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[U.S. TRUST LETTERHEAD]
Exhibit 22
X.X.XXXXX February 18, 1998
American Bankers Insurance Group, Inc.
00000 Xxxxx Xxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx
Re: Engagement of U.S. Trust Company of California N.A.
Gentlemen:
This letter agreement (the "Agreement") confirms the
understanding and agreement between American Bankers Insurance
Group, Inc. (the "Company") and U.S. Trust Company of California,
N.A. ("U.S. Trust"), with respect to certain professional services
to be provided by U.S. Trust in connection with the American
Bankers Insurance Group Employee Stock Ownership Plan and the
Retirement Plan and related Trusts (collectively, the "Plans").
1. U.S. Trust is being engaged by the Company to serve as
an investment manager of the Company stock held by the Plans with
respect to the tender offer made by Cendant (the "Tender Offer")
and to the merger contemplated by the merger agreement entered
into between American International Group, Inc. and the Company
(the "Proposed Merger") (Collectively, the Merger and the Tender
Offer will be referred as the "Proposed Transactions"). In
performing the services contemplated hereunder, U.S. Trust
confirms that it is a fiduciary, as defined in Section 3(21) of
ERISA with respect to the Plans.
2. In its capacity as an investment manager with respect to
the Plans, U.S. Trust responsibilities pursuant to this Agreement
will be as follows:
(i) To conduct a due diligence review relating to the
Tender Offer and the Proposed Merger;
(ii) To determine whether or not to tender pursuant to the
Tender Offer all or some portion of the Company stock
held by the Plans and if such decision is in the
interest of the Plan participants, taking into
consideration (A) the opinion of the independent
financial advisor engaged by U.S. Trust as to the
economic fairness of the Tender Offer, and (B) all
requirements of the Plans and applicable law;
(iii) To timely respond to the Tender Offer accordingly;
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American Bankers Insurance Group, Inc.
February 18, 1998
(iv) To determine with respect to the vote relating to the Proposed
Merger whether to accept the directions of participants with
respect to the allocated shares under the Employee Stock
Ownership Plan; and to vote the unallocated and undirected shares
of the Company stock held under the Employee Stock Ownership Plan
and all of the Company stock held by the Retirement Plan pursuant
to the Proposed Merger, taking into consideration (x) the opinion
of the independent financial advisor engaged by U.S. Trust as to
the economic fairness of the Proposed Merger, and (y) all
requirements of the Plans and applicable law;
(v) to timely respond to the Proposed Merger accordingly; and
(vi) if the Proposed Merger is consummated, to determine whether to
receive cash and/or AIG stock as consideration for the shares of
Company stock held in the Plans.
It is understood that in exercising its responsibilities pursuant to
this Agreement, U.S. Trust will rely on the written opinion of Xxxx & Xxxxxx
LLC (the "Financial Advisor"), whether (i) the consideration received by the
Plans pursuant to the Proposed Merger or the Tender Offer, respectively,
constitutes fair market value; and (ii) the Proposed Merger or the Tender
Offer, respectively, are fair and reasonable to the Plan from a financial point
of view (the "Financial Opinion"). Although the fees and expenses incurred by
U.S. Trust pursuant to this Agreement will be paid by the Company, it is
understood that U.S. Trust's sole professional responsibilities are to the
Plans and their participants.
3. The Company will furnish or cause to be furnished to U.S. Trust or
its Financial Advisor all current and historical financial and other information
regarding the Company reasonably requested by U.S. Trust or its Financial
Advisor in order for U.S. Trust to perform its obligations hereunder. The
Company represents that the information which it provides will be accurate and
complete in all material respects to the best of its officers' knowledge and it
is understood that U.S. Trust will rely on the accuracy of that representation
to carry out its responsibilities pursuant to this Agreement. U.S. Trust will
keep all such information strictly confidential and will not use such
information for any purpose other than as set forth herein.
4. Except as otherwise required by paragraph 7, as compensation for
the services to be rendered by U.S. Trust in connection with this Agreement,
the Company will pay to U.S. Trust the sum of $300,000, to be paid in two
installments. The first installment of $150,000 will be due on the date of the
execution of this Agreement. The second installment of $150,000 will be due on
the date U.S. Trust renders its final decision pursuant to the terms
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of this Agreement. No portion of the fee to U.S. Trust under this paragraph or
reimbursement of its expenses under paragraph 5 hereof is contingent in any way
upon the consummation of the Proposed Transactions or U.S. Trust's
determinations with respect to the Proposed Transactions. In the event that the
services contemplated by this Agreement extend beyond May 1, 1998, the parties
agree to negotiate in good faith the terms of additional compensation for U.S.
Trust.
5. U.S. Trust will engage Xxxxx Day Xxxxxx & Xxxxx as its legal counsel
to advise it in connection with the Proposed Transactions and the Company
agrees to reimburse U.S. Trust for all reasonable legal fees of its legal
counsel with respect to the matters described herein, plus the reasonable
expenses of such counsel. The legal fees of counsel to U.S. Trust will be
billed at such counsel's normal and customary (with no premium) hourly rats.
The Company agrees to reimburse U.S. Trust promptly on a monthly basis, within
ten (10) days of receipt of billing, for all reasonable legal fees and expenses
and for all reasonable out-of-pocket expenses incurred by U.S. Trust, in
connection with the services contemplated by this Agreement, including
reasonable expenses for travel, lodging, communications, postage, long distance
telephone, telecopy, duplicating and other incidentals. A final statement for
legal fees and expenses will be submitted to and paid by the Company within 20
days after U.S. Trust renders its final decision pursuant to this Agreement. It
is understood by the Company that legal counsel engaged by U.S. Trust will
report to and consult solely with U.S. Trust and that the attorney-client
privilege will be solely between such legal counsel and U.S. Trust. Because the
timesheets and billing records of counsel engaged by U.S. Trust are protected
by the attorney-client privilege or may be attorney work-product protected by
the attorney-client privilege, U.S. Trust will review the billing records of
its counsel and certify to the Company that the fees and expenses incurred by
counsel are reasonable. However, timesheets and billing records of counsel will
not be reviewed by, disclosed to or distributed to the Company.
U.S. Trust will engage Xxxx & Xxxxxx as its financial advisor in
connection with the Proposed Transactions and the Company will pay Xxxx &
Xxxxxx the sum of $150,000 in two installments, plus reasonable out-of-pocket
expenses. The first installment of $75,000 will be due on the date of the
execution of this Agreement. The second installment of $75,000 will be due on
the date U.S. Trust renders its final decision with respect to this Agreement.
In the event that the services contemplated by this Agreement extend beyond May
1, 1998, the parties agree to negotiate in good faith the terms of additional
compensation for Xxxx & Xxxxxx.
6. The Company and its successors, to the extent permitted by XXXXX,
will indemnify U.S. Trust and Duff & Xxxxxx and hold them and each of their
officers, directors, principals, shareholders, employees and
attorneys (individually an "Indemnified Party"), harmless against any and all
losses, claims, damages or liabilities, including reasonable legal fees and
expenses, to which any Indemnified Party may become subject arising in any
manner out of or in connection with the performance of their duties under this
Agreement, except that
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such Indemnified Party will not be so indemnified if such losses, claims,
damages or liabilities are finally adjudged by a court of competent
jurisdiction, or are determined by any other legal proceeding mutually
agreeable to the Company and the Indemnified Parties, to have resulted from
their negligence or willful misconduct. In addition, the Company waives any
rights or claims it may have against any Indemnified Party in connection with
this Agreement, except to the extent such claims are based on the negligence or
willful misconduct of such Indemnified Party. Pursuant to the foregoing
indemnification, the Company will, upon notice, advance or pay promptly to or
on behalf of any Indemnified Party, all attorneys' fees and other expenses and
disbursements as they are incurred. For purposes of this Agreement, negligence
shall be defined as acts or omissions that constitute a material departure from
standards of ordinary care.
If any Indemnified Party receives notice of the assertion of any claim or
of the commencement of any action or proceeding against the Indemnified Party
by any person who is not a party (or an affiliate of a party) to this Agreement
(a "Third Party Claim"), the Indemnified Party will give the Company reasonably
prompt written notice thereof. The Company will have the right to participate
in or, by giving written notice to the Indemnified party, to elect to assume
the defense of any Third Party Claim at the Company's expense and by the
Company's counsel (provided such counsel is reasonably satisfactory to the
Indemnified Party), and the Indemnified Party will cooperate in good faith in
such defense.
If within ten (10) calendar days after giving notice of a Third Party
Claim to the Company, the Indemnified Party receives written notice from the
Company that the Company has elected to assume the defense of the Third Party
Claim, the Company will not be liable for any legal expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof;
provided, however, that if the Company fails to take reasonable steps necessary
to defend diligently such Third Party Claims within ten (10) calendar days
after receiving written notice from the Indemnified Party that the Indemnified
Party reasonably believes the Company has failed to take such steps or if the
Indemnified Party reasonably determines that it needs separate counsel based on
a conflict of interest, the Indemnified Party may assume its own defense, and
the Company will be liable for all reasonable legal fees, costs and expenses
paid or incurred in connection therewith in accordance with the terms of this
Agreement. Without the prior written consent of the Indemnified Party which
will not be unreasonably withheld, the Company will not enter into any
settlement of any Third Party Claim which would lead to liability or create any
financial or other obligation on the part of the Indemnified Party for which
the Indemnified Party is not entitled to indemnification hereunder. Without the
prior written consent of the Company which will not be unreasonably withheld,
an Indemnified Party will not enter into any settlement of any Third Party
Claim which would create any financial or other liability on the part of the
Company.
If during the period of, or subsequent to the termination of, this
Agreement, any Indemnified Party is required to participate in any legal or
other proceeding as a result of the
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services provided pursuant to this Agreement, the Company will compensate U.S.
Trust or Duff & Xxxxxx (or such Indemnified Party individually if such party is
then no longer an employee of U.S. Trust or Duff & Xxxxxx) for such services or
time required at U.S. Trust's or Duff & Xxxxxx per diem rates then in effect,
plus any reasonable legal fees and out-of-pocket expenses incurred to the same
extent and in the same manner as specified hereinabove. The Company will pay
these sums within thirty (30) days of being billed; provided, however, that
U.S. Trust or Duff & Xxxxxx will promptly reimburse to the Company all amounts
paid to an Indemnified Party pursuant to this Paragraph 6 in the event that the
Indemnified Party is finally adjudged to have acted with negligence or willful
misconduct with respect to professional services pursuant to this Agreement. In
the event that costs are incurred by any party in enforcing this Agreement, the
prevailing parties will be entitled to reimbursement from the other parties of
all reasonable costs, including legal fees, so incurred.
It is understood by the parties that the foregoing indemnification
agreement is in addition to any indemnification provided by the Company under
the Trust Agreement and will survive the termination for any reason of this
Agreement and the termination for any reason of the services of U.S. Trust as
investment manager or Duff & Xxxxxx as Financial Advisor.
7. The engagement of U.S. Trust under this Agreement may be terminated at
any time by U.S. Trust or by the Company upon thirty (30) days' written notice
to the other party or such shorter period of time as may be agreed upon by both
parties. If this Agreement is unilaterally terminated by U.S. Trust, U.S.
Trust's compensation under this Agreement will be determined by its hourly
rates for services rendered up to and including the effective date of the
termination. In the event that the Agreement is terminated by the Company, U.S.
Trust shall be entitled to the sum of the installment payments then due under
the terms of paragraph 4. In the event of termination of this Agreement for any
reason, U.S. Trust will be entitled to receive within thirty (30) days of
billing reimbursement for all reasonable legal and professional fees and all
reasonable out-of-pocket expenses incurred by U.S. Trust through the effective
date of termination not previously reimbursed and any reasonable expenses and
legal fees incurred by U.S. Trust thereafter in successfully enforcing the
terms of, or otherwise pursuant to, this Agreement.
8. The individuals executing this Agreement for the parties hereto
represent and warrant that they are authorized to enter into this Agreement.
9. The provisions of this Agreement will inure to, and be binding upon,
the successors and assigns of the Company and U.S. Trust, except that U.S.
Trust will not assign its obligations to perform services hereunder to any
other party without the prior written consent of the Company.
10. The provisions of this Agreement represent the entire understanding of
the parties with respect to the duties and responsibilities of U.S. Trust
concerning its engagement by the Company and this Agreement supersedes all
prior oral or written agreements or understandings between the parties
concerning the subject matter of this Agreement.
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11. This Agreement may be amended only by a written instrument
executed by all parties hereto.
12. The obligations of U.S. Trust and the Company are solely
corporate obligations, and no officer, director, employee, agent, shareholder,
or controlling person will be subject to any personal liability whatsoever in
connection with this Agreement.
13. This Agreement may be executed in one or more counterparts, each
of which will be deemed an original, but all of which together will constitute
one and the same agreement.
14. This Agreement will be effective upon execution and governed by
and construed in accordance with the laws of the State of California.
If the foregoing terms correctly reflect the understanding and
agreement between the parties, please execute the three enclosed copies of this
letter, and return two copies to the undersigned along with a check payable to
U.S. Trust in the amount of $150,000 and a check payable to Xxxx & Xxxxxx in
the amount of $75,000.
Very truly yours,
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
Dated: February 18, 1998 By: /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Managing Director
AGREE TO AND ACCEPTED
AMERICAN BANKERS INSURANCE GROUP, INC.
Dated: By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Executive Vice President
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