 5, 2012 (without
exhibits), the questions the Committee asked the parties to address in their January 9, 2013 presentations, the brieIing materials provided to the
Board on December 21, 2012 and January 4, 2013, the slides Starr and Treasury used during their January 9, 2013 presentations, and a
transcript oI the parties` presentations to the Board on January 9, 2013.

Sincerely,



Collins J. Seitz, Jr.
Seitz Ross Aronstam & Moritz LLP
100 S. West Street, Suite 400
Wilmington, Delaware 19801


Paul C. Curnin
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Enclosures (by hand)

7
A053
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 53 of 91








EXHIBIT 11
A054
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 54 of 91
A055
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 55 of 91








EXHIBIT 12
A056
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 56 of 91
Opposing view: Give AIG shareholders their day in court
David Boies 9:23p.m. EST January 8, 2013
The government took company equity without offering proper compensation.
Objections to AIG shareholders having their day in court to contest the terms of the government's takeover of their company are based on ignorance of
the law and the facts.
OUR VIEW: So much for gratitude (http://www.usatoday.com/story/opinion/2013/01/08/aig-bailout-lawsuit-maurice-greenberg/1566158/)
The government loaned AIG money during the 2008 financial crisis — as it did many, many companies. As the government recognized in 2008, and
recently admitted again, the loan to AIG was fully secured. The government also charged AIG 14.5% interest, much higher than the rate charged other
assisted companies with better political connections
In addition, the government took (without a shareholder vote or consent) 80% of the company's equity without any compensation. The government then
further harmed AIG's shareholders by using AIG's assets to conduct "backdoor bailouts" of other companies that the government wanted to stabilize,
bailouts concealed from the public until congressional investigations revealed them.
All of the loans to AIG have now, of course, been repaid with interest. Unlike assistance to many other companies, the "rescue" of AIG did not cost
taxpayers a penny — and because the loan was fully secured from the beginning, taxpayers were never at risk. In fact, the government has admitted that
it made $22 billion in profits as a result of its takeover of AIG.
The Court of Federal Claims in Washington has already ruled as a matter of law that the government had no right to exact AIG's equity as a condition of
loaning the company money — or to take AIG assets to conduct "backdoor bailouts" of other favored companies.
Moreover, the facts on which AIG's shareholders rely for their claims are largely undisputed, revealed in the government's own documents, and set forth
in reports of numerous congressional committees and inspector generals.
The government has also recently admitted that it took AIG's equity not as compensation or collateral for the loan, but to "punish" AIG's shareholders for
letting their company become a victim of the 2008 liquidity crisis. This admission further supports AIG's shareholder claims.
Trying to use ad hominem attacks to short-circuit a serious judicial proceeding is not a worthy goal.
David Boies is the lead attorney representing Starr International in a shareholder lawsuit against the government. Starr's chairman is Maurice "Hank"
Greenberg, AIG's former chief executive.
(Photo: Spencer Platt, 2009 Getty
Images photo)
Page 1 of 2 Opposing view: Give AIG shareholders their day in court
4/2/2013 http://www.usatoday.com/story/opinion/2013/01/08/aig-shareholders-starr-international/1819165/
A057
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 57 of 91








EXHIBIT 13
A058
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 58 of 91
Login to OnePass | Settings | Help SEARCH

NEW YORK LEGAL HOME NEWS INSIGHT LEGAL MATERIALS

RELATED COURT DOCUMENTS &
INSIGHT
AIG v. Fed Feb. 28 letter
AIG v. Fed March 1 letter
AIG v. Fed stay order
Starr v. U.S. amended
complaint

In BofA death match, MBIA wins a
round at N.Y. appeals court read
more »
Justices throw up Comcast
obstacle in two more class
actions read more »
Judge in RIM securities class
action: Mismanagement isn't
fraud read more »
3/14/2013 COMMENTS (0)

AIG, the Fed and the long litigation tail of government bailouts
Former AIG chief Hank Greenberg's latest complaint in Starr International's wrongful taking litigation against the
U.S.government, filed Tuesday in the U.S. Court of Claims, contains quite a bitter discussion of the AIG board's
decision not to join the suit, which Starr styled as a shareholder derivative action on behalf of the corporation.
According to Starr, which is now asserting that the Federal Reserve's 2008 acquisition of about 80 percent of the
stock of the teetering insurer cost AIG shareholders $55 billion (up from his original $25 billion claim), AIG's board
remains under the control of the feds, to the extent that directors didn't even consider the merits of Starr's case.
Board members, Starr asserted, "had served in government, did business with the government, and/or substantially
benefited from the government's taking control of AIG." Not only did the government supposedly extract a promise
from the board that it would not join Starr's suit, according to the complaint, it also threatened to scrutinize AIG's
securities and tax filings if the company threw in with its former chief. Even though the Treasury Department no
longer owns AIG shares orassets, Starr's lawyers at Boies, Schiller & Flexner and Skadden, Arps, Slate,
Meagher & Flom argue that the carrot-and-stick combination of coercion and intimidation has left AIG under the
sway of the government.
Perhaps. But the very same AIG that is supposedly in the government's pocket is also engaged in heated litigation
against the New York Federal Reserve. You remember the case: AIG lawyers at Quinn Emanuel Urquhart &
Sullivan sued the Fed in January, seeking a declaratory judgment that AIG - and not the Fed - owns securities
claims based on the company's long-ago purchase of Countrywide mortgage-backed securities.
The declaratory judgment suit, which was prompted by Fed officials' affidavits in AIG's $7 billion fraud case against
Countrywide in federal court in Los Angeles, has produced some fascinating revelations in the last couple of weeks.
First, U.S. District Judge Lewis Kaplan (who took over the case after the Fed removed AIG's state-court complaint
to federal court) suggested in a Feb. 26 order that by injecting itself into the California case to support
Countrywide's contention that AIG transferred its MBS securities claims to the Fed as part of the 2008 bailout, the
Fed "appears to be engaged in an attempt to circumvent and defeat the forum selection clause to which it is bound
by its agreement with AIG." Kaplan, who granted the Fed's motion to stay the case, nevertheless said its conduct
was, on its face, "perhaps ... unattractive and, indeed, wrongful."
The Fed's lawyers at Debevoise & Plimpton responded with a Feb. 28 letter informing Kaplan that it was
contractually obligated, under the terms of a July 2012 settlement with Bank of America, to submit the declarations
in California in support of Countrywide. The letter, which attached the $43 million settlement agreement, was
intended to assuage Kaplan's concerns about the Fed's supposed forum shopping. But as you can imagine, AIG's
lawyers leapt all over the disclosure of a secret deal between the Fed and BofA. That settlement, AIG argued in a
March 1 letter to Judge Kaplan, resolved MBS contract claims on only a handful of the securities the Fed acquired
from AIG in 2008, yet for the low, low price of $43 million, presumed to release BofA from $7 billion in MBS
securities claims asserted by AIG. The settlement and the Fed's subsequent rush to defend BofA, AIG said, "appear
to evidence questionable collusion between FRBNY and BofA." (AIG has tried, and so far failed, to use the newly
disclosed settlement to expand discovery in its California suit against Countywide. As things stand, AIG's New York
declaratory judgment case is stayed until U.S. District Judge Mariana Pfaelzer of Los Angeles issues a decision on
whether AIG owns its securities claims. But Kaplan's stay order indicated that he doesn't expect Pfaelzer's ruling to
end the matter.)
Starr's new complaint against the government also tries to make hay from the Fed's disclosure of a side settlement
with BofA, even though it's tough to square AIG's belligerence toward the government in the Countrywide securities
litigation with the cowed corporation Starr otherwise portrays AIG to be. The former AIG chief suggests that the
Fed's $43 million deal with Bank of America and its declarations of ownership of securities claims based on the
mortgage-backed securities it acquired from AIG are a further insult to AIG shareholders already cheated by the
U.S. government's preferential treatment of AIG counterparties.
Starr is by no means a sympathetic plaintiff, and the Treasury officials who made the decision to acquire AIG have a
strong argument that the bailout turned out to be a good move for the government. Not only did the acquisition
avert the domino effect of AIG defaulting on credit default swaps, but according to Pro Publica (which maintains a
unique and superb database on the fate of bailout recipients), Treasury and the Federal Reserve ultimately realized
profits of almost $23 billion from their investment in AIG. Even Starr concedes that AIG desperately needed help
from the government. Greenberg's company just believes that it should have come in the form of discounted credit

Page 1 of 2 AIG, the Fed and the long litigation tail of government bailouts
4/2/2013 http://newsandinsight.thomsonreuters.com/New_York/News/2013/03_-_March/AIG,_the_F...
A059
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 59 of 91
and federal guarantees rather than the takeover of a majority of AIG stock. Starr asserts that AIG was the only
bailout recipient whose shareholders were muscled aside by the federal government.
Certainly, AIG is the only bailout recipient currently battling the Fed over ownership of MBS securities claims. And in
that regard, Starr may have a point. AIG and Bear Stearns were the only financial institutions whose MBS portfolios
were purchased by the Federal Reserve. In AIG's case, the acquisition came two months after the government took
control of the company and its board. Would the Fed have gotten hold of AIG's mortgage-backed securities without
possession of almost 90 percent of the company's shares? Would AIG have realized the same billion-dollar profits on
its mortgage-backed portfolio as the Fed if it had been bailed out with credit and permitted to hold onto its MBS?
We'll never know, of course. But for as long as the federal government maintains the position that some financial
institutions are too big to fail, it should remember the long-term litigation consequences of its bailout methodology
for AIG. Four-and-a-half years after the crisis, neither AIG nor the government can be sure what those are.
Follow us on Twitter: @AlisonFrankel, @ReutersLegal | Like us on Facebook
Register or log in to comment.
© 2013 THOMSON REUTERS
CONTACT US PRIVACY POLICY TERMS OF USE COPYRIGHT SITE MAP
Page 2 of 2 AIG, the Fed and the long litigation tail of government bailouts
4/2/2013 http://newsandinsight.thomsonreuters.com/New_York/News/2013/03_-_March/AIG,_the_F...
A060
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 60 of 91








EXHIBIT 14
A061
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 61 of 91
January 11, 2013, 6:33 PM ET
By Leslie Scism and Serena Ng
REUTERS
American International Group Inc. filed a lawsuit against a Federal Reserve vehicle created during AIG’s
bailout that held some of its troubled mortgage bonds, in a dispute over rights to sue over the bonds.
Securities transferred to the vehicle, known as Maiden Lane II, were ultimately sold by the Federal
Reserve Bank of New York to recoup part of the complicated, massive AIG bailout that was fully paid off
last year.
At issue is whether AIG, in selling billions of dollars in troubled mortgage bonds to the New York Fed in
late 2008, transferred its rights to sue for losses it incurred on the securities. The New York Fed earlier
joined a lawsuit over the bonds against Bank of America Corp. that resulted in a proposed settlement,
pending before a court.
The giant insurer doesn’t ask for any monetary payment in the suit, but wants the court to clarify the
contract in terms favorable to it.
A New York Fed spokesman declined to comment.
The dispute is part of the legal fallout from the financial crisis that is expected to grind on for years in the
courts. For AIG, one of the largest single recipients of aid, the lawsuit raises a risk of re-igniting a
firestorm that broke out this past week over the company’s consideration of possible participation in a
lawsuit filed by a former CEO. That lawsuit alleges the government extracted too-onerous terms from AIG
in the bailout.
The suits are different. The former CEO’s suit seeks $25 billion from the government. The company’s suit
filed this week doesn’t seek monetary damages.
$,*6XHV)HGHUDO5HVHUYH9HKLFOHLQ'LVSXWH2YHU
/DZVXLW5LJKWV
Page 1 of 2 AIG Sues Federal Reserve Vehicle in Dispute Over Lawsuit Rights - Deal Journal - WSJ
4/2/2013 http://blogs.wsj.com/deals/2013/01/11/aig-sues-federal-reserve-in-dispute-over-lawsuit-righ...
A062
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 62 of 91
Copyright 2013 Dow Jones & Company, Inc. All Rights Reserved
This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by
copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit
www.djreprints.com
AIG’s board reviewed the lawsuit by the ex-CEO, Maurice R. “Hank” Greenberg, earlier this week and
decided not to participate.
AIG in August 2011 sued Bank of America in an attempt to recover over $10 billion in losses on its
mortgage investments. The bonds were originally underwritten by Countrywide Financial Corp. and Merrill
Lynch & Co., both of which are now part of Bank of America. AIG accused the bank and its units of
“massive fraud” in loan underwriting, which AIG said led to substantial losses in some $28 billion
mortgage bonds AIG had acquired. More than $7 billion of those damages relate to mortgage bonds sold
to Maiden Lane II, AIG said.
AIG said it recently learned that the Federal Reserve Bank of New York has taken the position that AIG
had transferred the “litigation claims” to the Maiden Lane vehicle.
An AIG spokesman said the company “narrowly seeks a declaration from the Court that a 2008 contract
between AIG and ML II did not transfer to ML II AIG’s right to sue Bank of America and other financial
institutions for the billions of dollars of damages they caused AIG and its shareholders in connection with
the fraudulent sale of [residential mortgage backed securities] to AIG.”
Earlier a Bank of America spokesman said the bank’s disclosures on the quality of mortgage bonds were
robust enough for sophisticated investors, and called AIG “the very definition of an informed, seasoned
investor, with losses solely attributable to its own excesses and errors. We reject AIGs assertions and
allegations.”
A Bank of America spokesman wasn’t immediately reached for comment Friday.
The New York Fed created Maiden Lane II in late 2008 to acquire battered subprime and other residential
mortgage bonds from AIG as part of the bailout of the insurer. Maiden Lane II paid $20.5 billion for the
securities, which had a face value of roughly $40 billion at the time, and AIG realized a large loss on the
bonds, which had been held by its securities lending business.
While the mortgage securities were on the Fed’s balance sheet, the New York Fed joined other large
bond investors in suing Bank of America over loan representations and warranties that Countrywide had
made when it issued the bonds before the housing crash. The plaintiffs reached a proposed $8.5 billion
settlement with the bank in mid-2011.
The Fed sold Maiden Lane II’s bonds to banks and investors in 2011 and 2012, and current holders of the
bonds stand to receive the settlement payouts, according to a person familiar with the terms of the sales.
Page 2 of 2 AIG Sues Federal Reserve Vehicle in Dispute Over Lawsuit Rights - Deal Journal - WSJ
4/2/2013 http://blogs.wsj.com/deals/2013/01/11/aig-sues-federal-reserve-in-dispute-over-lawsuit-righ...
A063
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 63 of 91








EXHIBIT 15
A064
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 64 of 91
» Print
This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to colleagues,
clients or customers, use the Reprints tool at the top of any article or visit: www.reutersreprints.com.
AIG sues NY Fed over right to sue Bank of
America, others
Fri, Jan 11 2013
By Jonathan Stempel
NEW YORK (Reuters) - American International Group Inc has filed a
lawsuit against a vehicle created by the Federal Reserve Bank of New
York to help bail out the insurer, in a bid to preserve its right to sue
Bank of America Corp and other issuers of mortgage debt that went
sour.
The complaint filed in the New York State Supreme Court in Manhattan
seeks a declaration that AIG has not transferred billions of dollars of
"litigation claims" to Maiden Lane II, including many related to the
insurer's $10 billion lawsuit against Bank of America.
Maiden Lane II was created in December 2008 to buy residential
mortgage-backed securities (RMBS) from AIG and ease liquidity
strains.
According to the complaint, New York Fed officials in December told Bank of America that Maiden Lane II had, by agreeing
to buy the securities, assumed from AIG all litigation claims relating to what it bought. AIG said this included more than $7
billion of damages claims against Bank of America.
AIG is not seeking monetary payments in the lawsuit, but wants the court to clarify that the New York-based insurer still
has the right to sue issuers of securities in Maiden Lane II.
New York Fed spokesman Jack Gutt declined to comment. Bank of America spokesman Lawrence Grayson also declined
to comment.
The lawsuit is part of the fallout from AIG's $182.3 billion federal bailout that began in September 2008, and which was fully
paid off last year.
It came after AIG provoked a firestorm in Congress and from the American people this week as it mulled whether to sue
the government that bailed it out by joining a $25 billion lawsuit by former Chief Executive Maurice "Hank" Greenberg. AIG
eventually decided to stay out of that case.
When it sued Bank of America in August 2011, AIG accused the Charlotte, North Carolina-based lender of misrepresenting
the quality of more than $28 billion of securities it had bought from the bank and its Countrywide and Merrill Lynch units.
An AIG spokesman said Friday's lawsuit "narrowly seeks a declaration from the Court that a 2008 contract between AIG
and ML II did not transfer to ML II AIG's right to sue Bank of America and other financial institutions for the billions of
dollars of damages they caused AIG and its shareholders in connection with the fraudulent sale of RMBS to AIG."
According to Friday's complaint, Maiden Lane II paid $20.8 billion for a variety of subprime and other mortgage securities
from AIG, barely half of their estimated $39.3 billion face value.
The case is American International Group Inc et al v. Maiden Lane II LLC, New York State Supreme Court, New York
County, No. 650115/2013.
(Reporting by Jonathan Stempel in New York; Editing by Gary Hill)
© Thomson Reuters 2011. All rights reserved. Users may download and print extracts of content from this website for their
own personal and non-commercial use only. Republication or redistribution of Thomson Reuters content, including by
framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters
and its logo are registered trademarks or trademarks of the Thomson Reuters group of companies around the world.
Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of
relevant interests.
This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to colleagues,
clients or customers, use the Reprints tool at the top of any article or visit: www.reutersreprints.com.
Page 1 of 1 Business & Financial News, Breaking US & International News | Reuters.com
4/2/2013 http://www.reuters.com/assets/print?aid=USBRE90B02420130112
A065
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 65 of 91








EXHIBIT 16
A066
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 66 of 91
EXECUTION COPY
AIG CREDIT FACILITY TRUST AGREEMENT
dated as of
January 16, 2009,
among
FEDERAL RESERVE BANK OF NEW YORK,
and
JILL M. CONSIDINE, CHESTER B. FELDBERG
AND DOUGLAS L. FOSHEE,
as Trustees
A067
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 67 of 91
i
Table of Contents
ARTICLE 1
GENERAL PROVISIONS
Section 1.01. Creation of Trust.............................................................................. 2
Section 1.02. Appointment and Acceptance of Trustees........................................ 2
Section 1.03. Trust is Irrevocable.......................................................................... 3
ARTICLE 2
MANAGEMENT
Section 2.01. Establishment of Accounts. .............................................................. 3
Section 2.02. Initial Deposit of Trust Stock. .......................................................... 4
Section 2.03. Actions of Trustees in General......................................................... 5
Section 2.04. Exercise of Trust Stock Voting Rights.............................................. 6
Section 2.05. Disposition of Trust Stock. ............................................................... 8
Section 2.06. Investment and Distribution of Funds in Deposit Account. ............. 9
Section 2.07. Control of Trust Litigation............................................................. 10
ARTICLE 3
TRUSTEES; TRUST EXPENSES; INDEMNIFICATION
Section 3.01. Independence of Trustees............................................................... 10
Section 3.02. Number, Resignation, Succession and Disqualification of
Trustees. .................................................................................................... 11
Section 3.03. Standard of Care and Indemnification of Trustees........................ 12
Section 3.04. Payment of Other Trust Expenses.................................................. 13
Section 3.05. Additional Rights and Obligations of Trustees. ............................. 15
ARTICLE 4
BOOKS AND RECORDS; TAX REPORTING
Section 4.01. Records .......................................................................................... 17
Section 4.02. Tax Reporting................................................................................. 18
ARTICLE 5
AMENDMENTS; TERMINATION; GOVERNING LAW
Section 5.01. Amendment..................................................................................... 18
Section 5.02. Termination.................................................................................... 18
Section 5.03. Governing Law............................................................................... 18
A068
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 68 of 91
ii
ARTICLE 6
MISCELLANEOUS
Section 6.01. Assignments.................................................................................... 19
Section 6.02. Third Parties .................................................................................. 19
Section 6.03. Notices............................................................................................ 19
Section 6.04. Individuals Authorized to Act for the FRBNY................................ 20
Section 6.05. Entire Agreement ........................................................................... 20
Section 6.06. Successors...................................................................................... 20
Section 6.07. Remedies ........................................................................................ 20
Section 6.08. Waiver of Jury Trial....................................................................... 21
Section 6.09. Jurisdiction; Venue or Inconvenient Forum; Consent to
Service of Process. .................................................................................... 21
Section 6.10. Headings ........................................................................................ 21
Section 6.11. Perpetuities Savings Language...................................................... 21
Section 6.12. Severability .................................................................................... 21
Section 6.13. Counterparts .................................................................................. 22
A069
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 69 of 91
AIG CREDIT FACILITY TRUST AGREEMENT
THIS AIG CREDIT FACILITY TRUST AGREEMENT (this “Trust
Agreement”) is made this 16th day of January, 2009 by and among the Federal
Reserve Bank of New York (the “FRBNY”), and Jill M. Considine, Chester B.
Feldberg and Douglas L. Foshee (each, a “Trustee” and collectively, the
“Trustees”).
W I T N E S S E T H:
WHEREAS, pursuant to Section 13(3) of the Federal Reserve Act, 12
U.S.C. § 343(3), the Board of Governors of the Federal Reserve System (the
“Board of Governors”) determined that unusual and exigent circumstances exist
both with respect to the financial condition of American International Group, Inc.,
a Delaware corporation (the “Company”), and its likely impact on the nation’s
economic stability, and the stability of the nation’s financial and banking systems,
and authorized the FRBNY, subject to certain conditions, to enter into an
$85,000,000,000 lending facility with the Company as set forth in the Credit
Agreement dated as of September 22, 2008 between the Company and the
FRBNY (as amended from time to time, the “Credit Agreement”);
WHEREAS, as a condition of the Credit Agreement, the Company is
obligated to issue to a trust for the sole benefit of the United States Treasury
(“Treasury”) the Series C Perpetual, Convertible, Participating Preferred Stock
of the Company described in Exhibit D of the Credit Agreement (the “Company
Preferred Stock”) and convertible into approximately 77.9% of the issued and
outstanding shares of common stock of the Company (the “Company Common
Stock”);
WHEREAS, pursuant to Section 13(3) and Section 4 of the Federal
Reserve Act, 12 U.S.C. §§ 343(3), 341 (Seventh), the FRBNY entered into the
Credit Agreement with the Company to implement the $85,000,000,000 lending
facility authorized by the Board of Governors, and is exercising its powers
incident thereto to establish the trust created hereunder (the “Trust”) for the
purpose of acquiring, holding, and disposing of the Trust Stock (as defined in
Section 2.02 hereof);
WHEREAS, the issuance of the Company Preferred Stock to the Trust is
intended to provide compensation for the assumption of the risks arising from the
Credit Agreement and to reduce those risks;
WHEREAS, the FRBNY has worked in consultation with the United
States Department of the Treasury (the “Treasury Department”) in structuring
the Credit Agreement and this Trust Agreement;
A070
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 70 of 91
2
WHEREAS, the FRBNY, in consultation with the Treasury Department,
herein appoints the Trustees as trustees of the Trust to have all of the rights,
powers and duties set forth herein;
WHEREAS, to avoid any possible conflict with its supervisory and
monetary policy functions, the FRBNY does not intend to exercise any discretion
or control over the voting and consent rights associated with the Trust Stock;
WHEREAS, the FRBNY wishes the Trustees to have absolute discretion
and control over the Trust Stock, subject to the terms of this Trust Agreement;
WHEREAS, the FRBNY anticipates that the Trustees will leave the day-
to-day management of the Company to the persons charged with such
management, and will limit their involvement in the corporate governance of the
Company to the exercise of the rights set forth in this Trust Agreement; and
WHEREAS, the Trustees are willing to accept the appointment and to act
as trustees pursuant to the terms of this Trust Agreement.
NOW THEREFORE, the parties hereto do hereby agree as follows:
ARTICLE 1
GENERAL PROVISIONS
Section 1.01. Creation of Trust. Subject to the terms and conditions of
this Trust Agreement, the FRBNY hereby establishes a trust designated as the
AIG Credit Facility Trust for the sole benefit of the Treasury, which, for the
avoidance of doubt, means that any property distributable to the Treasury as a
beneficiary hereunder shall be paid to the Treasury for deposit into the General
Fund as miscellaneous receipts.
Section 1.02. Appointment and Acceptance of Trustees. The FRBNY, in
consultation with the Treasury Department, hereby appoints the Trustees as
trustees of the Trust to have all of the rights, powers, authorities, discretions, and
duties set forth herein and, subject to the terms and conditions of this Trust
Agreement, as otherwise provided to trustees under the laws governing the
administration of the Trust. The Trustees hereby accept said appointment,
acknowledge the receipt of the sum of One Dollar ($1.00) (together with any
other property, including the Company Preferred Stock, that the Trust may
otherwise receive, the “Trust Assets”), and covenant that they will hold the Trust
Assets in trust upon and subject exclusively to the terms and conditions set forth
herein, for the sole benefit of the Treasury.
A071
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 71 of 91
3
Section 1.03. Trust is Irrevocable. This Trust Agreement and the Trust
shall be irrevocable and, except as provided in Section 5.01 hereof, unamendable
except that the Board of Governors may terminate or amend its authorization
pursuant to Section 13(3) of the Federal Reserve Act, thereby revoking or
amending the Trust in accordance with Federal law, provided, however, that a
Trustee’s rights to resign as a trustee hereunder and to compensation and
indemnification with respect to acts or omissions occurring prior to any such
revocation or amendment may not be modified without the written consent of that
Trustee.
ARTICLE 2
MANAGEMENT
Section 2.01. Establishment of Accounts.
(a) The Trustees shall establish (and during the term of this Trust
Agreement shall maintain) a custody account (the “Securities Account”) at a
commercial bank selected by, and under an agreement acceptable to, the FRBNY
in the name of the Trust bearing a designation clearly indicating that the Trust
Stock held therein is held for the sole benefit of the Treasury. Except as expressly
provided herein, the Trustees shall possess all right, title, and interest in all Trust
Stock held from time to time in the Securities Account for the sole benefit of the
Treasury. The Securities Account shall be under the sole dominion and control of
the Trustees for the sole benefit of the Treasury.
(b) The Trustees shall establish (and during the term of this Trust
Agreement shall maintain) a deposit account (the “Deposit Account”) at a
commercial bank selected by, and under an agreement acceptable to, the FRBNY
in the name of the Trust bearing a designation clearly indicating that the funds
deposited therein are held for the sole benefit of the Treasury. Except as
expressly provided herein, the Trustees shall possess all right, title, and interest in
all moneys on deposit from time to time in the Deposit Account for the sole
benefit of the Treasury. The Deposit Account shall be under the sole dominion
and control of the Trustees for the sole benefit of the Treasury.
(c) Subject to the terms of this Trust Agreement, the Trustees shall
receive and hold in the Securities Account or Deposit Account, as applicable, the
initial cash contribution of the FRBNY, advances from the Company as provided
in Section 3.04(b) hereof, the Trust Stock and all dividends and other cash and
non-cash distributions as may be declared and paid upon the Trust Stock,
investments permitted under Section 2.06 hereof, as well as the proceeds of any
sale or other disposition of the Trust Stock, for the sole benefit of the Treasury.
A072
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 72 of 91
4
Section 2.02. Initial Deposit of Trust Stock.
(a) In accordance with the Stock Purchase Agreement referred to in
Section 2.03(d)(ii) hereof, the Company Preferred Stock shall be delivered to the
Securities Account in an amount equal to 100% of the issued and outstanding
shares of the Company Preferred Stock registered jointly in the names of the
Trustees in their capacities as trustees of the Trust. All shares of Company
Preferred Stock delivered to the Securities Account, and all shares of Company
Common Stock into which any of the Company Preferred Stock shall have been
converted, are referred to herein as the “Trust Stock.” Except as expressly
provided herein, the FRBNY shall have no ownership interest in the Trust Stock
or any of the other Trust Assets.
(b) To the extent that any certificates evidencing the Trust Stock
delivered to the Securities Account are not registered jointly in the names of
Trustees in their capacities as trustees of the Trust, the Trustees shall present to
the Company all certificates evidencing Trust Stock not registered jointly in the
names of Trustees in their capacities as trustees of the Trust for surrender and
cancellation, and for the issuance and delivery to the Securities Account of new
certificates registered jointly in the names of the Trustees in their capacities as
trustees of the Trust.
(c) In the event that (i) the Company is merged into or consolidated
with another corporation or divided into two or more resulting entities, (ii) all or
substantially all of the assets of the Company are transferred to another
corporation pursuant to a plan requiring the Company’s assets to be distributed in
liquidation or (iii) all the shares of the Company are to be exchanged in
connection with a reorganization or recapitalization of the Company (each of (i),
(ii) and (iii) or any analogous transaction, a “Trigger Event”), then in connection
with any such Trigger Event, the term “Company” for all purposes of this Trust
Agreement shall be taken to include any successor entity, and the Trustees shall
receive and hold under this Trust Agreement as Trust Stock (and the term Trust
Stock as used herein shall include) any stock of, or other interests in, such
successor entity received on account of their ownership (as trustees hereunder) of
Trust Stock prior to such Trigger Event.
(d) In connection with any Trigger Event, the Trustees are hereby
authorized to surrender Trust Stock held by the Trustees hereunder, if the Trustees
are of the opinion in the exercise of their independent judgment that such
ministerial act is appropriate or required.
A073
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 73 of 91
5
Section 2.03. Actions of Trustees in General.
(a) Each Trustee shall have equal rights and authority under the terms of
this Trust Agreement, and any action taken by the Trustees hereunder shall be a
joint action of all of the Trustees. For the avoidance of doubt, the Trustees may
not elect to each assume separate responsibility for a portion of the Trust Stock
(for example, each vote one-third of the Trust Stock) but must instead jointly
decide on a single course of action with respect to the relevant matter under
consideration. In the event of a disagreement among the Trustees with respect to
any matter, the Trustees shall consult with each other and use their reasonable
best efforts to reach agreement with respect to such matter. If, after such
consultation (including with legal or financial advisors as appropriate), the
Trustees remain unable to reach agreement with respect to such matter, a majority
vote of the Trustees shall be sufficient for resolving such matter, after which all of
the Trustees shall act in accordance with the majority position.
(b) If fewer than three Trustees are available to vote with respect to any
matter, as a result of death, incapacity or any other reason, then no vote shall take
place until all three Trustees are available, unless the available Trustee or Trustees
determine(s) in the exercise of his or her or their independent judgment that
waiting to vote with respect to such matter (and taking the related action) could
have significant adverse consequences with respect to the administration of the
Trust or the Trust Assets. In the event of any such determination, the available
Trustee or Trustees may act and bind the Trust, provided, however, that in the
event there are only two available Trustees and those two available Trustees do
not agree with one another, such Trustees are authorized and directed to act in a
manner consistent with the recommendation(s) of a majority of the independent
directors of the Company.
(c) In order to permit the Trustees to administer the Trust and perform
their duties under this Trust Agreement, the Trustees may, as they deem
appropriate in their independent judgment, (i) engage legal, financial, press and
other professional advisers and agents, (ii) hire full-time and part-time
administrative, secretarial and clerical staff (or make arrangements to use
administrative, secretarial or clerical staff made available to them by their
professional advisers or agents) and (iii) lease or sublease office space (or make
arrangements to occupy office space made available to them by their professional
advisers or agents). Among other things, such professional advisers or agents
may be designated as the notice location for all notices and other correspondence
relating to the Trust and may, on behalf of the Trustees, maintain the official
records of the Trust, schedule meetings of the Trustees, and maintain minutes of
such meetings and records of significant actions.
A074
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 74 of 91
6
(d) At an appropriate time following the execution and delivery of this
Trust Agreement, the Trustees shall execute and deliver in their capacities as
trustees hereunder, and not in their individual capacities, the following documents,
which shall have been approved in form and substance by the FRBNY:
(i) Multistate Form A Statement Regarding the Acquisition of
Control of or Merger with a Domestic Insurer;
(ii) Statement Regarding the Acquisition of Control of
American International Group, Inc.; and
(iii) Series C Perpetual, Convertible, Participating Preferred
Stock Purchase Agreement between the Trust and the Company.
Section 2.04. Exercise of Trust Stock Voting Rights.
(a) At all times prior to the termination of the Trust, the Trustees shall
(subject to Section 2.05 hereof and the other provisions of this Section 2.04)
exercise all rights, titles, powers, and privileges of a stockholder of the Company,
including, to the extent permitted by law, the right to convert the Company
Preferred Stock to Company Common Stock and the exclusive right to exercise
any and all voting and other rights and benefits attached to, derived from, or
otherwise attributable to the Trust Stock, including without limitation the right to
vote to amend or cause the amendment of the certificate of incorporation or the
by-laws of the Company, and the right to vote to elect and remove, or cause the
election or removal of, the directors of the Company, all to the extent permitted
by their ownership (as trustees hereunder) of the Trust Stock.
(b) The Trustees shall have the exclusive right to vote the Trust Stock,
or give written consent, in person or by proxy, at all meetings of stockholders of
the Company, and in all proceedings, votes and actions in which the vote or
consent, written or otherwise (any of the foregoing, a “Vote”), of the holders of
the Trust Stock may be required or authorized, provided, however, that the
Trustees shall Vote the Trust Stock in accordance with the other provisions of this
Section 2.04.
(c) The Trustees shall take any and all reasonable actions available to
them and necessary to cause the actions described in items (i), (ii), (iii) and (iv) of
this Subsection (c) to be effected, and shall Vote or cause to be Voted all of the
Trust Stock in favor of:
(i) amending Article Four of the Company’s Certificate of
Incorporation to provide for (w) an increase in number of authorized
shares of the Company Common Stock from 5,000,000,000 to
19,000,000,000, (x) a decrease in the par value of the Company Common
Stock from $2.50 to $0.000001 per share, (y) an increase in number of
authorized shares of the Company Serial Preferred Stock from 6,000,000
A075
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 75 of 91
7
to 13,000,000,000, and (z) a decrease in the par value of the Company
Serial Preferred Stock from $5.00 to $0.00004 per share;
(ii) amending the Certificate of Designations of the Company
Preferred Stock (the “Certificate of Designations”) such that (A) the
number of shares of the Company Preferred Stock outstanding upon the
effectiveness of such amendment shall be the Number of Underlying
Shares (as defined in the Certificate of Designations) as of the effective
date of such amendment, (B) the Conversion Ratio (as defined in the
Certificate of Designations) as of any date shall equal the quotient
obtained by dividing (x) the Number of Underlying Shares as of such date
by (y) the Number of Underlying Shares as of the effective date of such
amendment and (C) the liquidation preference per share of the Company
Preferred Stock shall be $500,000 divided by the Number of Underlying
Shares as of the effective date of such amendment;
(iii) amending Article Eight of the Company’s Certificate of
Incorporation to eliminate the requirement that the board of directors of
the Company obtain the assent or vote of the Company’s stockholders in
order to authorize or cause to be executed mortgages and liens upon all or
substantially all of the Company’s assets; and
(iv) amending the Company’s Certificate of Incorporation to
allow the TARP Preferred Stock to rank senior to the Company Preferred
Stock. “TARP Preferred Stock” means the Series D Preferred Stock of
the Company, par value $5.00 per share, issued to the Treasury
Department.
(d) In exercising their discretion hereunder with respect to the Trust
Stock, the Trustees are advised that it is the FRBNY’s view that (x) maximizing
the Company’s ability to honor its commitments to, and repay all amounts owed
to, the FRBNY or the Treasury Department and (y) the Company being managed
in a manner that will not disrupt financial market conditions, are both consistent
with maximizing the value of the Trust Stock. With those nonbinding views in
mind, with respect to any and all matters (other than matters as to which express
instruction is given pursuant to this Section 2.04) to be Voted on by the Trustees
as holders of the Trust Stock, the Trustees shall have full discretionary power to
Vote the Trust Stock, provided, however, that the Trustees shall exercise all such
Voting and other similar rights with respect to the Trust Stock in accordance with
the Applicable Standard of Care (as defined in Section 3.03(a) hereof).
(e) The Trustees shall Vote to elect (and, if they shall for any reason be
required to nominate, shall nominate for election) as members of the board of
directors of the Company only persons who are not, and have not been within one
year of their nomination, officers, directors, or senior employees of the FRBNY
or the Treasury Department.
A076
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 76 of 91
8
(f) In no event shall the Trustees become directors of the Company or
otherwise become responsible for directing or managing the day-to-day
operations of the Company or any of its subsidiaries.
(g) In exercising their authority under this Section 2.04, the Trustees
may request information from the FRBNY that the FRBNY may have as a result
of its role as lender to the Company under the Credit Agreement. In no event,
however, shall information provided by the FRBNY as lender relieve the Trustees
from exercising their independent judgment with respect to any action to be taken
under this Section 2.04.
Section 2.05. Disposition of Trust Stock.
(a) The Trustees shall, in one or a series of transactions, sell or
otherwise dispose of the Trust Stock as follows:
(i) The Trustees shall, in a manner they deem appropriate in
their independent judgment to accomplish the goals set forth in clause (ii)
of this Subsection (a), develop a written plan (the “Divestiture Plan”) for
the sale or other disposition of the Trust Stock, taking into consideration,
among any other factors that the Trustees deem relevant: (1) the effect of
any sale or other disposition on repayment of amounts owed to the
FRBNY or the Treasury Department; (2) in the case of any conversion of
Company Preferred Stock to Company Common Stock (particularly
before the full settlement of the Equity Units issued by the Company
pursuant to the purchase contract dated May 16, 2008 between the
Company and The Bank of New York), the impact of any such conversion
on anti-dilution features favorable to the Trust; (3) the financial condition
of the Company; (4) the impact of a sale or other disposition of the Trust
Stock on general financial market conditions; (5) obtaining full and
adequate consideration for the Trust Stock; and (6) the best interests of the
Treasury. The Trustees may amend the Divestiture Plan from time to time.
(ii) The goal of the Divestiture Plan shall be to dispose of the
Trust Stock in a value maximizing manner. It shall be a further goal of the
Divestiture Plan to dispose of the Trust Stock no later than a reasonably
practicable time after (x) the Credit Agreement is no longer in effect and
(y) the Treasury Department no longer owns any TARP Preferred Stock.
It is anticipated that in developing the Divestiture Plan, the Trustees will
hire legal, financial and other professionals as necessary. The Trustees
may also request information from the FRBNY that the FRBNY may have
as a result of its role as lender to the Company under the Credit Agreement.
(iii) The Trustees may sell or otherwise dispose of the Trust
Stock, only with the prior approval of the FRBNY, after its consultation
with the Treasury Department.
A077
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 77 of 91
9
(iv) The Trustees may, but shall not be required to, obtain a
“fairness opinion” from an investment bank in connection with the sale or
other disposition of Trust Stock.
(b) The cash proceeds of any sale or other disposition of the Trust Stock
shall be deposited in the Deposit Account and reinvested and distributed in
accordance with the provisions of Section 2.06 hereof.
(c) Except as expressly provided in this Section 2.05 and Section 2.02(d)
hereof, the Trustees shall not have the authority to sell, pledge, encumber,
hypothecate, lend or otherwise transfer the Trust Stock, and any action in
violation of the foregoing shall be null and void.
Section 2.06. Investment and Distribution of Funds in Deposit Account.
(a) The Trustees shall distribute amounts held in the Deposit Account to
Treasury at least quarterly, subject to Section 2.06(b) hereof.
(b) Prior to any distribution from the Deposit Account to the Treasury
under this Section 2.06 or Section 5.02 hereof, the Trustees shall apply the
balance of the Deposit Account as follows: first, the Trustees shall reimburse
themselves for any outstanding amounts due them from the Trust under the terms
of this Trust Agreement; second, the Trustees shall reimburse the FRBNY for any
amounts paid by the FRBNY under Section 2.07 or Section 3.03(e) hereof; third,
the Trustees shall set aside a reasonable reserve for future amounts to be paid
from the Trust under the terms of this Trust Agreement, taking into consideration
the value of the other property that will continue to be held in trust hereunder,
provided, however, that, during the continuance of the Trust, such reserve shall
not be less than One Hundred Thousand Dollars ($100,000); fourth, the Trustees
shall reimburse the FRBNY for any amounts advanced on behalf of the Trust in
connection with the Trust’s acquisition of the Trust Stock; fifth, the Trustees shall
reimburse the Company for any amounts advanced by the Company to cover
amounts authorized to be paid from the Trust under this Trust Agreement; and
sixth, the Trustees shall distribute the remaining balance of the Deposit Account
in excess of the reserve, if any, referred to above to the Treasury.
(c) To the extent that the Trustees believe it is necessary or appropriate
to invest any balance in the Deposit Account, the Trustees shall have full
discretion to invest such balance, in whole or in part in assets that are eligible for
use in FRBNY’s open market operations. The investments and the proceeds of
such investments shall be received and held in the Deposit Account, subject to the
terms of this Trust Agreement. Any loss of income or principal on any such
investments shall be for the account of the Trust.
A078
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 78 of 91
10
Section 2.07. Control of Trust Litigation.
(a) The FRBNY shall at its own expense, but with the right to be
reimbursed for such expense pursuant to Section 2.06(b) hereof, control the
defense of any actual or threatened suit or litigation of any character involving the
Trust or any one or more of the Trustees in their capacities as trustees hereunder
(“Trust Litigation”), including without limitation designating counsel for the
Trustee(s) in their capacities as trustee(s) hereunder and controlling all
negotiations, litigation, arbitration, settlements, compromises and appeals of any
Trust Litigation, provided that (i) the FRBNY may not agree to any settlement
involving any Trustee(s) that contemplates any personal liability or obligations of
the Trustee(s) or any admission of wrongdoing by the Trustee(s) without the prior
written consent of the affected Trustee(s), (ii) if the FRBNY is also a party to any
such Trust Litigation, the FRBNY shall engage and pay the expenses of separate
counsel for the affected Trustee(s) to the extent that the interests of the FRBNY
are in conflict with those of the affected Trustee(s) and (iii) in such event, (x) the
affected Trustee(s) shall have the right to approve the separate counsel designated
by the FRBNY, which approval shall not unreasonably be withheld or delayed
and (y) the FRBNY shall be reimbursed for such expenses pursuant to Section
2.06(b) hereof.
(b) The Trustees shall provide reasonably prompt notice to the FRBNY
of any Trust Litigation and may not make any admissions of liability or incur any
significant expenses after receiving actual notice of the claim or agree to any
settlement without the written consent of the FRBNY, which consent shall not
unreasonably be withheld or delayed.
ARTICLE 3
TRUSTEES; TRUST EXPENSES; INDEMNIFICATION
Section 3.01. Independence of Trustees. A Trustee may not be an officer
or employee of the FRBNY, the Treasury Department or the Company and may
not have any material financial interest in the FRBNY (other than a Federal
Reserve pension) or the Company (other than an insurance policy or annuity),
shall not have a parent, spouse or child employed by or serving as an officer or
director of the FRBNY, the Treasury Department, or the Company and shall be
compensated for services rendered in connection with the administration of the
Trust only as provided in Section 3.04 hereof.
A079
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 79 of 91
11
Section 3.02. Number, Resignation, Succession and Disqualification of
Trustees.
(a) It is the FRBNY’s intention that there shall at all times be three
trustees acting hereunder, provided, however, that, during any period in which
there is a vacancy in the office of Trustee pending an appointment of a successor
Trustee by the FRBNY (which shall consult with the Treasury Department
regarding such appointment) the remaining Trustees may continue to exercise all
of the powers, authorities and discretions granted them hereunder as provided in
Section 2.03(b) hereof.
(b) A Trustee may at any time resign by giving 60 days’ written notice
of resignation to the FRBNY and the other Trustees. The FRBNY, after
consultation with the Treasury Department and the other Trustees, shall, at least
15 days prior to the effective date of such resignation, appoint a successor trustee
who shall satisfy the requirements of Section 3.01 hereof. If no successor trustee
shall have been appointed and shall have accepted such appointment at least 15
days prior to the effective date of such resignation, any of the Trustees may
petition any competent authority or court of competent jurisdiction (at the expense
of the Trust) for the appointment of a successor trustee.
(c) If at any time a Trustee shall become incapable of acting, or if the
other Trustees shall for any reason unanimously determine in good faith that the
replacement of such Trustee is in the best interests of the Trust, including without
limitation because of a belief that such Trustee is unable to act prudently and
effectively with respect to financial matters because of accident, physical or
mental illness, substance abuse, deterioration, injury or other similar cause, the
other Trustees, after consultation with the FRBNY, may remove such Trustee by
written instrument or instruments delivered to the FRBNY, provided, however,
that an individual Trustee who dies shall be deemed to have been removed
immediately prior to his death.
(d) If at any time any Trustee is (i) the subject of any information,
indictment, or complaint, involving the commission of or participation in a crime
involving dishonesty or breach of trust that is punishable by imprisonment for a
term exceeding one year under state or Federal law, or (ii) reasonably determined
by the FRBNY, in consultation with the Treasury Department, to have
demonstrated untrustworthiness or to be derelict in the performance of his or her
duties under this Trust Agreement, such Trustee shall, absent a determination by
the FRBNY, after consulting with the Treasury Department, that such
disqualification is not required, become immediately disqualified from acting as
trustee hereunder upon the receipt by the other Trustees of written notice from the
FRBNY of the occurrence of such an event, and the receipt by such Trustees of
such notice shall automatically and immediately constitute the removal of the
disqualified Trustee.
A080
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 80 of 91
12
(e) In the event of any vacancy in the office of Trustee as a result of
removal, the FRBNY, after consultation with the Treasury Department and the
Trustees then in office, shall, by written instrument or instruments delivered to the
successor Trustee, fill such vacancy by appointing a successor Trustee who shall
satisfy the requirements of Section 3.01 hereof.
(f) Upon written assumption by a successor trustee of powers and
duties hereunder, a copy of the instrument of assumption shall be delivered by the
FRBNY to the other Trustees and the Company, whereupon the successor trustee
shall become vested with all of the powers and duties of the resigning, removed or
disqualified Trustee, and the term “Trustee” as used herein shall mean such
successor trustee.
Section 3.03. Standard of Care and Indemnification of Trustees.
(a) Standard of Care. A Trustee shall have no liability hereunder for
any action taken or refrained from or suffered by such Trustee, provided that such
Trustee (i) acted in good faith in a manner the Trustee reasonably believed to be
in accordance with the provisions of this Trust Agreement and in or not opposed
to the best interests of the Treasury and (ii) had no reasonable cause to believe his
or her conduct was unlawful (the standard set forth in foregoing clauses (i) and (ii)
being the “Applicable Standard of Care”).
(b) Reliance on Experts. The Trustees may act through legal, financial,
press and other professional advisers and agents and shall not be answerable for
the default, negligence or misconduct of any such professional adviser or agent so
long as such professional adviser or agent was selected by the Trustees in
accordance with the Applicable Standard of Care. For the avoidance of doubt, the
right to act through professional advisers and agents is not an authorization to
assign or delegate any rights or obligations under this Trust Agreement. The
Trustees may consult with counsel, and the advice of such counsel shall be full
and complete authorization and protection in respect of any action taken or
refrained from or suffered by the Trustees hereunder so long as such legal counsel
was selected by the Trustees in accordance with the Applicable Standard of Care.
(c) Reliance on Certificates. The Trustees shall not be responsible for
the sufficiency or the accuracy of the form, execution, validity or genuineness of
the Trust Stock, or of any documents relating thereto, or for any lack of
endorsement thereon, or for any description therein, nor shall the Trustees be
responsible or liable in any respect on account of the identity, authority or rights
of the persons executing or delivering or purporting to execute or deliver any such
Trust Stock or document or endorsement or this Trust Agreement, except for the
execution and delivery of this Trust Agreement by the Trustees, so long as the
Trustees acted in accordance with the Applicable Standard of Care.
A081
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 81 of 91
13
(d) Indemnification. Each Trustee shall at all times be indemnified and
held harmless from the Trust for any loss, cost or expense of any kind or character
whatsoever (including taxes other than taxes based upon, measured by or
determined by the income of the Trustee) incurred or suffered by such Trustee in
connection with the Trust, the Trust Assets or this Trust Agreement so long as
such Trustee had no reasonable cause to believe his or her conduct was unlawful,
provided, however, that:
(i) neither the Trust nor the FRBNY shall be responsible for
the costs and expenses (including settlement amounts) of any suit or
litigation that the Trustees (in their individual or fiduciary capacities) shall
settle without first obtaining the FRBNY’s written consent, which consent
shall not unreasonably be withheld or delayed; and
(ii) in order to recover under this indemnity with respect to any
Trust Litigation or other claim a Trustee: (x) must provide reasonably
prompt notice to the FRBNY of the claim for which indemnification is
sought, provided that the failure to provide notice shall only limit the
indemnification provided hereby to the extent of any incremental expense
or actual prejudice as a result of such failure; and (y) must not make any
admissions of liability or incur any significant expenses after receiving
actual notice of the claim or agree to any settlement without the written
consent of the FRBNY, which consent shall not unreasonably be withheld
or delayed.
(e) Source of Payment. If the amount due a Trustee or otherwise
payable from the Trust under Section 3.03(d) hereof cannot be immediately offset
against or paid or reimbursed from the balance in the Deposit Account, for so
long as the Credit Agreement is in effect the amount due shall be paid by the
FRBNY and the FRBNY shall be entitled to reimbursement from the Company.
Upon the FRBNY’s receipt of reimbursement from the Company, the amount so
reimbursed by the Company to the FRBNY shall thereafter be treated as if it were
an amount advanced by the Company to the Trust for costs and expenses under
Section 3.04 hereof.
(f) Survival. The provisions of this Section 3.03 shall survive the
termination of the Trust or this Trust Agreement or the resignation or removal of a
Trustee.
Section 3.04. Payment of Other Trust Expenses.
(a) Each Trustee shall be entitled to annual compensation in the amount
of One Hundred Thousand Dollars ($100,000), payable quarterly in arrears, for all
services rendered by such Trustee hereunder. All costs and expenses incurred or
paid by the Trustees in their capacities as trustees hereunder (including the
reasonable compensation and the expenses and disbursements of the professional
advisers and agents of the Trustees in their capacities as trustees) shall be paid or
A082
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 82 of 91
14
reimbursed from the Trust, subject to the provisions of Sections 2.07 and 3.03
hereof. In addition, all of the reasonable legal costs and expenses heretofore
incurred by the Trustees in their individual capacities in connection with the
establishment of the Trust shall be paid or reimbursed from the Trust.
(b) Any amounts due to the Trustees or third parties under Subsection (a)
above shall be obligations of the Trust. Until such time as such amounts can be
offset against or reimbursed from the balance in the Deposit Account, such
amounts shall be paid by the Company and the Company shall be entitled to
reimbursement from the Trust therefor, without interest, as provided in Section
2.06(b) hereof. Specifically:
(i) Following the execution of this Trust Agreement and the
establishment of the Deposit Account, the Company shall deposit into the
Deposit Account the sum of One Hundred Thousand Dollars ($100,000).
(ii) The Trustees may from time to time and at any time pay
from the Deposit Account the compensation payable to the Trustees and
all of the other costs and expenses payable or reimbursable from the Trust
under this Trust Agreement and, in the event that at any time prior to the
termination of the Trust the value of property held in the Deposit Account
shall be less than Twenty-Five Thousand Dollars ($25,000), the Trustees
shall notify the Company in writing as to the amount by which such value
is less than the sum of One Hundred Thousand Dollars ($100,000) and,
upon receipt of such notification, the Company shall promptly deposit into
the Deposit Account an amount of cash equal to such deficiency.
(iii) In addition, the Trustees shall provide to the FRBNY and
the Company, within 10 days following the end of every quarter, an
accounting of all costs and expenses paid from the Trust during that
quarter, together with supporting documentation, and an estimate of the
costs and expenses anticipated to be reasonably likely to be paid in the
following quarter. In the event that the amount of cash then available in
the Deposit Account or which is expected to be available in the Deposit
Account shall be insufficient to pay such costs and expenses (it being
understood that the Trustees are neither required nor permitted to sell any
portion of the Trust Stock for the purpose of obtaining cash to pay such
compensation, costs, expenses, disbursements and advances ), the
Company shall, within 10 days of receipt of a request for funds, contribute
to the Deposit Account an amount of cash necessary to pay such costs and
expenses.
(iv) The FRBNY shall pay any amounts the Company fails to
pay pursuant to this Subsection (b) as long as the Credit Agreement is in
effect and the FRBNY shall be entitled to reimbursement from the
Company. Upon the FRBNY’s receipt of reimbursement from the
Company, the amount so reimbursed by the Company to the FRBNY shall
A083
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 83 of 91
15
thereafter be treated as if it were an amount advanced by the Company to
the Trust for costs and expenses under this Section 3.04.
(c) Except as otherwise provided in this Trust Agreement, all ongoing
Trust expenses, including, but not limited to, all investment-related expenses, all
fees payable to the Trustees for their services hereunder, including but not limited
to staff expenses, legal expenses, financial advisory, auditing and tax preparation
expenses, mailing expenses, printing and postage expenses, insurance expenses,
external accounting expenses related to the Trust and its investments and
extraordinary expenses (such as litigation and indemnification of the Trustees)
shall be paid from the Trust as provided in this Section 3.04.
(d) Unless waived in writing by the FRBNY, as condition to the
payment from the Trust of expenses arising in connection with the retention by
the Trustees on behalf of the Trust of experts and other professional advisers, the
Trustees must disclose the material terms of the arrangement in advance to the
FRBNY. For the avoidance of doubt, actual approval by the FRBNY of such
arrangements shall not be a condition to the payment of costs and expenses of
such experts and other professional advisers from the Trust.
(e) The provisions of this Section 3.04 shall survive the termination of
the Trust or this Trust Agreement or the resignation or removal of a Trustee.
Section 3.05. Additional Rights and Obligations of Trustees.
(a) The duties, responsibilities and obligations of the Trustees shall be
limited to those expressly set forth herein and no duties, responsibilities or
obligations shall be inferred or implied. The Trustees shall not be subject to, nor
required to comply with, any other agreement to which the FRBNY is a party,
even though reference thereto may be made herein (unless the Trustees are also
parties thereto). The Trustees shall not be required to, and shall not, expend or
risk any of their own funds or otherwise incur any financial liability in the
performance of any of their duties hereunder. Each Trustee shall devote such
time as shall be necessary to carry out his or her duties with respect to the Trust as
determined by such Trustee in accordance with his or her independent judgment.
(b) No Trustee shall be obligated to present any business activity,
investment opportunity (or so called corporate opportunity) or prospective
economic advantage to the FRBNY, the Treasury or the Company, even if the
opportunity is of the character that, if presented to the FRBNY, the Treasury or
the Company, could be taken by it, and, except as otherwise expressly provided in
this Trust Agreement, each Trustee shall have the right to engage in any business
activity or to hold any such investment opportunity or prospective economic
advantage for his or her own account or to recommend any such opportunity to
third parties.
A084
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 84 of 91
16
(c) If at any time a Trustee is served with any judicial or administrative
order, judgment, decree, writ or other form of judicial or administrative process
that in any way affects the manner in which the Trustee performs functions in
connection with this Trust, the Trust Stock or other Trust Assets (including but
not limited to orders of attachment or garnishment or other forms of levies or
injunctions or stays), the Trustee is authorized to comply therewith in any manner
as the Trustee or its legal counsel deems appropriate, provided that the Trustee
shall have given notice thereof to the FRBNY and the Treasury Department and if
reasonably practicable shall have consulted with the FRBNY in respect thereof;
and if the Trustee complies with any such judicial or administrative order,
judgment, decree, writ or other form of judicial or administrative process, the
Trustee shall not be liable to any person or entity even though such order,
judgment, decree, writ or process may be subsequently modified, vacated or
otherwise determined to have been without legal force or effect.
(d) A Trustee shall not be liable for any action taken or refrained from
or suffered by such Trustee so long as that Trustee acted in accordance with the
Applicable Standard of Care. In no event shall a Trustee be liable for any
consequential, punitive or special damages. For the avoidance of doubt, the
Trustees are obliged to review, evaluate and make a determination, in accordance
with the Applicable Standard of Care, as to the appropriate course of action to
take with respect to each Vote or other issue of which notice is provided to the
Trust or the Trustees.
(e) So long as a Trustee acts in accordance with the Applicable
Standard of Care, a Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee hereunder and any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or document
reasonably believed by the Trustee to be genuine and to have been signed or
presented by the proper party or parties hereunder.
(f) In no event shall a Trustee be responsible or liable for any failure or
delay in the performance of obligations hereunder arising out of or caused by,
directly or indirectly, forces beyond the Trustee’s control, including, without
limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or
military disturbances, nuclear or natural catastrophes, acts of God, and
interruptions, loss or malfunctions of utilities, communications or computer
(software and hardware) services, it being understood that the Trustee shall use
reasonable efforts which are consistent with accepted practices to resume
performance as soon as practicable under the circumstances.
(g) In the event that, in the independent judgment of the Trustees, there
is any ambiguity or uncertainty hereunder or in any notice, instruction or other
communication received by the Trustees hereunder, the Trustees may, in their
sole discretion and upon notice to the person providing such notice, instruction or
A085
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 85 of 91
17
other communication and to the FRBNY, refrain from taking any action other
than retaining possession of the Trust Stock, unless the Trustees receive written
instructions, signed by the FRBNY, that address such ambiguity or uncertainty, in
which instance the Trustees shall act in accordance with such written instructions.
(h) In the event of any dispute or conflicting claims with respect to the
Trust, the Trust Assets or this Trust Agreement, the Trustees shall be entitled to
refuse to comply with any and all claims, demands or instructions as long as such
dispute or conflict shall continue, and the Trustees shall not be or become liable in
any way to any person for failure or refusal to comply with such conflicting
claims, demands or instructions. The Trustees shall be entitled to refuse to act
until either (i) such conflicting or adverse claims or demands shall have been
determined by a final order, judgment or decree of a court of competent
jurisdiction, which order, judgment or decree as to which all appeals have been
exhausted or waived, or settled by agreement between the conflicting parties as
evidenced in a writing satisfactory to the Trustees or (ii) the Trustees shall have
received security or an indemnity from the Trust or the FRBNY or another entity
reasonably satisfactory to them sufficient to hold them harmless from and against
any and all losses that they may incur by reason of so acting.
(i) The Trustees shall work with the Company and the board of
directors of the Company to ensure corporate governance procedures satisfactory
to the Trustees.
(j) Referring to Section 3.03(e) and Section 3.04(b)(iv) hereof, the
FRBNY shall provide the Trustees with reasonable advance notice of any
termination of the Credit Agreement.
ARTICLE 4
BOOKS AND RECORDS; TAX REPORTING
Section 4.01. Records. The Trustees shall maintain or cause to be
maintained records sufficient to document each significant action taken by the
Trustees pursuant to this Trust Agreement and shall provide the FRBNY with the
following reports in a format and manner reasonably requested by the FRBNY:
1 Monthly custodial reports;
2 Quarterly summary of significant actions (votes, consents, etc);
3 Quarterly reports summarizing the efforts and activities to effect the
sale or other disposition of the Trust Stock or other Trust Assets;
4 Minutes of any meetings of the Trustees; and
5 The Divestiture Plan, as amended from time to time by the Trustees.
So long as the Trust is in existence: (i) on a regular basis, but not less than
quarterly, the Trustees shall meet with representatives of the FRBNY to discuss
the administration of the Trust and other topics of interest to the parties; and
A086
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 86 of 91
18
(ii) the Trustees shall promptly provide the FRBNY with copies of all
correspondence or other information received by the Trustees from the Company
in their capacity as trustees under this Trust Agreement.
Section 4.02. Tax Reporting. The Trustees shall be solely responsible for
all tax returns and any other statements, returns or disclosures required to be filed
by the Trust.
ARTICLE 5
AMENDMENTS; TERMINATION; GOVERNING LAW
Section 5.01. Amendment. Neither the FRBNY nor the Trustees shall
have any power to alter, amend, modify or revoke any of the terms and conditions
of this Trust Agreement. Notwithstanding the foregoing, the FRBNY and the
Trustees may agree to amend, supplement, modify, or restate this Trust
Agreement in order to:
(i) cure any ambiguity, omission, formal defect or
inconsistency in this Trust Agreement (including to address any
circumstance or development the FRBNY and the Trustees reasonably
determine was not anticipated as of the Trust’s inception); or
(ii) grant to or confer upon the Trustees for the benefit of the
Treasury any additional rights, powers, authorities or remedies that may
lawfully be granted to or conferred upon the Trustees.
Section 5.02. Termination. Unless sooner terminated pursuant to any
other provision herein, this Trust Agreement shall terminate (and the Trust shall
cease and come to an end) upon the earlier of (i) the sale or other disposition of all
of the Trust Stock such that no Trust Stock continues to be held in trust hereunder;
or (ii) the Company shall have been liquidated and shall cease to exist or a plan of
reorganization or liquidation shall have been confirmed and consummated
providing for no distribution in respect of the Trust Stock. Notwithstanding the
above, the Trust shall not terminate until the Trustees transfer to the Treasury any
moneys in the Deposit Account and liquidate any other Trust Assets and transfer
the proceeds to the Treasury, which actions shall be taken expeditiously and
promptly upon the occurrence of a termination event described above.
Section 5.03. Governing Law. This Trust Agreement and the trust created
hereunder shall be construed, regulated and governed in all respects, not only as
to administration but also as to validity and effect, by any applicable provisions of
Federal law, and, in the absence of applicable Federal law, the laws of the State of
New York notwithstanding choice of law provisions thereof.
A087
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 87 of 91
19
ARTICLE 6
MISCELLANEOUS
Section 6.01. Assignments. The rights and obligations of the parties under
this Trust Agreement may not be assigned except as expressly provided for herein.
Section 6.02. Third Parties. Nothing in this Trust Agreement, expressed
or implied, is intended to confer upon any person (other than the parties hereto),
or their respective successors, any rights, remedies, obligations or liabilities under
or by reason of this Trust Agreement.
Section 6.03. Notices. Any notice which any party hereto may give to the
other hereunder shall be in writing and shall be given by hand delivery, first class
registered mail, or overnight courier service, sent,
if to the FRBNY, to
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045-0001
Attention: Sarah Dahlgren
Senior Vice President
with a copy to
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045-0001
Attention: Thomas C. Baxter, Jr.
Executive Vice President and General Counsel
if to the Trustees, to the addresses that each Trustee has
concurrently herewith provided to the parties to this Trust Agreement in writing.
if to the Treasury Department, to
Fiscal Assistant Secretary
United States Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220
if to the Company, to
American International Group, Inc.
70 Pine Street, New York, New York 10270
Attention: General Counsel
A088
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 88 of 91
20
or to such other address as such party may hereafter specify for the purpose by
notice to the other parties.
Section 6.04. Individuals Authorized to Act for the FRBNY. The FRBNY
shall, from time to time, provide to the Trustees a list of individuals authorized to
act on behalf of the FRBNY. Notwithstanding any other provision of this Trust
Agreement, the Trustees may not rely on any communications from the FRBNY
except for those made by such an authorized individual.
Section 6.05. Entire Agreement. This Trust Agreement constitutes the
entire agreement, and supersedes all prior agreements and understandings, oral
and written, among the parties with respect to the subject matter hereof and may
not be modified or amended in any manner other than as set forth herein.
Section 6.06. Successors. This Trust Agreement shall be binding upon
the successors to the parties hereto. The title to all property held hereunder shall
vest in any successor Trustee acting pursuant to the provisions hereof without the
execution or filing of any further instrument, but a resigning or removed Trustee
shall execute all instruments and do all acts necessary to vest title in the successor
Trustee. Each successor Trustee shall have, exercise and enjoy all of the powers,
both discretionary and ministerial, herein conferred upon his or her predecessors.
A successor Trustee shall not be obliged to examine or review the accounts,
records, or acts of, or property delivered by, any previous Trustee and shall not be
responsible for any action or any failure to act on the part of any previous Trustee.
Section 6.07. Remedies. Each of the parties hereto acknowledges and
agrees that in the event of any breach of this Trust Agreement, each non-
breaching party would be irreparably and immediately harmed and could not be
made whole by monetary damages. It is accordingly agreed that the parties hereto
(a) shall waive, in any action for specific performance, the defense of adequacy of
a remedy at law and (b) shall be entitled, in addition to any other remedy to which
they may be entitled at law or in equity, to an order compelling specific
performance of this Trust Agreement in any action instituted in the United States
District Court for the Southern District of New York. Each party hereto consents
to personal jurisdiction in any such action brought in the United States District
Court for the Southern District of New York.
A089
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 89 of 91
21
Section 6.08. Waiver of Jury Trial. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS TRUST
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
EACH PARTY HERETO CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER.
Section 6.09. Jurisdiction; Venue or Inconvenient Forum; Consent to
Service of Process.
(a) The parties agree that the United States District Court for the
Southern District of New York shall have exclusive jurisdiction over any claims
arising under this Trust Agreement, including claims for enforcement of this Trust
Agreement. Each party hereby waives any objection to venue or any defense of
inconvenient forum or any personal or subject matter jurisdictional defense in
connection with such proceedings.
(b) The parties consent to service of process in the manner provided for
notices in Section 6.03 hereof. Nothing in this Trust Agreement will affect the
right of any party to this Trust Agreement to serve process in any other manner
permitted by law.
Section 6.10. Headings. The titles to the Articles and the headings of the
Sections and Subsections of this Trust Agreement are for convenience of
reference only and are not to be considered in construing the terms and provisions
of this Trust Agreement.
Section 6.11. Perpetuities Savings Language. Unless sooner terminated
pursuant to other provisions of this Trust Agreement, the Trust shall terminate not
later than the expiration of twenty-one years after the death of the last survivor of
the descendants in being on the date of the execution of this Trust Agreement of
each of the original Trustees. Notwithstanding the above, the Trust shall not
terminate until the Trustees transfer to the Treasury any moneys in the Deposit
Account and liquidate any other Trust Assets and transfer the proceeds to the
Treasury, which actions shall be taken expeditiously and promptly upon the
occurrence of a termination event described above.
Section 6.12. Severability. In the event any one or more of the provisions
contained in this Trust Agreement should be held invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby. The parties
A090
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 90 of 91
22
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions to effectuate the intentions of the
parties as set forth in this Trust Agreement.
Section 6.13. Counterparts. This Trust Agreement may be executed in
counterparts, each of which shall constitute an original but all of which together
shall constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed as of the date first above written.
FEDERAL RESERVE BANK OF
NEW YORK
By: /s/ Sarah Dahlgren
Sarah Dahlgren
Senior Vice President
TRUSTEES:
/s/ Jill M. Considine
Jill M. Considine, Trustee
/s/ Chester B. Feldberg
Chester B. Feldberg, Trustee
/s/ Douglas L. Foshee
Douglas L. Foshee, Trustee
A091
Case 1:11-cv-00779-TCW Document 110-1 Filed 04/05/13 Page 91 of 91

Sign up to vote on this title
UsefulNot useful