Capital Maintenance Agreement

15. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter of this Agreement and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, of the Parties. This Agreement may be amended at any time by written agreement or deed signed by the parties. Physical capital maintenance does not address the costs associated with the actual maintenance of physical items such as equipment. Instead, it focuses on a company`s ability to maintain its cash flow in the future by maintaining access to revenue-generating assets used in the company`s infrastructure. Capital preservation, also known as capital recovery, is an accounting concept based on the principle that a company`s income should not be accounted for until it has fully covered its costs or maintained its capital. A company realizes capital preservation when the amount of its capital at the end of a period remains unchanged from that of the beginning of the period. Any surplus beyond that represents the company`s profit. 5. At the time a deposit is due under paragraph 4, AIG agrees that it (a) makes such contribution to the Company`s direct parent company153 and causes such direct parent company to subsequently contribute such funds, securities or instruments to the Company by AIG, or (b) make such contribution directly to the Company; without receiving in return any share capital or other ownership shares, in both cases subject to the necessary regulatory approvals. At any time dividends are due under paragraph 4, the Company agrees to pay such dividend to the direct parent company of Company 153 and will do its best to ensure that such direct parent company distributes or otherwise makes such funds available to AIG. All contributions and dividends provided for in this Agreement will be approved, declared and, where applicable, made in accordance with applicable law, including, but not limited to, approval by the Board of Directors of any applicable entity (including the Company) and any notice requirements set forth in the applicable rules and regulations of the State of domicile.

12. The agreements, representations, warranties and understandings set forth herein are mutually binding and mutually beneficial to AIG and its successors, as well as to the Company and its successors. 3. Term. This Agreement is effective on the Effective Date. This Agreement may be terminated at any time by written agreement of 777 and the Company and shall have no force or effect after such termination; However, provided that, except to the extent that it is superseded or assigned in accordance with this Section 3, this Agreement may not be assigned or terminated without the prior written permission of the Texas Department of Insurance (the „TDI“). Notwithstanding anything to the contrary, this Agreement may be terminated in its entirety and 777 will be released from all obligations under this Agreement if another party that has a credit or financial sound rating rating from at least two nationally recognized statistical rating agencies that corresponds to an „A-“ or higher rating from at least two nationally recognized statistical rating agencies that have a rating. „A-“ or more from Standard & Poor`s Company (or its successor) („S&P“); provided, however, that if that party has a credit rating or a financial strength rating from a single nationally recognized statistical rating agency, such an alternative capital preservation agreement may be provided by that party if that rating is equal to or higher than an „A“ rating of S&P. The concept of preservation of financial capital consists in the fact that the capital of a company is preserved only if the financial or monetary amount of its net assets at the end of a financial year corresponds to or exceeds the financial or monetary amount of its net assets at the beginning of the period, without distribution to , (3) For the avoidance of doubt, it is noted that the terms „Total Adjusted Capital“, „Company Intervention Level RbC“ and „Policyholder Surplus“ have the meanings assigned to them under the insurance laws and regulations of the State of domicile, or with respect to „Total Adjusted Capital“ and „RBC Intervention Threshold“, if not defined in them, which have the meaning ascribed to them in the Risk-Based Capital Instructions („RBC“) issued by the National Association of Insurance Commissioners („NAIC“). The term „specified minimum percentage“ is the percentage of Schedule 1 agreed to by AIG and the Company at least once a year, beginning on the date of filing of the Company`s 2010 financial statements with the insurance division of Domiciliary State153 and after review against standards and capital adequacy criteria („Agency Criteria“) of Standard & Poor153s Corp.

(„S&P“), Moody153s Investors Service („Moody153s“) and A.M. Best Company („A.M. Best“). Notwithstanding the obligation of the Company and AIG to review the minimum percentage indicated each year, the parties hereby agree to review and revise the minimum percentage indicated more frequently if they deem it appropriate (a) to take into account any material changes after the date of this Agreement to the Agency`s criteria adopted by any of the S&Ps; Moody153s or A.M. Preferably, on the one hand, or under the law of the State of domicile or the rules or instructions of RBC NAIC on the other hand, which result in the results falling within the scope of the Agency`s criteria deviating from those under the law of the State of domicile or the rules or instructions of RBC NAIC, (b) the Company carries out a material transaction that is treated materially differently according to the Agency`s criteria, on the one hand, and the naIC`s CCR rules or instructions, on the other hand, or (c) any other significant developments or circumstances affecting the Company on which AIG and the Company agree will merit a reassessment of the specified minimum percentage then applicable. Second, what is the concept of capital? Capital includes all goods produced or created by humans and used to produce goods or services. Capital may include physical assets such as a production facility or financial assets such as an investment portfolio. Capital can also refer to the money invested in a company to buy assets. The concept of capital preservation means that a company does not generate a profit until the costs associated with the transaction during a selected accounting period are fully amortized.


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