8-K
 
 
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):  May 12, 2008
AMERICAN INTERNATIONAL GROUP, INC.
(Exact name of registrant as specified in its charter)
         
Delaware   1-8787   13-2592361
         
(State or other jurisdiction   (Commission File Number)   (IRS Employer
of incorporation)       Identification No.)
70 Pine Street
New York, New York 10270

(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 if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):  
o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)    
 
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)    
 
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))    
 
o   Pre-commencement communications pursuant to Rule 13e4(c) under the Exchange Act   (17 CFR 240.13e-4(c))  
 
 

 


 

Section 8 – Other Events
Item 8.01. Other Events.
On May 16, 2008, American International Group, Inc. (“AIG”) closed the sale of 196,710,525 shares of its common stock, par value $2.50 per share, at a public offering price of $38.00 per share (the “Common Stock Offering”) and 78,400,000 equity units, initially consisting of purchase contracts and junior subordinated debentures, at a public offering price of $75.00 per equity unit (the “Equity Units Offering”).
In connection with the Common Stock Offering and Equity Units Offering, AIG entered into the several agreements and other instruments listed in Item 9.01 of this Current Report on Form 8-K and filed as exhibits hereto. These exhibits are incorporated by reference into the Registration Statement (Nos. 333-150865, 333-143992 and 333-106040) related to the Common Stock Offering and the Equity Units Offering.
Item 9.01 Financial Statements and Exhibits.
     (d) Exhibits
  1.1   Underwriting Agreement, dated as of May 12, 2008 between AIG and Citigroup Global Markets Inc., and J.P. Morgan Securities Inc., as representatives of the several underwriters named therein, relating to the Common Stock Offering.
 
  1.2   Underwriting Agreement, dated as of May 12, 2008 between AIG and Citigroup Global Markets Inc., and J.P. Morgan Securities Inc., as representatives of the several underwriters named therein, relating to the Equity Units Offering.
 
  4.1   Sixth Supplemental Indenture, dated as of May 16, 2008, between AIG and The Bank of New York, as Trustee.
 
  4.2   Seventh Supplemental Indenture, dated as of May 16, 2008, between AIG and The Bank of New York, as Trustee.
 
  4.3   Eighth Supplemental Indenture, dated as of May 16, 2008, between AIG and The Bank of New York, as Trustee.
 
  4.4   Form of 5.67% Series B-1 Junior Subordinated Debenture (included in Exhibit 4.1).

 


 

  4.5   Form of 5.82% Series B-2 Junior Subordinated Debenture (included in Exhibit 4.2).
 
  4.6   Form of 5.89% Series B-3 Junior Subordinated Debenture (included in Exhibit 4.3).
 
  4.7   Purchase Contract Agreement, dated as of May 16, 2008, between AIG and The Bank of New York, as Purchase Contract Agent.
 
  4.8   Form of Corporate Unit (included in Exhibit 4.7).
 
  4.9   Pledge Agreement, dated as of May 16, 2008, among AIG, The Bank of New York as the Purchase Contract Agent and Wilmington Trust Company, as Collateral Agent, Custodial Agent and Securities Intermediary.
 
  5.1   Validity Opinion of Sullivan & Cromwell LLP relating to Common Stock.
 
  5.2   Validity Opinion of Sullivan & Cromwell LLP relating to Equity Units
 
  8.1   Tax Opinion of Sullivan & Cromwell LLP relating to Common Stock.
 
  8.2   Tax Opinion of Sullivan & Cromwell LLP relating to Equity Units.

 


 

SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
         
  AMERICAN INTERNATIONAL GROUP, INC.
                             (Registrant)
 
 
Date: May 16, 2008  By:     /s/ Kathleen E. Shannon    
    Name:   Kathleen E. Shannon   
    Title:   Senior Vice President and Secretary   
 

 


 

EXHIBIT INDEX
  1.1   Underwriting Agreement, dated as of May 12, 2008 between AIG and Citigroup Global Markets Inc., and J.P. Morgan Securities Inc., as representatives of the several underwriters named therein, relating to the Common Stock Offering.
 
  1.2   Underwriting Agreement, dated as of May 12, 2008 between AIG and Citigroup Global Markets Inc., and J.P. Morgan Securities Inc., as representatives of the several underwriters named therein, relating to the Equity Units Offering.
 
  4.1   Sixth Supplemental Indenture, dated as of May 16, 2008, between AIG and The Bank of New York, as Trustee.
 
  4.2   Seventh Supplemental Indenture, dated as of May 16, 2008, between AIG and The Bank of New York, as Trustee.
 
  4.3   Eighth Supplemental Indenture, dated as of May 16, 2008, between AIG and The Bank of New York, as Trustee.
 
  4.4   Form of 5.67% Series B-1 Junior Subordinated Debenture (included in Exhibit 4.1).
 
  4.5   Form of 5.82% Series B-2 Junior Subordinated Debenture (included in Exhibit 4.2).
 
  4.6   Form of 5.89% Series B-3 Junior Subordinated Debenture (included in Exhibit 4.3).
 
  4.7   Purchase Contract Agreement, dated as of May 16, 2008, between the Company and The Bank of New York, as Purchase Contract Agent.
 
  4.8   Form of Corporate Unit (included in Exhibit 4.7).
 
  4.9   Pledge Agreement, dated as of May 16, 2008, among the Company, the Purchase Contract Agent and Wilmington Trust Company, as Collateral Agent, Custodial Agent and Securities Intermediary.

 


 

 
  5.1   Validity Opinion of Sullivan & Cromwell LLP relating to Common Stock.
 
  5.2   Validity Opinion of Sullivan & Cromwell LLP relating to Equity Units
 
  8.1   Tax Opinion of Sullivan & Cromwell LLP relating to Common Stock.
 
  8.2   Tax Opinion of Sullivan & Cromwell LLP relating to Equity Units.

 

EX-1.1
AMERICAN INTERNATIONAL GROUP, INC.
171,052,631 Shares
Common Stock, Par Value $2.50 Per Share
Underwriting Agreement
May 12, 2008
Citigroup Global Markets Inc.,
J.P. Morgan Securities Inc.,
As Representatives of the several Underwriters
named in Schedule I hereto.
c/o Citigroup Global Markets Inc.,
388 Greenwich Street
New York, NY 10013
c/o J.P. Morgan Securities Inc.
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
          American International Group, Inc., a Delaware corporation (the “Company”), proposes, subject to the terms and conditions stated herein, to issue and sell to the firms named in Schedule I hereto (the “Underwriters”), for whom you are acting as Representatives (the “Representatives”), an aggregate of 171,052,631 shares (the “Firm Shares”) of common stock, par value $2.50 per share (the “Common Stock”), of the Company and, at the election of the Representatives acting on behalf of the Underwriters, to issue and sell to the Underwriters up to an additional 25,657,894 shares of Common Stock (the “Optional Shares”, and, together with the Firm Shares, the “Securities”), solely to cover over-allotments.
          The Company is concurrently publicly offering equity units (“Units”) consisting of a contract to purchase shares of Common Stock and an unsecured debt obligation of the Company (the “Units Offering”) through other underwriters. The offering of the Securities is not contingent upon the completion of the Units Offering; the Units Offering is not contingent upon the offering of the Securities; and the Units are not being offered together with the Securities.
     1. The Company represents and warrants to, and agrees with, each of the Underwriters that:
          (a) Registration Statements on Form S-3 (Registration Nos. 333-143992 and 333-106040) in respect of the Securities have been filed with the Securities and Exchange Commission (the “Commission”); the latest filed of such registration statements (Registration No. 333-143992), in the form heretofore delivered to the Representatives (excluding exhibits to such

 


 

latest filed registration statement, but including all documents incorporated by reference in the prospectus describing Common Stock included in that registration statement, the “latest filed registration statement”), has been declared effective by the Commission in such form; the earlier filed registration statement also has been declared effective by the Commission; other than a registration statement, if any, increasing the size of the offering (a “Rule 462(b) Registration Statement”), filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the “Act”), which became effective upon filing, since the delivery to the Representatives no other document with respect thereto or document incorporated by reference therein has been filed or transmitted for filing with the Commission (other than filings by the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and other than preliminary prospectuses, preliminary prospectus supplements and other prospectuses filed pursuant to Rule 424(b) or Rule 433 of the rules and regulations of the Commission under the Act that relate to securities other than the Securities); and no stop order suspending the effectiveness of the latest filed registration statement or the Rule 462(b) Registration Statement, if any, has been issued and no proceeding for that purpose has been initiated or threatened by the Commission (the basic prospectus describing Common Stock filed as part of the latest filed registration statement is hereinafter called the “Basic Prospectus”; any preliminary prospectus (including the Basic Prospectus as supplemented by any preliminary prospectus supplement) relating to the Securities filed with the Commission pursuant to Rule 424(b) of the rules and regulations of the Commission under the Act is hereinafter called a “Preliminary Prospectus”; the various parts of the latest filed registration statement and the Rule 462(b) Registration Statement, if any, including all exhibits thereto and the documents incorporated by reference in the Basic Prospectus at the time such registration statement became effective, and any prospectus supplement relating to the Securities that is filed with the Commission and deemed by virtue of Rule 430B to be part of that registration statement, each as amended at the time that registration statement became effective or such part of the Rule 462(b) Registration Statement, if any, became or hereafter becomes effective, are hereinafter collectively called the “Registration Statement”; the Basic Prospectus as amended and supplemented immediately prior to the Applicable Time (as defined in Section 1(c) hereof), is hereinafter called the “Pricing Prospectus”; the form of the final prospectus relating to the Securities filed with the Commission pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof is hereinafter called the “Prospectus” but excluding any Statement of Eligibility under the Trust Indenture Act of 1939, as amended; any reference herein to the Basic Prospectus, the Pricing Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Act, as of the date of such prospectus; any reference to any amendment or supplement to the Basic Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include any post-effective amendment to the Registration Statement, any prospectus supplement relating to the Securities filed with the Commission pursuant to Rule 424(b) under the Act and any documents filed under the Exchange Act and incorporated therein, in each case after the date of the Basic Prospectus, such Preliminary Prospectus or the Prospectus, as the case may be; any reference to any amendment to the Registration Statement shall be deemed to refer to and include any annual report of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act after the effective date of the Registration Statement that is incorporated by reference in the Registration Statement; and any “issuer free writing prospectus” as defined in Rule 433 under the Act relating to the Securities is hereinafter called an “Issuer Free Writing Prospectus”;
          (b) No order preventing or suspending the use of any Preliminary Prospectus or any Issuer Free Writing Prospectus has been issued by the Commission, and each Preliminary

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Prospectus, at the time of filing thereof, conformed in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder, and did not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representatives expressly for use therein;
          (c) For the purposes of this Agreement, the “Applicable Time” is 5:00 p.m. (Eastern time) on the date of this Agreement; the Pricing Prospectus, as supplemented by the information contained in the final term sheet prepared and filed pursuant to Section 5(a) hereof, taken together (collectively, the “Pricing Disclosure Package”) as of the Applicable Time, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and each other Issuer Free Writing Prospectus listed on Schedule II(a) hereto does not conflict with the information contained in the Registration Statement, the Pricing Prospectus or the Prospectus, and each such other Issuer Free Writing Prospectus, as supplemented by and taken together with the Pricing Disclosure Package as of the Applicable Time, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representatives expressly for use therein;
          (d) The documents incorporated by reference in the Pricing Prospectus and the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and any further documents so filed and incorporated by reference in the Prospectus, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or, in the case of an Annual Report on Form 10-K, omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or, in the case of any other document filed under the Exchange Act, omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to (i) any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representatives expressly for use therein, or (ii) any statement in any such document which does not constitute part of the Registration Statement, Pricing Prospectus or Prospectus pursuant to Rule 412 under the Act;
          (e) The Registration Statement conforms, and the Prospectus and any further amendments or supplements to the Registration Statement and the Prospectus will conform, in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder and do not and will not, as of the applicable effective date as to the Registration

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Statement and any amendment thereto and as of its date as to the Prospectus and any supplement thereto, contain an untrue statement of a material fact or, in the case of the Registration Statement, omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or, in the case of the Prospectus, omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to (i) any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by any Underwriter through the Representatives expressly for use in the Prospectus or any amendment or supplement thereto, or (ii) any statement which does not constitute part of the Registration Statement or Prospectus pursuant to Rule 412 under the Act;
          (f) The Company and each of its Significant Subsidiaries (as defined in Rule 1.02(w) of Regulation S-X) have been duly incorporated or organized and are validly existing corporations or other entities in good standing under the laws of their respective jurisdiction of incorporation or organization and have full power and authority to own their respective properties and to conduct their respective businesses as described in the Prospectus, except, in the case of any Significant Subsidiary, where the failure to be so duly incorporated or organized, validly existing, in good standing or have such power or authority would not, individually or in the aggregate, have a Material Adverse Effect (as defined in Section 1(j) below);
          (g) Since the date of the latest audited financial statements incorporated by reference in the Basic Prospectus as amended or supplemented there has not been (i) any material change in the capital stock (other than as occasioned by Common Stock having been issued pursuant to the Company’s employee stock purchase plans, equity incentive plans and upon conversion of convertible securities, repurchased by the Company pursuant to any previously announced stock repurchase program or the Units Offering) or long-term debt (other than as occasioned by the Units Offering and the offering of approximately $5 billion of non-dilutive capital securities), or (ii) any material adverse change in or affecting the business, financial position, shareholders’ equity or results of operations of the Company and its consolidated subsidiaries considered as an entirety, in each case, otherwise than as set forth or contemplated in such Basic Prospectus as amended or supplemented prior to the Applicable Time (any such change described in clause (ii) is referred to as a “Material Adverse Change”);
          (h) The Securities have been duly authorized and, when issued and delivered pursuant to this Agreement, the Securities will be duly and validly issued, fully paid and nonassessable; and the Securities will conform in all material respects to the descriptions thereof contained in the Pricing Disclosure Package and in the Prospectus;
          (i) The Company has an authorized equity capitalization as set forth in the Pricing Prospectus;
          (j) The issue and sale of the Securities and the compliance by the Company with all of the provisions of this Agreement, and the consummation of the transactions herein contemplated, will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which the Company is a party or by which the Company is bound or to which any of the property or assets of the Company is subject, or result in any violation of any statute or any order, rule or regulation of any court or governmental agency or body having

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jurisdiction over the Company or any of its properties, except, in each case, for such conflicts, breaches, defaults and violations that would not have a material adverse effect on the business, financial position, shareholders’ equity or results of operations of the Company and its subsidiaries considered as an entirety (a “Material Adverse Effect”) or affect the validity of the Securities, nor will such action result in any violation of the provisions of the Restated Certificate of Incorporation, as amended, or the By-Laws of the Company; and no consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body is required by the Company for the issue and sale of the Securities or the consummation by the Company of the transactions contemplated by this Agreement, except the listing of the Securities on the New York Stock Exchange and except such consents, approvals, authorizations, orders, registrations or qualifications the failure to obtain or make would not have a Material Adverse Effect or affect the validity of the Securities, and such consents, approvals, authorizations, orders, registrations or qualifications as have been, or will have been prior to the First Time of Delivery (as defined in Section 4 hereof), obtained under the Act and such consents, approvals, authorizations, orders, registrations or qualifications as may be required under state securities or Blue Sky laws (including insurance laws of any state relating to offers and sales of securities in such state) in connection with the purchase and distribution of the Securities by the Underwriters;
          (k) The consolidated historical financial statements and schedules of the Company and its consolidated subsidiaries included in the Preliminary Prospectus, the Prospectus and the Registration Statement present fairly, in all material respects, the financial condition, results of operations and cash flows of the Company as of the dates and for the periods indicated, comply as to form, in all material respects, with the applicable accounting requirements of the Act and have been prepared in conformity with U.S. generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as otherwise noted therein);
          (l) The Company and its subsidiaries maintain “disclosure controls and procedures” (as such term is defined in Rule 13a-15(e) under the Exchange Act); as disclosed in the Registration Statement, Preliminary Prospectus and the Prospectus, such disclosure controls and procedures were not effective at March 31, 2008;
          (m) Neither the Company nor any of its Significant Subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any of its Significant Subsidiaries is currently subject to any sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department, except for any such sanction that individually or in the aggregate would not have a Material Adverse Effect;
          (n) The Company and its Significant Subsidiaries possess all licenses, certificates, permits and other authorizations issued by, and have made all declarations and filings with, the appropriate federal, state, local or foreign governmental or regulatory authorities that are necessary for the ownership or lease of their respective properties or the conduct of their respective businesses as described in the Registration Statement, the Preliminary Prospectus and the Prospectus, except where the failure to possess or make the same would not, individually or in the aggregate, have a Material Adverse Effect; and except as described in the Registration Statement, the Preliminary Prospectus and the Prospectus, neither the Company nor any of its Significant Subsidiaries has received notice of any revocation or modification of any such license, certificate, permit or authorization or has any reason to believe that any such license, certificate, permit or authorization will not be renewed in the ordinary course, in each case, except where the failure to

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posses the same or the modification to the same would not, individually or in the aggregate, have a Material Adverse Effect; and
          (o) There is no action, suit or proceeding pending, or to the knowledge of the executive officers of the Company, threatened against the Company or any of its subsidiaries, which has, or may reasonably be expected in the future to have, a Material Adverse Effect, except as set forth or contemplated in the Pricing Disclosure Package or the Prospectus as amended or supplemented in accordance with Section 5(a) hereof.
     2. (a) Subject to the terms and conditions herein set forth, (i) the Company agrees to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at the purchase price set forth in Exhibit A to Schedule II, the number of Firm Shares set forth opposite such Underwriter’s name in Schedule I and (ii) in the event and to the extent that the Representatives shall exercise the election to purchase Optional Shares as provided below, the Company agrees to issue and sell to the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at the same purchase price set forth in clause (i) of this Section 2(a), the number of the Optional Shares as to which such election shall have been exercised (to be adjusted by the Representatives, if necessary, so as to eliminate fractions of shares of Common Stock) determined by multiplying the number of such Optional Shares by a fraction, the numerator of which is the maximum number of Firm Shares which such Underwriter is entitled to purchase as set forth opposite the name of such Underwriter in Schedule I hereto and the denominator of which is the maximum number of Firm Shares that all of the Underwriters are entitled to purchase hereunder.
          (b) Each Underwriter represents and agrees with the Company that it will comply with or observe any restrictions or limitations set forth in the Prospectus as amended or supplemented on persons to whom, or the jurisdictions in which, or the manner in which, the Securities may be offered, sold, resold or delivered.
          (c) The Company hereby grants to the Underwriters the one-time right to purchase at the election of the Representatives up to 25,657,894 Optional Shares, solely for the purpose of covering over-allotments, if any, in connection with the offer and sale of the Firm Shares, at the purchase price set forth in clause (i) of Section 2(a). Any such election to purchase Optional Shares may be exercised by written notice from the Representatives to the Company, given within a period of 30 days after the date of this Agreement, setting forth the number of Optional Shares to be purchased and the date on which such Optional Shares are to be delivered, as determined by the Representatives, which shall in no event be earlier than the First Time of Delivery (as defined in Section 4 hereof) or, unless the Representatives and the Company otherwise agree in writing, earlier than three or later than five New York Business Days after the date of such notice. For the purposes of this Agreement, “New York Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York are generally authorized or obligated by law or executive order to close.
     3. Upon the authorization by the Representatives of the release of such Securities, the several Underwriters propose to offer such Securities for sale upon the terms and conditions set forth in the Prospectus.

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     4. The Company will deliver the Securities to one or more of the Representatives for the account of each Underwriter, against payment by or on behalf of such Underwriter of the purchase price therefor by wire transfer of Federal (same-day) funds to the account specified by the Company to the Representatives at least twenty-four hours in advance, by causing Wells Fargo Bank, N.A., as registrar, to register the Securities in global book entry form in the name of Cede & Co., or such other nominee as The Depository Trust Company (“DTC”) may designate, and shall cause DTC to credit the Securities to the account of one or more of the Representatives at DTC. The time and date of such delivery and payment, with respect to the Firm Shares, shall be 9:30 a.m., New York City time, on May 16, 2008 or such other time and date as the Representatives and the Company may agree upon in writing, and, with respect to the Optional Shares, shall be 9:30 a.m., New York City time, on the date specified by the Representatives in the written notice given by the Representatives of the Underwriters’ election to purchase the Optional Shares, or at such other time and date as the Representatives and the Company may agree upon in writing. Such time and date for delivery of the Firm Shares is herein called the “First Time of Delivery”, such time and date for delivery of the Optional Shares, if not the First Time of Delivery, is herein called an “Optional Time of Delivery”, and each such time and date for delivery is herein called a “Time of Delivery”.
          The documents to be delivered at a Time of Delivery by or on behalf of the parties hereto pursuant to Section 8 hereof, including the cross-receipt for the Securities, will be delivered at the offices of Sullivan & Cromwell LLP, 125 Broad Street, New York, NY 10004 (the “Closing Location”), and the Securities will be credited to the account of the Representatives at DTC, all at such Time of Delivery. A meeting will be held at the Closing Location at 4:00 p.m., New York City time, on the New York Business Day next preceding such Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto.
     5. The Company covenants and agrees with each of the Underwriters:
          (a) To prepare the Prospectus in a form approved by the Representatives and to file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission’s close of business on the second business day following the date of this Agreement; to make no further amendment or supplement (other than an amendment or supplement as a result of filings by the Company under the Exchange Act and other than amendments or supplements in connection with the Units Offering or offerings of unsecured debt securities of or guaranteed by the Company) to the Registration Statement or the Prospectus prior to the First Time of Delivery which shall be disapproved by the Representatives promptly after reasonable notice thereof; between the signing of this Agreement and the First Time of Delivery, to give reasonable advance notice to the Representatives of any filings by the Company under the Exchange Act that are incorporated by reference into the Prospectus and any filings by the Company under Item 2.02 or 7.01 of Current Report on Form 8-K; between the signing of this Agreement and the First Time of Delivery, to advise the Representatives promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any amendment or supplement to the Prospectus has been filed (other than an amendment or supplement as a result of filings by the Company under the Exchange Act and other than amendments or supplements in connection with the Units Offering or offerings of unsecured debt securities of or guaranteed by the Company) and to furnish the Representatives with copies thereof; to prepare a final term sheet, containing solely a description of the Securities, in the form set forth in Exhibit A to Schedule II hereto and to file such term sheet pursuant to Rule 433(d) under the Act within the time required by

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such Rule; to file promptly all other material required to be filed by the Company with the Commission pursuant to Rule 433(d) under the Act; to file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is required in connection with the offering or sale of the Securities, and during such same period to advise the Representatives, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed with the Commission (other than an amendment or supplement as a result of filings by the Company under the Exchange Act and other than the filing of prospectuses, preliminary prospectuses, preliminary prospectus supplements, issuer free-writing prospectuses and other documents pursuant to Rule 424(b) or Rule 433 under the Act that relate to the Units Offering or securities other than the Securities), of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any prospectus relating to the Securities, of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or Prospectus or for additional information; and, in the event of the issuance of any such stop order or of any such order preventing or suspending the use of any such prospectus relating to the Securities or suspending any such qualification, to use promptly its best efforts to obtain its withdrawal;
          (b) Promptly from time to time to take such action as the Representatives may reasonably request to qualify the Securities for offering and sale under the securities laws of such jurisdictions as the Representatives may request and to comply with such laws so as to permit the continuance of sales and dealings in such jurisdictions for as long as may be necessary to complete the distribution of the Securities; provided, however, that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction;
          (c) From time to time, to furnish the Underwriters with written and electronic copies of the Prospectus in such quantities as the Representatives may reasonably request, and, if the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is required at any time prior to the expiration of nine months after the time of issuance of the Prospectus in connection with the offering or sale of the Securities and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is delivered, not misleading, or if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Act or the Exchange Act, to notify the Representatives and upon their request to file such document and to prepare and furnish without charge to each Underwriter and to any dealer in securities as many copies as the Representatives may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance; and in case any Underwriter is required to deliver a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) in connection with sales of any of the Securities at any time nine months or more after the time of issue of the Prospectus, upon the request of the Representatives but at the

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expense of such Underwriter, to prepare and deliver to such Underwriter as many written and electronic copies as the Representatives may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Act;
          (d) To make generally available to its security holders as soon as practicable, but in any event not later than sixteen months after the effective date of the Registration Statement (as defined in Rule 158(c)), an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158);
          (e) During the period beginning from the date hereof, and continuing to and including the date 90 days after the date hereof or such earlier time as the Representatives may notify the Company, not to offer, sell, contract to sell, grant any option to purchase, or otherwise dispose of, or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the Company or any person in privity with the Company, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act in respect of, any shares of Common Stock, or any options or warrants to purchase any shares of Common Stock, or any securities convertible into, exchangeable for or that represent the right to receive shares of Common Stock , or otherwise publicly announce an intention to effect any such transaction (other than (1) the offer and sale of Securities pursuant to this Agreement and the Units Offering, (2) the grant of awards pursuant to the Company’s employee benefit, employee stock purchase and other similar plans, in each case, as existing on the date hereof (the “Employee Benefit Plans”), (3) the offering, sale, settlement or issuance of securities pursuant to any award or security issued under or pursuant to an Employee Benefit Plan or the Assurance Agreement, by the Company in favor of eligible employees, dated as of June 27, 2005, relating to certain obligations of Starr International Company, Inc., (4) the issue of shares of Common Stock or options, contracts or rights to acquire Common Stock in connection with the acquisition of a business or assets so long as the total number of shares of Common Stock issued or issuable does not exceed 3% of AIG’s then outstanding shares of Common Stock, or (5) with the consent of the Representatives); and
          (f) To use all commercially reasonable efforts to ensure that, no later than the First Time of Delivery, the Securities will be listed on the New York Stock Exchange.
     6. (a) The Company and each Underwriter agree that the Underwriters may prepare and use one or more preliminary term sheets relating to the Securities containing customary information; provided that such information has been approved by the Company before the first communication with prospective investors in the Securities containing such information is used;
          (b) Each Underwriter represents that it has not and will not use, authorize use of, refer to, or participate in the planning for use of, any written communication that constitutes an offer to sell or the solicitation of an offer to buy the Securities other than (A) any written communication permitted under subparagraph (a) above, (B) the final term sheet prepared and filed pursuant to Section 5(a) hereof, or (C) any written communication prepared by such Underwriter and approved in writing by the Company in advance;

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          (c) The Company represents to the Underwriters that it has not and will not use, authorize use of, refer to, or participate in the planning for use of, any written communication that constitutes an offer to sell or the solicitation of an offer to buy the Securities other than (A) any written communication permitted under subparagraph (a) above, (B) the final term sheet prepared and filed pursuant to Section 5(a) hereof, (C) a press release or other announcement relating to the Securities that complies with Rule 134 or Rule 135 under the Act and that the Company issues after giving notice to the Representatives of its intent to issue a press release, or (D) any written communication approved by the Representatives in advance in writing;
          (d) Any such free writing prospectus the use of which has been consented to by the Company or the Representatives, as the case may be (including the final term sheet prepared and filed pursuant to Section 5(a) hereof), is listed on Schedule II(a) hereto;
          (e) The Company represents and agrees that it has complied and will comply with the requirements of Rule 433 under the Act applicable to any Issuer Free Writing Prospectus, including timely filing with the Commission, where required, and legending; and
          (f) The Company agrees that if at any time following the issuance of an Issuer Free Writing Prospectus any event occurred or occurs as a result of which such Issuer Free Writing Prospectus would conflict with the information in the Registration Statement, the Pricing Prospectus or the Prospectus, or would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances then prevailing, not misleading, the Company will, if the Underwriters are then required to deliver a prospectus under the Act in respect of sales of Securities (or, in lieu thereof, the notice referred to in Rule 173 under the Act), give prompt notice thereof to the Representatives and, if requested by the Representatives, will prepare and furnish without charge to each Underwriter an Issuer Free Writing Prospectus or other document which will correct such conflict, statement or omission; provided, however, that this representation and warranty shall not apply to any statements or omissions in an Issuer Free Writing Prospectus made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representatives expressly for use therein.
     7. The Company covenants and agrees with the several Underwriters that the Company will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company’s counsel and accountants in connection with the registration of the Securities under the Act and all other expenses in connection with the preparation, printing and filing of the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, any Issuer Free Writing Prospectus, the Pricing Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters; (ii)  the cost of printing, word-processing or reproducing this Agreement, any Blue Sky and Legal Investment Memoranda and any other documents in connection with the offering, purchase, sale and delivery of the Securities; (iii) all expenses in connection with the qualification of the Securities for offering and sale under state securities laws as provided in Section 5(b) hereof, including the fees and disbursements of the Underwriters’ counsel in connection with such qualification and in connection with the Blue Sky and legal investment surveys; (iv) any filing fees incident to any required review and clearance by the Financial Industry Regulatory Authority of the terms of the sale of the Securities; (v) the fees and expenses of the Company’s registrar and transfer agent; and (vi) all other costs and expenses incident to the performance of its obligations hereunder which are

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not otherwise specifically provided for in this Section 7, but the Company shall not in any event be liable to any of the Underwriters for damages on account of loss of anticipated profits from the sale by them of the Securities. It is understood, however, that, except as provided in this Section 7, Section 9 and Section 12 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Securities by them, and any advertising expenses connected with any offers they may make.
     8. The obligations of the Underwriters shall be subject, in the discretion of the Representatives, to the condition that all representations and warranties (except in the case of the Optional Time of Delivery the representations and warranties in Sections 1(c), 1(g) and 1(o)) and other statements of the Company herein shall be true and correct, at and as of each Time of Delivery (it being understood, however, that in the case of the Optional Time of Delivery the representations and warranties in Sections 1(h) and 1(j) shall be limited to the Optional Shares), the condition that the Company shall have performed, in all material respects, all of its obligations hereunder theretofore to be performed and the following additional conditions:
          (a) No stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission or, to the knowledge of the executive officers of the Company, shall be contemplated by the Commission; the Prospectus and each Issuer Free Writing Prospectus shall have been timely filed with the Commission under the Act (in the case of an Issuer Free Writing Prospectus to the extent required by Rule 433 under the Act) and all requests for additional information on the part of the Commission shall have been complied with to the reasonable satisfaction of the Representatives;
          (b) Davis Polk & Wardwell, counsel to the Underwriters, shall have furnished to the Representatives such opinion, dated each Time of Delivery, with respect to the validity of the Securities, the Registration Statement, the Pricing Disclosure Package, the Prospectus, and other related matters as the Representatives may reasonably request (it being understood, however, that in the case of the Optional Time of Delivery, that the opinion shall only cover validity of the Optional Shares), and the Company shall have furnished to such counsel such documents as they reasonably request to enable them to pass upon such matters;
          (c) Sullivan & Cromwell LLP, counsel for the Company, shall have furnished to the Representatives their opinion or opinions, dated each Time of Delivery, to the effect set forth in Schedule III hereto (it being understood, however, that in the case of the Optional Time of Delivery, that the opinion shall only cover the opinion in paragraph (1) and, with respect to the Optional Shares, the opinion in paragraph (2) set forth in Schedule III hereto);
          (d) Kathleen E. Shannon, Senior Vice President, Secretary and Deputy General Counsel of the Company, shall have furnished to the Representatives her opinion, dated each Time of Delivery, to the effect set forth in Schedule IV hereto (it being understood, however, that in the case of the Optional Time of Delivery, that the opinion shall only cover the opinion in paragraphs (i), (ii) and (iii) set forth in Schedule IV hereto and shall be limited to the Optional Shares);
          (e) On the date of the Prospectus at a time prior to the execution of this Agreement and the First Time of Delivery, the independent registered public accounting firm who

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have audited the financial statements of the Company and its subsidiaries incorporated by reference in the Registration Statement, the Pricing Disclosure Package and the Prospectus shall have furnished to the Representatives a letter, dated the respective dates of delivery thereof, to the effect set forth in Schedule V hereto, and with respect to such letter dated such Time of Delivery, as to such other matters as the Representatives may reasonably request and in form and substance satisfactory to the Representatives;
          (f) Since the respective dates as of which information is given in the Pricing Disclosure Package (excluding any amendment or supplement thereto) and prior to the First Time of Delivery, there shall not have been in the reasonable judgment of the Representatives any Material Adverse Change, otherwise than as set forth or contemplated in the Prospectus (excluding any amendment or supplement thereto);
          (g) The Company shall have furnished or caused to be furnished to the Representatives a certificate of the Chief Executive Officer, the President, any Vice Chairman, any Executive or Senior Vice President or any Vice President and a principal financial or accounting officer of the Company, dated each Time of Delivery, in which such officers, to the best of their knowledge after reasonable investigation, shall state that the representations and warranties of the Company in this Agreement (except in the case of the Optional Time of Delivery the representations and warranties in Sections 1(c), 1(g) and 1(o), and it being understood, however, that in the case of the Optional Time of Delivery, the representations and warranties in Section 1(h) and 1(j) shall be limited to the Optional Shares) are true and correct, in all material respects, as of each Time of Delivery, that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied, in all material respects, at or prior to each Time of Delivery, that no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are threatened by the Commission, and that, with respect to the First Time of Delivery only, since the respective dates as of which information is given in the Pricing Disclosure Package, there has not been any Material Adverse Change, otherwise than as set forth or contemplated in the Prospectus as amended or supplemented in accordance with Section 5(a) hereof;
          (h) On or after the date hereof and prior to the First Time of Delivery, there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange if the effect of any such event, in the reasonable judgment of the Representatives, is to make it impracticable or inadvisable to proceed with the purchase by the Underwriters of the Securities from the Company; (ii) a general moratorium on commercial banking activities in New York declared by either Federal or New York State authorities; (iii) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war, other than any such outbreak, escalation or declaration arising out of or relating to the U.S. war on terrorism that does not represent a significant departure from the conditions that exist at the date hereof, if the effect of any such event in the reasonable judgment of the Representatives is to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Securities on the terms and in the manner contemplated by the Pricing Disclosure Package or the Prospectus as amended or supplemented in accordance with Section 5(a) hereof; (iv) the suspension of trading in the Common Stock on the New York Stock Exchange, if the effect of such event in the reasonable judgment of the Representatives is to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Securities on the terms and in the manner contemplated by the

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Pricing Disclosure Package or the Prospectus as amended or supplemented in accordance with Section 5(a) or (v) any downgrading in the rating accorded the Company’s senior debt securities by Moody’s Investors Service, a subsidiary of Moody’s Corporation, or Standard & Poor’s, a division of the McGraw-Hill Companies, Inc., if the effect of such event in the reasonable judgment of the Representatives is to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Securities on the terms and in the manner contemplated by the Pricing Disclosure Package or the Prospectus as amended or supplemented in accordance with Section 5(a);
          (i) The Securities to be delivered on the First Time of Delivery or Optional Time of Delivery, as the case may be, shall have been approved for listing on the New York Stock Exchange, subject to official notice of issuance; and
          (j) The “lock-up” agreements, each substantially in the form of Schedule VI hereto, between you and executive officers (as defined in Rule 16a-1(f) of the Exchange Act) and directors of the Company shall be delivered to you prior to the First Time of Delivery.
     9. (a) The Company will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, not misleading, or (ii) any untrue statement or alleged untrue statement of a material fact contained in the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus, the Pricing Disclosure Package (or any amendment or supplement thereto), or any Issuer Free Writing Prospectus, or caused by any omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and will reimburse such Underwriter for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, in reliance upon and in conformity with written information furnished to the Company by such Underwriter expressly for use therein; and provided, further, that the foregoing indemnity agreement contained in this Section 9(a), with respect to the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus shall not inure to the benefit of any Underwriter from whom the person asserting any such losses, claims, damages or liabilities purchased Securities, where (i) prior to the Applicable Time the Company shall have notified such Underwriter that the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus contains an untrue statement of material fact or omits to state therein a material fact necessary in order to make the statements therein not misleading, (ii) such untrue statement or omission of a material fact was corrected in a further amendment or supplement to the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing

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Prospectus, or any amendment or supplement thereto, or, where permitted by law, an Issuer Free Writing Prospectus, and such corrected Prospectus or Issuer Free Writing Prospectus was provided to such Underwriter prior to the Applicable Time, (iii) such corrected Registration Statement, Prospectus, Preliminary Prospectus or Issuer Free Writing Prospectus (excluding any document incorporated by reference therein) was not conveyed to such person at or prior to the contract for sale of the Securities to such person and (iv) such loss, claim, damage or liability would not have occurred had the corrected Registration Statement, Prospectus, Preliminary Prospectus or Issuer Free Writing Prospectus (excluding any document incorporated by reference therein) been conveyed to such person as provided for in clause (iii) above.
          (b) Each Underwriter will, severally and not jointly, indemnify and hold harmless the Company against any losses, claims, damages or liabilities to which the Company or such controlling person may become subject, under the Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, in reliance upon and in conformity with written information furnished to the Company by such Underwriter through the Representatives expressly for use therein; and will reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are incurred.
          (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party under such subsection, except to the extent that it has been prejudiced by such failure. In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff that is not subject to further appeal, the indemnifying party agrees to indemnify each indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party

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is or could have been a party and indemnification could have been sought hereunder by such indemnified party, unless such settlement (x) includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any indemnified party.
          (d) If the indemnification provided for in this Section 9 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters of the Securities on the other from the offering of the Securities to which such loss, claim, damage or liability (or action in respect thereof) relates. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and the Underwriters of the Securities on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and such Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from such offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by such Underwriters in respect thereof. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading relates to information supplied by the Company on the one hand or by such Underwriters on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the applicable Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of the Underwriters of Securities in this subsection (d) to contribute are several in proportion to their respective underwriting obligations with respect to such Securities and not joint.

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          (e) The obligations of the Company under this Section 9 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the respective Underwriters and each person, if any, who controls any Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section 9 shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company and to each person, if any, who controls the Company within the meaning of the Act.
     10. (a) If any Underwriter shall default in its obligation to purchase the Securities which it has agreed to purchase, the Representatives may in their discretion arrange for themselves or another party or other parties to purchase such Securities on the terms contained herein. If within thirty-six hours after such default by any Underwriter, the Representatives do not arrange for the purchase of such Securities, then the Company shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to the Representatives to purchase such Securities on such terms. In the event that, within the prescribed period, the Representatives notify the Company that they have so arranged for the purchase of such Securities, or the Company notifies the Representatives that it has so arranged for the purchase of such Securities, the Representatives or the Company shall have the right to postpone the applicable Time of Delivery for such Securities for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus, or in any other documents or arrangements, and the Company agrees to file promptly any amendments or supplements to the Registration Statement or the Prospectus which in the opinion of the Representatives may thereby be made necessary. The term “Underwriter” as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to this Agreement with respect to such Securities.
          (b) If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) above, the aggregate number of such Securities which remains unpurchased does not exceed one-tenth of the aggregate number of all the Securities to be purchased at the applicable Time of Delivery, then the Company shall have the right to require each non-defaulting Underwriter to purchase the number of Securities which such Underwriter agreed to purchase under this Agreement relating to such Securities and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the number of Securities which such Underwriter agreed to purchase under this Agreement) of the Securities of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default.
          (c) If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) above, the aggregate number of Securities which remains unpurchased exceeds one-tenth of the aggregate number of all the Securities to be purchased at the applicable Time of Delivery, as referred to in subsection (b) above, or if the Company shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Securities of a defaulting Underwriter or Underwriters, then this Agreement relating to such Securities shall thereupon terminate, without liability on the part of any non-defaulting Underwriter or the Company, except for the expenses to be borne by the Company and the Underwriters as

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provided in Section 7 hereof and the indemnity and contribution agreements in Section 9 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default.
     11. The respective indemnities, agreements, representations, warranties and other statements of the Company and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, or the Company, or any officer or director or controlling person of the Company, and shall survive delivery of and payment for the Securities.
     12. If the sale of the Securities provided for herein is not consummated because any condition to the obligations of the Underwriters set forth in Section 8 hereof is not satisfied (other than any termination pursuant to Section 8(h)(i), (ii) or (iii) hereof), or because of any refusal, inability or failure on the part of the Company to perform any agreement herein or comply with any provision hereof other than by reason of a default by any of the Underwriters, the Company will reimburse the Underwriters severally through Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. on demand for all out-of-pocket expenses (including reasonable fees and disbursements of counsel) that shall have been reasonably incurred by them in connection with the proposed purchase and sale of the Securities.
     13. In all dealings hereunder, the Representatives of the Underwriters of the Securities shall act on behalf of each of such Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by such Representatives jointly.
     All statements, requests, notices and advices hereunder shall be in writing, or by telephone if promptly confirmed in writing, and if to an Underwriter, shall be sufficient in all respects when delivered or sent by facsimile transmission or registered mail as set forth in Schedule I hereto under such Underwriter’s name, and if to the Company shall be sufficient in all respects when delivered or sent by registered mail to 70 Pine Street, New York, New York 10270, Facsimile Transmission No. (212) 785-1584, Attention: Corporate Secretary.
     14. This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company and, to the extent provided in Section 9 and Section 11 hereof, their respective officers and directors and each person who controls the Company or any Underwriter, and their respective heirs, executors, administrators, personal representatives, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Securities from any Underwriter shall be deemed a successor or assign by reason merely of such purchase.
     15. The Company acknowledges and agrees that (i) the purchase and sale of the Securities pursuant to this Agreement is an arm’s-length commercial transaction between the Company, on the one hand, and the several Underwriters, on the other, (ii) in connection therewith and with the process leading to such transaction each Underwriter is acting solely as a principal and not the agent or fiduciary of the Company, (iii) no Underwriter has assumed an advisory or fiduciary responsibility in favor of the Company with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently

- 17 -


 

advising the Company on other matters) or any other obligation to the Company except the obligations expressly set forth in this Agreement and (iv) the Company has consulted its own legal and financial advisors to the extent it deemed appropriate.
     16. This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company and the Underwriters, or any of them, with respect to the subject matter hereof.
     17. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.
     18. Time shall be of the essence in this Agreement.
     19. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all of such counterparts shall together constitute one and the same instrument.

- 18 -


 

          If the foregoing is in accordance with your understanding, please sign and return to us five counterparts hereof, whereupon this letter and the acceptance by each of you thereof shall constitute a binding agreement between the Company and each of you in accordance with its terms.
         
  Very truly yours,

AMERICAN INTERNATIONAL GROUP, INC.
 
 
  By:   /s/ Robert A. Gender  
  Name:   Robert A. Gender   
  Title:   Vice President and Treasurer   
 
Underwriting Agreement — Common Stock


 

         
  Accepted in New York, New York

CITIGROUP GLOBAL MARKETS INC.
 
 
  By:  /s/ Richard G. Spitzer  
  Name:  Richard G. Spitzer  
  Title:  Managing Director  
 
  J.P. MORGAN SECURITIES INC.
 
 
  By:  /s/ Ray Craig  
  Name:  Ray Craig  
  Title:  Executive Director
 
Underwriting Agreement — Common Stock


 

SCHEDULE I
         
    Number of  
    Firm Shares  
    to be  
Underwriters   Purchased  
Citigroup Global Markets Inc.
    58,461,512  
 
       
J.P. Morgan Securities Inc.
    58,461,512  
 
       
Credit Suisse Securities (USA) LLC
    10,263,158  
 
       
Deutsche Bank Securities Inc
    10,263,158  
 
       
Lehman Brothers Inc.
    10,263,158  
 
       
Merrill Lynch, Pierce, Fenner & Smith Incorporated
    10,263,158  
 
       
Wachovia Capital Markets, LLC
    10,263,158  
 
       
Dowling & Partners Securities, LLC
    726,974  
 
       
Fox-Pitt Kelton Cochran Caronia Waller (USA) LLC
    726,974  
 
       
Keefe, Bruyette & Woods, Inc.
    726,974  
 
       
The Williams Capital Group, L.P.
    256,579  
 
       
Loop Capital Markets, LLC
    94,079  
 
       
Muriel Siebert & Co., Inc.
    94,079  
 
       
Toussaint Capital Partners, LLC
    94,079  
 
       
Utendahl Capital Group, LLC
    94,079  
 
       
Total
    171,052,631  
Address of Representatives:
Citigroup Global Markets Inc.
388 Greenwich Street
New York, NY 10013
Fax: (212) 816-7912
Attn: General Counsel
J.P. Morgan Securities Inc.
277 Park Avenue, 9th Floor
New York, NY 10172
Fax: (212) 622-8358
Attn: Equity Syndicate Desk

 


 

SCHEDULE II
(a)   Issuer Free Writing Prospectuses:
 
    Final Term Sheet, attached as Exhibit A to Schedule II, as filed with the Commission pursuant to Rule 433, and dated May 12, 2008.
 
(b)   Additional Documents Incorporated by Reference:
None.

 


 

Exhibit A to Schedule II
Form of Final Term Sheet
Filed Pursuant to Rule 433
Dated May 12, 2008
Registration Nos. 333-106040; 333-143992; 333-150865
(AIG LOGO)
AMERICAN INTERNATIONAL GROUP, INC.
171,052,631 Shares of
Common Stock, Par Value $2.50 Per Share,
and
72,000,000 Equity Units,
Initial Stated Amount of $75
Final Term Sheet
     
Issuer:
  American International Group, Inc. (“AIG”)
 
   
Ticker/Exchange:
  AIG/NYSE
 
   
Last sale price of AIG Common Stock:
  $38.37 (May 12, 2008)
 
   
I. Common Stock Pricing Terms
   
 
   
Title of Securities:
  Common stock, $2.50 par value per share (the “Common Stock”)
 
   
Common Stock Offering:
  171,052,631 shares
 
   
Overallotment Option:
  25,657,894 shares of Common Stock at the Public Offering Price less the underwriting fees within 30 days of the date of the prospectus supplement for the Common Stock Offering, solely to cover overallotments, if any.
 
   
Public Offering Price:
  $38.00 per share of Common Stock ($6,499,999,978 Total, excluding underwriters’ overallotment option)
 
   
Underwriting fees:
  $0.6650 per share of Common Stock ($113,750,000 Total, excluding underwriters’ overallotment option)

 


 

     
Trade Date:
  May 12, 2008
 
   
Proceeds to AIG (before expenses):
  $37.3350 per share of Common Stock ($6,386,249,978 Total, excluding underwriters’ overallotment option)
 
   
Net proceeds (after expenses):
  Approximately $6,385,249,978 (approximately $7,343,187,451 if underwriters’ overallotment option is exercised in full)
 
   
Offering Settlement Date:
  May 16, 2008
 
   
Joint Bookrunning Managers:
  Citigroup Global Markets Inc. and J.P. Morgan Securities Inc.
 
   
Joint Lead Managers:
  Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wachovia Capital Markets, LLC
 
   
Co-Managers:
  Dowling & Partners Securities, LLC, Fox-Pitt Kelton Cochran Caronia Waller (USA) LLC, Keefe Bruyette & Woods, Inc., Loop Capital Markets, LLC, Muriel Siebert & Co., Inc., The Williams Capital Group, L.P., Toussaint Capital Partners, LLC, Utendahl Capital Group, LLC
 
   
II. Equity Units Pricing Terms
   
 
   
Title of Securities:
  Equity Units
 
   
Equity Units Offering:
  72,000,000 Equity Units (initially consisting of 72,000,000 Corporate Units)
 
   
Overallotment Option:
  6,400,000 Equity Units at the Public Offering Price less the underwriting discount within 13 days of the Settlement Date, solely to cover overallotments, if any.
 
   
Public Offering Price:
  $75.00 per Equity Unit ($5,400,000,000 Total, excluding underwriters’ overallotment option)
 
   
Underwriting Discount:
  $1.3125 per Equity Unit ($94,500,000 Total, excluding underwriters’ overallotment option)
 
   
Proceeds to AIG (before expenses):
  $73.6875 per Equity Unit ($5,305,500,000 Total, excluding underwriters’ overallotment option)

 


 

     
Net proceeds (after expenses):
  approximately $5,303,500,000 (approximately $5,775,100,000 if underwriters’ overallotment option is exercised in full)
 
   
Series B-1 Debenture Coupon:
  5.67% per annum
 
   
Series B-1 Debenture Maturity Date:
  February 15, 2041
 
   
Series B-2 Debenture Coupon:
  5.82% per annum
 
   
Series B-2 Debenture Maturity Date:
  May 1, 2041
 
   
Series B-3 Debenture Coupon:
  5.89% per annum
 
   
Series B-3 Debenture Maturity Date:
  August 1, 2041
 
   
Contract Adjustment Payments:
  2.7067% per annum to but excluding the first stock purchase date on the initial stated amount of $75 per stock purchase contract, 2.6450% per annum from and including the first stock purchase date to but excluding the second stock purchase date on the adjusted stated amount of $50 per stock purchase contract and 2.6100% per annum from and including the second stock purchase date to but excluding the third stock purchase date on the adjusted stated amount of $25 per stock purchase contract.
 
   
Reference Price:
  $38.00 (offering price of the Common Stock pursuant to the Common Stock Offering)
 
   
Threshold Appreciation Price:
  $45.60 (represents an appreciation of 20% over the Reference Price)
 
   
Minimum Settlement Rate:
  1.6447 shares of Common Stock (subject to adjustment)
 
   
Maximum Settlement Rate:
  1.9737 shares of Common Stock (subject to adjustment)
 
   
Listing:
  AIG has applied to list the Corporate Units on the NYSE under the symbol “AIG-PrA”.
 
   
CUSIP for the Corporate Units:
  026874 115
 
   
ISIN for the Corporate Units:
  US0268741156

 


 

     
CUSIP for the Treasury Units:
  026874 123
 
   
ISIN for the Treasury Units:
  US0268741230
 
   
CUSIP for Series B-1 Debentures:
  026874 BN6
 
   
ISIN for Series B-1 Debentures:
  US026874BN67
 
   
CUSIP for Series B-2 Debentures:
  026874 BP1
 
   
ISIN for Series B-2 Debentures:
  US026874BP16
 
   
CUSIP for Series B-3 Debentures:
  026874 BQ9
 
   
ISIN for Series B-3 Debentures:
  US026874BQ98
 
   
Trade Date:
  May 12, 2008
 
   
Settlement Date:
  May 16, 2008
 
   
Joint Bookrunning Managers:
  Citigroup Global Markets Inc. and J.P. Morgan Securities Inc.
 
   
Joint Lead Managers:
  Banc of America Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated, UBS Securities LLC, Wachovia Capital Markets, LLC
 
   
Co-Managers:
  Dowling & Partners Securities, LLC, Fox-Pitt Kelton Cochran Caronia Waller (USA) LLC, Keefe Bruyette & Woods, Inc., Loop Capital Markets, LLC, Muriel Siebert & Co., Inc., The Williams Capital Group, L.P., Toussaint Capital Partners, LLC, Utendahl Capital Group, LLC
 
   
Contract Adjustment Payment
deferral rate:
  5.67% per annum

 


 

     
Payment to be made on third stock purchase date of a Contract Adjustment Payment deferral:
  Each holder of an Equity Unit will receive (net of any required tax withholding on such contract adjustment payments, which shall be remitted to the appropriate taxing jurisdiction), in the sole discretion of AIG, either a number of shares of Common Stock (in addition to the number of shares of Common Stock per Equity Unit equal to the applicable settlement rate) equal to the aggregate amount of deferred contract adjustment payments payable to such holder divided by the greater of the applicable market value and $12.67, subject to anti-dilution adjustments, or additional debentures, in the sole discretion of AIG, in a principal amount equal to the aggregate amount of deferred contract adjustment payments.
 
   
Early Settlement:
  Holders of Equity Units can settle a stock purchase contract at any time other than during a blackout period by paying an amount in cash equal to its stated amount, in which case for each $25 stated amount of such stock purchase contract, 1.6447 shares of Common Stock, subject to adjustment, will be issued pursuant to the stock purchase contract. The number of shares will be fixed and will not be computed on the basis of the applicable market value of AIG’s Common Stock on the early settlement date. Holders will not be entitled to any accrued and unpaid contract adjustment payment on stock purchase contracts that are settled early under these circumstances. Holders of Equity Units may settle early only in integral multiples of 40 Equity Units.
 
   
Make-Whole Shares:
  The following table sets forth the Stock Prices, Effective Date and the number of make-whole shares applicable to a merger early settlement:
                                                                                         
    Stock Prices  
Effective Date   $10.00     $20.00     $30.00     $38.00     $40.00     $45.60     $50.00     $60.00     $70.00     $80.00     $120  
May 12, 2008
    1.3942       0.5204       0.1887       0.0000       0.1127       0.2722       0.2385       0.1711       0.1252       0.0927       0.0274  
May 1, 2009
    1.0158       0.3821       0.1118       0.0000       0.0574       0.2274       0.1949       0.1360       0.0970       0.0702       0.0188  
May 1, 2010
    0.5516       0.2212       0.0350       0.0000       0.0035       0.1707       0.1370       0.0860       0.0565       0.0387       0.0090  
February 15, 2011
    0.1389       0.0618       0.0069       0.0000       0.0000       0.0841       0.0532       0.0234       0.0132       0.0089       0.0021  
February 16, 2011
    0.1374       0.0611       0.0067       0.0000       0.0000       0.0851       0.0528       0.0232       0.0131       0.0088       0.0021  
May 1, 2011
    0.0582       0.0261       0.0038       0.0000       0.0000       0.0393       0.0263       0.0092       0.0049       0.0033       0.0006  
May 2, 2011
    0.0527       0.0238       0.0026       0.0000       0.0000       0.0359       0.0232       0.0087       0.0046       0.0032       0.0007  
August 1, 2011
    0.0000       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000  
The exact Stock Price and Effective Date applicable to a cash merger may not be set forth on the table, in which case:
    if the Stock Price is between two Stock Price amounts on the table or the Effective Date is between two dates on the table, the amount of make-whole shares will be determined by straight line interpolation between the make-whole share amounts set

 


 

      forth for the higher and lower Stock Price amounts and the two dates, as applicable, based on a 360-day year;
 
    if the Stock Price is in excess of $120.00 per share (subject to adjustment as described above), then the make-whole share amount will be zero; and
 
    if the Stock Price is less than $10.00 per share (subject to adjustment as described above), or the “minimum stock price,” then the make-whole share amount will be determined as if the stock price equaled the minimum stock price, using straight line interpolation, as described above, if the Effective Date is between two dates on the table.
The issuer has filed a registration statement (including a prospectus) with the Securities and Exchange Commission, or SEC, for the offerings to which this communication relates. Before you invest, you should read the prospectus in that registration statement, the preliminary prospectus supplements and other documents the issuer has filed with the SEC for more complete information about the issuer and these offerings. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling Citigroup Global Markets Inc. toll free at (800) 831-9146, or J.P. Morgan Securities Inc. toll free at (866) 430-0686.

 


 

SCHEDULE III
Form of Opinion of Sullivan & Cromwell LLP
May 16, 2008
[Name and Address of Underwriters]
Ladies and Gentlemen:
          In connection with the several purchases today by you and the other Underwriters named in Schedule I to the Underwriting Agreement, dated May 12, 2008 (the “Underwriting Agreement”), between American International Group, Inc., a Delaware corporation (the “Company”), and you, as Representatives of the several Underwriters named therein (the “Underwriters”), of 171,052,631 shares (the “Securities”) of the Company’s common stock, par value $2.50 per share (the “Common Stock”), we, as counsel for the Company, have examined such corporate records, certificates and other documents, and such questions of law, as we have considered necessary or appropriate for the purposes of this opinion. Upon the basis of such examination, it is our opinion that:
     (1) The Company has been duly incorporated and is an existing corporation in good standing under the laws of the State of Delaware.
     (2) All outstanding shares of the Company’s Common Stock, including the Securities, have been duly authorized and validly issued and are fully paid and nonassessable.
     (3) The Underwriting Agreement has been duly authorized, executed and delivered by the Company.
          The foregoing opinion is limited to the Federal laws of the United States, the laws of the State of New York and the General Corporation Law of the State of Delaware, and we are expressing no opinion as to the effect of the laws of any other jurisdiction.
          We have relied as to certain matters upon information obtained from public officials, officers of the Company and other sources believed by us to be responsible, and we have assumed that the certificates for the outstanding shares of Common Stock, including the Securities, conform to the specimen thereof examined by us and have been duly countersigned by a transfer agent and duly registered by a registrar of the Common Stock, and that the signatures on all documents examined by us are genuine, assumptions which we have not independently verified.
Very truly yours,

III-1


 

Form of Letter of Sullivan & Cromwell LLP
May 16, 2008
[Name and Address of Underwriters]
Ladies and Gentlemen:
     This is with reference to the registration under the Securities Act of 1933 (the “Securities Act”) and offering of 171,052,631 shares (the “Securities”) of common stock, par value $2.50 per share, of American International Group, Inc. (the “Company”).
     Two Registration Statements relating to the Securities (File Nos. 333-143992 and 333-106040) were filed on different dates on Form S-3 in accordance with procedures of the Securities and Exchange Commission (the “Commission”) permitting a delayed or continuous offering of securities pursuant thereto and, if appropriate, a post-effective amendment, document incorporated by reference therein or prospectus supplement that provides information relating to the terms of the securities and the manner of their distribution. References in this letter to the Registration Statement refer to the latest filed Registration Statement.
     The Securities have been offered by the Prospectus, dated July 13, 2007 (the “Basic Prospectus”), as supplemented by the Prospectus Supplement, dated May 12, 2008 (the “Prospectus Supplement”), which updates or supplements certain information contained in the Basic Prospectus. The Basic Prospectus, as supplemented by the Prospectus Supplement, does not necessarily contain a current description of the Company’s business and affairs since, pursuant to Form S-3, it incorporates by reference certain documents filed with the Commission that contain information as of various dates.
     As counsel to the Company, we reviewed the Registration Statement, the Basic Prospectus, the Prospectus Supplement and the documents listed in Schedule A (those listed documents, taken together with the Basic Prospectus, being referred to herein as the “Pricing Disclosure Package”) and participated in discussions with your representatives and those of the Company and its accountants. Between the date of the Prospectus Supplement and the time of delivery of this letter, we participated in further discussions with your representatives and those of the Company, its accountants and its counsel concerning certain matters relating to the Company and reviewed certificates of certain officers of the Company, a letter addressed to you from the Company’s accountants and an opinion addressed to you from counsel to the Company. On the basis of the information that we gained in the course of the performance of the services referred to above, considered in the light of our understanding of the applicable law (including the requirements of Form S-3 and the character of prospectus contemplated thereby) and the experience we have gained through our practice under the Securities Act, we confirm to you that, in our opinion, each part of the Registration Statement, when such part became effective, and the Basic Prospectus, as supplemented by the Prospectus Supplement, as of the date of the Prospectus Supplement,

III-2


 

appeared on their face to be appropriately responsive, in all material respects relevant to the offering of the Securities, to the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. Further, nothing that came to our attention in the course of such review has caused us to believe that, insofar as relevant to the offering of the Securities,
     (a) any part of the Registration Statement, when such part became effective, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or
     (b) the Pricing Disclosure Package, as of 5:00 P.M. on May 12, 2008 (which you have informed us is prior to the time of the first sale of the Securities by any Underwriter), contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or
     (c) the Basic Prospectus, as supplemented by the Prospectus Supplement, as of the date of the Prospectus Supplement, contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
We also advise you that nothing that came to our attention in the course of the procedures described in the second sentence of this paragraph has caused us to believe that (a) the Basic Prospectus, as supplemented by the Prospectus Supplement, or (b) the Pricing Disclosure Package, as of the time of delivery of this letter, contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
     The limitations inherent in the independent verification of factual matters and the character of determinations involved in the registration process are such, however, that we do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement, the Basic Prospectus, the Prospectus Supplement or the Pricing Disclosure Package, except for those made under the captions “Description of Common Stock AIG May Offer” in the Basic Prospectus and “Description of the Equity Units,” “Certain United States Tax Consequences to Non-U.S. Holders of Common Stock” and “Underwriting” in the Prospectus Supplement insofar as they relate to provisions of the Securities, equity units and the Underwriting Agreement therein described or insofar as they relate to provisions of United States Federal tax law therein described. Also, we do not express any opinion or belief as to the financial statements or other financial data derived from accounting records contained in the Registration Statement, the Basic Prospectus, the Prospectus Supplement or the Pricing Disclosure Package or as to the report of management’s assessment of the effectiveness of internal control over financial reporting or the auditors’ attestation report thereon, each as included in the Registration Statement, the Basic Prospectus, the Prospectus Supplement or the Pricing Disclosure Package.

III-3


 

     This letter is furnished by us, as counsel to the Company, to you, as Representatives of the Underwriters, solely for the benefit of the Underwriters in their capacity as such, and may not be relied upon by any other person. This letter may not be quoted, referred to or furnished to any purchaser or prospective purchaser of the Securities and may not be used in furtherance of any offer or sale of the Securities.
Very truly yours,

III-4


 

Schedule A
Preliminary Prospectus Supplement, dated May 8, 2008
Final Term Sheet, dated May 12, 2008, insofar as the Final Term Sheet related to the terms of the Securities

III-5


 

SCHEDULE IV
Form of Opinion of Kathleen E. Shannon
May 16, 2008
[Name and Address of Underwriters]
Ladies and Gentlemen:
          I am Senior Vice President, Secretary and Deputy General Counsel of American International Group, Inc., a Delaware corporation (the “Company”), and, as such, I am generally familiar with the corporate affairs of the Company.
          This opinion is rendered in connection with the several purchases today by you and the other Underwriters named in Schedule I to the Underwriting Agreement, dated May 12, 2008 (the “Underwriting Agreement”), between the Company and you, as Representatives of the several Underwriters named therein (the “Underwriters”), of 171,052,631 shares (the “Securities”) of the Company’s common stock, par value $2.50 per share (the “Common Stock”).
          Two Registration Statements relating to the Securities (File Nos. 333-143992 and 333-106040) were filed on Form S-3 under the Securities Act of 1933 (the “Act”) on different dates. The latest filed Registration Statement was declared effective by the Securities and Exchange Commission (the “Commission”) on July 13, 2007. References in this letter to the Registration Statement refer to the latest filed Registration Statement. The Securities have been offered by the Prospectus dated July 13, 2007 (the “Basic Prospectus”), as supplemented by the Prospectus Supplement, dated May 12, 2008 (the “Prospectus Supplement”).
          In rendering my opinion, I, as Senior Vice President, Secretary and Deputy General Counsel of the Company, have examined the Registration Statement, the Basic Prospectus, the Prospectus Supplement and the documents listed in Schedule A hereto (those listed documents, taken together with the Basic Prospectus as amended or supplemented immediately prior to the Applicable Time (as defined below) being referred to herein as the “Pricing Disclosure Package”), and I have examined such corporate records, certificates and other documents, and have reviewed such questions of law, as I have considered necessary or appropriate for the purposes of this opinion. Upon the basis of such examination and review, it is my opinion that:
          (i) The Company has authorized capital stock as set forth in the Company’s Restated Certificate of Incorporation, as amended, as incorporated by reference in the Pricing Disclosure Package and the Basic Prospectus; and all outstanding shares of the Company’s Common Stock, including the Securities, have been duly authorized and validly issued and are fully paid and nonassessble.
          (ii) The issue and sale of the Securities, and the compliance by the Company with all of the provisions of the Underwriting Agreement, will not result in a breach of any of the

IV-1


 

terms or provisions of, or constitute a default under, any material indenture, mortgage, deed of trust, loan agreement, or other material agreement or instrument in effect on the date hereof and known to me, to which the Company is a party or by which the Company may be bound or to which any of the property or assets of the Company is subject or violate any judgment, order or decree of any court or governmental body applicable to the Company, except for such breaches, defaults and violations that would not individually or in the aggregate have a Material Adverse Effect (as defined in the Underwriting Agreement) or affect the validity of the Securities, nor will such action result in any violation of the provisions of the Restated Certificate of Incorporation, as amended, or the By-Laws of the Company in effect on the date hereof.
          (iii) No consent, approval, authorization, order, registration or qualification of or with any court or any regulatory authority or other governmental body is required for the issuance and sale of the Securities or the consummation by the Company of the other transactions contemplated by the Underwriting Agreement, except such as have been obtained under the Act, such consents, approvals, authorizations, orders, registrations and qualifications required to list the Securities on the New York Stock Exchange and such consents, approvals, authorizations, orders, registrations or qualifications the failure to obtain or make would not individually or in the aggregate have a Material Adverse Effect or affect the validity of the Securities and as may be required under state securities or Blue Sky laws (including insurance laws of any state relating to offers and sales of securities in such state) in connection with the purchase and distribution of the Securities by the Underwriters, as contemplated by the Underwriting Agreement.
          (iv) To the best of my knowledge and information, there are no contracts or other documents required to be summarized or disclosed or filed as exhibits to the Registration Statement, other than those summarized or disclosed in the Registration Statement or filed as exhibits thereto, and there are no legal or governmental proceedings pending or threatened of a character required to be disclosed in the Registration Statement and the Basic Prospectus, as amended or supplemented by the Prospectus Supplement, which are not disclosed.
          (v) Nothing which came to my attention has caused me to believe that, insofar as relevant to the offering of the Securities,
(a) any part of the Registration Statement, when such part became effective, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or
(b) the Pricing Disclosure Package, as of 5:00 P.M. on May 12, 2008 (the “Applicable Time”) (which you have informed me is prior to the time of the first sale of the Securities by any Underwriter), contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or
(c) the Basic Prospectus, as supplemented by the Prospectus Supplement, as of the date of the Prospectus Supplement or as of the date hereof, contained or contains any untrue statement of a material fact or omitted or omits to state any

IV-2


 

material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
          (vi) The documents incorporated by reference in the Basic Prospectus, as supplemented by the Prospectus Supplement, as of the date they became effective or were filed with the Commission, as the case may be, complied as to form in all material respects with the Act and the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
          In rendering the opinion in paragraph (v), (A) I assume no responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement, the Basic Prospectus, the Prospectus Supplement or the Pricing Disclosure Package, except for those made under the captions “Description of Common Stock AIG May Offer” in the Basic Prospectus and “Description of the Equity Units” in the Prospectus Supplement insofar as they constitute summaries of the documents therein described, and (B) I express no opinion or belief as to the financial statements or other financial data derived from accounting records contained in the Registration Statement, the Basic Prospectus, the Prospectus Supplement or the Pricing Disclosure Package, or as to the report of management’s assessment of the effectiveness of internal control over financial reporting or the auditors’ attestation report thereon, each as included in the Registration Statement, the Basic Prospectus, the Prospectus Supplement and the Pricing Disclosure Package.
          In rendering the opinion in paragraph (vi), I express no opinion or belief as to the financial statements or other financial or statistical data contained in the documents incorporated by reference in the Basic Prospectus or the Prospectus Supplement, or as to the report of management’s assessment of the effectiveness of internal control over financial reporting or the auditors’ attestation report thereon, each as included in the documents incorporated by reference in the Basic Prospectus and the Prospectus Supplement.
          The foregoing opinion is limited to the Federal laws of the United States, the laws of the State of New York and the General Corporation Law of the State of Delaware, and I am expressing no opinion as to the effect of the laws of any other jurisdiction.
          I have relied as to certain matters upon information obtained from public officials, officers of the Company and other sources believed by me to be responsible, and I have assumed that the certificates for the outstanding shares of Common Stock, including the Securities, conform to the specimen thereof examined by me and have been duly countersigned by a transfer agent and duly registered by a registrar of the Common Stock, and that the signatures on all documents examined by me are genuine, assumptions which I have not independently verified.
          This letter is furnished by me, as Senior Vice President, Secretary and Deputy General Counsel of the Company, to you, as Representatives of the Underwriters, solely for the benefit of the Underwriters in their capacity as such, and may not be relied upon by any other person.  This opinion may not be quoted, referred to or furnished to any purchaser or prospective purchaser of the Securities and may not be used in furtherance of any offer or sale of the Securities.
Very truly yours,

IV-3


 

Schedule A
Preliminary Prospectus Supplement, dated May 8, 2008
Final Term Sheet, dated May 12, 2008, insofar as the Final Term Sheet related to the terms of the Securities

IV-4


 

Execution Copy
SCHEDULE V
Form of Letter of Independent Registered Public Accounting Firm
May 12, 2008
American International Group, Inc.
and
The Underwriters listed on Schedule I
Ladies and Gentlemen:
We have audited:
1.   the consolidated financial statements of American International Group, Inc. (the “Company”) and subsidiaries as of December 31, 2007 and 2006 and for each of the three years in the period ended December 31, 2007 included in the Company’s annual report on Form 10-K for the year ended December 31, 2007 (the “Form 10-K”),
2. the related financial statement schedules included in the Form 10-K, and
3.   the effectiveness of the Company’s internal control over financial reporting as of December 31, 2007.
The consolidated financial statements and financial statement schedules referred to above are incorporated by reference in the registration statements (Nos. 333-143992 and 333-106040) on Form S-3 filed by the Company under the Securities Act of 1933 (the “Act”); our report (which contains an adverse opinion on the effectiveness of internal control over financial reporting) with respect to the audits referred to above is also incorporated by reference in such registration statements. Such registration statements, of which the Prospectus dated July 13, 2007 forms a part, as supplemented by the Prospectus Supplement dated May 12, 2008 are herein collectively referred to as the “Registration Statement.” This letter is furnished with respect to the offering of the Company’s 171,052,631 shares of Common Stock.
In connection with the Registration Statement:
1.   We are an independent registered public accounting firm with respect to the Company within the meaning of the Act and the applicable rules and regulations thereunder adopted by the Securities and Exchange Commission (the “SEC”) and the Public Company Accounting Oversight Board (United States) (the “PCAOB”).
2.   In our opinion, the consolidated financial statements and financial statement schedules audited by us and incorporated by reference in the Registration Statement comply as to form


 

in all material respects with the applicable accounting requirements of the Act and the Securities Exchange Act of 1934 and the related rules and regulations adopted by the SEC.
3.   We have not audited any financial statements of the Company as of any date or for any period subsequent to December 31, 2007; although we have conducted an audit for the year ended December 31, 2007, the purpose (and therefore the scope) of such audit was to enable us to express our opinion on the consolidated financial statements as of December 31, 2007 and for the year then ended, but not on the financial statements for any interim period within such year. Therefore, we are unable to and do not express any opinion on the unaudited consolidated balance sheet as of March 31, 2008 and the unaudited consolidated statements of income (loss) , comprehensive income (loss), and cash flows for the three-month periods ended March 31, 2008 and 2007, included in the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2008, incorporated by reference in the Registration Statement, or on the Company’s financial position, results of operations or cash flows as of any date or for any period subsequent to December 31, 2007. Also, we have not audited the Company’s internal control over financial reporting as of any date subsequent to December 31, 2007. Therefore, we do not express any opinion on the Company’s internal control over financial reporting as of any date subsequent to December 31, 2007.
 
4.   For purposes of this letter, we have read the minutes of the 2008 meetings of the Board of Directors and Committees of the Board of Directors of the Company as set forth in the minute books at May 8, 2008, officials of the Company having advised us that the minutes of all such meetings through that date were set forth therein, except for the minutes of the meetings listed below which were not approved in final form, for which agendas were provided to us; officials of the Company have represented that such agendas include all substantive actions taken at such meetings:
  a.   the Board of Directors (the “Board”) - the February 26, 2008, March 12, 2008, May 5, 2008, May 6, 2008 and May 8, 2008 meetings;
 
  b.   the Audit Committee of the Board — the January 15, 2008, February 7, 2008, February 26, 2008, March 11, 2008, April 16, 2008 and May 5, 2008 meetings;
 
  c.   the Compensation and Management Resources Committee of the Board — the February 26, 2008 and March 11, 2008 meetings;
 
  d.   the Finance Committee of the Board - the December 13, 2007, February 12, 2008, March 11, 2008 April 17, 2008 and May 5, 2008 meetings;
 
  e.   the Nominating and Corporate Governance Committee of the Board — the January 15, 2008 and March 11, 2008 meetings;

V-2


 

  f.   the Public Policy and Social Responsibility Committee of the Board — the January 15, 2008 and April 16, 2008 meetings, and
 
  g.   the Regulatory, Compliance and Legal Committee of the Board — the January 16, 2008 and March 12, 2008 meetings.
We have carried out other procedures to May 8, 2008 (our work did not extend to the period from May 9, 2008 to May 12, 2008, inclusive) as follows:
With respect to the three-month periods ended March 31, 2008 and 2007, we have:
  (i)   performed the procedures (completed on May 8, 2008) specified by the PCAOB for a review of interim financial information as described in SAS No. 100, Interim Financial Information, on the unaudited consolidated financial statements as of and for the three-month periods ended March 31, 2008 and 2007 included in the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2008 (the “March 31, 2008 Form 10-Q”), incorporated by reference in the Registration Statement; and
 
  (ii)   inquired of certain officials of the Company who have responsibility for financial and accounting matters whether the unaudited consolidated financial statements referred to in (i) above comply as to form in all material respects with the applicable accounting requirements of the Securities Exchange Act of 1934 as it applies to the Form 10-Q and the related rules and regulations adopted by the SEC.
The foregoing procedures do not constitute an audit made in accordance with standards of the PCAOB. Also, they would not necessarily reveal matters of significance with respect to the comments in the following paragraph. Accordingly, we make no representations as to the sufficiency of the foregoing procedures for your purposes.
5.   Nothing came to our attention as a result of the foregoing procedures, however, that caused us to believe that:
  (i)   Any material modifications should be made to the unaudited consolidated financial statements described in 4, incorporated by reference in the Registration Statement, for them to be in conformity with generally accepted accounting principles.
 
  (ii)   The unaudited consolidated financial statements described in 4 do not comply as to form in all material respects with the applicable accounting requirements of the Securities Exchange Act of 1934 as it applies to the Form 10-Q and the related rules and regulations adopted by the SEC.
It should be noted that effective January 1, 2008, the Company adopted FAS 157 “Fair Value Measurements”, FAS 159 “The Fair Value Option for Financial Assets and Financial Liabilities” and FSP FIN 39-1 “Amendment of FASB Interpretation No. 39”.

V-3


 

6.   Company officials have advised us that no consolidated financial data as of any date or for any period subsequent to March 31, 2008 are available; accordingly, the procedures carried out by us with respect to changes in financial statement items after March 31, 2008 have, of necessity, been limited. We have inquired of certain officials of the Company who have responsibility for financial and accounting matters as to whether (a) at May 8, 2008 there was any change in the capital stock, increase in long-term debt, or decrease in consolidated shareholders’ equity of the Company as compared with amounts shown in the March 31, 2008 unaudited consolidated balance sheet incorporated by reference in the Registration Statement; or (b) for the period from April 1, 2008 to May 8, 2008, there was any decrease, as compared with the corresponding period in the preceding year, in consolidated net income.
 
    Those officials referred to above stated that due to the fact that there is no consolidated financial data available subsequent to March 31, 2008, they are unable to comment as to whether there was any such change, increase or decrease, except in all instances for changes, increases or decreases that the Registration Statement discloses have occurred or may occur.
 
7.   For purposes of this letter, we have also read the items identified by you on the attached pages from the Form 10-K and the March 31, 2008 Form 10-Q incorporated by reference in the Registration Statement and have performed the following procedures, which were applied as indicated with respect to the letters explained below. We make no comment as to whether the SEC would view any non-GAAP financial information included or incorporated by reference in the Registration Statement as being compliant with the requirements of Regulation G or Item 10 of Regulation S-K.
        
A
  Compared to or recomputed from corresponding amounts included in the Company’s audited financial statements incorporated by reference in the Registration Statement and found such amounts to be in agreement.
 
   
B
  Compared with or recomputed from corresponding amounts included in the Company’s accounting records and found such amounts to be in agreement.
 
   
C
  Compared to or recomputed from a schedule prepared by the Company from its accounting records and found such amounts to be in agreement. We (a) compared the amounts on the schedule to corresponding amounts appearing in the accounting records and found such amounts to be in agreement and (b) determined that the schedule was mathematically correct.
 
   
D
  Compared to or recomputed from corresponding amounts in the Company’s unaudited financial statements incorporated by reference in the Registration Statement and found such amounts to be in agreement.
 
   
E
  Compared to or recomputed from a corresponding amount in the Company’s audited financial statements incorporated by reference in the Registration Statement and found such amounts to be in agreement. However, we make no comment as to the appropriateness of the Company’s classifications of debt as being guaranteed by AIG and not guaranteed by AIG.
 
   
F
  Compared with corresponding amounts included in the Company’s accounting records and found such amounts to be in agreement. However, we make no comment as to the appropriateness of the Company’s classifications of debt as being guaranteed by AIG and not guaranteed by AIG.

V-4


 

8.   Our audit of the consolidated financial statements for the periods referred to in the introductory paragraph of this letter comprised audit tests and procedures deemed necessary for the purpose of expressing an opinion on such financial statements taken as a whole. For none of the periods referred to therein, or any other period, did we perform audit tests for the purpose of expressing an opinion on individual balances of accounts or summaries of selected transactions such as those identified by you, and, accordingly, we express no opinion thereon.
 
9.   It should be understood that we make no representations regarding questions of legal interpretation or regarding the sufficiency for your purposes of the procedures enumerated in the second preceding paragraph; also, such procedures would not necessarily reveal any material misstatement of the amounts or percentages identified by you. Further, we have addressed ourselves solely to the foregoing data as set forth or incorporated by reference in the Registration Statement and make no representations regarding the adequacy of disclosure or regarding whether any material facts have been omitted.
 
10.   This letter is solely for the information of the addressees and to assist the Underwriters in conducting and documenting their investigation of the affairs of the Company in connection with the offering of the securities covered by the Registration Statement, and is not to be used, circulated, quoted, or otherwise referred to for any other purpose, including but not limited to the registration, purchase, or sale of securities, nor is it to be filed with or referred to in whole or in part in the Registration Statement or any other document, except that reference may be made to it in the underwriting agreement or in any list of closing documents pertaining to the offering of the securities covered by the Registration Statement.
Yours very truly,

V-5


 

Schedule I
Citigroup Global Markets Inc.
J.P. Morgan Securities Inc.
Credit Suisse Securities (USA) LLC
Deutsche Bank Securities Inc.
Lehman Brothers Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Wachovia Capital Markets, LLC
Dowling & Partners Securities, LLC
Fox-Pitt Kelton Cochran Caronia Waller (USA) LLC
Keefe Bruyette & Woods, Inc.
Loop Capital Markets, LLC
Muriel Siebert & Co., Inc.
The Williams Capital Group, L.P.
Toussaint Capital Partners, LLC
Utendahl Capital Group, LLC

V-1


 

SCHEDULE VI
Form of “Lock-up” Agreements
May 16, 2008
[Name of Underwriters]
Ladies and Gentlemen:
          This Lock-Up Agreement is being delivered to you in connection with the proposed Underwriting Agreement (the “Underwriting Agreement”) to be entered into by American International Group, Inc., a Delaware corporation (the “Company”), and you and the other underwriters named in Schedule I to the Underwriting Agreement, with respect to the public offering (the “Offering”) of common stock, par value $2.50 per share, of the Company (the “Common Stock”).
          In order to induce you to enter into the Underwriting Agreement, the undersigned agrees that, for a period (the “Lock-Up Period”) beginning on the date hereof and ending on, and including, the date that is 90 days after the date of the Underwriting Agreement, the undersigned will not, without the prior written consent of [Name of Underwriter], (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission (the “Commission”) promulgated thereunder (the “Exchange Act”) with respect to, any Common Stock or any other securities of the Company that are substantially similar to Common Stock, or any securities convertible into or exchangeable or exercisable for, or any warrants or other rights to purchase, the foregoing, in each case, in which the undersigned has a “pecuniary interest” (within the meaning of Rule 16a-1(a)(2) under the Exchange Act), whether any such transaction is to be settled by delivery of Common Stock or such other securities, in cash or otherwise, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of Common Stock or any other securities of the Company that are substantially similar to Common Stock, or any securities convertible into or exchangeable or exercisable for, or any warrants or other rights to purchase, the foregoing, whether any such transaction is to be settled by delivery of Common Stock or such other securities, in cash or otherwise, or (iii) publicly announce an intention to effect any transaction specified in clause (i) or (ii). The foregoing sentence shall not apply to (a) the sale of shares of Common Stock upon the exercise of options to purchase Common Stock or the vesting, delivery or settlement of restricted shares, restricted stock units or other awards to provide for any withholding taxes on the exercise, vesting, delivery or settlement thereof or to pay the exercise price thereof, in each case pursuant to employee benefit plans and related plans as in effect on the date hereof or awards previously granted by Starr International Company, Inc., (b) bona fide gifts to tax exempt charitable organizations (other than private charitable foundations), (c) the contribution of Common Stock to a grantor retained annuity trust of which the undersigned is a trustee and the undersigned’s immediate family members (or trusts for their benefit) are the sole beneficiaries, (d) dispositions to any immediate family member or any trust or similar entity for the direct or indirect benefit of the

VI-1


 

undersigned and/or the immediate family of the undersigned, provided that such trust or similar entity agrees in writing to be bound by the terms of this Lock-Up Agreement, or (e) any other transaction that would not be required to be reported pursuant to Section 16(a) of the Exchange Act as a result of the applicable person no longer being an executive officer or director for Section 16(a) reporting purposes, provided, that no filing under Section 16(a) of the Exchange Act shall be voluntarily made during the Lock-Up Period. For purposes of this paragraph, “immediate family member” shall have the meaning in Section 16a-1(f) under the Exchange Act.
* * *
          If (i) the Company notifies you in writing that it does not intend to proceed with the Offering or (ii) for any reason the Underwriting Agreement shall be terminated, this Lock-Up Agreement shall be terminated and the undersigned shall be released from its obligations hereunder.
         
 
  Yours very truly,    
 
       
 
 
 
Name:
   

VI-2

EX-1.2
AMERICAN INTERNATIONAL GROUP, INC.
72,000,000 Equity Units
Underwriting Agreement
May 12, 2008
Citigroup Global Markets Inc.
J.P. Morgan Securities Inc.,
      As Representatives of the several Underwriters
      named in Schedule I hereto.
c/o Citigroup Global Markets Inc.,
      388 Greenwich Street
      New York, NY 10013
c/o J.P. Morgan Securities Inc.
      277 Park Avenue
      New York, New York 10172
Ladies and Gentlemen:
     American International Group, Inc., a Delaware corporation (the “Company”), proposes, subject to the terms and conditions stated herein, to issue and sell to the firms named in Schedule I hereto (the “Underwriters”), for whom you are acting as Representatives (the “Representatives”), an aggregate of 72,000,000 Equity Units of the Company (the “Firm Securities”) and, at the election of the Representatives acting on behalf of the Underwriters, to issue and sell to the Underwriters up to an additional 6,400,000 Equity Units of the Company (the “Optional Securities”, and, together with the Firm Securities, the “Securities”), solely to cover over-allotments.
     Each Equity Unit has an initial stated amount of $75 (“Stated Amount”) and initially consists of (i) a stock purchase contract (“Stock Purchase Contract”) pursuant to which the holder will agree to purchase and the Company will agree to sell on each of February 15, 2011, May 1, 2011 and August 1, 2011 (each, a “Purchase Contract Settlement Date”), for $25 a variable number of shares (the “Issuable Common Stock”) of the Company’s common stock, par value $2.50 per share (the “Common Stock”), equal to the applicable settlement rate, subject to anti-dilution adjustments, as determined pursuant to the terms of the Stock Purchase Contract and, initially, (ii) a 1/40, or 2.5%, undivided beneficial ownership interest in $1,000 principal amount of (a) the Company’s 5.67% Series B-1 Junior Subordinated Debentures (a “Series B-1

 


 

Debentures”), (b) the Company’s 5.82% Series B-2 Junior Subordinated Debentures (a “Series B-2 Debentures”), and (c) the Company’s 5.89% Series B-3 Junior Subordinated Debentures (a “Series B-3 Debentures” and, together with the Series B-1 Debentures and the Series B-2 Debentures, the "Debentures”); or on or after the applicable remarketing settlement date for any series of Debentures and prior to the applicable Purchase Contract Settlement Date, an interest in U.S. Treasury securities or a short-term note issued by an affiliate of the Company purchased with the net proceeds of the remarketing of such series of Debentures that matures on or prior to the applicable Purchase Contract Settlement Date, pursuant to the Purchase Contract Agreement (as defined below).
     The Purchase Contracts will be issued pursuant to the Purchase Contract Agreement, to be dated as of the Closing Date (as defined herein) (“Purchase Contract Agreement”), between the Company and The Bank of New York, as Purchase Contract Agent (the “Purchase Contract Agent”). The Stock Purchase Contracts together with the related Debentures are herein referred to as the “Corporate Units.”
     A holder of Corporate Units, at its option, may elect to create “Treasury Units” in accordance with the Purchase Contract Agrement by substituting U.S. Treasury securities for any pledged ownership interests in the Debentures. Unless otherwise indicated, the term “Equity Units” includes both Corporate Units and Treasury Units.
     The Debentures are to be issued under the Junior Subordinated Debt Indenture, dated as of March 13, 2007 (“Base Indenture”), between the Company and The Bank of New York, as Trustee (the "Trustee”), as amended and supplemented by the Sixth, Seventh, and Eighth supplemental indentures each to be dated as of the Closing Date, between the Company and the Trustee (collectively, the "Supplemental Indentures,” and together with the Base Indenture, “Indenture”).
     A holder’s ownership interest in each Debenture initially will be pledged to secure such holder’s obligation to purchase the Issuable Common Stock on the applicable Purchase Contract Settlement Date, such pledge to be on the terms and conditions set forth in the Pledge Agreement (the “Pledge Agreement”), to be dated as of the Closing Date, among the Company, Wilmington Trust Company, as Collateral Agent, Custodial Agent and Securities Intermediary (the “Collateral Agent”), and The Bank of New York, as the Purchase Contract Agent.
     Pursuant to a Remarketing Agreement, to be dated as of the Closing Date (“Remarketing Agreement”), among the Company, The Bank of New York, as the Purchase Contract Agent, and the remarketing agents named therein (“Remarketing Agents”), the Debentures will be remarketed, subject to certain terms and conditions.
     The “Component Securities” means, collectively, the Stock Purchase Contracts, the Debentures and the Issuable Common Stock.
     The terms and rights of any particular issuance of the Securities and/or Component Securities shall be as specified in (i) the Indenture, (ii) the Purchase Contract Agreement and (iii) the Pledge Agreement, as applicable (each document listed in clauses (i) through (iii), together with the Remarketing Agreement, a “Securities Agreement” and collectively the “Securities Agreements”).

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     The Company is concurrently publicly offering shares of Common Stock (the “Common Stock Offering”) through other underwriters. The offering of the Securities is not contingent upon the completion of the Common Stock Offering and the Common Stock Offering is not contingent upon the offering of the Securities.
     1. The Company represents and warrants to, and agrees with, each of the Underwriters that:
          (a) Registration statements on Form S-3 (Registration Nos. 333-143992 and 333-106040) in respect of the Securities have been filed with the Securities and Exchange Commission (the "Commission”); the latest filed of such registration statements (Registration No. 333-143992), in the form heretofore delivered to the Representatives (excluding exhibits to such latest filed registration statement, but including all documents incorporated by reference in the prospectus describing Common Stock included in that registration statement, the “latest filed registration statement”), has been declared effective by the Commission in such form, the earlier filed registration statement also has been declared effective by the Commission; other than a registration statement, if any, increasing the size of the offering (a “Rule 462(b) Registration Statement”), filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the "Act”), which became effective upon filing, since the delivery to the Representatives no other document with respect thereto or document incorporated by reference therein has been filed or transmitted for filing with the Commission (other than filings by the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and other than preliminary prospectuses, preliminary prospectus supplements and other prospectuses filed pursuant to Rule 424(b) or Rule 433 of the rules and regulations of the Commission under the Act that relate to securities other than the Securities); and no stop order suspending the effectiveness of the latest filed registration statement or the Rule 462(b) Registration Statement, if any, has been issued and no proceeding for that purpose has been initiated or threatened by the Commission (the basic prospectus filed as part of the latest filed registration statement is hereinafter called the “Basic Prospectus”; any preliminary prospectus (including the Basic Prospectus as supplemented by any preliminary prospectus supplement) relating to the Securities filed with the Commission pursuant to Rule 424(b) of the rules and regulations of the Commission under the Act is hereinafter called a “Preliminary Prospectus"; the various parts of the latest filed registration statement and the Rule 462(b) Registration Statement, if any, including all exhibits thereto and the documents incorporated by reference in the Basic Prospectus at the time such registration statement became effective, and any prospectus supplement relating to the Securities that is filed with the Commission and deemed by virtue of Rule 430B to be part of that registration statement, each as amended at the time that registration statement became effective or such part of the Rule 462(b) Registration Statement, if any, became or hereafter becomes effective, are hereinafter collectively called the “Registration Statement”; the Basic Prospectus as amended and supplemented immediately prior to the Applicable Time (as defined in Section 1(c) hereof), is hereinafter called the “Pricing Prospectus”; the form of the final prospectus relating to the Securities filed with the Commission pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof is hereinafter called the “Prospectus” but excluding any Statement of Eligibility under the Trust Indenture Act of 1939, as amended; any reference herein to the Basic Prospectus, the Pricing Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Act, as of the date of such prospectus; any reference to any amendment or supplement to the Basic Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include any post-effective amendment to the Registration Statement, any prospectus supplement relating to

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the Securities filed with the Commission pursuant to Rule 424(b) under the Act and any documents filed under the Exchange Act and incorporated therein, in each case after the date of the Basic Prospectus, such Preliminary Prospectus or the Prospectus, as the case may be; any reference to any amendment to the Registration Statement shall be deemed to refer to and include any annual report of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act after the effective date of the Registration Statement that is incorporated by reference in the Registration Statement; and any “issuer free writing prospectus” as defined in Rule 433 under the Act relating to the Securities is hereinafter called an “Issuer Free Writing Prospectus”;
          (b) No order preventing or suspending the use of any Preliminary Prospectus or any Issuer Free Writing Prospectus has been issued by the Commission, and each Preliminary Prospectus, at the time of filing thereof, conformed in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder, and did not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representatives expressly for use therein;
          (c) For the purposes of this Agreement, the “Applicable Time” is 5 p.m. (Eastern time) on the date of this Agreement; the Pricing Prospectus, as supplemented by the information contained in the final term sheet prepared and filed pursuant to Section 5(a) hereof, taken together (collectively, the “Pricing Disclosure Package”) as of the Applicable Time, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and each other Issuer Free Writing Prospectus listed on Schedule II(a) hereto does not conflict with the information contained in the Registration Statement, the Pricing Prospectus or the Prospectus, and each such other Issuer Free Writing Prospectus, as supplemented by and taken together with the Pricing Disclosure Package as of the Applicable Time, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representatives expressly for use therein;
          (d) The documents incorporated by reference in the Pricing Prospectus and the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and any further documents so filed and incorporated by reference in the Prospectus, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or, in the case of an Annual Report on Form 10-K, omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or, in the case of any other document filed under the Exchange Act, omit to state a material fact necessary to make the statements therein, in the light of the circumstances under

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which they were made, not misleading; provided, however, that this representation and warranty shall not apply to (i) any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representatives expressly for use therein, or (ii) any statement in any such document which does not constitute part of the Registration Statement, Pricing Prospectus or Prospectus pursuant to Rule 412 under the Act;
          (e) The Registration Statement conforms, and the Prospectus and any further amendments or supplements to the Registration Statement and the Prospectus will conform, in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder and do not and will not, as of the applicable effective date as to the Registration Statement and any amendment thereto and as of its date as to the Prospectus and any supplement thereto, contain an untrue statement of a material fact or, in the case of the Registration Statement, omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or, in the case of the Prospectus, omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to (i) any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by any Underwriter through the Representatives expressly for use in the Prospectus or any amendment or supplement thereto, or (ii) any statement which does not constitute part of the Registration Statement or Prospectus pursuant to Rule 412 under the Act;
          (f) The Company and each of its Significant Subsidiaries (as defined in Rule 1.02(w) of Regulation S-X) have been duly incorporated or organized and are validly existing corporations or other entities in good standing under the laws of their respective jurisdiction of incorporation or organization and have full power and authority to own their respective properties and to conduct their respective businesses as described in the Prospectus, except, in the case of any Significant Subsidiary, where the failure to be so duly incorporated or organized, validly existing, in good standing or have such power or authority would not, individually or in the aggregate, have a Material Adverse Effect (as defined in Section 1(i) below);
          (g) Since the date of the latest audited financial statements incorporated by reference in the Basic Prospectus as amended or supplemented there has not been (i) any material change in the capital stock (other than as occasioned by Common Stock having been issued pursuant to the Company’s employee stock purchase plans, equity incentive plans and upon conversion of convertible securities, repurchased by the Company pursuant to any previously announced stock repurchase program or issued pursuant to the Common Stock Offering and the offering of approximately $5 billion of non-dilutive capital securities or long-term debt), or (ii) any material adverse change in or affecting the business, financial position, shareholders’ equity or results of operations of the Company and its consolidated subsidiaries considered as an entirety, in each case, otherwise than as set forth or contemplated in such Basic Prospectus as amended or supplemented prior to the Applicable Time (any such change described in clause (ii) is referred to as a “Material Adverse Change”);
          (h) The Company has an authorized equity capitalization as set forth in the Pricing Prospectus;
          (i) The issue and sale of the Securities and the Component Securities and the compliance by the Company with all of the provisions of this Agreement and the Securities Agreements, and the consummation of the transactions contemplated herein and therein, will not

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conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which the Company is a party or by which the Company is bound or to which any of the property or assets of the Company is subject, or result in any violation of any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its properties, except, in each case, for such conflicts, breaches, defaults and violations that would not have a material adverse effect on the business, financial position, shareholders’ equity or results of operations of the Company and its subsidiaries considered as an entirety (a “Material Adverse Effect”) or affect the validity of the Securities or the Component Securities, nor will such action result in any violation of the provisions of the Restated Certificate of Incorporation, as amended, or the By-Laws of the Company; and no consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body is required by the Company for the issue and sale of the Securities and the Component Securities or the consummation by the Company of the transactions contemplated by this Agreement and the Securities Agreements, except the listing of the Securities on the New York Stock Exchange and except such consents, approvals, authorizations, orders, registrations or qualifications the failure to obtain or make would not have a Material Adverse Effect or affect the validity of the Securities or the Component Securities, and such consents, approvals, authorizations, orders, registrations or qualifications as have been, or will have been prior to the First Time of Delivery (as defined in Section 4 hereof), obtained under the Act and such consents, approvals, authorizations, orders, registrations or qualifications as may be required in connection with the transactions contemplated by the Remarketing Agreement, which will be obtained or made as provided by the Remarketing Agreement, and under state securities or Blue Sky laws (including insurance laws of any state relating to offers and sales of securities in such state) in connection with the purchase and distribution of the Securities by the Underwriters;
          (j) The consolidated historical financial statements and schedules of the Company and its consolidated subsidiaries included in the Preliminary Prospectus, the Prospectus and the Registration Statement present fairly, in all material respects, the financial condition, results of operations and cash flows of the Company as of the dates and for the periods indicated, comply as to form, in all material respects, with the applicable accounting requirements of the Act and have been prepared in conformity with U.S. generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as otherwise noted therein);
          (k) The Company and its subsidiaries maintain “disclosure controls and procedures” (as such term is defined in Rule 13a-15(e) under the Exchange Act); as disclosed in the Registration Statement, Preliminary Prospectus and the Prospectus, such disclosure controls and procedures were not effective at March 31, 2008;
          (l) Neither the Company nor any of its Significant Subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any of its Significant Subsidiaries is currently subject to any sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department, except for any such sanction that individually or in the aggregate would not have a Material Adverse Effect;
          (m) The Company and its Significant Subsidiaries possess all licenses, certificates, permits and other authorizations issued by, and have made all declarations and filings with, the appropriate federal, state, local or foreign governmental or regulatory authorities that are necessary for the ownership or lease of their respective properties or the conduct of their respective

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businesses as described in the Registration Statement, the Preliminary Prospectus and the Prospectus, except where the failure to possess or make the same would not, individually or in the aggregate, have a Material Adverse Effect; and except as described in the Registration Statement, the Preliminary Prospectus and the Prospectus, neither the Company nor any of its Significant Subsidiaries has received notice of any revocation or modification of any such license, certificate, permit or authorization or has any reason to believe that any such license, certificate, permit or authorization will not be renewed in the ordinary course, in each case, except where the failure to posses the same or the modification to the same would not, individually or in the aggregate, have a Material Adverse Effect;
          (n) There is no action, suit or proceeding pending, or to the knowledge of the executive officers of the Company, threatened against the Company or any of its subsidiaries, which has, or may reasonably be expected in the future to have, a Material Adverse Effect, except as set forth or contemplated in the Pricing Disclosure Package or the Prospectus as amended or supplemented in accordance with Section 5(a) hereof;
          (o) The Base Indenture has been duly authorized, executed and delivered by the Company and duly qualified under the Trust Indenture Act of 1939 and, constitutes a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles; each Supplemental Indenture has been duly authorized by the Company and, when executed and delivered by the Company and the Trustee will constitute a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles; and the Debentures have been duly authorized, and when issued and delivered by the Company and authenticated by the Trustee pursuant to this Agreement and the Indenture, will have been duly executed, authenticated, issued and delivered by the Company and will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles. The Indenture conforms and the Debentures will conform in all material respects to the descriptions thereof contained in the Pricing Disclosure Package and in the Prospectus;
          (p) The Securities have been duly authorized, and when executed, issued and delivered by the Company and authenticated by the Purchase Contract Agent pursuant to the Purchase Contract Agreement, will have been duly executed, authenticated, issued and delivered by the Company and will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles; provided, however, that upon the occurrence of a Termination Event (as defined in the Purchase Contract Agreement), Section 365(e)(2) of the Bankruptcy Code (11 U.S.C. §§ 101-1330, as amended) would provide that Section 365(e)(1) would not apply to substantively limit the provisions of the Purchase Contract Agreement or the Pledge Agreement that require termination of the Stock Purchase Contracts and release of the Collateral Agent’s security interest in (1) the Debentures, (2) the U.S. Treasury securities underlying the Treasury Units or (3) any Treasury Portfolio (as defined in the Purchase Contract Agreement), as applicable, and the transfer of such securities to the

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Purchase Contract Agent (for the benefit of the holders of the Securities); provided, further, however, that (x) the foregoing is subject to the equitable powers of the Bankruptcy Court and the Bankruptcy Court’s power under Section 105(a) and 510(c) of the Bankruptcy Code and (y) procedural restrictions respecting relief from the automatic stay under Section 362 of the Bankruptcy Code may delay the timing of the exercise of such rights and remedies. The Securities will conform in all material respects to the descriptions thereof contained in the Pricing Disclosure Package and in the Prospectus;
          (q) The Stock Purchase Contracts and the Purchase Contract Agreement have been duly authorized by the Company, and in the case of the Stock Purchase Contracts, when executed, issued and delivered by the Company and authenticated by the Purchase Contract Agent, and in the case of the Purchase Contract Agreement, when executed and delivered by the Company and the Purchase Contract Agent, will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles; provided, however, that upon the occurrence of a Termination Event, Section 365(e)(2) of the Bankruptcy Code (11 U.S.C. §§ 101-1330, as amended) would provide that Section 365(e)(1) would not apply to substantively limit the provisions of the Purchase Contract Agreement or the Pledge Agreement that require termination of the Stock Purchase Contracts and release of the Collateral Agent’s security interest in (1) the Debentures, (2) the U.S. Treasury securities underlying the Treasury Units or (3) any Treasury Portfolio, as applicable, and the transfer of such securities to the Purchase Contract Agent (for the benefit of the holders of the Securities); provided, further, however, that (x) the foregoing is subject to the equitable powers of the Bankruptcy Court and the Bankruptcy Court’s power under Section 105(a) and 510(c) of the Bankruptcy Code and (y) procedural restrictions respecting relief from the automatic stay under Section 362 of the Bankruptcy Code may delay the timing of the exercise of such rights and remedies. The Stock Purchase Contracts will conform in all material respects to the descriptions thereof contained in the Pricing Disclosure Package and in the Prospectus;
          (r) The Remarketing Agreement has been duly authorized by the Company and, when executed and delivered by the Company and the Remarketing Agents, will constitute a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles. The Remarketing Agreement will conform in all material respects to the descriptions thereof contained in the Pricing Disclosure Package and in the Prospectus.
          (s) (i) The Pledge Agreement has been duly authorized, and when executed and delivered by the Company, the Purchase Contract Agent and the Collateral Agent, will constitute a valid and legally binding obligation of the Company enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles; provided, however, that upon the occurrence of a Termination Event, Section 365(e)(2) of the Bankruptcy Code (11 U.S.C. §§ 101-1330, as amended) would provide that Section 365(e)(1) would not apply to substantively limit the provisions of the Purchase Contract Agreement or of the Pledge Agreement that require termination of the Stock Purchase Contracts and release of the Collateral Agent’s security interest in (1) the Debentures, (2) the U.S. Treasury securities underlying the Treasury Units or (3) any Treasury Portfolio, as applicable, and the transfer of such

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securities to the Purchase Contract Agent (for the benefit of the holders of the Securities); provided, further, however, that (x) the foregoing is subject to the equitable powers of the Bankruptcy Court and the Bankruptcy Court’s power under Section 105(a) and 510(c) of the Bankruptcy Code and (y) procedural restrictions respecting relief from the automatic stay under Section 362 of the Bankruptcy Code may delay the timing of the exercise of such rights and remedies. The Pledge Agreement will conform in all material respects to the descriptions thereof contained in the Pricing Disclosure Package and in the Prospectus.
          (t) The Isssuable Common Stock has been duly authorized and reserved for issuance upon delivery in accordance with the Stock Purchase Contracts and the Purchase Contract Agreement; and when issued and paid for in accordance with the provisions of the Purchase Contract Agreement and the Stock Purchase Contracts, such Issuable Common Stock will be validly issued, fully paid and nonassessable; and the Issuable Common Stock will conform in all material respects to the descriptions thereof contained in the Pricing Disclosure Package and in the Prospectus.
     2. (a) Subject to the terms and conditions herein set forth, (i) the Company agrees to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at the purchase price set forth in Exhibit A to Schedule II, the number of Firm Securities set forth opposite such Underwriter’s name in Schedule I and (ii) in the event and to the extent that the Representatives shall exercise the election to purchase Optional Securities as provided below, the Company agrees to issue and sell to the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at the same purchase price set forth in clause (i) of this Section 2(a), the number of the Optional Securities as to which such election shall have been exercised (to be adjusted by the Representatives, if necessary, so as to eliminate fractions of Equity Units) determined by multiplying the number of such Optional Securities by a fraction, the numerator of which is the maximum number of Firm Securities which such Underwriter is entitled to purchase as set forth opposite the name of such Underwriter in Schedule I hereto and the denominator of which is the maximum number of Firm Securities that all of the Underwriters are entitled to purchase hereunder.
          (b) Each Underwriter represents and agrees with the Company that it will comply with or observe any restrictions or limitations set forth in the Prospectus as amended or supplemented on persons to whom, or the jurisdictions in which, or the manner in which, the Securities may be offered, sold, resold or delivered.
          (c) The Company hereby grants to the Underwriters the one-time right to purchase at the election of the Representatives up to 6,400,000 Optional Securities, solely for the purpose of covering over-allotments, if any, in connection with the offer and sale of the Firm Securities, at the purchase price set forth in clause (i) of Section 2(a). Any such election to purchase Optional Securities may be exercised by written notice from the Representatives to the Company, given within a period of 13 days after the First Time of Delivery, setting forth the number of Optional Securities to be purchased and the date on which such Optional Securities are to be delivered, as determined by the Representatives, which shall in no event be earlier than the First Time of Delivery (as defined in Section 4 hereof) or, unless the Representatives and the Company otherwise agree in writing, earlier than three or later than five New York Business Days after the date of such notice. For the purposes of this Agreement, “New York Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which

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banking institutions in New York are generally authorized or obligated by law or executive order to close.
     3. Upon the authorization by the Representatives of the release of such Securities, the several Underwriters propose to offer such Securities for sale upon the terms and conditions set forth in the Prospectus.
     4. The Company will deliver the Securities to one or more of the Representatives for the account of each Underwriter, against payment by or on behalf of such Underwriter of the purchase price therefor by wire transfer of Federal (same-day) funds to the account specified by the Company to the Representatives at least twenty-four hours in advance, by causing The Bank of New York, as registrar, to register the Securities in global book entry form in the name of Cede & Co., or such other nominee as The Depository Trust Company (“DTC”) may designate, and shall cause DTC to credit the Securities to the account of one or more of the Representatives at DTC. The time and date of such delivery and payment, with respect to the Firm Securities, shall be 9:30 a.m., New York City time, on May 16, 2008 or such other time and date as the Representatives and the Company may agree upon in writing, and, with respect to the Optional Securities, shall be 9:30 a.m., New York City time, on the date specified by the Representatives in the written notice given by the Representatives of the Underwriters’ election to purchase the Optional Securities, or at such other time and date as the Representatives and the Company may agree upon in writing. Such time and date for delivery of the Firm Securities is herein called the “First Time of Delivery”, such time and date for delivery of the Optional Securities, if not the First Time of Delivery, is herein called an “Optional Time of Delivery”, and each such time and date for delivery is herein called a “Time of Delivery”.
          The documents to be delivered at a Time of Delivery by or on behalf of the parties hereto pursuant to Section 8 hereof, including the cross-receipt for the Securities, will be delivered at the offices of Sullivan & Cromwell LLP, 125 Broad Street, New York, NY 10004 (the “Closing Location”), and the Securities will be credited to the account of the Representatives at DTC, all at such Time of Delivery. A meeting will be held at the Closing Location at 4:00 p.m., New York City time, on the New York Business Day next preceding such Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto.
     5. The Company covenants and agrees with each of the Underwriters:
          (a) To prepare the Prospectus in a form approved by the Representatives and to file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission’s close of business on the second business day following the date of this Agreement; to make no further amendment or supplement (other than an amendment or supplement as a result of filings by the Company under the Exchange Act and other than amendments or supplements in connection with the Common Stock Offering or offerings of unsecured debt securities of or guaranteed by the Company) to the Registration Statement or the Prospectus prior to the First Time of Delivery which shall be disapproved by the Representatives promptly after reasonable notice thereof; between the signing of this Agreement and the First Time of Delivery, to give reasonable advance notice to the Representatives of any filings by the Company under the Exchange Act that are incorporated by reference into the Prospectus and any filings by the Company under Item 2.02 or 7.01 of Current Report on Form 8-K; between the signing of this Agreement and the First Time of Delivery, to advise the Representatives promptly after it receives notice thereof, of the time when any

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amendment to the Registration Statement has been filed or becomes effective or any amendment or supplement to the Prospectus has been filed (other than an amendment or supplement as a result of filings by the Company under the Exchange Act and other than amendments or supplements in connection with the Common Stock Offering or offerings of unsecured debt securities of or guaranteed by the Company) and to furnish the Representatives with copies thereof; to prepare a final term sheet, containing solely a description of the Securities, in the form set forth in Exhibit A to Schedule II hereto and to file such term sheet pursuant to Rule 433(d) under the Act within the time required by such Rule; to file promptly all other material required to be filed by the Company with the Commission pursuant to Rule 433(d) under the Act; to file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is required in connection with the offering or sale of the Securities, and during such same period to advise the Representatives, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed with the Commission (other than an amendment or supplement as a result of filings by the Company under the Exchange Act and other than the filing of prospectuses, preliminary prospectuses, preliminary prospectus supplements, issuer free-writing prospectuses and other documents pursuant to Rule 424(b) or Rule 433 under the Act that relate to the Common Stock Offering or securities other than the Securities), of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any prospectus relating to the Securities, of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or Prospectus or for additional information; and, in the event of the issuance of any such stop order or of any such order preventing or suspending the use of any such prospectus relating to the Securities or suspending any such qualification, to use promptly its best efforts to obtain its withdrawal;
          (b) Promptly from time to time to take such action as the Representatives may reasonably request to qualify the Securities for offering and sale under the securities laws of such jurisdictions as the Representatives may request and to comply with such laws so as to permit the continuance of sales and dealings in such jurisdictions for as long as may be necessary to complete the distribution of the Securities; provided, however, that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction;
          (c) From time to time, to furnish the Underwriters with written and electronic copies of the Prospectus in such quantities as the Representatives may reasonably request, and, if the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is required at any time prior to the expiration of nine months after the time of issuance of the Prospectus in connection with the offering or sale of the Securities and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is delivered, not misleading, or if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Act or the Exchange Act, to notify the

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Representatives and upon their request to file such document and to prepare and furnish without charge to each Underwriter and to any dealer in securities as many copies as the Representatives may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance; and in case any Underwriter is required to deliver a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) in connection with sales of any of the Securities at any time nine months or more after the time of issue of the Prospectus, upon the request of the Representatives but at the expense of such Underwriter, to prepare and deliver to such Underwriter as many written and electronic copies as the Representatives may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Act;
          (d) To make generally available to its security holders as soon as practicable, but in any event not later than sixteen months after the effective date of the Registration Statement (as defined in Rule 158(c)), an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158);
          (e) During the period beginning from the date hereof, and continuing to and including the date 90 days after the date hereof or such earlier time as the Representatives may notify the Company, not to offer, sell, contract to sell, grant any option to purchase, or otherwise dispose of, or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the Company or any person in privity with the Company, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act in respect of, any shares of Common Stock, or any options or warrants to purchase any shares of Common Stock, or any securities convertible into, exchangeable for or that represent the right to receive shares of Common Stock, or otherwise publicly announce an intention to effect any such transaction (other than (1) the offer and sale of Securities pursuant to this Agreement and the Common Stock Offering, (2) the grant of awards pursuant to the Company’s employee benefit, employee stock purchase and other similar plans, in each case, as existing on the date hereof (the “Employee Benefit Plans”), (3) the offering, sale, settlement or issuance of securities pursuant to any award or security issued under or pursuant to an Employee Benefit Plan or the Assurance Agreement, by the Company in favor of eligible employees, dated as of June 27, 2005, relating to certain obligations of Starr International Company, Inc., (4) the issue of shares of Common Stock or options, contracts or rights to acquire Common Stock in connection with the acquisition of a business or assets so long as the total number of shares of Common Stock issued or issuable does not exceed 3% of the Company’s then outstanding shares of Common Stock, or (5) with the consent of the Representatives;
          (f) To use all commercially reasonable efforts to ensure that, no later than the First Time of Delivery, the Securities will be approved for listing on the New York Stock Exchange; and
          (g) The Company shall reserve shares of Issuable Common Stock to satisfy the obligation of the Company to issue Common Stock pursuant to the Stock Purchase Contracts.
     6. (a) The Company and each Underwriter agree that the Underwriters may prepare and use one or more preliminary term sheets relating to the Securities containing customary

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information; provided that such information has been approved by the Company before the first communication with prospective investors in the Securities containing such information is used;
          (b) Each Underwriter represents that it has not and will not use, authorize use of, refer to, or participate in the planning for use of, any written communication that constitutes an offer to sell or the solicitation of an offer to buy the Securities other than (A) any written communication permitted under subparagraph (a) above, (B) the final term sheet prepared and filed pursuant to Section 5(a) hereof, or (C) any written communication prepared by such Underwriter and approved in writing by the Company in advance;
          (c) The Company represents to the Underwriters that it has not and will not use, authorize use of, refer to, or participate in the planning for use of, any written communication that constitutes an offer to sell or the solicitation of an offer to buy the Securities other than (A) any written communication permitted under subparagraph (a) above, (B) the final term sheet prepared and filed pursuant to Section 5(a) hereof, (C) a press release or other announcement relating to the Securities that complies with Rule 134 or Rule 135 under the Act and that the Company issues after giving notice to the Representatives of its intent to issue a press release, or (D) any written communication approved by the Representatives in advance in writing;
          (d) Any such free writing prospectus the use of which has been consented to by the Company or the Representatives, as the case may be (including the final term sheet prepared and filed pursuant to Section 5(a) hereof), is listed on Schedule II(a) hereto;
          (e) The Company represents and agrees that it has complied and will comply with the requirements of Rule 433 under the Act applicable to any Issuer Free Writing Prospectus, including timely filing with the Commission, where required, and legending; and
          (f) The Company agrees that if at any time following the issuance of an Issuer Free Writing Prospectus any event occurred or occurs as a result of which such Issuer Free Writing Prospectus would conflict with the information in the Registration Statement, the Pricing Prospectus or the Prospectus, or would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances then prevailing, not misleading, the Company will, if the Underwriters are then required to deliver a prospectus under the Act in respect of sales of Securities (or, in lieu thereof, the notice referred to in Rule 173 under the Act), give prompt notice thereof to the Representatives and, if requested by the Representatives, will prepare and furnish without charge to each Underwriter an Issuer Free Writing Prospectus or other document which will correct such conflict, statement or omission; provided, however, that this representation and warranty shall not apply to any statements or omissions in an Issuer Free Writing Prospectus made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representatives expressly for use therein.
     7. The Company covenants and agrees with the several Underwriters that the Company will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company’s counsel and accountants in connection with the registration of the Securities under the Act and all other expenses in connection with the preparation, printing and filing of the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, any Issuer Free Writing Prospectus, the Pricing Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters; (ii) the cost of printing,

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word-processing or reproducing this Agreement, the Securities Agreements, any Blue Sky and Legal Investment Memoranda and any other documents in connection with the offering, purchase, sale and delivery of the Securities; (iii) all expenses in connection with the qualification of the Securities for offering and sale under state securities laws as provided in Section 5(b) hereof, including the fees and disbursements of the Underwriters’ counsel in connection with such qualification and in connection with the Blue Sky and legal investment surveys; (iv) any filing fees incident to any required review and clearance by the Financial Industry Regulatory Authority of the terms of the sale of the Securities; (v) the fees and expenses of the Trustee, Purchase Contract Agent, Collateral Agent and the Remarketing Agents; (vi) the fees and expenses of the Company’s registrar and transfer agent; and (vii) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section 7, but the Company shall not in any event be liable to any of the Underwriters for damages on account of loss of anticipated profits from the sale by them of the Securities. It is understood, however, that, except as provided in this Section 7, Section 9 and Section 12 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Securities by them, and any advertising expenses connected with any offers they may make.
     8. The obligations of the Underwriters shall be subject, in the discretion of the Representatives, to the condition that all representations and warranties (except in the case of the Optional Time of Delivery the representations and warranties in Sections 1(c), 1(g) and 1(n)) and other statements of the Company herein shall be true and correct at and as of each Time of Delivery (it being understood, however, that in the case of the Optional Time of Delivery the representations and warranties in Sections 1(i), 1(o) through and including 1(q), 1(s) and 1(t) shall be limited to the Optional Securities), the condition that the Company shall have performed, in all material respects, all of its obligations hereunder theretofore to be performed and the following additional conditions:
          (a) No stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission or, to the knowledge of the executive officers of the Company, shall be contemplated by the Commission; the Prospectus and each Issuer Free Writing Prospectus shall have been timely filed with the Commission under the Act (in the case of an Issuer Free Writing Prospectus to the extent required by Rule 433 under the Act) and all requests for additional information on the part of the Commission shall have been complied with to the reasonable satisfaction of the Representatives;
          (b) Davis Polk & Wardwell, counsel to the Underwriters, shall have furnished to the Representatives such opinion, dated each Time of Delivery, with respect to the validity of the Securities, the Securities Agreements, the Registration Statement, the Pricing Disclosure Package, the Prospectus, and other related matters as the Representatives may reasonably request (it being understood, however, that in the case of the Optional Time of Delivery, that the opinion shall only cover validity of the Optional Securities), and the Company shall have furnished to such counsel such documents as they reasonably request to enable them to pass upon such matters;
          (c) Sullivan & Cromwell LLP, counsel for the Company, shall have furnished to the Representatives their opinion or opinions, dated each Time of Delivery, to the effect set forth in Schedule III hereto (it being understood, however, that in the case of the Optional Time of Delivery, that the opinion shall only cover the opinion in paragraph (1) and, with respect to the Optional Securities, the opinion in paragraphs (2), (3), (4) and (5) set forth in Schedule III hereto);

- 14 -


 

          (d) Kathleen E. Shannon, Senior Vice President, Secretary and Deputy General Counsel of the Company, shall have furnished to the Representatives her opinion, dated each Time of Delivery, to the effect set forth in Schedule IV hereto (it being understood, however, that in the case of the Optional Time of Delivery, that the opinion shall only cover the opinion in paragraphs (ii) and (iii) set forth in Schedule IV hereto and shall be limited to the Optional Securities);
          (e) On the date of the Prospectus at a time prior to the execution of this Agreement and the First Time of Delivery, the independent registered public accounting firm who have audited the financial statements of the Company and its subsidiaries incorporated by reference in the Registration Statement, the Pricing Disclosure Package and the Prospectus shall have furnished to the Representatives a letter, dated the respective dates of delivery thereof, to the effect set forth in Schedule V hereto, and with respect to such letter dated such Time of Delivery, as to such other matters as the Representatives may reasonably request and in form and substance satisfactory to the Representatives;
          (f) Since the respective dates as of which information is given in the Pricing Disclosure Package (excluding any amendment or supplement thereto) and prior to the First Time of Delivery, there shall not have been in the reasonable judgment of the Representatives any Material Adverse Change, otherwise than as set forth or contemplated in the Prospectus (excluding any amendment or supplement thereto);
          (g) The Company shall have furnished or caused to be furnished to the Representatives a certificate of the Chief Executive Officer, the President, any Vice Chairman, any Executive or Senior Vice President or any Vice President and a principal financial or accounting officer of the Company, dated each Time of Delivery, in which such officers, to the best of their knowledge after reasonable investigation, shall state that the representations and warranties of the Company in this Agreement (except in the case of the Optional Time of Delivery the representations and warranties in Sections 1(c), 1(g) and 1(n), and it being understood, however, that in the case of the Optional Time of Delivery, the representations and warranties in Sections 1(i), 1(o) through and including 1(q), 1(s) and 1(t) shall be limited to the Optional Securities) are true and correct, in all material respects, as of each Time of Delivery, that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied, in all material respects, at or prior to each Time of Delivery, that no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are threatened by the Commission, and that, with respect to the First Time of Delivery only, since the respective dates as of which information is given in the Pricing Disclosure Package, there has not been any Material Adverse Change, otherwise than as set forth or contemplated in the Prospectus as amended or supplemented in accordance with Section 5(a) hereof;
          (h) On or after the date hereof and prior to the First Time of Delivery, there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange if the effect of any such event, in the reasonable judgment of the Representatives, is to make it impracticable or inadvisable to proceed with the purchase by the Underwriters of the Securities from the Company; (ii) a general moratorium on commercial banking activities in New York declared by either Federal or New York State authorities; (iii) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war, other than any such outbreak,

- 15 -


 

escalation or declaration arising out of or relating to the U.S. war on terrorism that does not represent a significant departure from the conditions that exist at the date hereof, if the effect of any such event in the reasonable judgment of the Representatives is to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Securities on the terms and in the manner contemplated by the Pricing Disclosure Package or the Prospectus as amended or supplemented in accordance with Section 5(a) hereof; (iv) the suspension of trading in the Common Stock on the New York Stock Exchange, if the effect of such event in the reasonable judgment of the Representatives is to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Securities on the terms and in the manner contemplated by the Pricing Disclosure Package or the Prospectus as amended or supplemented in accordance with Section 5(a) or (v) any downgrading in the rating accorded the Company’s senior debt securities by Moody’s Investors Service, a subsidiary of Moody’s Corporation, or Standard & Poor’s, a division of the McGraw-Hill Companies, Inc., if the effect of such event in the reasonable judgment of the Representatives is to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Securities on the terms and in the manner contemplated by the Pricing Disclosure Package or the Prospectus as amended or supplemented in accordance with Section 5(a); and
          (i) The Securities to be delivered on the First Time of Delivery or Optional Time of Delivery, as the case may be, shall have been approved for listing on the New York Stock Exchange, subject to official notice of issuance.
     9. (a) The Company will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, not misleading, or (ii) any untrue statement or alleged untrue statement of a material fact contained in the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus, the Pricing Disclosure Package (or any amendment or supplement thereto), or any Issuer Free Writing Prospectus, or caused by any omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and will reimburse such Underwriter for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, in reliance upon and in conformity with written information furnished to the Company by such Underwriter expressly for use therein; and provided, further, that the foregoing indemnity agreement contained in this Section 9(a), with respect to the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus shall not inure to the benefit of any Underwriter from whom the person asserting any such losses, claims, damages or liabilities purchased Securities, where (i) prior to the Applicable Time the Company shall have notified such Underwriter that the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus contains an untrue statement of material fact or omits to state

- 16 -


 

therein a material fact necessary in order to make the statements therein not misleading, (ii) such untrue statement or omission of a material fact was corrected in a further amendment or supplement to the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus, or any amendment or supplement thereto, or, where permitted by law, an Issuer Free Writing Prospectus, and such corrected Prospectus or Issuer Free Writing Prospectus was provided to such Underwriter prior to the Applicable Time, (iii) such corrected Registration Statement, Prospectus, Preliminary Prospectus or Issuer Free Writing Prospectus (excluding any document incorporated by reference therein) was not conveyed to such person at or prior to the contract for sale of the Securities to such person and (iv) such loss, claim, damage or liability would not have occurred had the corrected Registration Statement, Prospectus, Preliminary Prospectus or Issuer Free Writing Prospectus (excluding any document incorporated by reference therein) been conveyed to such person as provided for in clause (iii) above.
          (b) Each Underwriter will, severally and not jointly, indemnify and hold harmless the Company against any losses, claims, damages or liabilities to which the Company or such controlling person may become subject, under the Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, in reliance upon and in conformity with written information furnished to the Company by such Underwriter through the Representatives expressly for use therein; and will reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are incurred.
          (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party under such subsection, except to the extent that it has been prejudiced by such failure. In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff that is not subject to further appeal, the indemnifying party agrees to indemnify each indemnified party from and against any loss or liability by reason of such settlement or

- 17 -


 

judgment. No indemnifying party shall, without the written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnification could have been sought hereunder by such indemnified party, unless such settlement (x) includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any indemnified party.
          (d) If the indemnification provided for in this Section 9 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters of the Securities on the other from the offering of the Securities to which such loss, claim, damage or liability (or action in respect thereof) relates. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and the Underwriters of the Securities on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and such Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from such offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by such Underwriters in respect thereof. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading relates to information supplied by the Company on the one hand or by such Underwriters on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the applicable Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of the Underwriters of Securities in this subsection (d) to contribute are several in proportion to their respective underwriting obligations with respect to such Securities and not joint.

- 18 -


 

          (e) The obligations of the Company under this Section 9 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the respective Underwriters and each person, if any, who controls any Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section 9 shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company and to each person, if any, who controls the Company within the meaning of the Act.
     10. (a) If any Underwriter shall default in its obligation to purchase the Securities which it has agreed to purchase, the Representatives may in their discretion arrange for themselves or another party or other parties to purchase such Securities on the terms contained herein. If within thirty-six hours after such default by any Underwriter, the Representatives do not arrange for the purchase of such Securities, then the Company shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to the Representatives to purchase such Securities on such terms. In the event that, within the prescribed period, the Representatives notify the Company that they have so arranged for the purchase of such Securities, or the Company notifies the Representatives that it has so arranged for the purchase of such Securities, the Representatives or the Company shall have the right to postpone the applicable Time of Delivery for such Securities for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus, or in any other documents or arrangements, and the Company agrees to file promptly any amendments or supplements to the Registration Statement or the Prospectus which in the opinion of the Representatives may thereby be made necessary. The term “Underwriter” as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to this Agreement with respect to such Securities.
          (b) If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) above, the aggregate number of such Securities which remains unpurchased does not exceed one-tenth of the aggregate number of all the Securities to be purchased at the applicable Time of Delivery, then the Company shall have the right to require each non-defaulting Underwriter to purchase the number of Securities which such Underwriter agreed to purchase under this Agreement relating to such Securities and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the number of Securities which such Underwriter agreed to purchase under this Agreement) of the Securities of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default.
          (c) If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) above, the aggregate number of Securities which remains unpurchased exceeds one-tenth of the aggregate number of all the Securities to be purchased at the applicable Time of Delivery, as referred to in subsection (b) above, or if the Company shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Securities of a defaulting Underwriter or Underwriters, then this Agreement relating to such Securities shall thereupon terminate, without liability on the part of any non-defaulting Underwriter or the Company, except for the expenses to be borne by the Company and the Underwriters as provided in Section 7 hereof and the indemnity and contribution agreements in Section 9 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default.

- 19 -


 

     11. The respective indemnities, agreements, representations, warranties and other statements of the Company and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, or the Company, or any officer or director or controlling person of the Company, and shall survive delivery of and payment for the Securities.
     12. If the sale of the Securities provided for herein is not consummated because any condition to the obligations of the Underwriters set forth in Section 8 hereof is not satisfied (other than any termination pursuant to Section 8(h)(i), (ii) or (iii) hereof), or because of any refusal, inability or failure on the part of the Company to perform any agreement herein or comply with any provision hereof other than by reason of a default by any of the Underwriters, the Company will reimburse the Underwriters severally through Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. on demand for all out-of-pocket expenses (including reasonable fees and disbursements of counsel) that shall have been reasonably incurred by them in connection with the proposed purchase and sale of the Securities.
     13. In all dealings hereunder, the Representatives of the Underwriters of the Securities shall act on behalf of each of such Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by such Representatives jointly.
     All statements, requests, notices and advices hereunder shall be in writing, or by telephone if promptly confirmed in writing, and if to an Underwriter, shall be sufficient in all respects when delivered or sent by facsimile transmission or registered mail as set forth in Schedule I hereto under such Underwriter’s name, and if to the Company shall be sufficient in all respects when delivered or sent by registered mail to 70 Pine Street, New York, New York 10270, Facsimile Transmission No. (212) 785-1584, Attention: Corporate Secretary.
     14. This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company and, to the extent provided in Section 9 and Section 11 hereof, their respective officers and directors and each person who controls the Company or any Underwriter, and their respective heirs, executors, administrators, personal representatives, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Securities from any Underwriter shall be deemed a successor or assign by reason merely of such purchase.
     15. The Company acknowledges and agrees that (i) the purchase and sale of the Securities pursuant to this Agreement is an arm’s-length commercial transaction between the Company, on the one hand, and the several Underwriters, on the other, (ii) in connection therewith and with the process leading to such transaction each Underwriter is acting solely as a principal and not the agent or fiduciary of the Company, (iii) no Underwriter has assumed an advisory or fiduciary responsibility in favor of the Company with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Company on other matters) or any other obligation to the Company except the obligations expressly set forth in this Agreement and (iv) the Company has consulted its own legal and financial advisors to the extent it deemed appropriate.

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     16. This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company and the Underwriters, or any of them, with respect to the subject matter hereof.
     17. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.
     18. Time shall be of the essence in this Agreement.
     19. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all of such counterparts shall together constitute one and the same instrument.

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     If the foregoing is in accordance with your understanding, please sign and return to us five counterparts hereof, whereupon this letter and the acceptance by each of you thereof shall constitute a binding agreement between the Company and each of you in accordance with its terms.
             
    Very truly yours,    
 
           
    AMERICAN INTERNATIONAL GROUP, INC.    
 
           
 
  By:   /s/ Robert A. Gender    
 
  Name:  
 
Robert A. Gender
   
 
  Title:   Vice President and Treasurer    
Underwriting Agreement — Equity Units

 


 

         
Accepted in New York, New York    
 
       
CITIGROUP GLOBAL MARKETS INC.    
 
       
By:
  /s/ Richard G. Spitzer    
Name:
  Richard G. Spitzer
   
Title:
  Managing Director    
 
       
J.P. MORGAN SECURITIES INC.    
 
       
By:
  /s/ Ray Craig    
Name:
  Ray Craig
   
Title:
  Executive Director    
Underwriting Agreement — Equity Units

 


 

SCHEDULE I
         
    Number of
    Firm Securities
    to be
Underwriters
  Purchased
Citigroup Global Markets Inc.
    24,607,800  
J.P. Morgan Securities Inc.
    24,607,800  
Banc of America Securities LLC
    4,320,000  
Merrill Lynch, Pierce, Fenner & Smith Incorporated
    4,320,000  
Morgan Stanley & Co. Incorporated
    4,320,000  
UBS Securities LLC
    4,320,000  
Wachovia Capital Markets, LLC
    4,320,000  
Dowling & Partners Securities, LLC
    306,000  
Fox-Pitt Kelton Cochran Caronia Waller (USA) LLC
    306,000  
Keefe, Bruyette & Woods, Inc.
    306,000  
The Williams Capital Group, L.P.
    108,000  
Loop Capital Markets, LLC
    39,600  
Muriel Siebert & Co., Inc.
    39,600  
Toussaint Capital Partners, LLC
    39,600  
Utendahl Capital Group, LLC
    39,600  
 
       
Total
    72,000,000  
 
       
Address of Representatives:
Citigroup Global Markets Inc.
388 Greenwich Street
New York, NY 10013
Fax: (212) 816-7912
Attn: General Counsel
J.P. Morgan Securities Inc.
277 Park Avenue, 9th Floor
New York, NY 10172
Fax: (212) 622-8358
Attn: Equity Syndicate Desk
I-1

 


 

SCHEDULE II
(a)   Issuer Free Writing Prospectuses:
 
    Final Term Sheet, attached as Exhibit A to Schedule II, as filed with the Commission pursuant to Rule 433, and dated May 12, 2008.
 
(b)   Additional Documents Incorporated by Reference:
 
    None.

II-1


 

Exhibit A to Schedule II
Form of Final Term Sheet
Filed Pursuant to Rule 433
Dated May 12, 2008
Registration Nos. 333-106040; 333-143992; 333-150865
(AIG LOGO)
AMERICAN INTERNATIONAL GROUP, INC.
171,052,631 Shares of
Common Stock, Par Value $2.50 Per Share,
and
72,000,000 Equity Units,
Initial Stated Amount of $75
Final Term Sheet
     
Issuer:
  American International Group, Inc. (“AIG”)
 
   
Ticker/Exchange:
  AIG/NYSE
 
   
Last sale price of AIG Common Stock:
  $38.37 (May 12, 2008)
 
   
I. Common Stock Pricing Terms
   
 
   
Title of Securities:
  Common stock, $2.50 par value per share (the “Common Stock”)
 
   
Common Stock Offering:
  171,052,631 shares
 
   
Overallotment Option:
  25,657,894 shares of Common Stock at the Public Offering Price less the underwriting fees within 30 days of the date of the prospectus supplement for the Common Stock Offering, solely to cover overallotments, if any.
 
   
Public Offering Price:
  $38.00 per share of Common Stock ($6,499,999,978 Total, excluding underwriters’ overallotment option)
 
   
Underwriting fees:
  $0.6650 per share of Common Stock ($113,750,000 Total, excluding underwriters’ overallotment option)

II-2


 

     
Trade Date:
  May 12, 2008
 
   
Proceeds to AIG (before expenses):
  $37.3350 per share of Common Stock ($6,386,249,978 Total, excluding underwriters’ overallotment option)
 
   
Net proceeds (after expenses):
  Approximately $6,385,249,978 (approximately $7,343,187,451 if underwriters’ overallotment option is exercised in full)
 
   
Offering Settlement Date:
  May 16, 2008
 
   
Joint Bookrunning Managers:
  Citigroup Global Markets Inc. and J.P. Morgan Securities Inc.
 
   
Joint Lead Managers:
  Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wachovia Capital Markets, LLC
 
   
Co-Managers:
  Dowling & Partners Securities, LLC, Fox-Pitt Kelton Cochran Caronia Waller (USA) LLC, Keefe Bruyette & Woods, Inc., Loop Capital Markets, LLC, Muriel Siebert & Co., Inc., The Williams Capital Group, L.P., Toussaint Capital Partners, LLC, Utendahl Capital Group, LLC
 
   
II. Equity Units Pricing Terms
   
 
   
Title of Securities:
  Equity Units
 
   
Equity Units Offering:
  72,000,000 Equity Units (initially consisting of 72,000,000 Corporate Units)
 
   
Overallotment Option:
  6,400,000 Equity Units at the Public Offering Price less the underwriting discount within 13 days of the Settlement Date, solely to cover overallotments, if any.
 
   
Public Offering Price:
  $75.00 per Equity Unit ($5,400,000,000 Total, excluding underwriters’ overallotment option)
 
   
Underwriting Discount:
  $1.3125 per Equity Unit ($94,500,000 Total, excluding underwriters’ overallotment option)
 
   
Proceeds to AIG (before expenses):
  $73.6875 per Equity Unit ($5,305,500,000 Total, excluding underwriters’ overallotment option)
 
   

II-3


 

     
Net proceeds (after expenses):
  approximately $5,303,500,000 (approximately $5,775,100,000 if underwriters’ overallotment option is exercised in full)
 
   
Series B-1 Debenture Coupon:
  5.67% per annum
 
   
Series B-1 Debenture Maturity Date:
  February 15, 2041
 
   
Series B-2 Debenture Coupon:
  5.82% per annum
 
   
Series B-2 Debenture Maturity Date:
  May 1, 2041
 
   
Series B-3 Debenture Coupon:
  5.89% per annum
 
   
Series B-3 Debenture Maturity Date:
  August 1, 2041
 
   
Contract Adjustment Payments:
  2.7067% per annum to but excluding the first stock purchase date on the initial stated amount of $75 per stock purchase contract, 2.6450% per annum from and including the first stock purchase date to but excluding the second stock purchase date on the adjusted stated amount of $50 per stock purchase contract and 2.6100% per annum from and including the second stock purchase date to but excluding the third stock purchase date on the adjusted stated amount of $25 per stock purchase contract.
 
   
Reference Price:
  $38.00 (offering price of the Common Stock pursuant to the Common Stock Offering)
 
   
Threshold Appreciation Price:
  $45.60 (represents an appreciation of 20% over the Reference Price)
 
   
Minimum Settlement Rate:
  1.6447 shares of Common Stock (subject to adjustment)
 
   
Maximum Settlement Rate:
  1.9737 shares of Common Stock (subject to adjustment)
 
   
Listing:
  AIG has applied to list the Corporate Units on the NYSE under the symbol “AIG-PrA”
 
   
. CUSIP for the Corporate Units:
  026874 115
 
   
ISIN for the Corporate Units:
  US0268741156
 
   

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CUSIP for the Treasury Units:
  026874 123
 
   
ISIN for the Treasury Units:
  US0268741230
 
   
CUSIP for Series B-1 Debentures:
  026874 BN6
 
   
ISIN for Series B-1 Debentures:
  US026874BN67
 
CUSIP for Series B-2 Debentures:
  026874 BP1
 
   
ISIN for Series B-2 Debentures:
  US026874BP16
 
   
CUSIP for Series B-3 Debentures:
  026874 BQ9
 
   
ISIN for Series B-3 Debentures:
  US026874BQ98
 
   
Trade Date:
  May 12, 2008
 
   
Settlement Date:
  May 16, 2008
 
   
Joint Bookrunning Managers:
  Citigroup Global Markets Inc. and J.P. Morgan Securities Inc.
 
   
Joint Lead Managers:
  Banc of America Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated, UBS Securities LLC, Wachovia Capital Markets, LLC
 
   
Co-Managers:
  Dowling & Partners Securities, LLC, Fox-Pitt Kelton Cochran Caronia Waller (USA) LLC, Keefe Bruyette & Woods, Inc., Loop Capital Markets, LLC, Muriel Siebert & Co., Inc., The Williams Capital Group, L.P., Toussaint Capital Partners, LLC, Utendahl Capital Group, LLC
 
   
Contract Adjustment Payment
deferral rate:
  5.67% per annum

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Payment to be made on third stock purchase date of a Contract Adjustment Payment deferral:
  Each holder of an Equity Unit will receive (net of any required tax withholding on such contract adjustment payments, which shall be remitted to the appropriate taxing jurisdiction), in the sole discretion of AIG, either a number of shares of Common Stock (in addition to the number of shares of Common Stock per Equity Unit equal to the applicable settlement rate) equal to the aggregate amount of deferred contract adjustment payments payable to such holder divided by the greater of the applicable market value and $12.67, subject to anti-dilution adjustments, or additional debentures, in the sole discretion of AIG, in a principal amount equal to the aggregate amount of deferred contract adjustment payments.
 
   
Early Settlement:
  Holders of Equity Units can settle a stock purchase contract at any time other than during a blackout period by paying an amount in cash equal to its stated amount, in which case for each $25 stated amount of such stock purchase contract, 1.6447 shares of Common Stock, subject to adjustment, will be issued pursuant to the stock purchase contract. The number of shares will be fixed and will not be computed on the basis of the applicable market value of AIG’s Common Stock on the early settlement date. Holders will not be entitled to any accrued and unpaid contract adjustment payment on stock purchase contracts that are settled early under these circumstances. Holders of Equity Units may settle early only in integral multiples of 40 Equity Units.
 
   
Make-Whole Shares:
  The following table sets forth the Stock Prices, Effective Date and the number of make-whole shares applicable to a merger early settlement:
 
   
                                                                                         
    Stock Prices  
Effective Date   $10.00     $20.00     $30.00     $38.00     $40.00     $45.60     $50.00     $60.00     $70.00     $80.00     $120  
May 12, 2008
    1.3942       0.5204       0.1887       0.0000       0.1127       0.2722       0.2385       0.1711       0.1252       0.0927       0.0274  
May 1, 2009
    1.0158       0.3821       0.1118       0.0000       0.0574       0.2274       0.1949       0.1360       0.0970       0.0702       0.0188  
May 1, 2010
    0.5516       0.2212       0.0350       0.0000       0.0035       0.1707       0.1370       0.0860       0.0565       0.0387       0.0090  
February 15, 2011
    0.1389       0.0618       0.0069       0.0000       0.0000       0.0841       0.0532       0.0234       0.0132       0.0089       0.0021  
February 16, 2011
    0.1374       0.0611       0.0067       0.0000       0.0000       0.0851       0.0528       0.0232       0.0131       0.0088       0.0021  
May 1, 2011
    0.0582       0.0261       0.0038       0.0000       0.0000       0.0393       0.0263       0.0092       0.0049       0.0033       0.0006  
May 2, 2011
    0.0527       0.0238       0.0026       0.0000       0.0000       0.0359       0.0232       0.0087       0.0046       0.0032       0.0007  
August 1, 2011
    0.0000       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000  
The exact Stock Price and Effective Date applicable to a cash merger may not be set forth on the table, in which case:
    if the Stock Price is between two Stock Price amounts on the table or the Effective Date is between two dates on the table, the amount of make-whole shares will be determined by straight line interpolation between the make-whole share amounts set forth for the higher and lower Stock Price amounts and the two dates, as applicable, based on a 360-day year;

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    if the Stock Price is in excess of $120.00 per share (subject to adjustment as described above), then the make-whole share amount will be zero; and
 
    if the Stock Price is less than $10.00 per share (subject to adjustment as described above), or the “minimum stock price,” then the make-whole share amount will be determined as if the stock price equaled the minimum stock price, using straight line interpolation, as described above, if the Effective Date is between two dates on the table.
The issuer has filed a registration statement (including a prospectus) with the Securities and Exchange Commission, or SEC, for the offerings to which this communication relates. Before you invest, you should read the prospectus in that registration statement, the preliminary prospectus supplements and other documents the issuer has filed with the SEC for more complete information about the issuer and these offerings. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling Citigroup Global Markets Inc. toll free at (800) 831-9146, or J.P. Morgan Securities Inc. toll free at (866) 430-0686.

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SCHEDULE III
Form of Opinion of Sullivan & Cromwell LLP
May 16, 2008
[Name and Address of Underwriters]
Ladies and Gentlemen:
     In connection with the several purchases today by you and the other Underwriters named in Schedule I to the Underwriting Agreement, dated May 12, 2008 (the “Underwriting Agreement”), between American International Group, Inc., a Delaware corporation (the “Company”), and you, as Representatives of the several Underwriters named therein (the “Underwriters”), of 72,000,000 equity units (the “Securities”), we, as counsel for the Company, have examined such corporate records, certificates and other documents, and such questions of law, as we have considered necessary or appropriate for the purposes of this opinion. Each Security has an initial stated amount of $75 and initially consists of (i) a stock purchase contract (the “Stock Purchase Contract”), with settlement dates on each of February 15, 2011, May 1, 2011 and August 1, 2011 and (ii) a 1/40 undivided beneficial ownership interest in $1,000 principal amount of the Company’s 5.67% Series B-1 Junior Subordinated Debentures (the “Series B-1 Debentures”), a 1/40 undivided beneficial ownership interest in $1,000 principal amount of the Company’s 5.82% Series B-2 Junior Subordinated Debentures (the “Series B-2 Debentures”) and a 1/40 undivided beneficial ownership interest in $1,000 principal amount of the Company’s 5.89% Series B-3 Junior Subordinated Debentures (the “Series B-3 Debentures” and, together with the Series B-1 Debentures and the Series B-2 Debentures, “Debentures”). The Stock Purchase Contracts have been issued under the Purchase Contract Agreement, dated as of May 16, 2008 (the “Purchase Contract Agreement”), between the Company and The Bank of New York, as Purchase Contract Agent (the “Purchase Contract Agent”); the Debentures have been issued pursuant to the Junior Subordinated Debt Indenture, dated as of March 13, 2007, as amended and supplemented by the Sixth, Seventh and Eighth Supplemental Indentures, each dated as of May 16, 2008 (collectively, the “Indenture”), between the Company and The Bank of New York, as Trustee (the “Trustee”); and up to 154,738,080 shares (the “Shares”) of the Company’s common stock, par value $2.50 per share (the “Common Stock”), are initially issuable upon settlement of the Stock Purchase Contracts. In accordance with the terms of the Purchase Contract Agreement, the Debentures will be pledged by the Purchase Contract Agent, on behalf of the holders of the Securities, to Wilmington Trust Company, as Collateral Agent, pursuant to the Pledge Agreement, dated as of May 16, 2008 (the “Pledge Agreement”), among the Company, the Purchase Contract Agent and Wilmington Trust Company, as Collateral Agent, Custodial Agent and Securities Intermediary, to secure the holders’ obligations to purchase the Shares in accordance with the Stock Purchase Contracts and the Purchase Contract Agreement. Upon the basis of the aforementioned examination, it is our opinion that:
  1.   The Company has been duly incorporated and is an existing corporation in good standing under the laws of the State of Delaware.

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  2.   The Indenture has been duly authorized, executed and delivered by the Company and duly qualified under the Trust Indenture Act of 1939; the Debentures have been duly authorized, executed, authenticated, issued and delivered; and the Indenture and the Debentures constitute valid and legally binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.
 
  3.   The Purchase Contract Agreement has been duly authorized, executed and delivered by the Company; the Stock Purchase Contracts have been duly authorized, executed and delivered by the Company; the Purchase Contract Agreement and the Stock Purchase Contracts constitute valid and legally binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.
 
  4.   The Securities have been duly authorized, executed and delivered by the Company and constitute valid obligations of the Company, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.
 
  5.   The Shares have been duly authorized and reserved for issuance upon delivery in accordance with the Stock Purchase Contracts and the Purchase Contract Agreement; and when issued and paid for in accordance with the provisions of the Stock Purchase Contracts and the Purchase Contract Agreement, such Shares will be validly issued, fully paid and nonassessable.
 
  6.   The Pledge Agreement has been duly authorized, executed and delivered by the Company and constitutes a valid and legally binding obligation of the Company enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.
 
  7.   The Remarketing Agreement, dated as of May 16, 2008, among the Company, the Purchase Contract Agent and Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., as Remarketing Agents (the “Remarketing Agents”), has been duly authorized, executed and delivered by the Company and constitutes a valid and legally binding obligation of the Company enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.
 
  8.   The Underwriting Agreement has been duly authorized, executed and delivered by the Company.
     The foregoing opinion is limited to the Federal laws of the United States, the laws of the State of New York and the General Corporation Law of the State of Delaware, and we are expressing no opinion as to the effect of the laws of any other jurisdiction.
     We have relied as to certain matters upon information obtained from public officials, officers of the Company and other sources believed by us to be responsible, and we have assumed that the

III-2


 

Indenture has been duly authorized, executed and delivered by the Trustee, that the Purchase Contract Agreement has been duly authorized, executed and delivered by the Purchase Contract Agent, that the Pledge Agreement has been duly authorized, executed and delivered by the Purchase Contract Agent and the Collateral Agent, Custodial Agent and Securities Intermediary, that the Remarketing Agreement has been duly authorized, executed and delivered by the Purchase Contract Agent and the Remarketing Agents, that the Securities and Debentures conform to the specimens thereof examined by us, that the Purchase Contract Agent’s certificates of authentication of the Securities have been manually signed by one of the Purchase Contract Agent’s authorized signatories, that the Trustee’s certificates of authentication of the Debentures have been manually signed by one of the Trustee’s authorized signatories, that the certificate for the Shares will conform to the specimen thereof examined by us and will be duly countersigned by a transfer agent and duly registered by a registrar of the Common Stock, and that the signatures on all documents examined by us are genuine, assumptions which we have not independently verified.
Very truly yours,

III-3


 

Form of Letter of Sullivan & Cromwell LLP
May 16, 2008
[Name and Address of Underwriters]
Ladies and Gentlemen:
     This is with reference to the registration under the Securities Act of 1933 (the “Securities Act”) and offering of 72,000,000 Equity Units (the “Securities”) of American International Group, Inc. (the “Company”).
     Two Registration Statements (File Nos. 333-143992 and 333-106040) relating to the Securities were filed on different dates on Form S-3 in accordance with procedures of the Securities and Exchange Commission (the “Commission”) permitting a delayed or continuous offering of securities pursuant thereto and, if appropriate, a post-effective amendment, document incorporated by reference therein or prospectus supplement that provides information relating to the terms of the securities and the manner of their distribution. References in this letter to the Registration Statement refer to the latest filed Registration Statement.
     The Securities have been offered by the Prospectus, dated July 13, 2007 (the “Basic Prospectus”), as supplemented by the Prospectus Supplement, dated May 12, 2008 (the “Prospectus Supplement”), which updates or supplements certain information contained in the Basic Prospectus. The Basic Prospectus, as supplemented by the Prospectus Supplement, does not necessarily contain a current description of the Company’s business and affairs since, pursuant to Form S-3, it incorporates by reference certain documents filed with the Commission that contain information as of various dates.
     As counsel to the Company, we reviewed the Registration Statement, the Basic Prospectus, the Prospectus Supplement and the documents listed in Schedule A (those listed documents, taken together with the Basic Prospectus, being referred to herein as the “Pricing Disclosure Package”) and participated in discussions with your representatives and those of the Company and its accountants. Between the date of the Prospectus Supplement and the time of delivery of this letter, we participated in further discussions with your representatives and those of the Company, its accountants and its counsel concerning certain matters relating to the Company and reviewed certificates of certain officers of the Company, a letter addressed to you from the Company’s accountants and an opinion addressed to you from counsel to the Company. On the basis of the information that we gained in the course of the performance of the services referred to above, considered in the light of our understanding of the applicable law (including the requirements of Form S-3 and the character of prospectus contemplated thereby) and the experience we have gained through our practice under the Securities Act, we confirm to you that, in our opinion, each part of the Registration Statement, when such part became effective, and the Basic Prospectus, as supplemented by the Prospectus Supplement, as of the date of the Prospectus Supplement, appeared on their face to be appropriately responsive, in all material respects relevant to the offering of the Securities, to the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder.

III-4


 

Further, nothing that came to our attention in the course of such review has caused us to believe that, insofar as relevant to the offering of the Securities,
     (a) any part of the Registration Statement, when such part became effective, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or
     (b) the Pricing Disclosure Package, as of 5:00 P.M. on May 12, 2008 (which you have informed us is prior to the time of the first sale of the Securities by any Underwriter), contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or
     (c) the Basic Prospectus, as supplemented by the Prospectus Supplement, as of the date of the Prospectus Supplement, contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
We also advise you that nothing that came to our attention in the course of the procedures described in the second sentence of this paragraph has caused us to believe that (a) the Basic Prospectus, as supplemented by the Prospectus Supplement, or (b) the Pricing Disclosure Package, as of the time of delivery of this letter, contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
     The limitations inherent in the independent verification of factual matters and the character of determinations involved in the registration process are such, however, that we do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement, the Basic Prospectus, the Prospectus Supplement or the Pricing Disclosure Package, except for those made under the captions “Description of Purchase Contracts AIG May Offer,” “Description of Units AIG May Offer,” “Description of Common Stock AIG May Offer” and “Description of Junior Subordinated Debentures AIG May Offer” in the Basic Prospectus and “Description of the Equity Units,” “Description of the Stock Purchase Contracts,” “Certain Provisions of the Purchase Contract Agreement and the Pledge Agreement,” “Description of Our Debentures,” “Description of Our Capital Stock,” “Certain United States Federal Income Tax Consequences” and “Underwriting” in the Prospectus Supplement insofar as they relate to provisions of the Securities, the stock purchase contracts, the purchase contract agreement, junior subordinated debentures, the junior debt indenture and related supplemental indentures, the pledge agreement, the remarketing agreement and the underwriting agreement therein described or insofar as they relate to provisions of United States Federal tax law therein described. Also, we do not express any opinion or belief as to the financial statements or other financial data derived from accounting records contained in the Registration Statement, the Basic Prospectus, the Prospectus Supplement or the Pricing Disclosure Package or as to the report of management’s assessment of the effectiveness of internal control over financial reporting or the auditors’ attestation report thereon, each as included in the Registration Statement, the Basic Prospectus, the Prospectus Supplement or the Pricing Disclosure Package.
          This letter is furnished by us, as counsel to the Company, to you, as Representatives of the Underwriters, solely for the benefit of the Underwriters in their capacity as such, and may not be relied upon by any other person. This letter may not be quoted, referred to or furnished to any

III-5


 

           purchaser or prospective purchaser of the Securities and may not be used in furtherance of any offer or sale of the Securities.
Very truly yours,

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Schedule A
Preliminary Prospectus Supplement, dated May 8, 2008
Final Term Sheet, dated May 12, 2008, insofar as the Final Term Sheet related to the terms of the Securities

III-7


 

SCHEDULE IV
Form of Opinion of Kathleen E. Shannon
May 16, 2008
[Name and Address of Underwriters]
Ladies and Gentlemen:
          I am Senior Vice President, Secretary and Deputy General Counsel of American International Group, Inc., a Delaware corporation (the “Company”), and, as such, I am generally familiar with the corporate affairs of the Company.
          This opinion is rendered in connection with the several purchases today by you and the other Underwriters named in Schedule I to the Underwriting Agreement, dated May 12, 2008 (the “Underwriting Agreement”), between the Company and you, as Representatives of the several Underwriters named therein (the “Underwriters”), of 72,000,000 Equity Units (the “Securities”) of the Company. Each Security has an initial stated amount of $75 and initially consists of (i) a stock purchase contract (the “Stock Purchase Contract”), with settlement dates on each of February 15, 2011, May 1, 2011 and August 1, 2011 and (ii) a 1/40 undivided beneficial ownership interest in $1,000 principal amount of the Company’s 5.67% Series B-1 Junior Subordinated Debentures (the “Series B-1 Debentures”), a 1/40 undivided beneficial ownership interest in $1,000 principal amount of the Company’s 5.82% Series B-2 Junior Subordinated Debentures (the “Series B-2 Debentures”) and a 1/40 undivided beneficial ownership interest in $1,000 principal amount of the Company’s 5.89% Series B-3 Junior Subordinated Debentures (the “Series B-3 Debentures” and, together with the Series B-1 Debentures and the Series B-2 Debentures, “Debentures”). The Stock Purchase Contracts have been issued under the Purchase Contract Agreement, dated as of May 16, 2008 (the “Purchase Contract Agreement”), between the Company and The Bank of New York, as Purchase Contract Agent (the “Purchase Contract Agent”); the Debentures have been issued pursuant to the Junior Subordinated Debt Indenture, dated as of March 13, 2007, as amended and supplemented by the Sixth, Seventh and Eighth Supplemental Indentures, each dated as of May 16, 2008 (collectively, the “Indenture”), between the Company and The Bank of New York, as Trustee; and up to 154,738,080 shares (the “Shares”) of the Company’s common stock, par value $2.50 per share (the “Common Stock”), are initially issuable upon settlement of the Stock Purchase Contracts. In accordance with the terms of the Purchase Contract Agreement, the Debentures will be pledged by the Purchase Contract Agent, on behalf of the holders of the Securities, to Wilmington Trust Company, as Collateral Agent, pursuant to the Pledge Agreement, dated as of May 16, 2008 (the “Pledge Agreement”), among the Company, the Purchase Contract Agent and Wilmington Trust Company, as Collateral Agent, Custodial Agent and Securities Intermediary, to secure the holders’ obligations to purchase the Shares in accordance with the Stock Purchase Contracts and the Purchase Contract Agreement.

IV-1


 

          Two Registration Statements (File Nos. 333-143992 and 333-106040) relating to the Securities, the Stock Purchase Contracts, the Debentures and the Shares were filed on Form S-3 under the Securities Act of 1933 (the “Act”) on different dates. The latest filed Registration Statement was declared effective by the Securities and Exchange Commission (the “Commission”) on July 13, 2007. References in this letter to the Registration Statement refer to the latest filed Registration Statement. The Securities have been offered by the Prospectus dated July 13, 2007 (the “Basic Prospectus”), as supplemented by the Prospectus Supplement, dated May 12, 2008 (the “Prospectus Supplement”).
          In rendering my opinion, I, as Senior Vice President, Secretary and Deputy General Counsel of the Company, have examined the Registration Statement, the Basic Prospectus, the Prospectus Supplement and the documents listed in Schedule A hereto (those listed documents, taken together with the Basic Prospectus as amended or supplemented immediately prior to the Applicable Time (as defined below), being referred to herein as the “Pricing Disclosure Package”), and I have examined such corporate records, certificates and other documents, and have reviewed such questions of law, as I have considered necessary or appropriate for the purposes of this opinion. Upon the basis of such examination and review, it is my opinion that:
          (i) The Company has authorized capital stock as set forth in the Company’s Restated Certificate of Incorporation, as amended, as incorporated by reference in the Pricing Disclosure Package and the Basic Prospectus; all outstanding shares of the Company’s Common Stock have been duly authorized and validly issued and are fully paid and nonassessble; and the Shares have been duly authorized and reserved for issuance upon delivery in accordance with the Stock Purchase Contracts and the Purchase Contract Agreement, and when issued and paid for in accordance with the provisions of the Stock Purchase Contracts and the Purchase Contract Agreement, such Shares will be validly issued, fully paid and nonassessable.
          (ii) The issue and sale of the Securities, and the issue of the Stock Purchase Contracts and Debentures, and the compliance by the Company with all of the provisions of the Underwriting Agreement, the Purchase Contract Agreement, the Indenture, the Pledge Agreement and the Remarketing Agreement, dated as of May 16, 2008 (the “Remarketing Agreement”), among the Company, the Purchase Contract Agent and Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., as Remarketing Agents, will not result in a breach of any of the terms or provisions of, or constitute a default under, any material indenture, mortgage, deed of trust, loan agreement, or other material agreement or instrument in effect on the date hereof and known to me, to which the Company is a party or by which the Company may be bound or to which any of the property or assets of the Company is subject or violate any judgment, order or decree of any court or governmental body applicable to the Company, except for such breaches, defaults and violations that would not individually or in the aggregate have a Material Adverse Effect (as defined in the Underwriting Agreement) or affect the validity of the Securities, the Stock Purchase Contracts or the Debentures, nor will such action result in any violation of the provisions of the Restated Certificate of Incorporation, as amended, or the By-Laws of the Company in effect on the date hereof.
          (iii) No consent, approval, authorization, order, registration or qualification of or with any court or any regulatory authority or other governmental body is required for the issuance and sale of the Securities, the issuance of the Stock Purchase Contracts or the Debentures, or the consummation by the Company of the other transactions contemplated by the Underwriting Agreement, the Purchase Contract Agreement, the Indenture, the Pledge Agreement or the

IV-2


 

Remarketing Agreement, except such as have been obtained under the Act, such consents, approvals, authorizations, orders, registrations and qualifications required to list the Securities on the New York Stock Exchange and such consents, approvals, authorizations, orders, registrations or qualifications the failure to obtain or make would not individually or in the aggregate have a Material Adverse Effect or affect the validity of the Securities, the Stock Purchase Contracts or the Debentures and as may be required in connection with the transactions contemplated by the Remarketing Agreement and under state securities or Blue Sky laws (including insurance laws of any state relating to offers and sales of securities in such state) in connection with the purchase and distribution of the Securities, the Stock Purchase Contracts and the Debentures by the Underwriters, as contemplated by the Underwriting Agreement.
          (iv) To the best of my knowledge and information, there are no contracts or other documents required to be summarized or disclosed or filed as exhibits to the Registration Statement, other than those summarized or disclosed in the Registration Statement or filed as exhibits thereto, and there are no legal or governmental proceedings pending or threatened of a character required to be disclosed in the Registration Statement and the Basic Prospectus, as amended or supplemented by the Prospectus Supplement, which are not disclosed.
          (v) Nothing which came to my attention has caused me to believe that, insofar as relevant to the offering of the Securities,
(a) any part of the Registration Statement, when such part became effective, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or
(b) the Pricing Disclosure Package, as of 5:00 P.M. on May 12, 2008 (the “Applicable Time”) (which you have informed me is prior to the time of the first sale of the Securities by any Underwriter), contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or
(c) the Basic Prospectus, as supplemented by the Prospectus Supplement, as of the date of the Prospectus Supplement or as of the date hereof, contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
          (vi) The documents incorporated by reference in the Basic Prospectus, as supplemented by the Prospectus Supplement, as of the date they became effective or were filed with the Commission, as the case may be, complied as to form in all material respects with the Act and the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
          In rendering the opinion in paragraph (v), (A) I assume no responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement, the Basic Prospectus, the Prospectus Supplement or the Pricing Disclosure Package, except for those made under the captions “Description of Purchase Contracts AIG May Offer,” “Description of Units AIG May Offer,” “Description of Common Stock AIG May Offer” and “Description of

IV-3


 

Junior Subordinated Debentures AIG May Offer” in the Basic Prospectus and “Description of the Equity Units,” “Description of the Stock Purchase Contracts,” “Certain Provisions of the Purchase Contract Agreement and the Pledge Agreement,” “Description of Our Debentures” and “Description of Our Capital Stock” in the Prospectus Supplement insofar as they constitute summaries of the documents therein described, and (B) I express no opinion or belief as to the financial statements or other financial data derived from accounting records contained in the Registration Statement, the Basic Prospectus, the Prospectus Supplement or the Pricing Disclosure Package, or as to the report of management’s assessment of the effectiveness of internal control over financial reporting or the auditors’ attestation report thereon, each as included in the Registration Statement, the Basic Prospectus, the Prospectus Supplement and the Pricing Disclosure Package.
          In rendering the opinion in paragraph (vi), I express no opinion or belief as to the financial statements or other financial or statistical data contained in the documents incorporated by reference in the Basic Prospectus or the Prospectus Supplement, or as to the report of management’s assessment of the effectiveness of internal control over financial reporting or the auditors’ attestation report thereon, each as included in the documents incorporated by reference in the Basic Prospectus and the Prospectus Supplement.
          The foregoing opinion is limited to the Federal laws of the United States, the laws of the State of New York and the General Corporation Law of the State of Delaware, and I am expressing no opinion as to the effect of the laws of any other jurisdiction.
          I have relied as to certain matters upon information obtained from public officials, officers of the Company and other sources believed by me to be responsible, and I have assumed that the certificates for the outstanding shares of Common Stock conform to the specimen thereof examined by me and have been duly countersigned by a transfer agent and duly registered by a registrar of the Common Stock, that the certificates for the Shares will conform to the specimen thereof examined by me and will be duly countersigned by a transfer agent and duly registered by a registrar of the Common Stock, and that the signatures on all documents examined by me are genuine, assumptions which I have not independently verified.
                    This letter is furnished by me, as Senior Vice President, Secretary and Deputy General Counsel of the Company, to you, as Representatives of the Underwriters, solely for the benefit of the Underwriters in their capacity as such, and may not be relied upon by any other person. This opinion may not be quoted, referred to or furnished to any purchaser or prospective purchaser of the Securities and may not be used in furtherance of any offer or sale of the Securities.
                     Very truly yours,

IV-4


 

Schedule A
Preliminary Prospectus Supplement, dated May 8, 2008
Final Term Sheet, dated May 12, 2008, insofar as the Final Term Sheet related to the terms of the Securities

IV-5


 

Execution Copy
SCHEDULE V
Form of Letter of Independent Registered Public Accounting Firm
May 12, 2008
American International Group, Inc.
and
The Underwriters listed on Schedule I
Ladies and Gentlemen:
We have audited:
1.   the consolidated financial statements of American International Group, Inc. (the “Company”) and subsidiaries as of December 31, 2007 and 2006 and for each of the three years in the period ended December 31, 2007 included in the Company’s annual report on Form 10-K for the year ended December 31, 2007 (the “Form 10-K”),
 
2.   the related financial statement schedules included in the Form 10-K, and
 
3.   the effectiveness of the Company’s internal control over financial reporting as of December 31, 2007.
The consolidated financial statements and financial statement schedules referred to above are incorporated by reference in the registration statements (Nos. 333-143992 and 333-106040) on Form S-3 filed by the Company under the Securities Act of 1933 (the “Act”); our report (which contains an adverse opinion on the effectiveness of internal control over financial reporting) with respect to the audits referred to above is also incorporated by reference in such registration statements. Such registration statements, of which the Prospectus dated July 13, 2007 forms a part, as supplemented by the Prospectus Supplement dated May 12, 2008 are herein collectively referred to as the “Registration Statement.” This letter is furnished with respect to the offering of the Company’s 72,000,000 Equity Units.
In connection with the Registration Statement:
1.   We are an independent registered public accounting firm with respect to the Company within the meaning of the Act and the applicable rules and regulations thereunder adopted by the Securities and Exchange Commission (the “SEC”) and the Public Company Accounting Oversight Board (United States) (the “PCAOB”).
 
2.   In our opinion, the consolidated financial statements and financial statement schedules audited by us and incorporated by reference in the Registration Statement comply as to form


 

    in all material respects with the applicable accounting requirements of the Act and the Securities Exchange Act of 1934 and the related rules and regulations adopted by the SEC.
 
3.   We have not audited any financial statements of the Company as of any date or for any period subsequent to December 31, 2007; although we have conducted an audit for the year ended December 31, 2007, the purpose (and therefore the scope) of such audit was to enable us to express our opinion on the consolidated financial statements as of December 31, 2007 and for the year then ended, but not on the financial statements for any interim period within such year. Therefore, we are unable to and do not express any opinion on the unaudited consolidated balance sheet as of March 31, 2008 and the unaudited consolidated statements of income (loss) , comprehensive income (loss), and cash flows for the three-month periods ended March 31, 2008 and 2007, included in the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2008, incorporated by reference in the Registration Statement, or on the Company’s financial position, results of operations or cash flows as of any date or for any period subsequent to December 31, 2007. Also, we have not audited the Company’s internal control over financial reporting as of any date subsequent to December 31, 2007. Therefore, we do not express any opinion on the Company’s internal control over financial reporting as of any date subsequent to December 31, 2007.
 
4.   For purposes of this letter, we have read the minutes of the 2008 meetings of the Board of Directors and Committees of the Board of Directors of the Company as set forth in the minute books at May 8, 2008, officials of the Company having advised us that the minutes of all such meetings through that date were set forth therein, except for the minutes of the meetings listed below which were not approved in final form, for which agendas were provided to us; officials of the Company have represented that such agendas include all substantive actions taken at such meetings:
  a.   the Board of Directors (the “Board”) - the February 26, 2008, March 12, 2008, May 5, 2008, May 6, 2008 and May 8, 2008 meetings;
 
  b.   the Audit Committee of the Board — the January 15, 2008, February 7, 2008, February 26, 2008, March 11, 2008, April 16, 2008 and May 5, 2008 meetings;
 
  c.   the Compensation and Management Resources Committee of the Board — the February 26, 2008 and March 11, 2008 meetings;
 
  d.   the Finance Committee of the Board - the December 13, 2007, February 12, 2008, March 11, 2008 April 17, 2008 and May 5, 2008 meetings;
 
  e.   the Nominating and Corporate Governance Committee of the Board — the January 15, 2008 and March 11, 2008 meetings;

V-2


 

  f.   the Public Policy and Social Responsibility Committee of the Board — the January 15, 2008 and April 16, 2008 meetings, and
 
  g.   the Regulatory, Compliance and Legal Committee of the Board — the January 16, 2008 and March 12, 2008 meetings.
We have carried out other procedures to May 8, 2008 (our work did not extend to the period from May 9, 2008 to May 12, 2008, inclusive) as follows:
With respect to the three-month periods ended March 31, 2008 and 2007, we have:
  (i)   performed the procedures (completed on May 8, 2008) specified by the PCAOB for a review of interim financial information as described in SAS No. 100, Interim Financial Information, on the unaudited consolidated financial statements as of and for the three-month periods ended March 31, 2008 and 2007 included in the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2008 (the “March 31, 2008 Form 10-Q”), incorporated by reference in the Registration Statement; and
 
  (ii)   inquired of certain officials of the Company who have responsibility for financial and accounting matters whether the unaudited consolidated financial statements referred to in (i) above comply as to form in all material respects with the applicable accounting requirements of the Securities Exchange Act of 1934 as it applies to the Form 10-Q and the related rules and regulations adopted by the SEC.
The foregoing procedures do not constitute an audit made in accordance with standards of the PCAOB. Also, they would not necessarily reveal matters of significance with respect to the comments in the following paragraph. Accordingly, we make no representations as to the sufficiency of the foregoing procedures for your purposes.
5. Nothing came to our attention as a result of the foregoing procedures, however, that caused us to believe that:
  (i)   Any material modifications should be made to the unaudited consolidated financial statements described in 4, incorporated by reference in the Registration Statement, for them to be in conformity with generally accepted accounting principles.
 
  (ii)   The unaudited consolidated financial statements described in 4 do not comply as to form in all material respects with the applicable accounting requirements of the Securities Exchange Act of 1934 as it applies to the Form 10-Q and the related rules and regulations adopted by the SEC.
It should be noted that effective January 1, 2008, the Company adopted FAS 157 “Fair Value Measurements”, FAS 159 “The Fair Value Option for Financial Assets and Financial Liabilities” and FSP FIN 39-1 “Amendment of FASB Interpretation No. 39”.

V-3


 

6.   Company officials have advised us that no consolidated financial data as of any date or for any period subsequent to March 31, 2008 are available; accordingly, the procedures carried out by us with respect to changes in financial statement items after March 31, 2008 have, of necessity, been limited. We have inquired of certain officials of the Company who have responsibility for financial and accounting matters as to whether (a) at May 8, 2008 there was any change in the capital stock, increase in long-term debt, or decrease in consolidated shareholders’ equity of the Company as compared with amounts shown in the March 31, 2008 unaudited consolidated balance sheet incorporated by reference in the Registration Statement; or (b) for the period from April 1, 2008 to May 8, 2008, there was any decrease, as compared with the corresponding period in the preceding year, in consolidated net income.
Those officials referred to above stated that due to the fact that there is no consolidated financial data available subsequent to March 31, 2008, they are unable to comment as to whether there was any such change, increase or decrease, except in all instances for changes, increases or decreases that the Registration Statement discloses have occurred or may occur.
7.   For purposes of this letter, we have also read the items identified by you on the attached pages from the Form 10-K and the March 31, 2008 Form 10-Q incorporated by reference in the Registration Statement and have performed the following procedures, which were applied as indicated with respect to the letters explained below. We make no comment as to whether the SEC would view any non-GAAP financial information included or incorporated by reference in the Registration Statement as being compliant with the requirements of Regulation G or Item 10 of Regulation S-K.
     
A
  Compared to or recomputed from corresponding amounts included in the Company’s audited financial statements incorporated by reference in the Registration Statement and found such amounts to be in agreement.
 
   
B
  Compared with or recomputed from corresponding amounts included in the Company’s accounting records and found such amounts to be in agreement.
 
   
C
  Compared to or recomputed from a schedule prepared by the Company from its accounting records and found such amounts to be in agreement. We (a) compared the amounts on the schedule to corresponding amounts appearing in the accounting records and found such amounts to be in agreement and (b) determined that the schedule was mathematically correct.
 
   
D
  Compared to or recomputed from corresponding amounts in the Company’s unaudited financial statements incorporated by reference in the Registration Statement and found such amounts to be in agreement.
 
   
E
  Compared to or recomputed from a corresponding amount in the Company’s audited financial statements incorporated by reference in the Registration Statement and found such amounts to be in agreement. However, we make no comment as to the appropriateness of the Company’s classifications of debt as being guaranteed by AIG and not guaranteed by AIG.
 
   
F
  Compared with corresponding amounts included in the Company’s accounting records and found such amounts to be in agreement. However, we make no comment as to the appropriateness of the Company’s classifications of debt as being guaranteed by AIG and not guaranteed by AIG.

V-4


 

8.   Our audit of the consolidated financial statements for the periods referred to in the introductory paragraph of this letter comprised audit tests and procedures deemed necessary for the purpose of expressing an opinion on such financial statements taken as a whole. For none of the periods referred to therein, or any other period, did we perform audit tests for the purpose of expressing an opinion on individual balances of accounts or summaries of selected transactions such as those identified by you, and, accordingly, we express no opinion thereon.
 
9.   It should be understood that we make no representations regarding questions of legal interpretation or regarding the sufficiency for your purposes of the procedures enumerated in the second preceding paragraph; also, such procedures would not necessarily reveal any material misstatement of the amounts or percentages identified by you. Further, we have addressed ourselves solely to the foregoing data as set forth or incorporated by reference in the Registration Statement and make no representations regarding the adequacy of disclosure or regarding whether any material facts have been omitted.
 
10.   This letter is solely for the information of the addressees and to assist the Underwriters in conducting and documenting their investigation of the affairs of the Company in connection with the offering of the securities covered by the Registration Statement, and is not to be used, circulated, quoted, or otherwise referred to for any other purpose, including but not limited to the registration, purchase, or sale of securities, nor is it to be filed with or referred to in whole or in part in the Registration Statement or any other document, except that reference may be made to it in the underwriting agreement or in any list of closing documents pertaining to the offering of the securities covered by the Registration Statement.
Yours very truly,

V-5


 

Schedule I
Citigroup Global Markets Inc.
J.P. Morgan Securities Inc.
Banc of America Securities LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
UBS Securities LLC
Wachovia Capital Markets, LLC
Dowling & Partners Securities, LLC
Fox-Pitt Kelton Cochran Caronia Waller (USA) LLC
Keefe Bruyette & Woods, Inc.
Loop Capital Markets, LLC
Muriel Siebert & Co., Inc.
The Williams Capital Group, L.P.
Toussaint Capital Partners, LLC
Utendahl Capital Group, LLC


 

Schedule I
Citigroup Global Markets Inc.
J.P. Morgan Securities Inc.
Banc of America Securities LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
UBS Securities LLC
Wachovia Capital Markets, LLC
Dowling & Partners Securities, LLC
Fox-Pitt Kelton Cochran Caronia Waller (USA) LLC
Keefe Bruyette & Woods, Inc.
Loop Capital Markets, LLC
Muriel Siebert & Co., Inc.
The Williams Capital Group, L.P.
Toussaint Capital Partners, LLC
Utendahl Capital Group, LLC

VI-1

EX-4.1
Exhibit 4.1
 
AMERICAN INTERNATIONAL GROUP, INC.
 
Sixth Supplemental Indenture
Dated as of May 16, 2008
 
(Supplemental to the Junior Subordinated Debt Indenture Dated as of March 13, 2007)
 
THE BANK OF NEW YORK,
as Trustee
 

 


 

     SIXTH SUPPLEMENTAL INDENTURE, dated as of May 16, 2008, between American International Group, Inc., a corporation duly organized and existing under the laws of the State of Delaware (herein called the “Company”), and The Bank of New York, a New York banking corporation, as Trustee (herein called “Trustee”);
RECITALS:
     WHEREAS, the Company has heretofore executed and delivered to the Trustee a Junior Subordinated Debt Indenture, dated as of March 13, 2007 (the “Indenture”), providing for the issuance from time to time of the Company’s unsecured debentures, notes or other evidences of indebtedness (herein and therein called the “Securities”), to be issued in one or more series as provided in the Indenture;
     WHEREAS, Section 901 of the Indenture permits the Company and the Trustee to enter into an indenture supplemental to the Indenture to establish the form and terms of a series of Securities;
     WHEREAS, Section 201 of the Indenture permits the form of Securities of a series to be established in an indenture supplemental to the Indenture;
     WHEREAS, Section 301 of the Indenture permits certain terms of a series of Securities to be established pursuant to an indenture supplemental to the Indenture;
     WHEREAS, pursuant to Sections 201 and 301 of the Indenture, the Company desires to provide for the establishment of a new series of Securities under the Indenture, the form and substance of such Securities and the terms, provisions and conditions thereof to be set forth as provided in the Indenture and this Sixth Supplemental Indenture;
     WHEREAS, all things necessary to make this Sixth Supplemental Indenture a valid agreement of the Company, in accordance with its terms, have been done;
     WHEREAS, the Corporate Units will include as a component the Debentures (as hereinafter defined);
     WHEREAS, the Debentures are entitled to the benefit of a Remarketing Agreement, dated as of the date hereof, among the Company, the Purchase Contract Agent (as hereinafter defined) and Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., as Remarketing Agents;
     NOW, THEREFORE, THIS SIXTH SUPPLEMENTAL INDENTURE WITNESSETH:
     For and in consideration of the premises and the purchase of the Securities of the series established by this Sixth Supplemental Indenture by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all such Holders, as follows:
Sixth Supplemental Indenture

 


 

ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.1 Relation to Indenture
     This Sixth Supplemental Indenture constitutes a part of the Indenture (the provisions of which, as modified by this Sixth Supplemental Indenture, shall apply to the Debentures) in respect of the Debentures but shall not modify, amend or otherwise affect the Indenture insofar as it relates to any other series of Securities or modify, amend or otherwise affect in any manner the terms and conditions of the Securities of any other series.
Section 1.2 Definitions
     For all purposes of this Sixth Supplemental Indenture, the capitalized terms used herein (i) which are defined in this Section 1.2 have the respective meanings assigned hereto in this Section 1.2 and (ii) which are defined in the Indenture (and which are not defined in this Section 1.2) have the respective meanings assigned thereto in the Indenture. For all purposes of this Sixth Supplemental Indenture:
     1.2.1 Unless the context otherwise requires, any reference to an Article, Section or Annex refers to an Article or Section of, or Annex to, as the case may be, this Sixth Supplemental Indenture;
     1.2.2 The words “herein”, “hereof” and “hereunder” and words of similar import refer to this Sixth Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision;
     1.2.3 The following terms have the meanings given to them in the Pledge Agreement (where applicable, with respect to the Debentures): Collateral Account; Collateral Agent; Custodial Agent, and Proceeds;
     1.2.4 The following terms have the meanings given to them in the Purchase Contract Agreement (where applicable, with respect to the Debentures): Contract Adjustment Payments; Corporate Units; Equity Units; First Stock Purchase Date; Purchase Contract Agent; Remarketing Period; Remarketing Settlement Date; Separate Debentures; Separate Debentures Purchase Price; Stock Purchase Contract; Stock Purchase Date; Treasury Portfolio Purchase Price, and Treasury Units.
Sixth Supplemental Indenture

-2-


 

     1.2.5 The terms defined in this Section 1.2.5 have the meanings assigned to them in this Section and include the plural as well as the singular:
     “Additional Debentures” means any debt securities issued pursuant to Section 5.11(c) of the Purchase Contract Agreement in respect of deferred Contract Adjustment Payments or pursuant to Section 2.1(g)(ii), and shall (a) bear interest at an annual rate equal to the then market rate of interest for similar instruments (not to exceed 10%), as determined by a nationally recognized investment banking firm selected by the Company, (b) rank pari passu with the Debentures, (c) provide for optional deferral on the same basis as the Debentures (d) be redeemable at the Company’s option at any time at their principal amount, plus accrued and unpaid interest thereon through their date of redemption and (e) be issued under the Indenture.
     “Adjusted Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.
     “Assurance Agreement” means the agreement of the Company, dated as of June 27, 2005, in favor of eligible employees and relating to specified obligations of Starr International Company, Inc. (as such agreement may be amended, supplemented, extended, modified or replaced from time to time).
     “Base Rate” has the meaning set forth in Section 2.2(a)(iii).
     “Business Day” is any day, other than a Saturday, Sunday or other day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed.
     “Calculation Agent” means AIG Financial Products Corp., or any other Person appointed by the Company, acting as calculation agent for the Debentures. Any successor or substitute Calculation Agent may be an Affiliate of the Company.
     “Capital Stock” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) shares issued by that Person.
     “Comparable Treasury Issue” means the U.S. Treasury security selected by an independent investment bank selected by the Calculation Agent as having a maturity comparable to the term remaining from the Redemption Date to the Final Maturity Date that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity.
     “Comparable Treasury Price” means, with respect to any Redemption Date, the average of the Reference Treasury Dealer Quotations for such Redemption Date.
Sixth Supplemental Indenture

-3-


 

     “Coupon Rate” means the interest rate payable on the Debentures as set forth herein.
     “Debentures” has the meaning set forth in Section 2.1(a).
     “Deferred Interest” has the meaning set forth in Section 2.1(g).
     “Deferral Period” means each period beginning on an Interest Payment Date with respect to which the Company elects pursuant to Section 2.1(g) to defer all or part of any interest payment due on such Interest Payment Date and ending on the earlier of (i) the First Stock Purchase Date and (ii) the next Interest Payment Date on which the Company has paid all accrued and previously unpaid interest on the Debentures.
     “Employee Benefit Plan” means any written purchase, savings, option, bonus, appreciation, profit sharing, thrift, incentive, pension or similar plan or arrangement or any written compensatory contract or arrangement.
     “Events of Default” has the meaning set forth in Section 2.1(h).
     “Failed Remarketing” has the meaning set forth in Section 2.1(p)(iii).
     “Final Maturity Date” means the earlier of February 15, 2041 and the maturity date specified by the Company pursuant to Section 2.2(a)(i).
     “Indebtedness” means all indebtedness and obligations (other than the Debentures) of, or Guaranteed or assumed by, the Company that (i) are for borrowed money or (ii) are evidenced by bonds, debentures, notes or other similar instruments.
     “Initial Interest Rate” has the meaning set forth in Section 2.1(e).
     “Interest Payment Date” has the meaning set forth in Section 2.1(e).
     “Interest Period” means the period from and including any Interest Payment Date (or, in the case of the first Interest Payment Date, May 16, 2008) to but excluding the next succeeding Interest Payment Date.
     “Make-Whole Redemption Price” means the sum, as determined by the Calculation Agent, of the present values, determined in accordance with customary financial practice, of the remaining scheduled payments of principal discounted from the Final Maturity Date and interest thereon that would have been payable to and including the Final Maturity Date (not including any portion of such payments of interest accrued to the Redemption Date) discounted from the relevant Interest Payment Date to the Redemption Date on a quarterly basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate plus 0.25%.
Sixth Supplemental Indenture

-4-


 

     “Other Debentures” means each of the series of Securities issued under the Seventh Supplemental Indenture to the Indenture and the Eighth Supplemental Indenture to the Indenture, each dated as of the date hereof, and each between the Company and the Trustee.
     “pari passu”, as applied to the ranking of any obligation of a Person in relation to any other obligation of such Person, means in any bankruptcy, insolvency or receivership proceeding that each such obligation either (i) is not subordinated or junior in right of payment to any other obligation or (ii) is subordinate or junior in right of payment to the same obligations as is the other, and is so subordinate or junior to the same extent, and is not subordinate or junior in right of payment to each other or to any obligation as to which the other is not so subordinate or junior.
     “Pledge Agreement” means the Pledge Agreement, dated as of May 16, 2008, among the Company, Wilmington Trust Company, as Collateral Agent, Custodial Agent and Securities Intermediary, and The Bank of New York, as Purchase Contract Agent, as it may be amended from time to time.
     “Purchase Contract Agreement” means the Purchase Contract Agreement, dated as of May 16, 2008, between the Company and The Bank of New York, as Purchase Contract Agent, as it may be amended from time to time.
     “Put Notice” has the meaning set forth in Section 2.1(n).
     “Put Right” has the meaning set forth in Section 2.1(n).
     “Reference Treasury Dealer” means each of Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., or their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. government securities dealer in the United States (a “Primary Treasury Dealer”), the Company shall substitute therefor another Primary Treasury Dealer; and any other Primary Treasury Dealer selected by the Calculation Agent after consultation with the Company.
     “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Calculation Agent, of the bid and ask prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Calculation Agent by that Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date.
     “Regular Record Date” for the payment of any current interest payable on any Interest Payment Date, the date specified in Section 2.1(f) and for the payment of Deferred Interest, the date specified in Section 2.1(g)(ii).
Sixth Supplemental Indenture

-5-


 

     “Remarketing” means a remarketing of Debentures pursuant to Section 2.1(p) and the Remarketing Agreement.
     “Remarketing Agents” means the Remarketing Agents and any successor or replacement remarketing agents appointed by the Company pursuant to Section 2.1(p).
     “Remarketing Agents’ Fee” means 0.25% of the sum of the Treasury Portfolio Purchase Price and the Separate Debentures Purchase Price.
     “Remarketing Agreement” means the remarketing agreement entered into among the Company, the Purchase Contract Agent and the Remarketing Agents pursuant to Section 2.1(p).
     “Remarketing Date” means any day during a Remarketing Period on which the Remarketing Agent finds buyers for all of the Debentures offered in the Remarketing by 4:00 p.m., New York City time.
     “Remarketing Period Start Date” means the first day of the Remarketing Period.
     “Reset Rate” has the meaning set forth in Section 2.1(p).
     “Reset Spread” has the meaning set forth in Section 2.1(p).
     “Successful” means, as to a Remarketing, that the Remarketing is conducted in accordance with Section 2.1(p) and the Remarketing Agent finds buyers for all of the Debentures offered in the Remarketing no later than 4:00 p.m., New York City time, on the last day of the Remarketing Period.
ARTICLE TWO
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
Section 2.1 Terms of Debentures
     Pursuant to Sections 201 and 301 of the Indenture, there is hereby established a series of Securities, the terms of which shall be as follows:
     (a) Designation. The Securities of this series shall be known and designated as the “5.67% Series B-1 Junior Subordinated Debentures” of the Company (the “Debentures”). The CUSIP number of the Debentures is 026874 BN6.
     (b) Aggregate Principal Amount. The maximum aggregate principal amount of the Debentures that may be authenticated and delivered under the Indenture and this Sixth Supplemental Indenture is $1,960,000,000 (except for
Sixth Supplemental Indenture

-6-


 

Debentures authenticated and delivered upon registration of transfer of, or exchange for, or in lieu of, other Debentures pursuant to Section 304, 305, 306, 906 or 1107 of the Indenture or 2.1(n) or 2.1(p) of this Sixth Supplemental Indenture).
     (c) Form and Denominations. (i) The Debentures will initially be issued in the form of one or more Securities substantially in the form of Annex A, with such modifications thereto as may be approved by the officer executing the same. The Debentures will be denominated in U.S. dollars and payments of principal and interest will be made in U.S. dollars. Except as provided for in Section 2.1(c)(ii), the Debentures will be issued only in fully registered certificated form without coupons, and the authorized denominations of the Debentures shall be $1,000 and integral multiples of $1,000 in excess thereof. Debentures that are components of Corporate Units shall be registered in the name of The Bank of New York, as Purchase Contract Agent. Principal and interest on the Debentures will be payable, the transfer of such Debentures will be registrable, and such Debentures will be exchangeable for Debentures of a like aggregate principal amount bearing identical terms and provisions, at the office or agency of the Company maintained for such purpose in the Borough of Manhattan, New York City, which shall initially be the Corporate Trust Office of the Trustee, provided, however, that payment of interest may be made, at the option of the Company, by check mailed to the Holder at such address as shall appear in the Security Register or by wire transfer to an account appropriately designated by the Holder entitled to payment. No service charge shall be made for any registration of transfer or exchange of any Debentures, but the Company may require payment from the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith.
     (i) If any Debenture is no longer a component of the Corporate Unit and released from the Collateral Account, the Company, at its election, may issue one or more certificates, in form of a Global Security to represent such Debenture and any other Debentures that cease to be a component of Corporate Units and are released from the Collateral Account. If issued as one or more Global Securities, the Depositary shall be The Depository Trust Company or such other depositary as any officer of the Company may from time to time designate. Upon the creation of Treasury Units or the recreation of Corporate Units, an appropriate annotation shall be made on the Schedule of Increases and Decreases on the Global Securities held by the Depositary and on the Schedule of Increases and Decreases on the Debenture held by the Collateral Agent. The Global Securities will be subject to the provisions of Section 305 of the Indenture and bear the legend in Section 204 of the Indenture; provided, however, that notwithstanding clause (2) of Section 305 of the Indenture, the Global Securities may be exchanged in whole or in part for Debentures registered in the name of the Purchase Contract Agent upon the recreation of Corporate Units in accordance
Sixth Supplemental Indenture

-7-


 

with the Purchase Contract Agreement and Pledge Agreement. Payments with respect to Global Securities will be made by wire transfer to the Depositary.
     (d) Maturity. The principal amount of, and all accrued and unpaid interest on, the outstanding Debentures shall be payable in full on the Final Maturity Date.
     (e) Rate of Interest. The Debentures shall bear interest (i) from and including May 16, 2008 to but excluding the earlier of their maturity date and the Remarketing Settlement Date at the rate of 5.67% per annum (the “Initial Interest Rate”), and (ii) from and including the Remarketing Settlement Date, at the Reset Rate. Interest on the Debentures shall be payable (i) quarterly in arrears on February 1, May 1, August 1 and November 1 of each year, beginning on August 1, 2008, (ii) if there is a Failed Remarketing, on February 15, 2011 for the period from and including February 1, 2011 to but excluding February 15, 2011 and (iii) after a Successful Remarketing, semi-annually in arrears on February 1 and August 1 at the Reset Rate, accruing from the Remarketing Settlement Date, unless the Company elects a Reset Rate that is a floating rate pursuant to Section 2.2(a)(iii) (each such date on which interest is to be paid, an “Interest Payment Date”). Except as provided in Section 2.1(p), the amount of interest payable on the Debentures for any period will be computed (i) for any full quarterly or semi-annual period on the basis of a 360-day year of twelve 30-day months and (ii) for any period shorter than a full quarterly or semi-annual period, on the basis of a 30-day month and, for any period less than a month, on the basis of the actual number of days elapsed per 30-day month. Except as provided in Section 2.1(p), in the event any Interest Payment Date falls on a day that is not a Business Day, the interest payment due on that date will be postponed to the next day that is a Business Day with the same force and effect as if made on such originally scheduled date and no interest shall accrue as a result of such postponement.
     (f) To Whom Interest is Payable. Except as provided in Section 2.1(g)(ii) and as otherwise determined by the Company from time to time, interest (other than Deferred Interest which shall be payable to the Persons specified pursuant to Section 2.1(g)(ii)) shall be payable to the Person in whose name the Debentures are registered at the close of business on the 15th day of the month prior to the month in which the Interest Payment Date falls, whether or not a Business Day, or on February 1, 2011 in the case of the Interest Payment Date, if any, that falls on February 15, 2011.
     (g) Option to Defer Interest Payments. (i) The Company shall have the right, at any time and from time to time prior to the First Stock Purchase Date, to defer the payment of interest on the Debentures for one or more consecutive Interest Periods; provided that no Deferral Period shall extend beyond the First Stock Purchase Date (such interest referred to as “Deferred Interest”). Deferred Interest will, subject to applicable law, accrue interest at the Initial Interest Rate
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compounded on each Interest Payment Date. The Company agrees that (A) until the First Stock Purchase Date, (x) if an Event of Default has occurred and is continuing, (y) the Company has given notice of its election to defer interest payments but the Deferral Period has not yet commenced or (z) a Deferral Period is continuing, (B) the Company has given notice of its election to defer Contract Adjustment Payments but the related deferral period has not yet commenced or a deferral period is continuing with respect to such Contract Adjustment Payments, or (C) Additional Debentures are outstanding, the Company shall not, and shall not permit any Subsidiary, subject to the exceptions specified in clause (v) of this Section 2.1(g), to: (a) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any Capital Stock of the Company, (b) make any payment of principal of, or interest or premium, if any, on, or repay, purchase or redeem any debt securities of the Company that rank pari passu with, or junior to, the Debentures (including the Other Debentures) or (c) make any payments with respect to any Guarantee by the Company of securities of any Subsidiary if such Guarantee ranks pari passu with, or junior to, the Debentures.
     (ii) The Company may pay Deferred Interest pursuant to this Section 2.1(g) to the Holder at any time either in the form of cash or in the form of an Additional Debentures having a principal amount equal to the aggregate amount of accrued but unpaid Deferred Interest on the date of issuance and maturing on the later of August 1, 2014 and the date five years after the date of commencement of the Deferral Period; provided, however, that the Company must pay any accrued but unpaid Deferred Interest to the Holder either in the form of cash or in the form of Additional Debentures on the First Stock Purchase Date, whether or not such Holder participates in the Remarketing. Deferred Interest paid on any Interest Payment Date shall be payable to the Person in whose name the Debentures are registered at the close of business on the Record Date next preceding such Interest Payment Date, provided that the Company shall establish a Special Record Date for any Deferred Interest to be paid on a date other than an Interest Payment Date and Holders on that Special Record Date shall be entitled to payment of the Deferred Interest.
     (iii) Upon termination of any Deferral Period and upon the payment of all Deferred Interest (together with any compounded interest thereon, if any, to the extent permitted by applicable law), the Company may elect to begin a new Deferral Period pursuant to clause (i) of this Section 2.1(g).
     (iv) The Company shall give written notice to the Trustee and the Holders of the Debentures of its election to begin any Deferral Period on any Interest Payment Date at least one Business Day prior to the Regular Record Date for that Interest Payment Date. Notwithstanding the previous sentence, the Company’s failure to pay any interest due within five Business Days after any Interest Payment Date occurring prior to the First Stock Purchase Date shall
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automatically and without any further action by any Person be deemed to commence a Deferral Period.
     (v) The restrictions in clause (i) of this Section 2.1(g) do not apply to (a) purchases, redemptions or other acquisitions of shares of the Company’s Capital Stock in connection with (1) any Employee Benefit Plan or the Assurance Agreement or (2) a dividend reinvestment, stock purchase plan or other similar plan, (b) any exchange or conversion of any class or series of the Company’s Capital Stock (or the Capital Stock of any Subsidiary) for any class or series of the Company’s Capital Stock or of any class or series of Indebtedness of the Company for any class or series of the Company’s Capital Stock, (c) the purchase of fractional interests in shares of the Capital Stock of the Company in accordance with the conversion or exchange provisions of the Company’s Capital Stock or the security or instrument being converted or exchanged, (d) any declaration of a dividend in connection with any stockholders’ rights plan, or the issuance of rights, equity securities or other property under any stockholders’ rights plan, or the redemption or repurchase of rights in accordance with any stockholders’ rights plan, (e) any dividend in the form of equity securities, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of the warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such equity securities, (f) any payment during a Deferral Period of current or deferred interest in respect of any debt securities of the Company that rank pari passu with the Debentures that is made pro rata to the amounts due on pari passu securities and the Debentures, (g) any payments of deferred interest or principal on such pari passu securities that, if not made, would cause the Company to breach the terms of the instrument governing such pari passu securities, (h) the repurchase of any debt securities of the Company that rank pari passu with the Debentures in exchange for Capital Stock in connection with a failed remarketing or similar event, any payment of deferred interest on any such debt securities in the form of additional debentures that will rank pari passu with the Debentures and the repayment of any such additional debentures at maturity or (i) any repayment or redemption of a security necessary to avoid a breach of the instrument governing that security.
     (h) Events of Default. After the First Stock Purchase Date, the Debentures shall be entitled to the benefits of the Events of Default set forth in Section 501 of the Indenture. Until the First Stock Purchase Date, the following events shall be Events of Default with respect to the Debentures (whatever the reason for such Event of Default and whether it shall be occasioned by the provisions of Article Fourteen of the Indenture or be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
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     (1) default in the payment of interest, including compounded interest, in full in cash or Additional Debentures on any Debenture for a period of 30 days after the First Stock Purchase Date;
     (2) default in the payment of the principal of any Debenture at the final stated maturity or upon a call for redemption pursuant to Section 2.1(i); or
     (3) the events set forth in Section 501(5) and (6) of the Indenture.
     (i) Redemption. The Debentures shall be redeemable in accordance with Article Eleven of the Indenture. Subject to Section 2.2(a)(ii), at any time on or after February 15, 2013, the Company may redeem, at its option, the Debentures, in whole or in part, at a price equal to the greater of their principal amount and the Make-Whole Redemption Price, plus, in either case, accrued and unpaid interest, if any, to the Redemption Date.
     (j) Sinking Fund. Article Twelve shall not apply to the Debentures.
     (k) Subordination. The Debentures shall at all times prior to the Remarketing Settlement Date, if any, be subject to Article Fourteen of the Indenture, subject to the following modifications:
     (i) For purposes of the Debentures, the “or” before clause (iii) of the definition of Senior Debt in the Indenture is deleted, the following clauses are added to the definition of Senior Debt in the Indenture after the word “contracts,” in clause (iii) for purposes of the Debentures:
“, (iv) any subordinated or junior subordinated debt that by its terms is not expressly pari passu or subordinated to the Debentures, (v) any Guarantee of any indebtedness, obligation or security issued by any Person that is an Affiliate of the Company and such Person is viewed by the Company as a vehicle to finance its operations, and (vi) Indebtedness of the Company to its Subsidiaries”; and
     (ii) For purposes of the Debentures, the following provision is added to the end of the definition of Senior Debt in the Indenture after the word “Securities”: “provided that (a) trade accounts payable and accrued liabilities arising in the ordinary course of the Company’s business, (b) the Company’s 6.25% Series A-1 Junior Subordinated Debentures, 5.75% Series A-2 Junior Subordinated Debentures, 4.875% Series A-3 Junior Subordinated Debentures, 6.45% Series A-4 Junior Subordinated Debentures, 7.70% Series A-5 Junior Subordinated Debentures and the
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Other Debentures and (c) any other indebtedness, Guarantee or other obligation that is specifically designated as being subordinate, or not superior, in right of payment to the Debentures, shall not be considered Senior Debt”.
     (iii) For purposes of the Debentures, the provisions of Section 1404 of the Indenture shall only apply in the case where (A) there has been an event of default with respect to Senior Debt within the meaning of clause (i) of the definition of Senior Debt, (B) the principal amount of such Senior Debt has been accelerated, (C) the outstanding principal amount of Senior Debt at the time of acceleration is at least $100,000,000 and (D) the event of default or acceleration has not been cured, waived, or otherwise ceased to exist. In no other case and to no other Senior Debt shall Section 1404 apply.
     (iv) The Debentures shall rank pari passu with the Company’s 6.25% Series A-1 Junior Subordinated Debentures, 5.75% Series A-2 Junior Subordinated Debentures, 4.875% Series A-3 Junior Subordinated Debentures, 6.45% Series A-4 Junior Subordinated Debentures, 7.70% Series A-5 Junior Subordinated Debentures and the Other Debentures.
     (l) Registrar, Paying Agent, Authenticating Agent and Place of Payment. The Company hereby appoints The Bank of New York as Security Registrar, Authenticating Agent and Paying Agent with respect to the Debentures. The Debentures may be surrendered for registration of transfer and for exchange without service charge, but upon payment of any taxes on other governmental charges payable in connection with such registration of transfer or exchange, at the office or agency of the Company maintained for such purpose in The City of New York, New York and at any other office or agency maintained by the Company for such purpose. The Place of Payment for the Debentures shall be the Paying Agent’s office in New York, New York. Principal and interest with respect to the Debentures will be payable, the transfer of the Debentures will be registrable and Debentures will be exchangeable for debentures of a like aggregate principal amount in denominations of $1,000 and integral multiples of $1,000, at the office of the Paying Agent.
     (m) Defeasance. After the First Stock Purchase Date, the Debentures will be subject to Sections 1302 and 1303 of the Indenture unless the Company makes the election set forth in Section 2.2(a)(iii).
     (n) Redemption at Holders’ Option. If there is a Failed Remarketing, each Holder of Debentures that are Separate Debentures will have the right to require the Company to redeem all or a portion of its Separate Debentures, but excluding any Additional Debentures, on the First Stock Purchase Date (the “Put Right”). Such right will be exercisable only upon delivery of notice to the Trustee
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on or prior to 11:00 a.m., New York City time, on the second Business Day prior to the First Stock Purchase Date (a “Put Notice”). A Put Notice shall be irrevocable. If a Put Notice shall have been duly given, the Separate Debentures to which the Put Notice relates shall become due and payable on the First Stock Purchase Date, and the Company shall redeem, such Debentures for a Redemption Price per Debenture equal to 100% of their principal amount. Accrued and unpaid interest on such Debenture to such date of redemption shall be paid to the Holders of such Debentures on the Record Date therefor. Section 1105 of the Indenture shall apply to any redemption pursuant to this Section 2.1(n), and Section 1107 of the Indenture shall apply to any Separate Debenture redeemed in part.
     (o) Modification. No supplemental indenture shall, without the consent of the Holder of each Outstanding Debenture, modify or amend Section 2.1(n) or Section 2.1(p) in any respect materially adverse to the Holder.
     (p) Remarketing and Reset Rate Mechanics.
     (i) Obligation to Conduct Remarketing and Related Requirements.
     (i) The Company and the Purchase Contract Agent shall appoint a nationally recognized investment banking firm as Remarketing Agent and enter into a Remarketing Agreement at least 30 days prior to the Remarketing Period Start Date. The Remarketing Agreement shall include such terms, conditions and other provisions as the Company, the Purchase Contract Agents and the Remarketing Agent may agree among themselves but shall in any event include provisions to substantially the following effect:
     (1) The Remarketing Agents will use their commercially reasonable efforts to obtain a price for the Debentures to be remarketed in the Remarketing which results in proceeds, net of the Remarketing Agents’ Fee, equal to at least 100% of the sum of the Treasury Portfolio Purchase Price and the Separate Debentures Purchase Price;
     (2) The Remarketing Agent will in consultation with the Company reset the Coupon Rate on the Debentures (as a rate per annum for payment of interest on each applicable Interest Payment Date) or establish the Reset Spread in order to give effect to clause (1) above for Interest Periods or portions thereof commencing on or after the Remarketing Settlement Date;
     (3) The Remarketing Agents will deduct the Remarketing Agents’ Fee from the proceeds of the Remarketing and remit any Proceeds remaining after such deduction to or at the direction of the Collateral
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Agent and the Custodial Agent in accordance with the Pledge Agreement; and
     (4) On any day in a Remarketing Period other than the last five Business Days of such Remarketing Period, the Company may, in its absolute discretion (and without prior notice being given to Holders of Debentures or of the Equity Units), postpone the Remarketing until the following Business Day by giving notice of such postponement to the Remarketing Agents in accordance with the Remarketing Agreement.
     (ii) The Company and the Purchase Contract Agent shall use their commercially reasonable efforts to effect Remarketing of the Debentures as described in this Section 2.1(p). If in the judgment of counsel to the Company or to the Remarketing Agents it is necessary for a Registration Statement covering the Debentures to have been filed and have become effective under the Securities Act in order to effect the Remarketing, then the Company and the Purchase Contract Agent shall use their commercially reasonable efforts (i) to ensure that a Registration Statement covering the full principal amount of Debentures to be remarketed shall have become effective in a form that will enable the Remarketing Agents to rely on it in connection with the Remarketing or (ii) effect such Remarketing pursuant to Rule 144A under the Securities Act or another available exemption from the registration requirements under the Securities Act.
     (ii) Reset of Coupon Rate in Connection with Remarketing.
     (i) As part of and in connection with the Remarketing, the Remarketing Agents shall, as contemplated by Section 2.1(p)(i)(2) and in accordance with the other provisions of this Section 2.1(p), (A) reset the Coupon Rate to a new rate (the “Reset Rate”), or (B) if the Company shall have made the election set forth in Section 2.2(a)(iii), establish the reset spread (the “Reset Spread”), rounded to the nearest one-thousandth (0.001) of one percent per annum, that will apply to all Debentures (whether or not the Holders thereof participated in the Remarketing) if such Remarketing is Successful for each Interest Period or portion thereof commencing on or after the Remarketing Settlement Date.
     (ii) If the Remarketing has been determined to be Successful in accordance with Section 2.1(p)(iii)(v), by approximately 4:30 p.m., New York City time, on any Remarketing Date, the Remarketing Agent shall notify the Company, the Purchase Contract Agent and the Trustee that the Remarketing was Successful and the Reset Rate or Reset Spread, as the case may be, determined as part of such Remarketing in accordance with this Section 2.1(p).
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     (iii) If a Remarketing is Successful, then commencing with the related Remarketing Settlement Date, (A) the Coupon Rate shall be reset to the Reset Rate or (B) if the Company shall have made the election set forth in Section 2.2(a)(iii), the Debentures shall bear interest at the Base Rate plus the Reset Spread, determined in accordance with this Section 2.1(p) pursuant to such Remarketing.
     (iv) In the event of a Failed Remarketing:
     (1) no Debentures will be sold in such Remarketing;
     (2) the Coupon Rate and the Interest Payment Dates will remain unchanged;
     (3) the Collateral Agent, for the benefit of the Company, will, at the written instruction of the Company, deliver or dispose of the Debentures that are included in Corporate Units in accordance with the Company’s written instructions to satisfy in full, from any such disposition or retention, such Holders’ obligations to pay the purchase price for the shares of Common Stock to be issued on the First Stock Purchase Date under the Stock Purchase Contracts underlying such Corporate Units; and
     (4) in the case of Debentures that are Separate Debentures the Holders of which elected to participate in the Remarketing, such Debentures will be returned to the related Holders in accordance with the Pledge Agreement and the Holders will be entitled to exercise the Put Right.
     (iii) Remarketing Procedures.
     (i) The Company will (A) (x) give, or cause the Trustee to give on its behalf, the Holders of the Separate Debentures and (y) cause the Purchase Contract Agent to give the record holders of Equity Units notice of the Remarketing at least seven Business Days prior to the Remarketing Period Start Date, and (B) request, not later than seven nor earlier than 15 calendar days prior to the Remarketing Period Start Date (or if clause (2) below applies, not later than 15 or earlier than 21 calendar days prior to the Remarketing Period Start Date), that the Depositary notify its participants holding Debentures, Corporate Units or Treasury Units, of the Remarketing. Such notices will set forth:
     (1) the Interest Payment Dates and Regular Record Dates that will apply after the Remarketing Settlement Date;
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     (2) the modifications to the terms of the Debentures, if any, effected pursuant to Section 2.2(a);
     (3) the procedures a beneficial owner must follow if it holds Debentures that are Separate Debentures to elect to participate in the Remarketing; and
     (4) the procedures a beneficial owner must follow to exercise its Put Right in the event such Remarketing is a Failed Remarketing if such beneficial owner holds Debentures that are Separate Debentures.
     (ii) On the Remarketing Period Start Date, all outstanding Debentures included in Corporate Units will be tendered or be deemed tendered to the Remarketing Agent for Remarketing. Each Holder of Debentures included in Corporate Units, by purchasing such Debentures agrees to have such Debentures remarketed on any Remarketing Date and authorizes the Remarketing Agent to take any and all action on its behalf necessary to effect the Remarketing.
     (iii) Each Holder of Debentures that are Separate Debentures may elect to have such Holder’s Debentures remarketed in the Remarketing in accordance with Section 5.02 of the Purchase Contract Agreement.
     (iv) If the Remarketing on any Remarketing Date is Successful, then on the Remarketing Settlement Date the Collateral Agent shall deliver to the Remarketing Agent the Debentures included in the Corporate Units and the Custodial Agent shall deliver to the Remarketing Agent the Debentures the Holders of which have made the election referred to in clause (iii) above, and the Remarketing Agent shall deduct the Remarketing Agent’s Fee to which it is entitled as provided in Section 2.1(p)(i) from the proceeds of such Remarketing and remit the remaining proceeds in accordance with Section 2.1(p)(i)(3) for application as provided therein.
     (v) If by 4:00 p.m., New York City time, on any Remarketing Date the Remarketing Agent has found buyers for all of the Debentures offered in the Remarketing in accordance with this Section 2.1(p), a Successful Remarketing shall be deemed to have occurred.
     (vi) If, by 4:00 p.m., New York City time, on the last day of the Remarketing Period, the Remarketing Agent is unable to find buyers for all of the Debentures offered in the Remarketing in accordance with this Section 2.1(p), such Remarketing shall be deemed to be a “Failed Remarketing.”
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     (vii) The Company shall notify, or cause the Trustee to notify, the Holders of the Debentures of a Successful Remarketing promptly following the Remarketing Settlement Date, and shall cause a notice of any Failed Remarketing to be published on the Business Day following the last day of the Remarketing Period, by publication in a daily newspaper in the English language of general circulation in New York City, which is expected to be The Wall Street Journal.
     (viii) The right of each Holder (whether of Separate Debentures or of Debentures included in Corporate Units) to have its Debentures remarketed and sold in connection with any Remarketing shall be limited to the extent that (i) the Remarketing Agents conduct a Remarketing pursuant to the terms of the Remarketing Agreement, (ii) the Remarketing Agents are able to find a purchaser or purchasers for the Debentures offered in the Remarketing in accordance with this Section 2.1(p) and the Remarketing Agreement, and (iii) the purchaser or purchasers deliver the purchase price therefor to the Remarketing Agent as and when required.
     (ix) Neither the Company nor the Remarketing Agents shall be obligated in any case to provide funds to make payment upon tender of Debentures for Remarketing.
Section 2.2 Company’s Election to Change Certain Terms
     (a) The Company may, without the consent of any Holders of Debentures, in consultation with the Remarketing Agents, elect at any time at least 30 days prior to the Remarketing Period Start Date, but on one occasion only:
     (i) to change the maturity of principal of the Debentures to a date that is earlier than February 15, 2041; provided, however, that the maturity of principal of the Debentures may not be changed to a date earlier than February 15, 2013;
     (ii) to change the terms of the Debentures to eliminate the Company’s right to redeem the Debentures at its option or to specify a date, which may not be earlier than February 15, 2013, on and after which the Debentures will be redeemable at the Company’s option either in whole or in part (as elected by the Company) or to modify the definition of “Make-Whole Redemption Price” or to provide that the Redemption Price shall be equal to the principal amount of the Debentures to be redeemed, plus accrued and unpaid interest to the Redemption Date; or
     (iii) to provide that the Debentures shall bear interest at a floating rate equal to the applicable index (the “Base Rate”) plus a Reset Spread to be determined in accordance with Section 2.1(p), in which case the Company may
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also elect to modify the business day and day count conventions set forth in Section 2.1(e) to conform to market practice for floating-rate debentures bearing interest at a rate determined by reference to such index.
     (b) The Company shall make the elections provided for in Section 2.2(a), as applicable, by giving irrevocable written notice of such elections to the Trustee. Any election under Sections 2.2(a)(i) and 2.2(a)(ii) shall be effective when made, and any such election under Section 2.2(a)(iii) shall be effective on the Remarketing Settlement Date.
     (c) In the case of a Successful Remarketing, on or after the Remarketing Settlement Date the Debentures will cease to be subordinated and the provisions of Section 2.1(k) shall not apply. In the case of a Failed Remarketing, the Debentures will remain subordinated to Senior Debt and Section 2.1(k) will continue to apply.
Section 2.3 Tax Treatment
     (a) The Company agrees, and by acceptance of a Corporate Unit, each holder of a Corporate Unit will be deemed to have agreed (unless the United States Internal Revenue Service requires a different treatment from such holder) (1) for United States federal, state and local income and franchise tax purposes to treat the acquisition of a Corporate Unit as the acquisition of the applicable ownership interest in the Debenture and the Other Debentures and the Stock Purchase Contract constituting the Corporate Unit, (2) to treat the Debenture as indebtedness for United States federal, state and local income and franchise tax purposes, (3) if such holder purchased the Corporate Unit in the initial offering for $75, to allocate $25 to the undivided beneficial ownership interests in the Debenture and each Other Debenture and $0 to the Stock Purchase Contract included in a Corporate Unit, and (4) to treat the Debenture as a “variable rate debt instrument” for U.S. federal income tax purposes.
     (b) Any payment (including cash or property) and original issue discount under the terms of this Sixth Supplemental Indenture shall be subject to withholding and backup withholding of tax as required by law. Any such withholding and backup withholding shall be treated as if made to the intended recipient in full compliance with the terms hereof.
ARTICLE THREE
MISCELLANEOUS
Section 3.1 Relationship to Existing Indenture
     The Sixth Supplemental Indenture is a supplemental indenture within the meaning of the Indenture. The Indenture, as supplemented and amended by this Sixth
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Supplemental Indenture, is in all respects ratified, confirmed and approved and, with respect to the Debentures, the Indenture, as supplemented and amended by this Sixth Supplemental Indenture, shall be read, taken and construed as one and the same instrument.
Section 3.2 Modification of the Existing Indenture
     Except as expressly modified by this Sixth Supplemental Indenture, the provisions of the Indenture shall govern the terms and conditions of the Debentures.
Section 3.3 Governing Law
     This instrument shall be governed by and construed in accordance with the laws of the State of New York.
Section 3.4 Counterparts
     This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
Section 3.5 Trustee Makes No Representation
     The recitals contained herein are made by the Company and not by the Trustee, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representation as to the validity or sufficiency of this Sixth Supplemental Indenture (except for its execution thereof and its certificates of authentication of the Debentures).
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     In Witness Whereof, the parties hereto have caused this Sixth Supplemental Indenture to be duly executed all as of the day and year first above written.
             
    AMERICAN INTERNATIONAL GROUP, INC.    
 
           
 
  By  
/s/ Robert A. Gender
   
 
      Name: Robert A. Gender    
 
      Title: Vice President and Treasurer    
 
           
    THE BANK OF NEW YORK,    
    as Trustee    
 
           
 
  By  
/s/ Sherma Thomas
   
 
      Name: Sherma Thomas
 
      Title: Assistant Treasurer
Sixth Supplemental Indenture


 

ANNEX A
     [Include if this Security is a Global Security — THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OR TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
AMERICAN INTERNATIONAL GROUP, INC.
5.67% SERIES B-1 JUNIOR SUBORDINATED DEBENTURES
     
No.   CUSIP No.: 026874 BN6
$   ISIN: US026874BN67
     American International Group, Inc., a corporation duly organized and existing under the laws of Delaware (herein called the “Company”, which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to         , or registered assigns, the principal sum of            Dollars ($ )][Include in Global Security and in Pledged Debenture — the principal sum as set forth on the Schedule of Increases or Decreases in Security attached hereto, which shall not exceed [ ]] on February 15, 2041, and to pay interest on said principal sum from May 16, 2008 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, subject to deferral as set forth herein, in arrears at a rate (i) of 5.67% per annum on February 1, May 1, August 1 and November 1 (each such date, an “Interest Payment Date”), commencing August 1, 2008, to but not including the earlier of the repayment of the outstanding principal amount of this Security and the Remarketing Settlement Date, (ii) if there is a Failed Remarketing, on February 15, 2011 for the period from and including February 1, 2011 to but excluding February 15, 2011 and (iii) if the Remarketing Settlement Date occurs, equal to the Reset Rate from and including the Remarketing Settlement Date, on each February 1 and August 1, or if the Company has elected that this Security will bear interest at a floating rate after the Remarketing Settlement Date, equal to the Base Rate plus the Reset Spread, on each February 1, May 1, August 1 and November 1, subject to adjustment as provided herein, commencing with the first such date to occur after the Remarketing Settlement Date, until
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the principal hereof shall have become due and payable, and on any overdue principal and premium, if any, and (without duplication and to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the same rate per annum compounded on each Interest Payment Date. The amount of interest payable on any Interest Payment Date shall, except as provided herein, be computed (i) for any full quarterly or semi-annual period on the basis of a 360-day year comprised of twelve 30-day months, (ii) for any period shorter than a full quarterly or semi-annual period, on the basis of a 30-day month and, for (iii) any period less than a month, on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which interest is payable on this Security is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay). The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities, as defined in said Indenture) is registered at the close of business on the Regular Record Date for such interest installment, which shall be the close of business on the 15th day of the month prior to the month in which the Interest Payment Date falls, or on February 1, 2011 in the case of the Interest Payment Date, if any, that falls on February 15, 2011, whether or not a Business Day or such other date as the Company may specify. Any such interest installment not punctually paid or duly provided for (other than Deferred Interest) shall forthwith cease to be payable to the registered Holders on such Regular Record Date and may be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date to be fixed by the Trustee for the payment of such Defaulted Interest, notice whereof shall be given to the registered Holders of this series of Securities not less than 10 days prior to such special record date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.
     Until the Remarketing Settlement Date, if any, the indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Debt of the Company, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by, such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination so provided and (c) appoints the Trustee his or her attorney-in-fact for any and all such purposes. Each Holder hereof, by his or her acceptance hereof, hereby waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Debt of the Company, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions.
     The Company shall have the right, at any time and from time to time, prior to February 15, 2011 to defer the payment of interest on this Security for one or more consecutive Interest Periods as described on the reverse hereof. The Company shall give
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written notice to the Trustee and the Holders of this Security of its election to begin any Deferral Period at least one Business Day prior to the Regular Record Date for that Interest Payment Date, provided, however, that the Company’s failure to pay any interest due within five Business Days after any Interest Payment Date occurring prior to the First Stock Purchase Date shall automatically and without any further action by any Person be deemed to commence a Deferral Period.
     Payment of the principal of (and premium, if any) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or by wire transfer of immediately available funds to an account designated by the Holder of this Security.
     Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
     Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
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     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
     Dated:
             
    American International Group, Inc.    
 
           
 
  By:        
 
     
 
Name:
   
 
      Title:    
 
           
Attest:
           
 
           
 
  [Secretary or Assistant Secretary]
           
     This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
Dated:
             
    The Bank of New York, as Trustee    
 
           
 
  By:        
 
     
 
Name:
   
 
      Title:    
Series B-1 Debenture
(Signature Page for Security)


 

ANNEX A
REVERSE OF SECURITY
     This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued and to be issued in one or more series under a Junior Subordinated Debt Indenture, dated as of March 13, 2007 (herein called the “Base Indenture”), as supplemented by a Sixth Supplemental Indenture, dated as of May 16, 2008 (herein called the “Sixth Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), in each case, between the Company and The Bank of New York, as Trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, the holders of Senior Debt and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof limited in aggregate principal amount to $1,960,000,000 (except for Securities authenticated and delivered upon registration or transfer of, or exchange for, or in lieu of, other Securities pursuant to Section 304, 305, 306, 906 or 1107 of the Base Indenture or 2.1(n) or 2.1(p) of the Sixth Supplemental Indenture).
     All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.
     The Securities of this series are subject to redemption on or after February 15, 2013, in whole or in part, upon not less than 30 days nor more than 60 days’ prior notice by first class mail, postage pre-paid, to each Holder of Securities to be redeemed, at a Redemption Price equal to the greater of 100% of the principal amount thereof and the Make-Whole Redemption Price, plus, in either case, accrued and unpaid interest, if any, to the Redemption Date.
     In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor and of an authorized denomination for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.
     The Company may elect at any time at least 30 days prior to the Remarketing Period Start Date, but on one occasion only:
     (i) to change the maturity of principal of this Security to a date that is earlier than February 15, 2041; provided, however, that the maturity of principal of this Security may not be changed to a date earlier than February 15, 2013;
     (ii) to change the terms of this Security to eliminate the Company’s right to redeem this Security at its option or to specify a date that may not be earlier than February 15, 2013 on and after which this Security will be redeemable at the Company’s option either in whole or in part (as elected by the Company) or to modify the definition of Make-Whole Redemption Price or to provide that the
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Redemption Price shall be equal to the principal amount of this Security to be redeemed, plus accrued and unpaid interest to the Redemption Date; or
     (iii) to provide that this Security shall bear interest at a floating rate equal to the applicable index plus a Reset Spread determined in accordance with Section 2.1(p) of the Sixth Supplemental Indenture, in which case the Company may also elect to modify the business day and day count conventions set forth in Section 2.1(e) of the Sixth Supplemental Indenture to conform to market practice for floating-rate debentures bearing interest at a rate determined by reference to such index.
     The elections set forth in clauses (i) and (ii) of the preceding paragraph shall become effective immediately upon the Trustee’s receipt of such notice and the election set forth in clause (iii) above shall become effective on the Remarketing Settlement Date.
     The Indenture contains provisions permitting the Company and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal amount of the Securities of each series affected at the time Outstanding, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Securities; provided, however, that, except as provided above and in the Sixth Supplemental Indenture, no such supplemental indenture shall (i) extend the fixed maturity of any Securities of any series, or reduce the principal amount thereof, reduce the rate or extend the time of payment of interest thereon, reduce any premium payable upon the redemption thereof, modify the right of Holders of Securities that are Separate Debentures to require the Company to purchase such Securities upon a Failed Remarketing, or modify the provisions of the Indenture relating to the Remarketing of the Securities, without the consent of the Holder of each Security so affected, or (ii) reduce the aforesaid percentage of Securities the Holders of which are required to consent to any such supplemental indenture, without the consent of the Holders of each Security then outstanding and affected thereby. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Securities of any series at the time outstanding affected thereby, on behalf of all of the Holders of the Securities of such series, to waive any past default in the performance of any of the covenants contained in the Indenture, or established pursuant to the Indenture with respect to such series, and its consequences, except a default in the payment of the principal of or premium, if any, or interest (subject to the Company’s right to defer interest payments) on any of the Securities of such series. Any such consent or waiver by the registered Holder of this Security (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Security and of any Security issued in exchange herefor or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Security.
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     No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest (subject to the Company’s right to defer interest payments) on this Security at the time and place and at the rate and in the money herein prescribed.
     The Company shall have the right, at any time and from time to time prior to February 15, 2011, to defer the payment of interest on the Securities for one or more consecutive Interest Periods; provided that no Deferral Period shall extend beyond February 15, 2011 (such interest referred to as “Deferred Interest”). Deferred Interest will accrue interest at the rate of 5.67% per annum compounded on each Interest Payment Date. The Company agrees that (A) until February 15, 2011, (x) if an Event of Default has occurred and is continuing, (y) the Company has given notice of its election to defer interest payments but the Deferral Period has not yet commenced or (z) a Deferral Period is continuing, (B) the Company has given notice of its election to defer Contract Adjustment Payments but the related deferral period has not yet commenced or a deferral period is continuing with respect to such Contract Adjustment Payments, or (C) Additional Debentures are outstanding, the Company shall not, and shall not permit any Subsidiary, subject to the exceptions specified below, to: (a) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any Capital Stock of the Company, (b) make any payment of principal of, or interest or premium, if any, on, or repay, purchase or redeem any debt securities of the Company that rank pari passu with, or junior to, this Security or (c) make any payments with respect to any Guarantee by the Company of securities of any Subsidiary if such Guarantee ranks pari passu with, or junior to, this Security. The Company may pay Deferred Interest (together with compounded interest thereon, if any, to the extent permitted by applicable law) to the Holder at any time either in the form of cash or in the form of Additional Debentures having a principal amount equal to the amount of accrued but unpaid Deferred Interest on the date of issuance and maturing on the later of August 1, 2014 and the date five years after the date of commencement of the Deferral Period; provided, however, that the Company must pay any accrued but unpaid Deferred Interest to the Holder either in the form of cash or in the form of Additional Debentures on the First Stock Purchase Date, whether or not such Holder participates in the Remarketing. Deferred Interest paid on any Interest Payment Date shall be payable to the Person in whose name the Debentures are registered at the close of business on the Regular Record Date next preceding such Interest Payment Date, provided that the Company may establish a Special Record Date for any Deferred Interest to be paid on a date other than an Interest Payment Date and Holders on that Special Record Date shall be entitled to payment of the Deferred Interest. Upon termination of any Deferral Period and upon the payment of all Deferred Interest and any compounded interest then due on any Interest Payment Date, the Company may elect to begin a new Deferral Period.
     The restrictions on payments do not apply to (a) purchases, redemptions or other acquisitions of shares of the Company’s Capital Stock in connection with (1) any Employee Benefit Plan or the Assurance Agreement or (2) a dividend reinvestment, stock
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purchase plan or other similar plan, (b) any exchange or conversion of any class or series of the Company’s Capital Stock (or the Capital Stock of any Subsidiary) for any class or series of the Company’s Capital Stock or of any class or series of Indebtedness of the Company for any class or series of the Company’s Capital Stock, (c) the purchase of fractional interests in shares of the Capital Stock of the Company in accordance with the conversion or exchange provisions of the Company’s Capital Stock or the security or instrument being converted or exchanged, (d) any declaration of a dividend in connection with any stockholders’ right plan, or the issuance of rights, equity securities or other property under any stockholders’ right plan, or the redemption or repurchase of rights in accordance with any stockholders’ rights plan, (e) any dividend in the form of equity securities, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of the warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such equity securities, (f) any payment during a Deferral Period of current or deferred interest in respect of any debt securities of the Company that rank pari passu with the Debentures that is made pro rata to the amounts due on pari passu securities and the Debentures, (g) any payments of deferred interest or principal on such pari passu securities that, if not made, would cause the Company to breach the terms of the instrument governing such pari passu securities, (h) the repurchase of any debt securities of the Company that rank pari passu with this Security in exchange for common stock in connection with a failed remarketing or similar event, any payment of deferred interest on any such debt securities in the form of additional debentures that will rank pari passu with this Security and the repayment of any such additional debentures at maturity or (i) any repayment or redemption of a security necessary to avoid a breach of the instrument governing that security.
     After the First Stock Purchase Date, so long as this Security bears interest at a fixed rate of interest, this Security will be subject to defeasance of the entire indebtedness of this Security and of certain restrictive covenants and events of default, in each case upon compliance with certain conditions set forth in the Indenture.
     After the First Stock Purchase Date, the Securities of this series will be entitled to the benefits of the Events of Default described in the Base Indenture. Until the First Stock Purchase Date, the Securities of this series are entitled to the Events of Default specified in the Sixth Supplemental Indenture.
     As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 25% in principal amount of the Securities of this series at the time outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default, as Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time outstanding a direction inconsistent with such request, and shall have failed to
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institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or, to the extent provided in Section 2.1(g) of the Sixth Supplemental Indenture, interest hereon on or after the respective due dates.
     As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
     The Securities of this series are issuable only in registered form without coupons in denominations of $1,000 and integral multiples of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.
     No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
     Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
     The Company agrees, and by acceptance of a Corporate Unit, each holder of a Corporate Unit will be deemed to have agreed (unless the United States Internal Revenue Service requires a different treatment from such holder) (1) for United States federal, state and local income and franchise tax purposes to treat the acquisition of a Corporate Unit as the acquisition of the applicable ownership interest in this Security and the Other Debentures and the Stock Purchase Contract constituting the Corporate Unit, (2) to treat this Security as indebtedness for United States federal, state and local income and franchise tax purposes, (3) if such holder purchased the Corporate Unit in the initial offering for $75, to allocate $25 to the undivided beneficial ownership interests in this Security and each Other Debenture and $0 to the Stock Purchase Contract included in a Corporate Unit, and (4) to treat this Security as a “variable rate debt instrument” for U.S. federal income tax purposes.
Series B-1 Debenture

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     THE BASE INDENTURE, THE SIXTH SUPPLEMENTAL INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Series B-1 Debenture

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ABBREVIATIONS
     The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:
     
TEN COM:
  as tenants in common
 
   
UNIF GIFT MIN ACT:    
                          Custodian                                    
 
  (Cust) (Minor)
 
   
TEN ENT:
  as tenants by the entireties
 
   
JT TEN:
  as joint tenants with right of survivorship and not as tenants in common
 
   
Under Uniform Gifts to Minors Act (State)
   
Additional abbreviations may also be used though not in the above list.
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ASSIGNMENT
     FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
 
 
(Please insert Social Security or Taxpayer I.D. or other Identifying Number of Assignee)
 
 
(Please print or type name and address including Postal Zip code of Assignee)
the within Debenture and all rights thereunder, hereby irrevocably constituting and appointing                                          Attorney, to transfer said Debenture on the books of the Security Registrar, with full power of substitution in the premises.
                 
Dated:
      Signature        
 
               
 
               
        NOTICE: The signature to this assignment must correspond with
        the name as it appears upon the face of the within Debenture in
        every particular, without alteration or enlargement or any
        change whatsoever.
Signature Guarantee:
               
         
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[TO BE ATTACHED TO GLOBAL CERTIFICATES AND PLEDGED
DEBENTURES]
SCHEDULE OF INCREASES OR DECREASES IN SECURITY
The initial principal amount of Securities represented by this [Global] Security is $         . The following increases or decreases in this [Global] Security have been made:
                 
                Signature of
            Principal   authorized
    Amount of   Amount of   amount of this   signatory of
    increase in   decrease in   Security   [Security
    principal   principal   following such   Registrar]
    amount of this   amount of this   decrease or   [Collateral
Date   Security   Security   increase   Agent]
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
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EX-4.2
Exhibit 4.2
AMERICAN INTERNATIONAL GROUP, INC.
 
Seventh Supplemental Indenture
Dated as of May 16, 2008
 
(Supplemental to the Junior Subordinated Debt Indenture Dated as of March 13, 2007)
 
THE BANK OF NEW YORK,
as Trustee

 


 

     SEVENTH SUPPLEMENTAL INDENTURE, dated as of May 16, 2008, between American International Group, Inc., a corporation duly organized and existing under the laws of the State of Delaware (herein called the “Company”), and The Bank of New York, a New York banking corporation, as Trustee (herein called “Trustee”);
R E C I T A L S:
     WHEREAS, the Company has heretofore executed and delivered to the Trustee a Junior Subordinated Debt Indenture, dated as of March 13, 2007 (the “Indenture”), providing for the issuance from time to time of the Company’s unsecured debentures, notes or other evidences of indebtedness (herein and therein called the “Securities”), to be issued in one or more series as provided in the Indenture;
     WHEREAS, Section 901 of the Indenture permits the Company and the Trustee to enter into an indenture supplemental to the Indenture to establish the form and terms of a series of Securities;
     WHEREAS, Section 201 of the Indenture permits the form of Securities of a series to be established in an indenture supplemental to the Indenture;
     WHEREAS, Section 301 of the Indenture permits certain terms of a series of Securities to be established pursuant to an indenture supplemental to the Indenture;
     WHEREAS, pursuant to Sections 201 and 301 of the Indenture, the Company desires to provide for the establishment of a new series of Securities under the Indenture, the form and substance of such Securities and the terms, provisions and conditions thereof to be set forth as provided in the Indenture and this Seventh Supplemental Indenture;
     WHEREAS, all things necessary to make this Seventh Supplemental Indenture a valid agreement of the Company, in accordance with its terms, have been done;
     WHEREAS, the Corporate Units will include as a component the Debentures (as hereinafter defined);
     WHEREAS, the Debentures are entitled to the benefit of a Remarketing Agreement, dated as of the date hereof, among the Company, the Purchase Contract Agent (as hereinafter defined) and Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., as Remarketing Agents;
     NOW, THEREFORE, THIS SEVENTH SUPPLEMENTAL INDENTURE WITNESSETH:
Seventh Supplemental Indenture

 


 

     For and in consideration of the premises and the purchase of the Securities of the series established by this Seventh Supplemental Indenture by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all such Holders, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.1 Relation to Indenture
     This Seventh Supplemental Indenture constitutes a part of the Indenture (the provisions of which, as modified by this Seventh Supplemental Indenture, shall apply to the Debentures) in respect of the Debentures but shall not modify, amend or otherwise affect the Indenture insofar as it relates to any other series of Securities or modify, amend or otherwise affect in any manner the terms and conditions of the Securities of any other series.
Section 1.2 Definitions
     For all purposes of this Seventh Supplemental Indenture, the capitalized terms used herein (i) which are defined in this Section 1.2 have the respective meanings assigned hereto in this Section 1.2 and (ii) which are defined in the Indenture (and which are not defined in this Section 1.2) have the respective meanings assigned thereto in the Indenture. For all purposes of this Seventh Supplemental Indenture:
     1.2.1 Unless the context otherwise requires, any reference to an Article, Section or Annex refers to an Article or Section of, or Annex to, as the case may be, this Seventh Supplemental Indenture;
     1.2.2 The words “herein”, “hereof” and “hereunder” and words of similar import refer to this Seventh Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision;
     1.2.3 The following terms have the meanings given to them in the Pledge Agreement (where applicable, with respect to the Debentures): Collateral Account; Collateral Agent; Custodial Agent, and Proceeds;
     1.2.4 The following terms have the meanings given to them in the Purchase Contract Agreement (where applicable, with respect to the Debentures): Contract Adjustment Payments; Corporate Units; Equity Units; Purchase Contract Agent; Remarketing Period; Remarketing Settlement Date; Second Stock Purchase Date; Separate Debentures; Separate Debentures Purchase Price; Stock Purchase Contract; Stock Purchase Date; Treasury Portfolio Purchase Price, and Treasury Units.
Seventh Supplemental Indenture

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     1.2.5 The terms defined in this Section 1.2.5 have the meanings assigned to them in this Section and include the plural as well as the singular:
     “Additional Debentures” means any debt securities issued pursuant to Section 5.11(c) of the Purchase Contract Agreement in respect of deferred Contract Adjustment Payments or pursuant to Section 2.1(g)(ii), and shall (a) bear interest at an annual rate equal to the then market rate of interest for similar instruments (not to exceed 10%), as determined by a nationally recognized investment banking firm selected by the Company, (b) rank pari passu with the Debentures, (c) provide for optional deferral on the same basis as the Debentures (d) be redeemable at the Company’s option at any time at their principal amount, plus accrued and unpaid interest thereon through their date of redemption and (e) be issued under the Indenture.
     “Adjusted Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.
     “Assurance Agreement” means the agreement of the Company, dated as of June 27, 2005, in favor of eligible employees and relating to specified obligations of Starr International Company, Inc. (as such agreement may be amended, supplemented, extended, modified or replaced from time to time).
     “Base Rate” has the meaning set forth in Section 2.2(a)(iii).
     “Business Day” is any day, other than a Saturday, Sunday or other day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed.
     “Calculation Agent” means AIG Financial Products Corp., or any other Person appointed by the Company, acting as calculation agent for the Debentures. Any successor or substitute Calculation Agent may be an Affiliate of the Company.
     “Capital Stock” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) shares issued by that Person.
     “Comparable Treasury Issue” means the U.S. Treasury security selected by an independent investment bank selected by the Calculation Agent as having a maturity comparable to the term remaining from the Redemption Date to the Final Maturity Date that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity.
     “Comparable Treasury Price” means, with respect to any Redemption Date, the average of the Reference Treasury Dealer Quotations for such Redemption Date.
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     “Coupon Rate” means the interest rate payable on the Debentures as set forth herein.
     “Debentures” has the meaning set forth in Section 2.1(a).
     “Deferred Interest” has the meaning set forth in Section 2.1(g).
     “Deferral Period” means each period beginning on an Interest Payment Date with respect to which the Company elects pursuant to Section 2.1(g) to defer all or part of any interest payment due on such Interest Payment Date and ending on the earlier of (i) the Second Stock Purchase Date and (ii) the next Interest Payment Date on which the Company has paid all accrued and previously unpaid interest on the Debentures.
     “Employee Benefit Plan” means any written purchase, savings, option, bonus, appreciation, profit sharing, thrift, incentive, pension or similar plan or arrangement or any written compensatory contract or arrangement.
     “Events of Default” has the meaning set forth in Section 2.1(h).
     “Failed Remarketing” has the meaning set forth in Section 2.1(p)(iii).
     “Final Maturity Date” means the earlier of May 1, 2041 and the maturity date specified by the Company pursuant to Section 2.2(a)(i).
     “Indebtedness” means all indebtedness and obligations (other than the Debentures) of, or Guaranteed or assumed by, the Company that (i) are for borrowed money or (ii) are evidenced by bonds, debentures, notes or other similar instruments.
     “Initial Interest Rate” has the meaning set forth in Section 2.1(e).
     “Interest Payment Date” has the meaning set forth in Section 2.1(e).
     “Interest Period” means the period from and including any Interest Payment Date (or, in the case of the first Interest Payment Date, May 16, 2008) to but excluding the next succeeding Interest Payment Date.
     “Make-Whole Redemption Price” means the sum, as determined by the Calculation Agent, of the present values, determined in accordance with customary financial practice, of the remaining scheduled payments of principal discounted from the Final Maturity Date and interest thereon that would have been payable to and including the Final Maturity Date (not including any portion of such payments of interest accrued to the Redemption Date) discounted from the relevant Interest Payment Date to the Redemption Date on a quarterly basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate plus 0.25%.
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     “Other Debentures” means each of the series of Securities issued under the Sixth Supplemental Indenture to the Indenture and the Eighth Supplemental Indenture to the Indenture, each dated as of the date hereof, and each between the Company and the Trustee.
     “pari passu”, as applied to the ranking of any obligation of a Person in relation to any other obligation of such Person, means in any bankruptcy, insolvency or receivership proceeding that each such obligation either (i) is not subordinated or junior in right of payment to any other obligation or (ii) is subordinate or junior in right of payment to the same obligations as is the other, and is so subordinate or junior to the same extent, and is not subordinate or junior in right of payment to each other or to any obligation as to which the other is not so subordinate or junior.
     “Pledge Agreement” means the Pledge Agreement, dated as of May 16, 2008, among the Company, Wilmington Trust Company, as Collateral Agent, Custodial Agent and Securities Intermediary, and The Bank of New York, as Purchase Contract Agent, as it may be amended from time to time.
     “Purchase Contract Agreement” means the Purchase Contract Agreement, dated as of May 16, 2008, between the Company and The Bank of New York, as Purchase Contract Agent, as it may be amended from time to time.
     “Put Notice” has the meaning set forth in Section 2.1(n).
     “Put Right” has the meaning set forth in Section 2.1(n).
     “Reference Treasury Dealer” means each of Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., or their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. government securities dealer in the United States (a “Primary Treasury Dealer”), the Company shall substitute therefor another Primary Treasury Dealer; and any other Primary Treasury Dealer selected by the Calculation Agent after consultation with the Company.
     “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Calculation Agent, of the bid and ask prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Calculation Agent by that Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date.
     “Regular Record Date” for the payment of any current interest payable on any Interest Payment Date, the date specified in Section 2.1(f) and for the payment of Deferred Interest, the date specified in Section 2.1(g)(ii).
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     “Remarketing” means a remarketing of Debentures pursuant to Section 2.1(p) and the Remarketing Agreement.
     “Remarketing Agents” means the Remarketing Agents and any successor or replacement remarketing agents appointed by the Company pursuant to Section 2.1(p).
     “Remarketing Agents’ Fee” means 0.25% of the sum of the Treasury Portfolio Purchase Price and the Separate Debentures Purchase Price.
     “Remarketing Agreement” means the remarketing agreement entered into among the Company, the Purchase Contract Agent and the Remarketing Agents pursuant to Section 2.1(p).
     “Remarketing Date” means any day during a Remarketing Period on which the Remarketing Agent finds buyers for all of the Debentures offered in the Remarketing by 4:00 p.m., New York City time.
     “Remarketing Period Start Date” means the first day of the Remarketing Period.
     “Reset Rate” has the meaning set forth in Section 2.1(p).
     “Reset Spread” has the meaning set forth in Section 2.1(p).
     “Successful” means, as to a Remarketing, that the Remarketing is conducted in accordance with Section 2.1(p) and the Remarketing Agent finds buyers for all of the Debentures offered in the Remarketing no later than 4:00 p.m., New York City time, on the last day of the Remarketing Period.
ARTICLE TWO
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
Section 2.1 Terms of Debentures
     Pursuant to Sections 201 and 301 of the Indenture, there is hereby established a series of Securities, the terms of which shall be as follows:
     (a) Designation. The Securities of this series shall be known and designated as the “5.82% Series B-2 Junior Subordinated Debentures” of the Company (the “Debentures”). The CUSIP number of the Debentures is 026874 BP1.
     (b) Aggregate Principal Amount. The maximum aggregate principal amount of the Debentures that may be authenticated and delivered under the Indenture and this Seventh Supplemental Indenture is $1,960,000,000 (except for
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Debentures authenticated and delivered upon registration of transfer of, or exchange for, or in lieu of, other Debentures pursuant to Section 304, 305, 306, 906 or 1107 of the Indenture or 2.1(n) or 2.1(p) of this Seventh Supplemental Indenture).
     (c) Form and Denominations. (i) The Debentures will initially be issued in the form of one or more Securities substantially in the form of Annex A, with such modifications thereto as may be approved by the officer executing the same. The Debentures will be denominated in U.S. dollars and payments of principal and interest will be made in U.S. dollars. Except as provided for in Section 2.1(c)(ii), the Debentures will be issued only in fully registered certificated form without coupons, and the authorized denominations of the Debentures shall be $1,000 and integral multiples of $1,000 in excess thereof. Debentures that are components of Corporate Units shall be registered in the name of The Bank of New York, as Purchase Contract Agent. Principal and interest on the Debentures will be payable, the transfer of such Debentures will be registrable, and such Debentures will be exchangeable for Debentures of a like aggregate principal amount bearing identical terms and provisions, at the office or agency of the Company maintained for such purpose in the Borough of Manhattan, New York City, which shall initially be the Corporate Trust Office of the Trustee, provided, however, that payment of interest may be made, at the option of the Company, by check mailed to the Holder at such address as shall appear in the Security Register or by wire transfer to an account appropriately designated by the Holder entitled to payment. No service charge shall be made for any registration of transfer or exchange of any Debentures, but the Company may require payment from the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith.
     (ii) If any Debenture is no longer a component of the Corporate Unit and released from the Collateral Account, the Company, at its election, may issue one or more certificates, in form of a Global Security to represent such Debenture and any other Debentures that cease to be a component of Corporate Units and are released from the Collateral Account. If issued as one or more Global Securities, the Depositary shall be The Depository Trust Company or such other depositary as any officer of the Company may from time to time designate. Upon the creation of Treasury Units or the recreation of Corporate Units, an appropriate annotation shall be made on the Schedule of Increases and Decreases on the Global Securities held by the Depositary and on the Schedule of Increases and Decreases on the Debenture held by the Collateral Agent. The Global Securities will be subject to the provisions of Section 305 of the Indenture and bear the legend in Section 204 of the Indenture; provided, however, that notwithstanding clause (2) of Section 305 of the Indenture, the Global Securities may be exchanged in whole or in part for Debentures registered in the name of the Purchase Contract Agent upon the recreation of Corporate Units in accordance
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with the Purchase Contract Agreement and Pledge Agreement. Payments with respect to Global Securities will be made by wire transfer to the Depositary.
     (d) Maturity. The principal amount of, and all accrued and unpaid interest on, the outstanding Debentures shall be payable in full on the Final Maturity Date.
     (e) Rate of Interest. The Debentures shall bear interest (i) from and including May 16, 2008 to but excluding the earlier of their maturity date and the Remarketing Settlement Date at the rate of 5.82% per annum (the “Initial Interest Rate”), and (ii) from and including the Remarketing Settlement Date, at the Reset Rate. Interest on the Debentures shall be payable (i) quarterly in arrears on February 1, May 1, August 1 and November 1 of each year, beginning on August 1, 2008 and (ii) after a Successful Remarketing, semi-annually in arrears on May 1 and November 1 at the Reset Rate, accruing from the Remarketing Settlement Date, unless the Company elects a Reset Rate that is a floating rate pursuant to Section 2.2(a)(iii) (each such date on which interest is to be paid, an “Interest Payment Date”). Except as provided in Section 2.1(p), the amount of interest payable on the Debentures for any period will be computed (i) for any full quarterly or semi-annual period on the basis of a 360-day year of twelve 30-day months and (ii) for any period shorter than a full quarterly or semi-annual period, on the basis of a 30-day month and, for any period less than a month, on the basis of the actual number of days elapsed per 30-day month. Except as provided in Section 2.1(p), in the event any Interest Payment Date falls on a day that is not a Business Day, the interest payment due on that date will be postponed to the next day that is a Business Day with the same force and effect as if made on such originally scheduled date and no interest shall accrue as a result of such postponement.
     (f) To Whom Interest is Payable. Except as provided in Section 2.1(g)(ii) and as otherwise determined by the Company from time to time, interest (other than Deferred Interest which shall be payable to the Persons specified pursuant to Section 2.1(g)(ii)) shall be payable to the Person in whose name the Debentures are registered at the close of business on the 15th day of the month prior to the month in which the Interest Payment Date falls, whether or not a Business Day.
     (g) Option to Defer Interest Payments. (i) The Company shall have the right, at any time and from time to time prior to the Second Stock Purchase Date, to defer the payment of interest on the Debentures for one or more consecutive Interest Periods; provided that no Deferral Period shall extend beyond the Second Stock Purchase Date (such interest referred to as “Deferred Interest”). Deferred Interest will, subject to applicable law, accrue interest at the Initial Interest Rate compounded on each Interest Payment Date. The Company agrees that (A) until the Second Stock Purchase Date, (x) if an Event of Default has
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occurred and is continuing, (y) the Company has given notice of its election to defer interest payments but the Deferral Period has not yet commenced or (z) a Deferral Period is continuing, (B) the Company has given notice of its election to defer Contract Adjustment Payments but the related deferral period has not yet commenced or a deferral period is continuing with respect to such Contract Adjustment Payments, or (C) Additional Debentures are outstanding, the Company shall not, and shall not permit any Subsidiary, subject to the exceptions specified in clause (v) of this Section 2.1(g), to: (a) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any Capital Stock of the Company, (b) make any payment of principal of, or interest or premium, if any, on, or repay, purchase or redeem any debt securities of the Company that rank pari passu with, or junior to, the Debentures (including the Other Debentures) or (c) make any payments with respect to any Guarantee by the Company of securities of any Subsidiary if such Guarantee ranks pari passu with, or junior to, the Debentures.
     (ii) The Company may pay Deferred Interest pursuant to this Section 2.1(g) to the Holder at any time either in the form of cash or in the form of an Additional Debentures having a principal amount equal to the aggregate amount of accrued but unpaid Deferred Interest on the date of issuance and maturing on the later of August 1, 2014 and the date five years after the date of commencement of the Deferral Period; provided, however, that the Company must pay any accrued but unpaid Deferred Interest to the Holder either in the form of cash or in the form of Additional Debentures on the Second Stock Purchase Date, whether or not such Holder participates in the Remarketing. Deferred Interest paid on any Interest Payment Date shall be payable to the Person in whose name the Debentures are registered at the close of business on the Record Date next preceding such Interest Payment Date, provided that the Company shall establish a Special Record Date for any Deferred Interest to be paid on a date other than an Interest Payment Date and Holders on that Special Record Date shall be entitled to payment of the Deferred Interest.
     (iii) Upon termination of any Deferral Period and upon the payment of all Deferred Interest (together with any compounded interest thereon, if any, to the extent permitted by applicable law), the Company may elect to begin a new Deferral Period pursuant to clause (i) of this Section 2.1(g).
     (iv) The Company shall give written notice to the Trustee and the Holders of the Debentures of its election to begin any Deferral Period on any Interest Payment Date at least one Business Day prior to the Regular Record Date for that Interest Payment Date. Notwithstanding the previous sentence, the Company’s failure to pay any interest due within five Business Days after any Interest Payment Date occurring prior to the Second Stock Purchase Date shall automatically and without any further action by any Person be deemed to commence a Deferral Period.
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     (v) The restrictions in clause (i) of this Section 2.1(g) do not apply to (a) purchases, redemptions or other acquisitions of shares of the Company’s Capital Stock in connection with (1) any Employee Benefit Plan or the Assurance Agreement or (2) a dividend reinvestment, stock purchase plan or other similar plan, (b) any exchange or conversion of any class or series of the Company’s Capital Stock (or the Capital Stock of any Subsidiary) for any class or series of the Company’s Capital Stock or of any class or series of Indebtedness of the Company for any class or series of the Company’s Capital Stock, (c) the purchase of fractional interests in shares of the Capital Stock of the Company in accordance with the conversion or exchange provisions of the Company’s Capital Stock or the security or instrument being converted or exchanged, (d) any declaration of a dividend in connection with any stockholders’ rights plan, or the issuance of rights, equity securities or other property under any stockholders’ rights plan, or the redemption or repurchase of rights in accordance with any stockholders’ rights plan, (e) any dividend in the form of equity securities, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of the warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such equity securities, (f) any payment during a Deferral Period of current or deferred interest in respect of any debt securities of the Company that rank pari passu with the Debentures that is made pro rata to the amounts due on pari passu securities and the Debentures, (g) any payments of deferred interest or principal on such pari passu securities that, if not made, would cause the Company to breach the terms of the instrument governing such pari passu securities, (h) the repurchase of any debt securities of the Company that rank pari passu with the Debentures in exchange for Capital Stock in connection with a failed remarketing or similar event, any payment of deferred interest on any such debt securities in the form of additional debentures that will rank pari passu with the Debentures and the repayment of any such additional debentures at maturity or (i) any repayment or redemption of a security necessary to avoid a breach of the instrument governing that security.
     (h) Events of Default. After the Second Stock Purchase Date, the Debentures shall be entitled to the benefits of the Events of Default set forth in Section 501 of the Indenture. Until the Second Stock Purchase Date, the following events shall be Events of Default with respect to the Debentures (whatever the reason for such Event of Default and whether it shall be occasioned by the provisions of Article Fourteen of the Indenture or be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
     (1) default in the payment of interest, including compounded interest, in full in cash or Additional Debentures on any Debenture for a period of 30 days after the Second Stock Purchase Date;
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     (2) default in the payment of the principal of any Debenture at the final stated maturity or upon a call for redemption pursuant to Section 2.1(i); or
     (3) the events set forth in Section 501(5) and (6) of the Indenture.
     (i) Redemption. The Debentures shall be redeemable in accordance with Article Eleven of the Indenture. Subject to Section 2.2(a)(ii), at any time on or after May 1, 2013, the Company may redeem, at its option, the Debentures, in whole or in part, at a price equal to the greater of their principal amount and the Make-Whole Redemption Price, plus, in either case, accrued and unpaid interest, if any, to the Redemption Date.
     (j) Sinking Fund. Article Twelve shall not apply to the Debentures.
     (k) Subordination. The Debentures shall at all times prior to the Remarketing Settlement Date, if any, be subject to Article Fourteen of the Indenture, subject to the following modifications:
     (i) For purposes of the Debentures, the “or” before clause (iii) of the definition of Senior Debt in the Indenture is deleted, the following clauses are added to the definition of Senior Debt in the Indenture after the word “contracts,” in clause (iii) for purposes of the Debentures:
“, (iv) any subordinated or junior subordinated debt that by its terms is not expressly pari passu or subordinated to the Debentures, (v) any Guarantee of any indebtedness, obligation or security issued by any Person that is an Affiliate of the Company and such Person is viewed by the Company as a vehicle to finance its operations, and (vi) Indebtedness of the Company to its Subsidiaries”; and
     (ii) For purposes of the Debentures, the following provision is added to the end of the definition of Senior Debt in the Indenture after the word “Securities”: “provided that (a) trade accounts payable and accrued liabilities arising in the ordinary course of the Company’s business, (b) the Company’s 6.25% Series A-1 Junior Subordinated Debentures, 5.75% Series A-2 Junior Subordinated Debentures, 4.875% Series A-3 Junior Subordinated Debentures, 6.45% Series A-4 Junior Subordinated Debentures, 7.70% Series A-5 Junior Subordinated Debentures and the Other Debentures and (c) any other indebtedness, Guarantee or other obligation that is specifically designated as being subordinate, or not superior, in right of payment to the Debentures, shall not be considered Senior Debt”.
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     (iii) For purposes of the Debentures, the provisions of Section 1404 of the Indenture shall only apply in the case where (A) there has been an event of default with respect to Senior Debt within the meaning of clause (i) of the definition of Senior Debt, (B) the principal amount of such Senior Debt has been accelerated, (C) the outstanding principal amount of Senior Debt at the time of acceleration is at least $100,000,000 and (D) the event of default or acceleration has not been cured, waived, or otherwise ceased to exist. In no other case and to no other Senior Debt shall Section 1404 apply.
     (iv) The Debentures shall rank pari passu with the Company’s 6.25% Series A-1 Junior Subordinated Debentures, 5.75% Series A-2 Junior Subordinated Debentures, 4.875% Series A-3 Junior Subordinated Debentures, 6.45% Series A-4 Junior Subordinated Debentures, 7.70% Series A-5 Junior Subordinated Debentures and the Other Debentures.
     (l) Registrar, Paying Agent, Authenticating Agent and Place of Payment. The Company hereby appoints The Bank of New York as Security Registrar, Authenticating Agent and Paying Agent with respect to the Debentures. The Debentures may be surrendered for registration of transfer and for exchange without service charge, but upon payment of any taxes on other governmental charges payable in connection with such registration of transfer or exchange, at the office or agency of the Company maintained for such purpose in The City of New York, New York and at any other office or agency maintained by the Company for such purpose. The Place of Payment for the Debentures shall be the Paying Agent’s office in New York, New York. Principal and interest with respect to the Debentures will be payable, the transfer of the Debentures will be registrable and Debentures will be exchangeable for debentures of a like aggregate principal amount in denominations of $1,000 and integral multiples of $1,000, at the office of the Paying Agent.
     (m) Defeasance. After the Second Stock Purchase Date, the Debentures will be subject to Sections 1302 and 1303 of the Indenture unless the Company makes the election set forth in Section 2.2(a)(iii).
     (n) Redemption at Holders’ Option. If there is a Failed Remarketing, each Holder of Debentures that are Separate Debentures will have the right to require the Company to redeem all or a portion of its Separate Debentures, but excluding any Additional Debentures, on the Second Stock Purchase Date (the “Put Right”). Such right will be exercisable only upon delivery of notice to the Trustee on or prior to 11:00 a.m., New York City time, on the second Business Day prior to the Second Stock Purchase Date (a “Put Notice”). A Put Notice shall be irrevocable. If a Put Notice shall have been duly given, the Separate Debentures to which the Put Notice relates shall become due and payable on the Second Stock Purchase Date, and the Company shall redeem, such Debentures for
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a Redemption Price per Debenture equal to 100% of their principal amount. Accrued and unpaid interest on such Debenture to such date of redemption shall be paid to the Holders of such Debentures on the Record Date therefor. Section 1105 of the Indenture shall apply to any redemption pursuant to this Section 2.1(n), and Section 1107 of the Indenture shall apply to any Separate Debenture redeemed in part.
     (o) Modification. No supplemental indenture shall, without the consent of the Holder of each Outstanding Debenture, modify or amend Section 2.1(n) or Section 2.1(p) in any respect materially adverse to the Holder.
     (p) Remarketing and Reset Rate Mechanics.
     (i) Obligation to Conduct Remarketing and Related Requirements.
     (i) The Company and the Purchase Contract Agent shall appoint a nationally recognized investment banking firm as Remarketing Agent and enter into a Remarketing Agreement at least 30 days prior to the Remarketing Period Start Date. The Remarketing Agreement shall include such terms, conditions and other provisions as the Company, the Purchase Contract Agents and the Remarketing Agent may agree among themselves but shall in any event include provisions to substantially the following effect:
     (1) The Remarketing Agents will use their commercially reasonable efforts to obtain a price for the Debentures to be remarketed in the Remarketing which results in proceeds, net of the Remarketing Agents’ Fee, equal to at least 100% of the sum of the Treasury Portfolio Purchase Price and the Separate Debentures Purchase Price;
     (2) The Remarketing Agent will in consultation with the Company reset the Coupon Rate on the Debentures (as a rate per annum for payment of interest on each applicable Interest Payment Date) or establish the Reset Spread in order to give effect to clause (1) above for Interest Periods or portions thereof commencing on or after the Remarketing Settlement Date;
     (3) The Remarketing Agents will deduct the Remarketing Agents’ Fee from the proceeds of the Remarketing and remit any Proceeds remaining after such deduction to or at the direction of the Collateral Agent and the Custodial Agent in accordance with the Pledge Agreement; and
     (4) On any day in a Remarketing Period other than the last five Business Days of such Remarketing Period, the Company may, in its
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absolute discretion (and without prior notice being given to Holders of Debentures or of the Equity Units), postpone the Remarketing until the following Business Day by giving notice of such postponement to the Remarketing Agents in accordance with the Remarketing Agreement.
     (ii) The Company and the Purchase Contract Agent shall use their commercially reasonable efforts to effect Remarketing of the Debentures as described in this Section 2.1(p). If in the judgment of counsel to the Company or to the Remarketing Agents it is necessary for a Registration Statement covering the Debentures to have been filed and have become effective under the Securities Act in order to effect the Remarketing, then the Company and the Purchase Contract Agent shall use their commercially reasonable efforts (i) to ensure that a Registration Statement covering the full principal amount of Debentures to be remarketed shall have become effective in a form that will enable the Remarketing Agents to rely on it in connection with the Remarketing or (ii) effect such Remarketing pursuant to Rule 144A under the Securities Act or another available exemption from the registration requirements under the Securities Act.
     (ii) Reset of Coupon Rate in Connection with Remarketing.
     (i) As part of and in connection with the Remarketing, the Remarketing Agents shall, as contemplated by Section 2.1(p)(i)(2) and in accordance with the other provisions of this Section 2.1(p), (A) reset the Coupon Rate to a new rate (the “Reset Rate”), or (B) if the Company shall have made the election set forth in Section 2.2(a)(iii), establish the reset spread (the “Reset Spread”), rounded to the nearest one-thousandth (0.001) of one percent per annum, that will apply to all Debentures (whether or not the Holders thereof participated in the Remarketing) if such Remarketing is Successful for each Interest Period or portion thereof commencing on or after the Remarketing Settlement Date.
     (ii) If the Remarketing has been determined to be Successful in accordance with Section 2.1(p)(iii)(v), by approximately 4:30 p.m., New York City time, on any Remarketing Date, the Remarketing Agent shall notify the Company, the Purchase Contract Agent and the Trustee that the Remarketing was Successful and the Reset Rate or Reset Spread, as the case may be, determined as part of such Remarketing in accordance with this Section 2.1(p).
     (iii) If a Remarketing is Successful, then commencing with the related Remarketing Settlement Date, (A) the Coupon Rate shall be reset to the Reset Rate or (B) if the Company shall have made the election set forth in Section 2.2(a)(iii), the Debentures shall bear interest at the Base
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Rate plus the Reset Spread, determined in accordance with this Section 2.1(p) pursuant to such Remarketing.
     (iv) In the event of a Failed Remarketing:
     (1) no Debentures will be sold in such Remarketing;
     (2) the Coupon Rate and the Interest Payment Dates will remain unchanged;
     (3) the Collateral Agent, for the benefit of the Company, will, at the written instruction of the Company, deliver or dispose of the Debentures that are included in Corporate Units in accordance with the Company’s written instructions to satisfy in full, from any such disposition or retention, such Holders’ obligations to pay the purchase price for the shares of Common Stock to be issued on the Second Stock Purchase Date under the Stock Purchase Contracts underlying such Corporate Units; and
     (4) in the case of Debentures that are Separate Debentures the Holders of which elected to participate in the Remarketing, such Debentures will be returned to the related Holders in accordance with the Pledge Agreement and the Holders will be entitled to exercise the Put Right.
     (iii) Remarketing Procedures.
     (i) The Company will (A) (x) give, or cause the Trustee to give on its behalf, the Holders of the Separate Debentures and (y) cause the Purchase Contract Agent to give the record holders of Equity Units notice of the Remarketing at least seven Business Days prior to the Remarketing Period Start Date, and (B) request, not later than seven nor earlier than 15 calendar days prior to the Remarketing Period Start Date (or if clause (2) below applies, not later than 15 or earlier than 21 calendar days prior to the Remarketing Period Start Date), that the Depositary notify its participants holding Debentures, Corporate Units or Treasury Units, of the Remarketing. Such notices will set forth:
     (1) the Interest Payment Dates and Regular Record Dates that will apply after the Remarketing Settlement Date;
     (2) the modifications to the terms of the Debentures, if any, effected pursuant to Section 2.2(a);
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     (3) the procedures a beneficial owner must follow if it holds Debentures that are Separate Debentures to elect to participate in the Remarketing; and
     (4) the procedures a beneficial owner must follow to exercise its Put Right in the event such Remarketing is a Failed Remarketing if such beneficial owner holds Debentures that are Separate Debentures.
     (ii) On the Remarketing Period Start Date, all outstanding Debentures included in Corporate Units will be tendered or be deemed tendered to the Remarketing Agent for Remarketing. Each Holder of Debentures included in Corporate Units, by purchasing such Debentures agrees to have such Debentures remarketed on any Remarketing Date and authorizes the Remarketing Agent to take any and all action on its behalf necessary to effect the Remarketing.
     (iii) Each Holder of Debentures that are Separate Debentures may elect to have such Holder’s Debentures remarketed in the Remarketing in accordance with Section 5.02 of the Purchase Contract Agreement.
     (iv) If the Remarketing on any Remarketing Date is Successful, then on the Remarketing Settlement Date the Collateral Agent shall deliver to the Remarketing Agent the Debentures included in the Corporate Units and the Custodial Agent shall deliver to the Remarketing Agent the Debentures the Holders of which have made the election referred to in clause (iii) above, and the Remarketing Agent shall deduct the Remarketing Agent’s Fee to which it is entitled as provided in Section 2.1(p)(i) from the proceeds of such Remarketing and remit the remaining proceeds in accordance with Section 2.1(p)(i)(3) for application as provided therein.
     (v) If by 4:00 p.m., New York City time, on any Remarketing Date the Remarketing Agent has found buyers for all of the Debentures offered in the Remarketing in accordance with this Section 2.1(p), a Successful Remarketing shall be deemed to have occurred.
     (vi) If, by 4:00 p.m., New York City time, on the last day of the Remarketing Period, the Remarketing Agent is unable to find buyers for all of the Debentures offered in the Remarketing in accordance with this Section 2.1(p), such Remarketing shall be deemed to be a “Failed Remarketing.”
     (vii) The Company shall notify, or cause the Trustee to notify, the Holders of the Debentures of a Successful Remarketing promptly
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following the Remarketing Settlement Date, and shall cause a notice of any Failed Remarketing to be published on the Business Day following the last day of the Remarketing Period, by publication in a daily newspaper in the English language of general circulation in New York City, which is expected to be The Wall Street Journal.
     (viii) The right of each Holder (whether of Separate Debentures or of Debentures included in Corporate Units) to have its Debentures remarketed and sold in connection with any Remarketing shall be limited to the extent that (i) the Remarketing Agents conduct a Remarketing pursuant to the terms of the Remarketing Agreement, (ii) the Remarketing Agents are able to find a purchaser or purchasers for the Debentures offered in the Remarketing in accordance with this Section 2.1(p) and the Remarketing Agreement, and (iii) the purchaser or purchasers deliver the purchase price therefor to the Remarketing Agent as and when required.
     (ix) Neither the Company nor the Remarketing Agents shall be obligated in any case to provide funds to make payment upon tender of Debentures for Remarketing.
Section 2.2 Company’s Election to Change Certain Terms
     (a) The Company may, without the consent of any Holders of Debentures, in consultation with the Remarketing Agents, elect at any time at least 30 days prior to the Remarketing Period Start Date, but on one occasion only:
     (i) to change the maturity of principal of the Debentures to a date that is earlier than May 1, 2041; provided, however, that the maturity of principal of the Debentures may not be changed to a date earlier than May 1, 2013;
     (ii) to change the terms of the Debentures to eliminate the Company’s right to redeem the Debentures at its option or to specify a date, which may not be earlier than May 1, 2013, on and after which the Debentures will be redeemable at the Company’s option either in whole or in part (as elected by the Company) or to modify the definition of “Make-Whole Redemption Price” or to provide that the Redemption Price shall be equal to the principal amount of the Debentures to be redeemed, plus accrued and unpaid interest to the Redemption Date; or
     (iii) to provide that the Debentures shall bear interest at a floating rate equal to the applicable index (the “Base Rate”) plus a Reset Spread to be determined in accordance with Section 2.1(p), in which case the Company may also elect to modify the business day and day count conventions set forth in Section 2.1(e) to conform to market practice for floating-rate debentures bearing interest at a rate determined by reference to such index.
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     (b) The Company shall make the elections provided for in Section 2.2(a), as applicable, by giving irrevocable written notice of such elections to the Trustee. Any election under Sections 2.2(a)(i) and 2.2(a)(ii) shall be effective when made, and any such election under Section 2.2(a)(iii) shall be effective on the Remarketing Settlement Date.
     (c) In the case of a Successful Remarketing, on or after the Remarketing Settlement Date the Debentures will cease to be subordinated and the provisions of Section 2.1(k) shall not apply. In the case of a Failed Remarketing, the Debentures will remain subordinated to Senior Debt and Section 2.1(k) will continue to apply.
Section 2.3 Tax Treatment
     (a) The Company agrees, and by acceptance of a Corporate Unit, each holder of a Corporate Unit will be deemed to have agreed (unless the United States Internal Revenue Service requires a different treatment from such holder) (1) for United States federal, state and local income and franchise tax purposes to treat the acquisition of a Corporate Unit as the acquisition of the applicable ownership interest in the Debenture and the Other Debentures and the Stock Purchase Contract constituting the Corporate Unit, (2) to treat the Debenture as indebtedness for United States federal, state and local income and franchise tax purposes, (3) if such holder purchased the Corporate Unit in the initial offering for $75, to allocate $25 to the undivided beneficial ownership interests in the Debenture and each Other Debenture and $0 to the Stock Purchase Contract included in a Corporate Unit, and (4) to treat the Debenture as a “variable rate debt instrument” for U.S. federal income tax purposes.
     (b) Any payment (including cash or property) and original issue discount under the terms of this Eighth Supplemental Indenture shall be subject to withholding and backup withholding of tax as required by law. Any such withholding and backup withholding shall be treated as if made to the intended recipient in full compliance with the terms hereof.
ARTICLE THREE
MISCELLANEOUS
Section 3.1 Relationship to Existing Indenture
     The Seventh Supplemental Indenture is a supplemental indenture within the meaning of the Indenture. The Indenture, as supplemented and amended by this Seventh Supplemental Indenture, is in all respects ratified, confirmed and approved and, with respect to the Debentures, the Indenture, as supplemented and amended by this Seventh Supplemental Indenture, shall be read, taken and construed as one and the same instrument.
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Section 3.2 Modification of the Existing Indenture
     Except as expressly modified by this Seventh Supplemental Indenture, the provisions of the Indenture shall govern the terms and conditions of the Debentures.
Section 3.3 Governing Law
     This instrument shall be governed by and construed in accordance with the laws of the State of New York.
Section 3.4 Counterparts
     This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
Section 3.5 Trustee Makes No Representation
     The recitals contained herein are made by the Company and not by the Trustee, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representation as to the validity or sufficiency of this Seventh Supplemental Indenture (except for its execution thereof and its certificates of authentication of the Debentures).
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     In Witness Whereof, the parties hereto have caused this Seventh Supplemental Indenture to be duly executed all as of the day and year first above written.
         
  AMERICAN INTERNATIONAL GROUP, INC.
 
 
  By:   /s/ Robert A. Gender  
    Name:   Robert A. Gender   
    Title:   Vice President and Treasurer   
 
  THE BANK OF NEW YORK,
as Trustee
 
 
  By:   /s/ Sherma Thomas  
    Name:  Sherma Thomas  
    Title:  Assistant Treasurer  
 
Seventh Supplemental Indenture

 


 

ANNEX A
     [Include if this Security is a Global Security — THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OR TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
AMERICAN INTERNATIONAL GROUP, INC.
5.82% SERIES B-2 JUNIOR SUBORDINATED DEBENTURES
      
No.   CUSIP No.: 026874 BP1
$   ISIN: US026874BP16
     American International Group, Inc., a corporation duly organized and existing under the laws of Delaware (herein called the “Company”, which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to         , or registered assigns, the principal sum of            Dollars ($ )][Include in Global Security and in Pledged Debenture — the principal sum as set forth on the Schedule of Increases or Decreases in Security attached hereto, which shall not exceed [ ]] on May 1, 2041, and to pay interest on said principal sum from May 16, 2008 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, subject to deferral as set forth herein, in arrears at a rate (i) of 5.82% per annum on February 1, May 1, August 1 and November 1 (each such date, an “Interest Payment Date”), commencing August 1, 2008, to but not including the earlier of the repayment of the outstanding principal amount of this Security and the Remarketing Settlement Date and (ii) if the Remarketing Settlement Date occurs, equal to the Reset Rate from and including the Remarketing Settlement Date, on each May 1 and November 1, or if the Company has elected that this Security will bear interest at a floating rate after the Remarketing Settlement Date, equal to the Base Rate plus the Reset Spread, on each February 1, May 1, August 1 and November 1, subject to adjustment as provided herein, commencing with the first such date to occur after the Remarketing Settlement Date, until the principal hereof shall have become due and payable, and on any overdue principal and premium, if any, and (without duplication and to the extent
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that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the same rate per annum compounded on each Interest Payment Date. The amount of interest payable on any Interest Payment Date shall, except as provided herein, be computed (i) for any full quarterly or semi-annual period on the basis of a 360-day year comprised of twelve 30-day months, (ii) for any period shorter than a full quarterly or semi-annual period, on the basis of a 30-day month and, for (iii) any period less than a month, on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which interest is payable on this Security is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay). The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities, as defined in said Indenture) is registered at the close of business on the Regular Record Date for such interest installment, which shall be the close of business on the 15th day of the month prior to the month in which the Interest Payment Date falls, whether or not a Business Day or such other date as the Company may specify. Any such interest installment not punctually paid or duly provided for (other than Deferred Interest) shall forthwith cease to be payable to the registered Holders on such Regular Record Date and may be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date to be fixed by the Trustee for the payment of such Defaulted Interest, notice whereof shall be given to the registered Holders of this series of Securities not less than 10 days prior to such special record date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.
     Until the Remarketing Settlement Date, if any, the indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Debt of the Company, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by, such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination so provided and (c) appoints the Trustee his or her attorney-in-fact for any and all such purposes. Each Holder hereof, by his or her acceptance hereof, hereby waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Debt of the Company, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions.
     The Company shall have the right, at any time and from time to time, prior to May 1, 2011 to defer the payment of interest on this Security for one or more consecutive Interest Periods as described on the reverse hereof. The Company shall give written notice to the Trustee and the Holders of this Security of its election to begin any Deferral Period at least one Business Day prior to the Regular Record Date for that Interest Payment Date, provided, however, that the Company’s failure to pay any interest due
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within five Business Days after any Interest Payment Date occurring prior to the Second Stock Purchase Date shall automatically and without any further action by any Person be deemed to commence a Deferral Period.
     Payment of the principal of (and premium, if any) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or by wire transfer of immediately available funds to an account designated by the Holder of this Security.
     Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
     Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
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     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
Dated:
         
  American International Group, Inc.
 
 
  By:      
    Name:      
    Title:      
 
     
Attest:
   
 
   
 
[Secretary or Assistant Secretary]
   
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
Dated:
         
  The Bank of New York,
     as Trustee
 
 
  By:      
    Name:      
    Title:      
 
Series B-2 Debenture
(Signature Page for Security)

 


 

ANNEX A
REVERSE OF SECURITY
     This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued and to be issued in one or more series under a Junior Subordinated Debt Indenture, dated as of March 13, 2007 (herein called the “Base Indenture”), as supplemented by a Seventh Supplemental Indenture, dated as of May 16, 2008 (herein called the “Seventh Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), in each case, between the Company and The Bank of New York, as Trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, the holders of Senior Debt and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof limited in aggregate principal amount to $1,960,000,000 (except for Securities authenticated and delivered upon registration or transfer of, or exchange for, or in lieu of, other Securities pursuant to Section 304, 305, 306, 906 or 1107 of the Base Indenture or 2.1(n) or 2.1(p) of the Seventh Supplemental Indenture).
     All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.
     The Securities of this series are subject to redemption on or after May 1, 2013, in whole or in part, upon not less than 30 days nor more than 60 days’ prior notice by first class mail, postage pre-paid, to each Holder of Securities to be redeemed, at a Redemption Price equal to the greater of 100% of the principal amount thereof and the Make-Whole Redemption Price, plus, in either case, accrued and unpaid interest, if any, to the Redemption Date.
     In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor and of an authorized denomination for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.
     The Company may elect at any time at least 30 days prior to the Remarketing Period Start Date, but on one occasion only:
     (i) to change the maturity of principal of this Security to a date that is earlier than May 1, 2041; provided, however, that the maturity of principal of this Security may not be changed to a date earlier than May 1, 2013;
     (ii) to change the terms of this Security to eliminate the Company’s right to redeem this Security at its option or to specify a date that may not be earlier than May 1, 2013 on and after which this Security will be redeemable at the Company’s option either in whole or in part (as elected by the Company) or to modify the definition of Make-Whole Redemption Price or to provide that the
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Redemption Price shall be equal to the principal amount of this Security to be redeemed, plus accrued and unpaid interest to the Redemption Date; or
     (iii) to provide that this Security shall bear interest at a floating rate equal to the applicable index plus a Reset Spread determined in accordance with Section 2.1(p) of the Seventh Supplemental Indenture, in which case the Company may also elect to modify the business day and day count conventions set forth in Section 2.1(e) of the Seventh Supplemental Indenture to conform to market practice for floating-rate debentures bearing interest at a rate determined by reference to such index.
     The elections set forth in clauses (i) and (ii) of the preceding paragraph shall become effective immediately upon the Trustee’s receipt of such notice and the election set forth in clause (iii) above shall become effective on the Remarketing Settlement Date.
     The Indenture contains provisions permitting the Company and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal amount of the Securities of each series affected at the time Outstanding, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Securities; provided, however, that, except as provided above and in the Seventh Supplemental Indenture, no such supplemental indenture shall (i) extend the fixed maturity of any Securities of any series, or reduce the principal amount thereof, reduce the rate or extend the time of payment of interest thereon, reduce any premium payable upon the redemption thereof, modify the right of Holders of Securities that are Separate Debentures to require the Company to purchase such Securities upon a Failed Remarketing, or modify the provisions of the Indenture relating to the Remarketing of the Securities, without the consent of the Holder of each Security so affected, or (ii) reduce the aforesaid percentage of Securities the Holders of which are required to consent to any such supplemental indenture, without the consent of the Holders of each Security then outstanding and affected thereby. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Securities of any series at the time outstanding affected thereby, on behalf of all of the Holders of the Securities of such series, to waive any past default in the performance of any of the covenants contained in the Indenture, or established pursuant to the Indenture with respect to such series, and its consequences, except a default in the payment of the principal of or premium, if any, or interest (subject to the Company’s right to defer interest payments) on any of the Securities of such series. Any such consent or waiver by the registered Holder of this Security (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Security and of any Security issued in exchange herefor or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Security.
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     No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest (subject to the Company’s right to defer interest payments) on this Security at the time and place and at the rate and in the money herein prescribed.
     The Company shall have the right, at any time and from time to time prior to May 1, 2011, to defer the payment of interest on the Securities for one or more consecutive Interest Periods; provided that no Deferral Period shall extend beyond May 1, 2011 (such interest referred to as “Deferred Interest”). Deferred Interest will accrue interest at the rate of 5.82% per annum compounded on each Interest Payment Date. The Company agrees that (A) until May 1, 2011, (x) if an Event of Default has occurred and is continuing, (y) the Company has given notice of its election to defer interest payments but the Deferral Period has not yet commenced or (z) a Deferral Period is continuing, (B) the Company has given notice of its election to defer Contract Adjustment Payments but the related deferral period has not yet commenced or a deferral period is continuing with respect to such Contract Adjustment Payments, or (C) Additional Debentures are outstanding, the Company shall not, and shall not permit any Subsidiary, subject to the exceptions specified below, to: (a) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any Capital Stock of the Company, (b) make any payment of principal of, or interest or premium, if any, on, or repay, purchase or redeem any debt securities of the Company that rank pari passu with, or junior to, this Security or (c) make any payments with respect to any Guarantee by the Company of securities of any Subsidiary if such Guarantee ranks pari passu with, or junior to, this Security. The Company may pay Deferred Interest (together with compounded interest thereon, if any, to the extent permitted by applicable law) to the Holder at any time either in the form of cash or in the form of Additional Debentures having a principal amount equal to the amount of accrued but unpaid Deferred Interest on the date of issuance and maturing on the later of August 1, 2014 and the date five years after the date of commencement of the Deferral Period; provided, however, that the Company must pay any accrued but unpaid Deferred Interest to the Holder either in the form of cash or in the form of Additional Debentures on the Second Stock Purchase Date, whether or not such Holder participates in the Remarketing. Deferred Interest paid on any Interest Payment Date shall be payable to the Person in whose name the Debentures are registered at the close of business on the Regular Record Date next preceding such Interest Payment Date, provided that the Company may establish a Special Record Date for any Deferred Interest to be paid on a date other than an Interest Payment Date and Holders on that Special Record Date shall be entitled to payment of the Deferred Interest. Upon termination of any Deferral Period and upon the payment of all Deferred Interest and any compounded interest then due on any Interest Payment Date, the Company may elect to begin a new Deferral Period.
     The restrictions on payments do not apply to (a) purchases, redemptions or other acquisitions of shares of the Company’s Capital Stock in connection with (1) any Employee Benefit Plan or the Assurance Agreement or (2) a dividend reinvestment, stock
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purchase plan or other similar plan, (b) any exchange or conversion of any class or series of the Company’s Capital Stock (or the Capital Stock of any Subsidiary) for any class or series of the Company’s Capital Stock or of any class or series of Indebtedness of the Company for any class or series of the Company’s Capital Stock, (c) the purchase of fractional interests in shares of the Capital Stock of the Company in accordance with the conversion or exchange provisions of the Company’s Capital Stock or the security or instrument being converted or exchanged, (d) any declaration of a dividend in connection with any stockholders’ right plan, or the issuance of rights, equity securities or other property under any stockholders’ right plan, or the redemption or repurchase of rights in accordance with any stockholders’ rights plan, (e) any dividend in the form of equity securities, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of the warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such equity securities, (f) any payment during a Deferral Period of current or deferred interest in respect of any debt securities of the Company that rank pari passu with the Debentures that is made pro rata to the amounts due on pari passu securities and the Debentures, (g) any payments of deferred interest or principal on such pari passu securities that, if not made, would cause the Company to breach the terms of the instrument governing such pari passu securities, (h) the repurchase of any debt securities of the Company that rank pari passu with this Security in exchange for common stock in connection with a failed remarketing or similar event, any payment of deferred interest on any such debt securities in the form of additional debentures that will rank pari passu with this Security and the repayment of any such additional debentures at maturity or (i) any repayment or redemption of a security necessary to avoid a breach of the instrument governing that security.
     After the Second Stock Purchase Date, so long as this Security bears interest at a fixed rate of interest, this Security will be subject to defeasance of the entire indebtedness of this Security and of certain restrictive covenants and events of default, in each case upon compliance with certain conditions set forth in the Indenture.
     After the Second Stock Purchase Date, the Securities of this series will be entitled to the benefits of the Events of Default described in the Base Indenture. Until the Second Stock Purchase Date, the Securities of this series are entitled to the Events of Default specified in the Seventh Supplemental Indenture.
     As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 25% in principal amount of the Securities of this series at the time outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default, as Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time outstanding a direction inconsistent with such request, and shall have failed to
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institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or, to the extent provided in Section 2.1(g) of the Seventh Supplemental Indenture, interest hereon on or after the respective due dates.
     As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
     The Securities of this series are issuable only in registered form without coupons in denominations of $1,000 and integral multiples of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.
     No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
     Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
     The Company agrees, and by acceptance of a Corporate Unit, each holder of a Corporate Unit will be deemed to have agreed (unless the United States Internal Revenue Service requires a different treatment from such holder) (1) for United States federal, state and local income and franchise tax purposes to treat the acquisition of a Corporate Unit as the acquisition of the applicable ownership interest in this Security and the Other Debentures and the Stock Purchase Contract constituting the Corporate Unit, (2) to treat this Security as indebtedness for United States federal, state and local income and franchise tax purposes, (3) if such holder purchased the Corporate Unit in the initial offering for $75, to allocate $25 to the undivided beneficial ownership interests in this Security and each Other Debenture and $0 to the Stock Purchase Contract included in a Corporate Unit, and (4) to treat this Security as a “variable rate debt instrument” for U.S. federal income tax purposes.
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     THE BASE INDENTURE, THE SEVENTH SUPPLEMENTAL INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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ABBREVIATIONS
     The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:
         
TEN COM:   as tenants in common
 
       
UNIF GIFT MIN ACT:                        Custodian                     
    (Cust) (Minor)
 
       
TEN ENT:   as tenants by the entireties
 
       
JT TEN:   as joint tenants with right of survivorship and not as tenants in common
 
       
Under Uniform Gifts to Minors Act    
(State)
       
Additional abbreviations may also be used though not in the above list.
Series B-2 Debenture

A-11


 

ASSIGNMENT
     FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
 
 
(Please insert Social Security or Taxpayer I.D. or other Identifying Number of Assignee)
 
 
(Please print or type name and address including Postal Zip code of Assignee)
the within Debenture and all rights thereunder, hereby irrevocably constituting and appointing                      Attorney, to transfer said Debenture on the books of the Security Registrar, with full power of substitution in the premises.
     
Dated:
  Signature                              
 
 
  NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Debenture in every particular, without alteration or enlargement or any change whatsoever.
     
Signature Guarantee:
   
 
   
Series B-2 Debenture

A-12


 

[TO BE ATTACHED TO GLOBAL CERTIFICATES AND PLEDGED DEBENTURES]
SCHEDULE OF INCREASES OR DECREASES IN SECURITY
     The initial principal amount of Securities represented by this [Global] Security is $                . The following increases or decreases in this [Global] Security have been made:
                 
                Signature of
            Principal   authorized
    Amount of   Amount of   amount of this   signatory of
    increase in   decrease in   Security   [Security
    principal   principal   following such   Registrar]
    amount of this   amount of this   decrease or   [Collateral
Date   Security   Security   increase   Agent]
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
 
               
Series B-2 Debenture

A-13

EX-4.3
Exhibit 4.3
 
AMERICAN INTERNATIONAL GROUP, INC.
 
Eighth Supplemental Indenture
Dated as of May 16, 2008
 
(Supplemental to the Junior Subordinated Debt Indenture Dated as of March 13, 2007)
 
THE BANK OF NEW YORK,
as Trustee
 

 


 

     EIGHTH SUPPLEMENTAL INDENTURE, dated as of May 16, 2008, between American International Group, Inc., a corporation duly organized and existing under the laws of the State of Delaware (herein called the “Company”), and The Bank of New York, a New York banking corporation, as Trustee (herein called “Trustee”);
R E C I T A L S:
     WHEREAS, the Company has heretofore executed and delivered to the Trustee a Junior Subordinated Debt Indenture, dated as of March 13, 2007 (the “Indenture”), providing for the issuance from time to time of the Company’s unsecured debentures, notes or other evidences of indebtedness (herein and therein called the “Securities”), to be issued in one or more series as provided in the Indenture;
     WHEREAS, Section 901 of the Indenture permits the Company and the Trustee to enter into an indenture supplemental to the Indenture to establish the form and terms of a series of Securities;
     WHEREAS, Section 201 of the Indenture permits the form of Securities of a series to be established in an indenture supplemental to the Indenture;
     WHEREAS, Section 301 of the Indenture permits certain terms of a series of Securities to be established pursuant to an indenture supplemental to the Indenture;
     WHEREAS, pursuant to Sections 201 and 301 of the Indenture, the Company desires to provide for the establishment of a new series of Securities under the Indenture, the form and substance of such Securities and the terms, provisions and conditions thereof to be set forth as provided in the Indenture and this Eighth Supplemental Indenture;
     WHEREAS, all things necessary to make this Eighth Supplemental Indenture a valid agreement of the Company, in accordance with its terms, have been done;
     WHEREAS, the Corporate Units will include as a component the Debentures (as hereinafter defined);
     WHEREAS, the Debentures are entitled to the benefit of a Remarketing Agreement, dated as of the date hereof, among the Company, the Purchase Contract Agent (as hereinafter defined) and Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., as Remarketing Agents;
     NOW, THEREFORE, THIS EIGHTH SUPPLEMENTAL INDENTURE WITNESSETH:
Eighth Supplemental Indenture

 


 

     For and in consideration of the premises and the purchase of the Securities of the series established by this Eighth Supplemental Indenture by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all such Holders, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.1 Relation to Indenture
     This Eighth Supplemental Indenture constitutes a part of the Indenture (the provisions of which, as modified by this Eighth Supplemental Indenture, shall apply to the Debentures) in respect of the Debentures but shall not modify, amend or otherwise affect the Indenture insofar as it relates to any other series of Securities or modify, amend or otherwise affect in any manner the terms and conditions of the Securities of any other series.
Section 1.2 Definitions
     For all purposes of this Eighth Supplemental Indenture, the capitalized terms used herein (i) which are defined in this Section 1.2 have the respective meanings assigned hereto in this Section 1.2 and (ii) which are defined in the Indenture (and which are not defined in this Section 1.2) have the respective meanings assigned thereto in the Indenture. For all purposes of this Eighth Supplemental Indenture:
     1.2.1 Unless the context otherwise requires, any reference to an Article, Section or Annex refers to an Article or Section of, or Annex to, as the case may be, this Eighth Supplemental Indenture;
     1.2.2 The words “herein”, “hereof” and “hereunder” and words of similar import refer to this Eighth Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision;
     1.2.3 The following terms have the meanings given to them in the Pledge Agreement (where applicable, with respect to the Debentures): Collateral Account; Collateral Agent; Custodial Agent, and Proceeds;
     1.2.4 The following terms have the meanings given to them in the Purchase Contract Agreement (where applicable, with respect to the Debentures): Contract Adjustment Payments; Corporate Units; Equity Units; Purchase Contract Agent; Remarketing Period; Remarketing Settlement Date; Separate Debentures; Separate Debentures Purchase Price; Stock Purchase Contract; Stock Purchase Date; Third Stock Purchase Date; Treasury Portfolio Purchase Price, and Treasury Units.
Eighth Supplemental Indenture

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     1.2.5 The terms defined in this Section 1.2.5 have the meanings assigned to them in this Section and include the plural as well as the singular:
     “Additional Debentures” means any debt securities issued pursuant to Section 5.11(c) of the Purchase Contract Agreement in respect of deferred Contract Adjustment Payments or pursuant to Section 2.1(g)(ii), and shall (a) bear interest at an annual rate equal to the then market rate of interest for similar instruments (not to exceed 10%), as determined by a nationally recognized investment banking firm selected by the Company, (b) rank pari passu with the Debentures, (c) provide for optional deferral on the same basis as the Debentures (d) be redeemable at the Company’s option at any time at their principal amount, plus accrued and unpaid interest thereon through their date of redemption and (e) be issued under the Indenture.
     “Adjusted Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.
     “Assurance Agreement” means the agreement of the Company, dated as of June 27, 2005, in favor of eligible employees and relating to specified obligations of Starr International Company, Inc. (as such agreement may be amended, supplemented, extended, modified or replaced from time to time).
     “Base Rate” has the meaning set forth in Section 2.2(a)(iii).
     “Business Day” is any day, other than a Saturday, Sunday or other day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed.
     “Calculation Agent” means AIG Financial Products Corp., or any other Person appointed by the Company, acting as calculation agent for the Debentures. Any successor or substitute Calculation Agent may be an Affiliate of the Company.
     “Capital Stock” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) shares issued by that Person.
     “Comparable Treasury Issue” means the U.S. Treasury security selected by an independent investment bank selected by the Calculation Agent as having a maturity comparable to the term remaining from the Redemption Date to the Final Maturity Date that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity.
     “Comparable Treasury Price” means, with respect to any Redemption Date, the average of the Reference Treasury Dealer Quotations for such Redemption Date.
Eighth Supplemental Indenture

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     “Coupon Rate” means the interest rate payable on the Debentures as set forth herein.
     “Debentures” has the meaning set forth in Section 2.1(a).
     “Deferred Interest” has the meaning set forth in Section 2.1(g).
     “Deferral Period” means each period beginning on an Interest Payment Date with respect to which the Company elects pursuant to Section 2.1(g) to defer all or part of any interest payment due on such Interest Payment Date and ending on the earlier of (i) the Third Stock Purchase Date and (ii) the next Interest Payment Date on which the Company has paid all accrued and previously unpaid interest on the Debentures.
     “Employee Benefit Plan” means any written purchase, savings, option, bonus, appreciation, profit sharing, thrift, incentive, pension or similar plan or arrangement or any written compensatory contract or arrangement.
     “Events of Default” has the meaning set forth in Section 2.1(h).
     “Failed Remarketing” has the meaning set forth in Section 2.1(p)(iii).
     “Final Maturity Date” means the earlier of August 1, 2041 and the maturity date specified by the Company pursuant to Section 2.2(a)(i).
     “Indebtedness” means all indebtedness and obligations (other than the Debentures) of, or Guaranteed or assumed by, the Company that (i) are for borrowed money or (ii) are evidenced by bonds, debentures, notes or other similar instruments.
     “Initial Interest Rate” has the meaning set forth in Section 2.1(e).
     “Interest Payment Date” has the meaning set forth in Section 2.1(e).
     “Interest Period” means the period from and including any Interest Payment Date (or, in the case of the first Interest Payment Date, May 16, 2008) to but excluding the next succeeding Interest Payment Date.
     “Make-Whole Redemption Price” means the sum, as determined by the Calculation Agent, of the present values, determined in accordance with customary financial practice, of the remaining scheduled payments of principal discounted from the Final Maturity Date and interest thereon that would have been payable to and including the Final Maturity Date (not including any portion of such payments of interest accrued to the Redemption Date) discounted from the relevant Interest Payment Date to the Redemption Date on a quarterly basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate plus 0.25%.
Eighth Supplemental Indenture

-4-


 

     “Other Debentures” means each of the series of Securities issued under the Sixth Supplemental Indenture to the Indenture and the Seventh Supplemental Indenture to the Indenture, each dated as of the date hereof, and each between the Company and the Trustee.
     “pari passu”, as applied to the ranking of any obligation of a Person in relation to any other obligation of such Person, means in any bankruptcy, insolvency or receivership proceeding that each such obligation either (i) is not subordinated or junior in right of payment to any other obligation or (ii) is subordinate or junior in right of payment to the same obligations as is the other, and is so subordinate or junior to the same extent, and is not subordinate or junior in right of payment to each other or to any obligation as to which the other is not so subordinate or junior.
     “Pledge Agreement” means the Pledge Agreement, dated as of May 16, 2008, among the Company, Wilmington Trust Company, as Collateral Agent, Custodial Agent and Securities Intermediary, and The Bank of New York, as Purchase Contract Agent, as it may be amended from time to time.
     “Purchase Contract Agreement” means the Purchase Contract Agreement, dated as of May 16, 2008, between the Company and The Bank of New York, as Purchase Contract Agent, as it may be amended from time to time.
     “Put Notice” has the meaning set forth in Section 2.1(n).
     “Put Right” has the meaning set forth in Section 2.1(n).
     “Reference Treasury Dealer” means each of Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., or their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. government securities dealer in the United States (a “Primary Treasury Dealer”), the Company shall substitute therefor another Primary Treasury Dealer; and any other Primary Treasury Dealer selected by the Calculation Agent after consultation with the Company.
     “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Calculation Agent, of the bid and ask prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Calculation Agent by that Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date.
     “Regular Record Date” for the payment of any current interest payable on any Interest Payment Date, the date specified in Section 2.1(f) and for the payment of Deferred Interest, the date specified in Section 2.1(g)(ii).
Eighth Supplemental Indenture

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     “Remarketing” means a remarketing of Debentures pursuant to Section 2.1(p) and the Remarketing Agreement.
     “Remarketing Agents” means the Remarketing Agents and any successor or replacement remarketing agents appointed by the Company pursuant to Section 2.1(p).
     “Remarketing Agents’ Fee” means 0.25% of the sum of the Treasury Portfolio Purchase Price and the Separate Debentures Purchase Price.
     “Remarketing Agreement” means the remarketing agreement entered into among the Company, the Purchase Contract Agent and the Remarketing Agents pursuant to Section 2.1(p).
     “Remarketing Date” means any day during a Remarketing Period on which the Remarketing Agent finds buyers for all of the Debentures offered in the Remarketing by 4:00 p.m., New York City time.
     “Remarketing Period Start Date” means the first day of the Remarketing Period.
     “Reset Rate” has the meaning set forth in Section 2.1(p).
     “Reset Spread” has the meaning set forth in Section 2.1(p).
     “Successful” means, as to a Remarketing, that the Remarketing is conducted in accordance with Section 2.1(p) and the Remarketing Agent finds buyers for all of the Debentures offered in the Remarketing no later than 4:00 p.m., New York City time, on the last day of the Remarketing Period.
ARTICLE TWO
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
Section 2.1 Terms of Debentures
     Pursuant to Sections 201 and 301 of the Indenture, there is hereby established a series of Securities, the terms of which shall be as follows:
     (a) Designation. The Securities of this series shall be known and designated as the “5.89% Series B-3 Junior Subordinated Debentures” of the Company (the “Debentures”). The CUSIP number of the Debentures is 026874 BQ9.
     (b) Aggregate Principal Amount. The maximum aggregate principal amount of the Debentures that may be authenticated and delivered under the Indenture and this Eighth Supplemental Indenture is $1,960,000,000 (except for
Eighth Supplemental Indenture

-6-


 

Debentures authenticated and delivered upon registration of transfer of, or exchange for, or in lieu of, other Debentures pursuant to Section 304, 305, 306, 906 or 1107 of the Indenture or 2.1(n) or 2.1(p) of this Eighth Supplemental Indenture).
     (c) Form and Denominations. (i) The Debentures will initially be issued in the form of one or more Securities substantially in the form of Annex A, with such modifications thereto as may be approved by the officer executing the same. The Debentures will be denominated in U.S. dollars and payments of principal and interest will be made in U.S. dollars. Except as provided for in Section 2.1(c)(ii), the Debentures will be issued only in fully registered certificated form without coupons, and the authorized denominations of the Debentures shall be $1,000 and integral multiples of $1,000 in excess thereof. Debentures that are components of Corporate Units shall be registered in the name of The Bank of New York, as Purchase Contract Agent. Principal and interest on the Debentures will be payable, the transfer of such Debentures will be registrable, and such Debentures will be exchangeable for Debentures of a like aggregate principal amount bearing identical terms and provisions, at the office or agency of the Company maintained for such purpose in the Borough of Manhattan, New York City, which shall initially be the Corporate Trust Office of the Trustee, provided, however, that payment of interest may be made, at the option of the Company, by check mailed to the Holder at such address as shall appear in the Security Register or by wire transfer to an account appropriately designated by the Holder entitled to payment. No service charge shall be made for any registration of transfer or exchange of any Debentures, but the Company may require payment from the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith.
     (i) If any Debenture is no longer a component of the Corporate Unit and released from the Collateral Account, the Company, at its election, may issue one or more certificates, in form of a Global Security to represent such Debenture and any other Debentures that cease to be a component of Corporate Units and are released from the Collateral Account. If issued as one or more Global Securities, the Depositary shall be The Depository Trust Company or such other depositary as any officer of the Company may from time to time designate. Upon the creation of Treasury Units or the recreation of Corporate Units, an appropriate annotation shall be made on the Schedule of Increases and Decreases on the Global Securities held by the Depositary and on the Schedule of Increases and Decreases on the Debenture held by the Collateral Agent. The Global Securities will be subject to the provisions of Section 305 of the Indenture and bear the legend in Section 204 of the Indenture; provided, however, that notwithstanding clause (2) of Section 305 of the Indenture, the Global Securities may be exchanged in whole or in part for Debentures registered in the name of the Purchase Contract Agent upon the recreation of Corporate Units in accordance
Eighth Supplemental Indenture

-7-


 

with the Purchase Contract Agreement and Pledge Agreement. Payments with respect to Global Securities will be made by wire transfer to the Depositary.
     (d) Maturity. The principal amount of, and all accrued and unpaid interest on, the outstanding Debentures shall be payable in full on the Final Maturity Date.
     (e) Rate of Interest. The Debentures shall bear interest (i) from and including May 16, 2008 to but excluding the earlier of their maturity date and the Remarketing Settlement Date at the rate of 5.89% per annum (the “Initial Interest Rate”), and (ii) from and including the Remarketing Settlement Date, at the Reset Rate. Interest on the Debentures shall be payable (i) quarterly in arrears on February 1, May 1, August 1 and November 1 of each year, beginning on August 1, 2008 and (ii) after a Successful Remarketing, semi-annually in arrears on February 1 and August 1 at the Reset Rate, accruing from the Remarketing Settlement Date, unless the Company elects a Reset Rate that is a floating rate pursuant to Section 2.2(a)(iii) (each such date on which interest is to be paid, an “Interest Payment Date”). Except as provided in Section 2.1(p), the amount of interest payable on the Debentures for any period will be computed (i) for any full quarterly or semi-annual period on the basis of a 360-day year of twelve 30-day months and (ii) for any period shorter than a full quarterly or semi-annual period, on the basis of a 30-day month and, for any period less than a month, on the basis of the actual number of days elapsed per 30-day month. Except as provided in Section 2.1(p), in the event any Interest Payment Date falls on a day that is not a Business Day, the interest payment due on that date will be postponed to the next day that is a Business Day with the same force and effect as if made on such originally scheduled date and no interest shall accrue as a result of such postponement.
     (f) To Whom Interest is Payable. Except as provided in Section 2.1(g)(ii) and as otherwise determined by the Company from time to time, interest (other than Deferred Interest which shall be payable to the Persons specified pursuant to Section 2.1(g)(ii)) shall be payable to the Person in whose name the Debentures are registered at the close of business on the 15th day of the month prior to the month in which the Interest Payment Date falls, whether or not a Business Day.
     (g) Option to Defer Interest Payments. (i) The Company shall have the right, at any time and from time to time prior to the Third Stock Purchase Date, to defer the payment of interest on the Debentures for one or more consecutive Interest Periods; provided that no Deferral Period shall extend beyond the Third Stock Purchase Date (such interest referred to as “Deferred Interest”). Deferred Interest will, subject to applicable law, accrue interest at the Initial Interest Rate compounded on each Interest Payment Date. The Company agrees that (A) until the Third Stock Purchase Date, (x) if an Event of Default has
Eighth Supplemental Indenture

-8-


 

occurred and is continuing, (y) the Company has given notice of its election to defer interest payments but the Deferral Period has not yet commenced or (z) a Deferral Period is continuing, (B) the Company has given notice of its election to defer Contract Adjustment Payments but the related deferral period has not yet commenced or a deferral period is continuing with respect to such Contract Adjustment Payments, or (C) Additional Debentures are outstanding, the Company shall not, and shall not permit any Subsidiary, subject to the exceptions specified in clause (v) of this Section 2.1(g), to: (a) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any Capital Stock of the Company, (b) make any payment of principal of, or interest or premium, if any, on, or repay, purchase or redeem any debt securities of the Company that rank pari passu with, or junior to, the Debentures (including the Other Debentures) or (c) make any payments with respect to any Guarantee by the Company of securities of any Subsidiary if such Guarantee ranks pari passu with, or junior to, the Debentures.
     (ii) The Company may pay Deferred Interest pursuant to this Section 2.1(g) to the Holder at any time either in the form of cash or in the form of an Additional Debentures having a principal amount equal to the aggregate amount of accrued but unpaid Deferred Interest on the date of issuance and maturing on the later of August 1, 2014 and the date five years after the date of commencement of the Deferral Period; provided, however, that the Company must pay any accrued but unpaid Deferred Interest to the Holder either in the form of cash or in the form of Additional Debentures on the Third Stock Purchase Date, whether or not such Holder participates in the Remarketing. Deferred Interest paid on any Interest Payment Date shall be payable to the Person in whose name the Debentures are registered at the close of business on the Record Date next preceding such Interest Payment Date, provided that the Company shall establish a Special Record Date for any Deferred Interest to be paid on a date other than an Interest Payment Date and Holders on that Special Record Date shall be entitled to payment of the Deferred Interest.
     (iii) Upon termination of any Deferral Period and upon the payment of all Deferred Interest (together with any compounded interest thereon, if any, to the extent permitted by applicable law), the Company may elect to begin a new Deferral Period pursuant to clause (i) of this Section 2.1(g).
     (iv) The Company shall give written notice to the Trustee and the Holders of the Debentures of its election to begin any Deferral Period on any Interest Payment Date at least one Business Day prior to the Regular Record Date for that Interest Payment Date. Notwithstanding the previous sentence, the Company’s failure to pay any interest due within five Business Days after any Interest Payment Date occurring prior to the Third Stock Purchase Date shall automatically and without any further action by any Person be deemed to commence a Deferral Period.
Eighth Supplemental Indenture

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     (v) The restrictions in clause (i) of this Section 2.1(g) do not apply to (a) purchases, redemptions or other acquisitions of shares of the Company’s Capital Stock in connection with (1) any Employee Benefit Plan or the Assurance Agreement or (2) a dividend reinvestment, stock purchase plan or other similar plan, (b) any exchange or conversion of any class or series of the Company’s Capital Stock (or the Capital Stock of any Subsidiary) for any class or series of the Company’s Capital Stock or of any class or series of Indebtedness of the Company for any class or series of the Company’s Capital Stock, (c) the purchase of fractional interests in shares of the Capital Stock of the Company in accordance with the conversion or exchange provisions of the Company’s Capital Stock or the security or instrument being converted or exchanged, (d) any declaration of a dividend in connection with any stockholders’ rights plan, or the issuance of rights, equity securities or other property under any stockholders’ rights plan, or the redemption or repurchase of rights in accordance with any stockholders’ rights plan, (e) any dividend in the form of equity securities, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of the warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such equity securities, (f) any payment during a Deferral Period of current or deferred interest in respect of any debt securities of the Company that rank pari passu with the Debentures that is made pro rata to the amounts due on pari passu securities and the Debentures, (g) any payments of deferred interest or principal on such pari passu securities that, if not made, would cause the Company to breach the terms of the instrument governing such pari passu securities, (h) the repurchase of any debt securities of the Company that rank pari passu with the Debentures in exchange for Capital Stock in connection with a failed remarketing or similar event, any payment of deferred interest on any such debt securities in the form of additional debentures that will rank pari passu with the Debentures and the repayment of any such additional debentures at maturity or (i) any repayment or redemption of a security necessary to avoid a breach of the instrument governing that security.
     (h) Events of Default. After the Third Stock Purchase Date, the Debentures shall be entitled to the benefits of the Events of Default set forth in Section 501 of the Indenture. Until the Third Stock Purchase Date, the following events shall be Events of Default with respect to the Debentures (whatever the reason for such Event of Default and whether it shall be occasioned by the provisions of Article Fourteen of the Indenture or be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
     (1) default in the payment of interest, including compounded interest, in full in cash or Additional Debentures on any Debenture for a period of 30 days after the Third Stock Purchase Date;
Eighth Supplemental Indenture

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     (2) default in the payment of the principal of any Debenture at the final stated maturity or upon a call for redemption pursuant to Section 2.1(i); or
     (3) the events set forth in Section 501(5) and (6) of the Indenture.
     (i) Redemption. The Debentures shall be redeemable in accordance with Article Eleven of the Indenture. Subject to Section 2.2(a)(ii), at any time on or after August 1, 2013, the Company may redeem, at its option, the Debentures, in whole or in part, at a price equal to the greater of their principal amount and the Make-Whole Redemption Price, plus, in either case, accrued and unpaid interest, if any, to the Redemption Date.
     (j) Sinking Fund. Article Twelve shall not apply to the Debentures.
     (k) Subordination. The Debentures shall at all times prior to the Remarketing Settlement Date, if any, be subject to Article Fourteen of the Indenture, subject to the following modifications:
     (i) For purposes of the Debentures, the “or” before clause (iii) of the definition of Senior Debt in the Indenture is deleted, the following clauses are added to the definition of Senior Debt in the Indenture after the word “contracts,” in clause (iii) for purposes of the Debentures:
“, (iv) any subordinated or junior subordinated debt that by its terms is not expressly pari passu or subordinated to the Debentures, (v) any Guarantee of any indebtedness, obligation or security issued by any Person that is an Affiliate of the Company and such Person is viewed by the Company as a vehicle to finance its operations, and (vi) Indebtedness of the Company to its Subsidiaries”; and
     (ii) For purposes of the Debentures, the following provision is added to the end of the definition of Senior Debt in the Indenture after the word “Securities”: “provided that (a) trade accounts payable and accrued liabilities arising in the ordinary course of the Company’s business, (b) the Company’s 6.25% Series A-1 Junior Subordinated Debentures, 5.75% Series A-2 Junior Subordinated Debentures, 4.875% Series A-3 Junior Subordinated Debentures, 6.45% Series A-4 Junior Subordinated Debentures, 7.70% Series A-5 Junior Subordinated Debentures and the Other Debentures and (c) any other indebtedness, Guarantee or other obligation that is specifically designated as being subordinate, or not superior, in right of payment to the Debentures, shall not be considered Senior Debt”.
Eighth Supplemental Indenture

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     (iii) For purposes of the Debentures, the provisions of Section 1404 of the Indenture shall only apply in the case where (A) there has been an event of default with respect to Senior Debt within the meaning of clause (i) of the definition of Senior Debt, (B) the principal amount of such Senior Debt has been accelerated, (C) the outstanding principal amount of Senior Debt at the time of acceleration is at least $100,000,000 and (D) the event of default or acceleration has not been cured, waived, or otherwise ceased to exist. In no other case and to no other Senior Debt shall Section 1404 apply.
     (iv) The Debentures shall rank pari passu with the Company’s 6.25% Series A-1 Junior Subordinated Debentures, 5.75% Series A-2 Junior Subordinated Debentures, 4.875% Series A-3 Junior Subordinated Debentures, 6.45% Series A-4 Junior Subordinated Debentures, 7.70% Series A-5 Junior Subordinated Debentures and the Other Debentures.
     (l) Registrar, Paying Agent, Authenticating Agent and Place of Payment. The Company hereby appoints The Bank of New York as Security Registrar, Authenticating Agent and Paying Agent with respect to the Debentures. The Debentures may be surrendered for registration of transfer and for exchange without service charge, but upon payment of any taxes on other governmental charges payable in connection with such registration of transfer or exchange, at the office or agency of the Company maintained for such purpose in The City of New York, New York and at any other office or agency maintained by the Company for such purpose. The Place of Payment for the Debentures shall be the Paying Agent’s office in New York, New York. Principal and interest with respect to the Debentures will be payable, the transfer of the Debentures will be registrable and Debentures will be exchangeable for debentures of a like aggregate principal amount in denominations of $1,000 and integral multiples of $1,000, at the office of the Paying Agent.
     (m) Defeasance. After the Third Stock Purchase Date, the Debentures will be subject to Sections 1302 and 1303 of the Indenture unless the Company makes the election set forth in Section 2.2(a)(iii).
     (n) Redemption at Holders’ Option. If there is a Failed Remarketing, each Holder of Debentures that are Separate Debentures will have the right to require the Company to redeem all or a portion of its Separate Debentures, but excluding any Additional Debentures, on the Third Stock Purchase Date (the “Put Right”). Such right will be exercisable only upon delivery of notice to the Trustee on or prior to 11:00 a.m., New York City time, on the second Business Day prior to the Third Stock Purchase Date (a “Put Notice”). A Put Notice shall be irrevocable. If a Put Notice shall have been duly given, the Separate Debentures to which the Put Notice relates shall become due and payable on the Third Stock Purchase Date, and the Company shall redeem, such Debentures for a
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Redemption Price per Debenture equal to 100% of their principal amount. Accrued and unpaid interest on such Debenture to such date of redemption shall be paid to the Holders of such Debentures on the Record Date therefor. Section 1105 of the Indenture shall apply to any redemption pursuant to this Section 2.1(n), and Section 1107 of the Indenture shall apply to any Separate Debenture redeemed in part.
     (o) Modification. No supplemental indenture shall, without the consent of the Holder of each Outstanding Debenture, modify or amend Section 2.1(n) or Section 2.1(p) in any respect materially adverse to the Holder.
     (p) Remarketing and Reset Rate Mechanics.
     (i) Obligation to Conduct Remarketing and Related Requirements.
     (i) The Company and the Purchase Contract Agent shall appoint a nationally recognized investment banking firm as Remarketing Agent and enter into a Remarketing Agreement at least 30 days prior to the Remarketing Period Start Date. The Remarketing Agreement shall include such terms, conditions and other provisions as the Company, the Purchase Contract Agents and the Remarketing Agent may agree among themselves but shall in any event include provisions to substantially the following effect:
     (1) The Remarketing Agents will use their commercially reasonable efforts to obtain a price for the Debentures to be remarketed in the Remarketing which results in proceeds, net of the Remarketing Agents’ Fee, equal to at least 100% of the sum of the Treasury Portfolio Purchase Price and the Separate Debentures Purchase Price;
     (2) The Remarketing Agent will in consultation with the Company reset the Coupon Rate on the Debentures (as a rate per annum for payment of interest on each applicable Interest Payment Date) or establish the Reset Spread in order to give effect to clause (1) above for Interest Periods or portions thereof commencing on or after the Remarketing Settlement Date;
     (3) The Remarketing Agents will deduct the Remarketing Agents’ Fee from the proceeds of the Remarketing and remit any Proceeds remaining after such deduction to or at the direction of the Collateral Agent and the Custodial Agent in accordance with the Pledge Agreement; and
     (4) On any day in a Remarketing Period other than the last five Business Days of such Remarketing Period, the Company may, in its
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absolute discretion (and without prior notice being given to Holders of Debentures or of the Equity Units), postpone the Remarketing until the following Business Day by giving notice of such postponement to the Remarketing Agents in accordance with the Remarketing Agreement.
     (ii) The Company and the Purchase Contract Agent shall use their commercially reasonable efforts to effect Remarketing of the Debentures as described in this Section 2.1(p). If in the judgment of counsel to the Company or to the Remarketing Agents it is necessary for a Registration Statement covering the Debentures to have been filed and have become effective under the Securities Act in order to effect the Remarketing, then the Company and the Purchase Contract Agent shall use their commercially reasonable efforts (i) to ensure that a Registration Statement covering the full principal amount of Debentures to be remarketed shall have become effective in a form that will enable the Remarketing Agents to rely on it in connection with the Remarketing or (ii) effect such Remarketing pursuant to Rule 144A under the Securities Act or another available exemption from the registration requirements under the Securities Act.
(ii) Reset of Coupon Rate in Connection with Remarketing.
     (i) As part of and in connection with the Remarketing, the Remarketing Agents shall, as contemplated by Section 2.1(p)(i)(2) and in accordance with the other provisions of this Section 2.1(p), (A) reset the Coupon Rate to a new rate (the “Reset Rate”), or (B) if the Company shall have made the election set forth in Section 2.2(a)(iii), establish the reset spread (the “Reset Spread”), rounded to the nearest one-thousandth (0.001) of one percent per annum, that will apply to all Debentures (whether or not the Holders thereof participated in the Remarketing) if such Remarketing is Successful for each Interest Period or portion thereof commencing on or after the Remarketing Settlement Date.
     (ii) If the Remarketing has been determined to be Successful in accordance with Section 2.1(p)(iii)(v), by approximately 4:30 p.m., New York City time, on any Remarketing Date, the Remarketing Agent shall notify the Company, the Purchase Contract Agent and the Trustee that the Remarketing was Successful and the Reset Rate or Reset Spread, as the case may be, determined as part of such Remarketing in accordance with this Section 2.1(p).
     (iii) If a Remarketing is Successful, then commencing with the related Remarketing Settlement Date, (A) the Coupon Rate shall be reset to the Reset Rate or (B) if the Company shall have made the election set forth in Section 2.2(a)(iii), the Debentures shall bear interest at the Base
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Rate plus the Reset Spread, determined in accordance with this Section 2.1(p) pursuant to such Remarketing.
     (iv) In the event of a Failed Remarketing:
     (1) no Debentures will be sold in such Remarketing;
     (2) the Coupon Rate and the Interest Payment Dates will remain unchanged;
     (3) the Collateral Agent, for the benefit of the Company, will, at the written instruction of the Company, deliver or dispose of the Debentures that are included in Corporate Units in accordance with the Company’s written instructions to satisfy in full, from any such disposition or retention, such Holders’ obligations to pay the purchase price for the shares of Common Stock to be issued on the Third Stock Purchase Date under the Stock Purchase Contracts underlying such Corporate Units; and
     (4) in the case of Debentures that are Separate Debentures the Holders of which elected to participate in the Remarketing, such Debentures will be returned to the related Holders in accordance with the Pledge Agreement and the Holders will be entitled to exercise the Put Right.
     (iii) Remarketing Procedures.
     (i) The Company will (A) (x) give, or cause the Trustee to give on its behalf, the Holders of the Separate Debentures and (y) cause the Purchase Contract Agent to give the record holders of Equity Units notice of the Remarketing at least seven Business Days prior to the Remarketing Period Start Date, and (B) request, not later than seven nor earlier than 15 calendar days prior to the Remarketing Period Start Date (or if clause (2) below applies, not later than 15 or earlier than 21 calendar days prior to the Remarketing Period Start Date), that the Depositary notify its participants holding Debentures, Corporate Units or Treasury Units, of the Remarketing. Such notices will set forth:
     (1) the Interest Payment Dates and Regular Record Dates that will apply after the Remarketing Settlement Date;
     (2) the modifications to the terms of the Debentures, if any, effected pursuant to Section 2.2(a);
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     (3) the procedures a beneficial owner must follow if it holds Debentures that are Separate Debentures to elect to participate in the Remarketing; and
     (4) the procedures a beneficial owner must follow to exercise its Put Right in the event such Remarketing is a Failed Remarketing if such beneficial owner holds Debentures that are Separate Debentures.
     (ii) On the Remarketing Period Start Date, all outstanding Debentures included in Corporate Units will be tendered or be deemed tendered to the Remarketing Agent for Remarketing. Each Holder of Debentures included in Corporate Units, by purchasing such Debentures agrees to have such Debentures remarketed on any Remarketing Date and authorizes the Remarketing Agent to take any and all action on its behalf necessary to effect the Remarketing.
     (iii) Each Holder of Debentures that are Separate Debentures may elect to have such Holder’s Debentures remarketed in the Remarketing in accordance with Section 5.02 of the Purchase Contract Agreement.
     (iv) If the Remarketing on any Remarketing Date is Successful, then on the Remarketing Settlement Date the Collateral Agent shall deliver to the Remarketing Agent the Debentures included in the Corporate Units and the Custodial Agent shall deliver to the Remarketing Agent the Debentures the Holders of which have made the election referred to in clause (iii) above, and the Remarketing Agent shall deduct the Remarketing Agent’s Fee to which it is entitled as provided in Section 2.1(p)(i) from the proceeds of such Remarketing and remit the remaining proceeds in accordance with Section 2.1(p)(i)(3) for application as provided therein.
     (v) If by 4:00 p.m., New York City time, on any Remarketing Date the Remarketing Agent has found buyers for all of the Debentures offered in the Remarketing in accordance with this Section 2.1(p), a Successful Remarketing shall be deemed to have occurred.
     (vi) If, by 4:00 p.m., New York City time, on the last day of the Remarketing Period, the Remarketing Agent is unable to find buyers for all of the Debentures offered in the Remarketing in accordance with this Section 2.1(p), such Remarketing shall be deemed to be a “Failed Remarketing.”
     (vii) The Company shall notify, or cause the Trustee to notify, the Holders of the Debentures of a Successful Remarketing promptly
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following the Remarketing Settlement Date, and shall cause a notice of any Failed Remarketing to be published on the Business Day following the last day of the Remarketing Period, by publication in a daily newspaper in the English language of general circulation in New York City, which is expected to be The Wall Street Journal.
     (viii) The right of each Holder (whether of Separate Debentures or of Debentures included in Corporate Units) to have its Debentures remarketed and sold in connection with any Remarketing shall be limited to the extent that (i) the Remarketing Agents conduct a Remarketing pursuant to the terms of the Remarketing Agreement, (ii) the Remarketing Agents are able to find a purchaser or purchasers for the Debentures offered in the Remarketing in accordance with this Section 2.1(p) and the Remarketing Agreement, and (iii) the purchaser or purchasers deliver the purchase price therefor to the Remarketing Agent as and when required.
     (ix) Neither the Company nor the Remarketing Agents shall be obligated in any case to provide funds to make payment upon tender of Debentures for Remarketing.
Section 2.2 Company’s Election to Change Certain Terms
     (a) The Company may, without the consent of any Holders of Debentures, in consultation with the Remarketing Agents, elect at any time at least 30 days prior to the Remarketing Period Start Date, but on one occasion only:
     (i) to change the maturity of principal of the Debentures to a date that is earlier than August 1, 2041; provided, however, that the maturity of principal of the Debentures may not be changed to a date earlier than August 1, 2013;
     (ii) to change the terms of the Debentures to eliminate the Company’s right to redeem the Debentures at its option or to specify a date, which may not be earlier than August 1, 2013, on and after which the Debentures will be redeemable at the Company’s option either in whole or in part (as elected by the Company) or to modify the definition of “Make-Whole Redemption Price” or to provide that the Redemption Price shall be equal to the principal amount of the Debentures to be redeemed, plus accrued and unpaid interest to the Redemption Date; or
     (iii) to provide that the Debentures shall bear interest at a floating rate equal to the applicable index (the “Base Rate”) plus a Reset Spread to be determined in accordance with Section 2.1(p), in which case the Company may also elect to modify the business day and day count conventions set forth in Section 2.1(e) to conform to market practice for floating-rate debentures bearing interest at a rate determined by reference to such index.
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     (b) The Company shall make the elections provided for in Section 2.2(a), as applicable, by giving irrevocable written notice of such elections to the Trustee. Any election under Sections 2.2(a)(i) and 2.2(a)(ii) shall be effective when made, and any such election under Section 2.2(a)(iii) shall be effective on the Remarketing Settlement Date.
     (c) In the case of a Successful Remarketing, on or after the Remarketing Settlement Date the Debentures will cease to be subordinated and the provisions of Section 2.1(k) shall not apply. In the case of a Failed Remarketing, the Debentures will remain subordinated to Senior Debt and Section 2.1(k) will continue to apply.
Section 2.3 Tax Treatment
     (a) The Company agrees, and by acceptance of a Corporate Unit, each holder of a Corporate Unit will be deemed to have agreed (unless the United States Internal Revenue Service requires a different treatment from such holder) (1) for United States federal, state and local income and franchise tax purposes to treat the acquisition of a Corporate Unit as the acquisition of the applicable ownership interest in the Debenture and the Other Debentures and the Stock Purchase Contract constituting the Corporate Unit, (2) to treat the Debenture as indebtedness for United States federal, state and local income and franchise tax purposes, (3) if such holder purchased the Corporate Unit in the initial offering for $75, to allocate $25 to the undivided beneficial ownership interests in the Debenture and each Other Debenture and $0 to the Stock Purchase Contract included in a Corporate Unit, and (4) to treat the Debenture as a “variable rate debt instrument” for U.S. federal income tax purposes.
     (b) Any payment (including cash or property) and original issue discount under the terms of this Eighth Supplemental Indenture shall be subject to withholding and backup withholding of tax as required by law. Any such withholding and backup withholding shall be treated as if made to the intended recipient in full compliance with the terms hereof.
ARTICLE THREE
MISCELLANEOUS
Section 3.1 Relationship to Existing Indenture
     The Eighth Supplemental Indenture is a supplemental indenture within the meaning of the Indenture. The Indenture, as supplemented and amended by this Eighth Supplemental Indenture, is in all respects ratified, confirmed and approved and, with respect to the Debentures, the Indenture, as supplemented and amended by this Eighth Supplemental Indenture, shall be read, taken and construed as one and the same instrument.
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Section 3.2 Modification of the Existing Indenture
     Except as expressly modified by this Eighth Supplemental Indenture, the provisions of the Indenture shall govern the terms and conditions of the Debentures.
Section 3.3 Governing Law
     This instrument shall be governed by and construed in accordance with the laws of the State of New York.
Section 3.4 Counterparts
     This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
Section 3.5 Trustee Makes No Representation
     The recitals contained herein are made by the Company and not by the Trustee, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representation as to the validity or sufficiency of this Eighth Supplemental Indenture (except for its execution thereof and its certificates of authentication of the Debentures).
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     In Witness Whereof, the parties hereto have caused this Eighth Supplemental Indenture to be duly executed all as of the day and year first above written.
         
  AMERICAN INTERNATIONAL GROUP, INC.
 
 
  By   /s/ Robert A. Gender  
    Name:   Robert A. Gender   
    Title:   Vice President and Treasurer   
 
  THE BANK OF NEW YORK,
as Trustee
 
 
  By   /s/ Sherma Thomas  
    Name:   Sherma Thomas  
    Title:   Assistant Treasurer  
 
Eighth Supplemental Indenture

 


 

ANNEX-A
     [Include if this Security is a Global Security — THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OR TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
AMERICAN INTERNATIONAL GROUP, INC.
5.89% SERIES B-3 JUNIOR SUBORDINATED DEBENTURES
No.
$
  CUSIP No.: 026874 BQ9
ISIN: US026874BQ98
     American International Group, Inc., a corporation duly organized and existing under the laws of Delaware (herein called the “Company”, which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to         , or registered assigns, the principal sum of            Dollars ($    )][Include in Global Security and in Pledged Debenture — the principal sum as set forth on the Schedule of Increases or Decreases in Security attached hereto, which shall not exceed [ ]] on August 1, 2041, and to pay interest on said principal sum from May 16, 2008 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, subject to deferral as set forth herein, in arrears at a rate (i) of 5.89% per annum on February 1, May 1, August 1 and November 1 (each such date, an “Interest Payment Date”), commencing August 1, 2008, to but not including the earlier of the repayment of the outstanding principal amount of this Security and the Remarketing Settlement Date and (ii) if the Remarketing Settlement Date occurs, equal to the Reset Rate from and including the Remarketing Settlement Date, on each February 1 and August 1, or if the Company has elected that this Security will bear interest at a floating rate after the Remarketing Settlement Date, equal to the Base Rate plus the Reset Spread, on each February 1, May 1, August 1 and November 1, subject to adjustment as provided herein, commencing with the first such date to occur after the Remarketing Settlement Date, until the principal hereof shall have become due and payable, and on any overdue principal and premium, if any, and (without duplication and to the extent
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that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the same rate per annum compounded on each Interest Payment Date. The amount of interest payable on any Interest Payment Date shall, except as provided herein, be computed (i) for any full quarterly or semi-annual period on the basis of a 360-day year comprised of twelve 30-day months, (ii) for any period shorter than a full quarterly or semi-annual period, on the basis of a 30-day month and, for (iii) any period less than a month, on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which interest is payable on this Security is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay). The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities, as defined in said Indenture) is registered at the close of business on the Regular Record Date for such interest installment, which shall be the close of business on the 15th day of the month prior to the month in which the Interest Payment Date falls, whether or not a Business Day or such other date as the Company may specify. Any such interest installment not punctually paid or duly provided for (other than Deferred Interest) shall forthwith cease to be payable to the registered Holders on such Regular Record Date and may be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date to be fixed by the Trustee for the payment of such Defaulted Interest, notice whereof shall be given to the registered Holders of this series of Securities not less than 10 days prior to such special record date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.
     Until the Remarketing Settlement Date, if any, the indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Debt of the Company, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by, such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination so provided and (c) appoints the Trustee his or her attorney-in-fact for any and all such purposes. Each Holder hereof, by his or her acceptance hereof, hereby waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Debt of the Company, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions.
     The Company shall have the right, at any time and from time to time, prior to August 1, 2011 to defer the payment of interest on this Security for one or more consecutive Interest Periods as described on the reverse hereof. The Company shall give written notice to the Trustee and the Holders of this Security of its election to begin any Deferral Period at least one Business Day prior to the Regular Record Date for that Interest Payment Date, provided, however, that the Company’s failure to pay any interest
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due within five Business Days after any Interest Payment Date occurring prior to the Third Stock Purchase Date shall automatically and without any further action by any Person be deemed to commence a Deferral Period.
     Payment of the principal of (and premium, if any) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or by wire transfer of immediately available funds to an account designated by the Holder of this Security.
     Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
     Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
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     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
Dated:
         
  American International Group, Inc.
 
 
  By:      
    Name:      
    Title:      
 
     
Attest:
   
 
 
 
          [Secretary or Assistant Secretary]
   
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
Dated:
         
  The Bank of New York,
     as Trustee
 
 
  By:      
    Name:      
    Title:      
 
Series B-3 Debenture
(Signature Page for Security)

 


 

ANNEX A
REVERSE OF SECURITY
     This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued and to be issued in one or more series under a Junior Subordinated Debt Indenture, dated as of March 13, 2007 (herein called the “Base Indenture”), as supplemented by a Eighth Supplemental Indenture, dated as of May 16, 2008 (herein called the “Eighth Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), in each case, between the Company and The Bank of New York, as Trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, the holders of Senior Debt and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof limited in aggregate principal amount to $1,960,000,000 (except for Securities authenticated and delivered upon registration or transfer of, or exchange for, or in lieu of, other Securities pursuant to Section 304, 305, 306, 906 or 1107 of the Base Indenture or 2.1(n) or 2.1(p) of the Eighth Supplemental Indenture).
     All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.
     The Securities of this series are subject to redemption on or after August 1, 2013, in whole or in part, upon not less than 30 days nor more than 60 days’ prior notice by first class mail, postage pre-paid, to each Holder of Securities to be redeemed, at a Redemption Price equal to the greater of 100% of the principal amount thereof and the Make-Whole Redemption Price, plus, in either case, accrued and unpaid interest, if any, to the Redemption Date.
     In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor and of an authorized denomination for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.
     The Company may elect at any time at least 30 days prior to the Remarketing Period Start Date, but on one occasion only:
     (i) to change the maturity of principal of this Security to a date that is earlier than August 1, 2041; provided, however, that the maturity of principal of this Security may not be changed to a date earlier than August 1, 2013;
     (ii) to change the terms of this Security to eliminate the Company’s right to redeem this Security at its option or to specify a date that may not be earlier than August 1, 2013 on and after which this Security will be redeemable at the Company’s option either in whole or in part (as elected by the Company) or to modify the definition of Make-Whole Redemption Price or to provide that the
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Redemption Price shall be equal to the principal amount of this Security to be redeemed, plus accrued and unpaid interest to the Redemption Date; or
     (iii) to provide that this Security shall bear interest at a floating rate equal to the applicable index plus a Reset Spread determined in accordance with Section 2.1(p) of the Eighth Supplemental Indenture, in which case the Company may also elect to modify the business day and day count conventions set forth in Section 2.1(e) of the Eighth Supplemental Indenture to conform to market practice for floating-rate debentures bearing interest at a rate determined by reference to such index.
     The elections set forth in clauses (i) and (ii) of the preceding paragraph shall become effective immediately upon the Trustee’s receipt of such notice and the election set forth in clause (iii) above shall become effective on the Remarketing Settlement Date.
     The Indenture contains provisions permitting the Company and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal amount of the Securities of each series affected at the time Outstanding, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Securities; provided, however, that, except as provided above and in the Eighth Supplemental Indenture, no such supplemental indenture shall (i) extend the fixed maturity of any Securities of any series, or reduce the principal amount thereof, reduce the rate or extend the time of payment of interest thereon, reduce any premium payable upon the redemption thereof, modify the right of Holders of Securities that are Separate Debentures to require the Company to purchase such Securities upon a Failed Remarketing, or modify the provisions of the Indenture relating to the Remarketing of the Securities, without the consent of the Holder of each Security so affected, or (ii) reduce the aforesaid percentage of Securities the Holders of which are required to consent to any such supplemental indenture, without the consent of the Holders of each Security then outstanding and affected thereby. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Securities of any series at the time outstanding affected thereby, on behalf of all of the Holders of the Securities of such series, to waive any past default in the performance of any of the covenants contained in the Indenture, or established pursuant to the Indenture with respect to such series, and its consequences, except a default in the payment of the principal of or premium, if any, or interest (subject to the Company’s right to defer interest payments) on any of the Securities of such series. Any such consent or waiver by the registered Holder of this Security (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Security and of any Security issued in exchange herefor or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Security.
Series B-3 Debenture

A-6


 

     No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest (subject to the Company’s right to defer interest payments) on this Security at the time and place and at the rate and in the money herein prescribed.
     The Company shall have the right, at any time and from time to time prior to August 1, 2011, to defer the payment of interest on the Securities for one or more consecutive Interest Periods; provided that no Deferral Period shall extend beyond August 1, 2011 (such interest referred to as “Deferred Interest”). Deferred Interest will accrue interest at the rate of 5.89% per annum compounded on each Interest Payment Date. The Company agrees that (A) until August 1, 2011, (x) if an Event of Default has occurred and is continuing, (y) the Company has given notice of its election to defer interest payments but the Deferral Period has not yet commenced or (z) a Deferral Period is continuing, (B) the Company has given notice of its election to defer Contract Adjustment Payments but the related deferral period has not yet commenced or a deferral period is continuing with respect to such Contract Adjustment Payments, or (C) Additional Debentures are outstanding, the Company shall not, and shall not permit any Subsidiary, subject to the exceptions specified below, to: (a) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any Capital Stock of the Company, (b) make any payment of principal of, or interest or premium, if any, on, or repay, purchase or redeem any debt securities of the Company that rank pari passu with, or junior to, this Security or (c) make any payments with respect to any Guarantee by the Company of securities of any Subsidiary if such Guarantee ranks pari passu with, or junior to, this Security. The Company may pay Deferred Interest (together with compounded interest thereon, if any, to the extent permitted by applicable law) to the Holder at any time either in the form of cash or in the form of Additional Debentures having a principal amount equal to the amount of accrued but unpaid Deferred Interest on the date of issuance and maturing on the later of August 1, 2014 and the date five years after the date of commencement of the Deferral Period; provided, however, that the Company must pay any accrued but unpaid Deferred Interest to the Holder either in the form of cash or in the form of Additional Debentures on the Third Stock Purchase Date, whether or not such Holder participates in the Remarketing. Deferred Interest paid on any Interest Payment Date shall be payable to the Person in whose name the Debentures are registered at the close of business on the Regular Record Date next preceding such Interest Payment Date, provided that the Company may establish a Special Record Date for any Deferred Interest to be paid on a date other than an Interest Payment Date and Holders on that Special Record Date shall be entitled to payment of the Deferred Interest. Upon termination of any Deferral Period and upon the payment of all Deferred Interest and any compounded interest then due on any Interest Payment Date, the Company may elect to begin a new Deferral Period.
     The restrictions on payments do not apply to (a) purchases, redemptions or other acquisitions of shares of the Company’s Capital Stock in connection with (1) any Employee Benefit Plan or the Assurance Agreement or (2) a dividend reinvestment, stock
Series B-3 Debenture

A-7


 

purchase plan or other similar plan, (b) any exchange or conversion of any class or series of the Company’s Capital Stock (or the Capital Stock of any Subsidiary) for any class or series of the Company’s Capital Stock or of any class or series of Indebtedness of the Company for any class or series of the Company’s Capital Stock, (c) the purchase of fractional interests in shares of the Capital Stock of the Company in accordance with the conversion or exchange provisions of the Company’s Capital Stock or the security or instrument being converted or exchanged, (d) any declaration of a dividend in connection with any stockholders’ right plan, or the issuance of rights, equity securities or other property under any stockholders’ right plan, or the redemption or repurchase of rights in accordance with any stockholders’ rights plan, (e) any dividend in the form of equity securities, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of the warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such equity securities, (f) any payment during a Deferral Period of current or deferred interest in respect of any debt securities of the Company that rank pari passu with the Debentures that is made pro rata to the amounts due on pari passu securities and the Debentures, (g) any payments of deferred interest or principal on such pari passu securities that, if not made, would cause the Company to breach the terms of the instrument governing such pari passu securities, (h) the repurchase of any debt securities of the Company that rank pari passu with this Security in exchange for common stock in connection with a failed remarketing or similar event, any payment of deferred interest on any such debt securities in the form of additional debentures that will rank pari passu with this Security and the repayment of any such additional debentures at maturity or (i) any repayment or redemption of a security necessary to avoid a breach of the instrument governing that security.
     After the Third Stock Purchase Date, so long as this Security bears interest at a fixed rate of interest, this Security will be subject to defeasance of the entire indebtedness of this Security and of certain restrictive covenants and events of default, in each case upon compliance with certain conditions set forth in the Indenture.
     After the Third Stock Purchase Date, the Securities of this series will be entitled to the benefits of the Events of Default described in the Base Indenture. Until the Third Stock Purchase Date, the Securities of this series are entitled to the Events of Default specified in the Eighth Supplemental Indenture.
     As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 25% in principal amount of the Securities of this series at the time outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default, as Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time outstanding a direction inconsistent with such request, and shall have failed to
Series B-3 Debenture

A-8


 

institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or, to the extent provided in Section 2.1(g) of the Eighth Supplemental Indenture, interest hereon on or after the respective due dates.
     As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
     The Securities of this series are issuable only in registered form without coupons in denominations of $1,000 and integral multiples of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.
     No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
     Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
     The Company agrees, and by acceptance of a Corporate Unit, each holder of a Corporate Unit will be deemed to have agreed (unless the United States Internal Revenue Service requires a different treatment from such holder) (1) for United States federal, state and local income and franchise tax purposes to treat the acquisition of a Corporate Unit as the acquisition of the applicable ownership interest in this Security and the Other Debentures and the Stock Purchase Contract constituting the Corporate Unit, (2) to treat this Security as indebtedness for United States federal, state and local income and franchise tax purposes, (3) if such holder purchased the Corporate Unit in the initial offering for $75, to allocate $25 to the undivided beneficial ownership interests in this Security and each Other Debenture and $0 to the Stock Purchase Contract included in a Corporate Unit, and (4) to treat this Security as a “variable rate debt instrument” for U.S. federal income tax purposes.
Series B-3 Debenture

A-9


 

     THE BASE INDENTURE, THE EIGHTH SUPPLEMENTAL INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Series B-3 Debenture

A-10


 

ABBREVIATIONS
     The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:
     
TEN COM:
  as tenants in common
 
   
UNIF GIFT MIN ACT:
                       Custodian                    
 
  (Cust) (Minor)
 
   
TEN ENT:
  as tenants by the entireties
 
   
JT TEN:
  as joint tenants with right of survivorship and not as tenants in common
 
   
Under Uniform Gifts to Minors Act
(State)
   
Additional abbreviations may also be used though not in the above list.
Series B-3 Debenture

A-11


 

ASSIGNMENT
     FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
 
 
(Please insert Social Security or Taxpayer I.D. or other Identifying Number of Assignee)
 
 
(Please print or type name and address including Postal Zip code of Assignee)
the within Debenture and all rights thereunder, hereby irrevocably constituting and appointing ___Attorney, to transfer said Debenture on the books of the Security Registrar, with full power of substitution in the premises.
         
Dated:
      Signature                                        
 
       
 
      NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Debenture in every particular, without alteration or enlargement or any change whatsoever.
 
       
Signature Guarantee:
       
     
Series B-3 Debenture

A-12


 

[TO BE ATTACHED TO GLOBAL CERTIFICATES AND PLEDGED DEBENTURES]
SCHEDULE OF INCREASES OR DECREASES IN SECURITY
     The initial principal amount of Securities represented by this [Global] Security is $  . The following increases or decreases in this [Global] Security have been made:
                                 
                            Signature of  
                    Principal     authorized  
    Amount of     Amount of     amount of this     signatory of  
    increase in     decrease in     Security     [Security  
    principal     principal     following such     Registrar]  
    amount of this     amount of this     decrease or     [Collateral  
Date   Security     Security     increase     Agent]  
 
                         
 
                         
 
                         
 
                         
 
                         
 
                         
 
                         
 
                         
Series B-3 Debenture

A-13

EX-4.7
Exhibit 4.7
 
PURCHASE CONTRACT AGREEMENT
between
AMERICAN INTERNATIONAL GROUP, INC.
and
THE BANK OF NEW YORK
as Purchase Contract Agent
Dated as of May 16, 2008
 

 


 

TABLE OF CONTENTS
             
Article I
 
           
Definitions and Other Provisions of General Application
 
           
Section 1.01
  Definitions     1  
Section 1.02
  Compliance Certificates and Opinions     14  
Section 1.03
  Form of Documents Delivered to Purchase Contract Agent     14  
Section 1.04
  Acts of Holders; Record Dates     15  
Section 1.05
  Notices     16  
Section 1.06
  Notice to Holders; Waiver     17  
Section 1.07
  Effect of Headings and Table of Contents     17  
Section 1.08
  Successors and Assigns     17  
Section 1.09
  Separability Clause     17  
Section 1.10
  Benefits of Agreement     18  
Section 1.11
  Governing Law     18  
Section 1.12
  Legal Holidays     18  
Section 1.13
  Counterparts     18  
Section 1.14
  Inspection of Agreement     19  
Section 1.15
  Appointment of Financial Institution as Agent for the Company     19  
Section 1.16
  No Waiver     19  
Section 1.17
  Force Majeure     19  
 
           
Article II
 
           
Certificate Forms
 
           
Section 2.01
  Forms of Certificates Generally     19  
Section 2.02
  Form of Purchase Contract Agent’s Certificate of Authentication     20  
 
           
Article III
 
           
The Equity Units
 
           
Section 3.01
  Amount; Form and Denominations     20  
Section 3.02
  Rights and Obligations Evidenced by the Certificates     20  
Section 3.03
  Execution, Authentication, Delivery and Dating     22  
Section 3.04
  Temporary Certificates     22  
Section 3.05
  Registration; Registration of Transfer and Exchange     23  
Section 3.06
  Notices to Holders     24  
Section 3.07
  Book-Entry Interests     24  
Section 3.08
  Appointment of Successor Depositary     25  
Section 3.09
  Definitive Certificates     25  
Section 3.10
  Mutilated, Destroyed, Lost and Stolen Certificates     26  
Section 3.11
  Persons Deemed Owners     27  
Section 3.12
  Cancellation     27  
Section 3.13
  Creation of Treasury Units by Substitution of Qualifying Treasury Securities     28  
Purchase Contract Agreement

 


 

             
Section 3.14
  Recreation of Corporate Units     29  
Section 3.15
  Transfer of Collateral upon Occurrence of Termination Event     30  
Section 3.16
  No Consent to Assumption     31  
Section 3.17
  CUSIP Numbers     31  
 
           
Article IV
 
           
The Debentures
 
Section 4.01
  Distributions; Rights to Distributions Preserved     31  
Section 4.02
  Notice and Voting     32  
 
           
Article V
 
           
The Stock Purchase Contracts
 
           
Section 5.01
  Purchase of Shares of Common Stock     33  
Section 5.02
  Remarketing; Payment of Purchase Price     34  
Section 5.03
  Issuance of Shares of Common Stock     36  
Section 5.04
  Adjustment of Fixed Settlement Rates     37  
Section 5.05
  Notice of Adjustments and Certain Other Events     45  
Section 5.06
  Termination Event; Notice     46  
Section 5.07
  Early Settlement     46  
Section 5.08
  No Fractional Shares     48  
Section 5.09
  Charges and Taxes     49  
Section 5.10
  Contract Adjustment Payments     49  
Section 5.11
  Deferral of Contract Adjustment Payments     53  
 
           
Article VI
 
           
Rights and Remedies of Holders
 
           
Section 6.01
  Unconditional Right of Holders to Receive Contract Adjustment Payments and to Purchase Shares of Common Stock     54  
Section 6.02
  Restoration of Rights and Remedies     55  
Section 6.03
  Rights and Remedies Cumulative     55  
Section 6.04
  Delay or Omission Not Waiver     55  
Section 6.05
  Undertaking for Costs     55  
Section 6.06
  Waiver of Stay or Extension Laws     55  
 
           
Article VII
 
           
The Purchase Contract Agent
 
           
Section 7.01
  Certain Duties and Responsibilities     56  
Section 7.02
  Notice of Default     57  
Section 7.03
  Certain Rights of Purchase Contract Agent     57  
Section 7.04
  Not Responsible for Recitals or Issuance of Equity Units     59  
Section 7.05
  May Hold Equity Units     59  
Purchase Contract Agreement

ii


 

             
Section 7.06
  Money Held in Custody     59  
Section 7.07
  Compensation and Reimbursement     59  
Section 7.08
  Corporate Purchase Contract Agent Required, Eligibility     60  
Section 7.09
  Resignation and Removal; Appointment of Successor     60  
Section 7.10
  Acceptance of Appointment by Successor     61  
Section 7.11
  Merger, Conversion, Consolidation or Succession to Business     62  
Section 7.12
  Preservation of Information; Communications to Holders     62  
Section 7.13
  No Obligations of Purchase Contract Agent     63  
Section 7.14
  Tax Compliance     63  
 
           
Article VIII
 
           
Supplemental Agreements
 
           
Section 8.01
  Supplemental Agreements without Consent of Holders     64  
Section 8.02
  Supplemental Agreements with Consent of Holders     64  
Section 8.03
  Execution of Supplemental Agreements     65  
Section 8.04
  Effect of Supplemental Agreements     65  
Section 8.05
  Reference to Supplemental Agreements     66  
 
           
Article IX
 
           
Consolidation, Merger, Conveyance, Transfer or Lease
 
           
Section 9.01
  Covenant Not to Consolidate, Merge, Convey, Transfer or Lease Property Except under Certain Conditions     66  
Section 9.02
  Rights and Duties of Successor Person     66  
Section 9.03
  Officers’ Certificate Given to Purchase Contract Agent     67  
 
           
Article X
 
           
Covenants
 
           
Section 10.01
  Performance under Stock Purchase Contracts     67  
Section 10.02
  Maintenance of Office or Agency     67  
Section 10.03
  Company to Reserve Common Stock     68  
Section 10.04
  Covenants as to Common Stock     68  
Section 10.05
  Statements of Officers of the Company as to Default     68  
Section 10.06
  ERISA     68  
Section 10.07
  Tax Treatment     68  
 
           
Exhibit A
  — Form of Corporate Unit        
Exhibit B
  —  Form of Treasury Unit        
Exhibit C 
  —  Form of Instruction to Purchase Contract Agent        
Exhibit D 
  —  Form of Notice of Termination Event        
Exhibit E 
  —  Form of Notice to Settle with Cash        
Exhibit F 
  —  Form of Notice to Collateral Agent        
Purchase Contract Agreement

iii


 

     Purchase Contract Agreement, dated as of May 16, 2008, between American International Group, Inc., a Delaware corporation (the “Company”), and The Bank of New York, a New York banking corporation, acting as purchase contract agent for the Holders of Equity Units (as defined herein) from time to time (the “Purchase Contract Agent”).
Recitals
     The Company has duly authorized the execution and delivery of this Agreement and the Certificates (as defined herein) evidencing the Equity Units.
     All things necessary to make the Stock Purchase Contracts (as defined herein), when the Certificates are executed by the Company and authenticated, executed on behalf of the Holders and delivered by the Purchase Contract Agent, as provided in this Agreement, the valid and legally binding obligations of the Company have been done. For and in consideration of the premises and the purchase of the Equity Units by the Holders thereof, it is mutually agreed as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
     Section 1.01 Definitions.
     For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:
     (a) the terms defined in this Article I have the meanings assigned to them in this Article I and include the plural as well as the singular, and nouns and pronouns of the masculine gender include the feminine and neuter genders;
     (b) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States as in effect at the time of the calculation to be made;
     (c) all references to an Article, Section or other subdivision or Exhibit refer to an Article, Section or other subdivision of, or Exhibit to, this Agreement;
     (d) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, Exhibit or other subdivision; and
     (e) the following terms have the meanings given to them in this Section 1.01(e):
     “Additional Debentures” means junior subordinated debentures of the Company that will be issued pursuant to the Base Indenture, in the Company’s sole discretion, as provided in Section 5.11(c)(ii).
     “Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting
Purchase Contract Agreement

 


 

securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
     “Agreement” means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more agreements supplemental hereto entered into pursuant to the applicable provisions hereof.
     “Applicable Market Value” means, with respect to any Stock Purchase Date, the average of the VWAP per share of Common Stock (or Exchange Property Units in which the Stock Purchase Contracts will be settled following a Reorganization Event) on each of the 20 consecutive Trading Days in the applicable Observation Period. For purposes of calculating the Exchange Property Unit value, (x) the value of any common stock included in the Exchange Property Unit will be determined using the average of the VWAP per share of such common stock on each of the 20 consecutive Trading Days in the applicable Observation Period, and (y) the value of any other property, including securities other than common stock, included in the Exchange Property Unit will be the value of such property on the first Trading Day of the applicable Observation Period (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution).
     “Bankruptcy Code” means Title 11 of the United States Code, or any other law of the United States that from time to time provides a uniform system of bankruptcy laws.
     “Base Indenture” means the Junior Subordinated Debt Indenture, dated as of March 13, 2007, between the Company and the Trustee, as amended or supplemented from time to time.
     “Beneficial Owner” means, with respect to a Book-Entry Interest, a Person who is the beneficial owner of such Book-Entry Interest as reflected on the books of the Depositary or on the books of a Person maintaining an account with such Depositary (directly as a Depositary Participant or as an indirect participant, in each case in accordance with the rules of such Depositary).
     “Blackout Period” means any period following the close of business on the second Business Day immediately preceding the first day of any Remarketing Period for any series of Debentures and ending on the last day of such Remarketing Period or, if a Successful Remarketing occurs during such Remarketing Period, the applicable Stock Purchase Date.
     “Board of Directors” means the board of directors of the Company or a duly authorized committee of that board.
     “Board Resolution” means one or more resolutions of the Board of Directors, a copy of which has been certified by the Secretary or an Assistant Secretary of the Company, to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification and delivered to the Purchase Contract Agent.
     “Book-Entry Interest” means a beneficial interest in a Global Certificate, registered in the name of a Depositary or a nominee thereof, ownership and transfers of which shall be maintained and made through book entries by such Depositary as described in Section 3.07.
     “Business Day” means a day other than a Saturday, Sunday or any other day on which banking institutions and trust companies in New York City are authorized or required by any applicable law to close.
Purchase Contract Agreement

2


 

     “Certificate” means a Corporate Unit Certificate or a Treasury Unit Certificate.
     “Closing Price” of the Common Stock on any date of determination means the last reported sale price of the Common Stock on the NYSE on that date. If the Common Stock is not listed for trading on the NYSE on any date of determination, the closing price of the Common Stock on such date of determination means the closing sale price as reported in the composite transactions for the principal U.S. securities exchange on which the Common Stock is listed, or, if the Common Stock is not so reported, the market value of the Common Stock on that date as determined by a nationally recognized independent investment banking firm retained by the Company for this purpose.
     “Code” means the Internal Revenue Code of 1986, as amended from time to time, and administrative guidance and the regulations promulgated thereunder.
     “Collateral Agent” means Wilmington Trust Company, as Collateral Agent under the Pledge Agreement until a successor Collateral Agent shall have become appointed as such pursuant to the applicable provisions of the Pledge Agreement, and thereafter “Collateral Agent” shall mean the Person who is then the Collateral Agent thereunder.
     “Collateral Substitution” means (i) with respect to Corporate Units, the substitution of the Pledged Debentures included in such Corporate Units with the applicable Qualifying Treasury Securities in an aggregate principal amount at maturity equal to the aggregate Principal Amount of such Pledged Debentures, or (ii) with respect to Treasury Units, the substitution for the Pledged Treasury Securities included in such Treasury Units with the applicable Debentures in an aggregate Principal Amount equal to the aggregate principal amount at maturity of the Pledged Treasury Securities.
     “Common Stock” means the common stock, par value $2.50 per share, of the Company.
     “Company” means the Person named as the “Company” in the first paragraph of this Agreement until a successor shall have become such pursuant to the applicable provision of this Agreement, and thereafter “Company” shall mean such successor.
     “Contract Adjustment Payments” means the payments payable by the Company in arrears on the Payment Dates in respect of each Stock Purchase Contract that are accrued but unpaid prior to each such date:
     (i) from and including May 16, 2008 to but excluding the First Stock Purchase Date, at the annual rate of 2.7067% on the initial Stated Amount of $75 per Stock Purchase Contract;
     (ii) from and including the First Stock Purchase Date to but excluding the Second Stock Purchase Date, at the annual rate of 2.6450% on the adjusted Stated Amount of $50 per Stock Purchase Contract; and
     (iii) from and including the Second Stock Purchase Date to but excluding the Third Stock Purchase Date, at the annual rate of 2.6100% on the adjusted Stated Amount of $25 per Stock Purchase Contract.
     “Corporate Trust Office” means the principal office of the Purchase Contract Agent at which at any time its corporate trust business shall be administered, which office at the date hereof is located at 101 Barclay Street, Floor 8 West, New York, New York 10286, Attention: Corporate Trust
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Administration, or such other address as the Purchase Contract Agent may designate from time to time by notice to the Holders and the Company, or the principal corporate trust office of any successor Purchase Contract Agent (or such other address as such successor Purchase Contract Agent may designate from time to time by notice to the Holders and the Company).
     “Corporate Unit” means the collective rights and obligations of a Holder of a Corporate Unit Certificate in respect of:
(i) (1) at all times prior to the First Stock Purchase Date or, if earlier, the First Remarketing Settlement Date, a 1/40 undivided beneficial interest in a Series B-1 Debenture,
  (2)   at all times prior to the Second Stock Purchase Date or, if earlier, the Second Remarketing Settlement Date, a 1/40 undivided beneficial interest in a Series B-2 Debenture,
 
  (3)   at all times prior to the Third Stock Purchase Date or, if earlier, the Third Remarketing Settlement Date, a 1/40 undivided beneficial interest in a Series B-3 Debenture, and
 
  (4)   after the Remarketing Settlement Date for any series of Debentures and prior to the applicable Stock Purchase Date, the undivided beneficial ownership interest corresponding to one Corporate Unit in the Treasury Portfolio purchased with the net proceeds of the Remarketing, and
(ii) the related Stock Purchase Contract.
The Debentures comprising part of a Corporate Unit at any time are referred to as the “applicable series of Debentures.”
     “Corporate Unit Certificate” means a certificate evidencing the rights and obligations of a Holder in respect of the number of Corporate Units specified on such certificate.
     “Current Market Price” means, in respect of a share of Common Stock on any day of determination, the average of the VWAP per share of Common Stock over each of the 10 consecutive Trading Days ending on the earlier of the day in question and the day before the “ex date” with respect to the issuance or distribution requiring such computation. For purposes of this definition, the term “ex date,” when used with respect to any issuance or distribution, shall mean the first date on which the shares of Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive such issuance or distribution.
     “Custodial Agent” means Wilmington Trust Company, as Custodial Agent under the Pledge Agreement until a successor Custodial Agent shall have become such pursuant to the applicable provisions of the Pledge Agreement, and thereafter “Custodial Agent” shall mean the Person who is then the Custodial Agent thereunder.
     “Debentures” means, collectively, the Series B-1 Debentures, the Series B-2 Debentures and the Series B-3 Debentures.
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     “Depositary” means a clearing agency registered under Section 17A of the Exchange Act that is designated to act as Depositary for the Equity Units as contemplated by Sections 3.07 and 3.08 or its nominee.
     “Depositary Participant” means a broker, dealer, bank, other financial institution or other Person for whom from time to time the Depositary effects book entry transfers and pledges of securities deposited with the Depositary.
     “DTC” means The Depository Trust Company.
     “Equity Units” means Corporate Units or Treasury Units, as applicable.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder.
     “Exchange Act” means the Securities Exchange Act of 1934 and any statute successor thereto, in each case as amended from time to time, and the rules and regulations promulgated thereunder.
     “Failed Remarketing,” in respect of a series of Debentures, has the meaning set forth in the applicable Supplemental Indenture.
     “First Qualifying Treasury Security” means a zero-coupon U.S. Treasury security (CUSIP No. 912820GC5) having a principal amount of $1,000 and maturing on February 15, 2011.
     “First Remarketing Settlement Date” means the third Business Day immediately succeeding the date of a Successful Remarketing of the Series B-1 Debentures.
     “First Stock Purchase Date” means February 15, 2011.
     “Fixed Settlement Rates” means the Maximum Settlement Rate and the Minimum Settlement Rate, collectively.
     “Global Certificate” means a Certificate that evidences all or part of the Equity Units and is registered in the name of the Depositary or a nominee thereof.
     “Holder” means, with respect to an Equity Unit, the Person in whose name the Equity Unit evidenced by a Certificate is registered in the Security Register.
     “Indenture” means, with respect to any series of Debentures, the Base Indenture and the applicable Supplemental Indenture, taken together.
     “Interest Payment Date” for each series of Debentures means the Interest Payment Date set forth in the applicable Supplemental Indenture.
     “Issuer Order” or “Issuer Request” means a written order or request signed in the name of the Company by its Chairman, its President, a Senior Vice President or a Vice President and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Purchase Contract Agent.
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     “Make-Whole Shares” means, with respect to a Cash Merger Early Settlement, a number of shares of Common Stock (for the purpose of this definition, the “make-whole share amount”) determined for each Stock Purchase Contract being settled by reference to the table below based on the date on which the Cash Merger becomes effective (for the purposes of this definition, the “effective date”) and the price (for the purposes of this definition, the “stock price”) paid per share for Common Stock in such Cash Merger. If holders of Common Stock receive only cash in such transaction, the stock price shall be the cash amount paid per share. Otherwise, the stock price shall be the average of the Closing Prices per share of Common Stock on each of the 20 consecutive Trading Days ending on the Trading Day immediately preceding the effective date of such Cash Merger.
                                                                                         
    Stock Prices
Effective Date   $10.00   $20.00   $30.00   $38.00   $40.00   $45.60   $50.00   $60.00   $70.00   $80.00   $120.00
May 12, 2008
    1.3942       0.5204       0.1887       0.0000       0.1127       0.2722       0.2385       0.1711       0.1252       0.0927       0.0274  
May 1, 2009
    1.0158       0.3821       0.1118       0.0000       0.0574       0.2274       0.1949       0.1360       0.0970       0.0702       0.0188  
May 1, 2010
    0.5516       0.2212       0.0350       0.0000       0.0035       0.1707       0.1370       0.0860       0.0565       0.0387       0.0090  
February 15, 2011
    0.1389       0.0618       0.0069       0.0000       0.0000       0.0841       0.0532       0.0234       0.0132       0.0089       0.0021  
February 16, 2011
    0.1374       0.0611       0.0067       0.0000       0.0000       0.0851       0.0528       0.0232       0.0131       0.0088       0.0021  
May 1, 2011
    0.0582       0.0261       0.0038       0.0000       0.0000       0.0393       0.0263       0.0092       0.0049       0.0033       0.0006  
May 2, 2011
    0.0527       0.0238       0.0026       0.0000       0.0000       0.0359       0.0232       0.0087       0.0046       0.0032       0.0007  
August 1, 2011
    0.0000       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000       0.0000  
     The stock prices and make-whole share amounts set forth in the table shall be subject to adjustment as set forth in Section 5.04(a).
     If the exact stock price and effective date applicable to a Cash Merger is not set forth on the table, then:
  (i)   if the stock price is between two stock price amounts on the table or the effective date is between two dates on the table, the amount of Make-Whole Shares shall be determined by straight line interpolation between the make-whole share amounts set forth for the higher and lower stock price amounts and the two dates, as applicable, based on a 360-day year;
 
  (ii)   if the stock price is in excess of $120.00 per share (subject to adjustment as set forth in Section 5.04(a)), then the make-whole share amount shall be zero; and
  (iii)   if the stock price is less than $10.00 per share (subject to adjustment as set forth in Section 5.04(a)), for purposes of this definition the “minimum stock price,” then the make-whole share amount shall be determined as if the stock price equaled the minimum stock price, using straight line interpolation, as described under (i) above, if the effective date is between two dates on the table.
     “Maximum Settlement Rate” means 0.6579, which is approximately equal to $25 divided by the Reference Price, as adjusted from time to time pursuant to Section 5.04.
     “Minimum Settlement Rate” means 0.54823, which is approximately equal to $25 divided by the Threshold Appreciation Price, as adjusted from time to time pursuant to Section 5.04.
     “NYSE” means The New York Stock Exchange, Inc.
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     “Observation Period” means, with respect to any Stock Purchase Date or Cash Merger Early Settlement Date, the 20 consecutive Trading Day period ending on the third Trading Day immediately preceding such Stock Purchase Date or Cash Merger Early Settlement Date.
     “Officers’ Certificate” means a certificate signed by the Company’s Chairman or a Vice Chairman of the Board, its President, a Senior Vice President or a Vice President and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Purchase Contract Agent.
     “Opinion of Counsel” means a written opinion of counsel, who may be counsel to the Company (and who may be an employee of the Company). An Opinion of Counsel may rely on certificates as to matters of fact.
     “Outstanding Equity Units” means, as of the date of determination, all Equity Units evidenced by Certificates theretofore authenticated, executed and delivered under this Agreement, except:
     (i) if a Termination Event has occurred, (x) Corporate Units for which the underlying Debentures have been theretofore deposited with the Purchase Contract Agent in trust for the Holders of such Corporate Units and (y) Treasury Units;
     (ii) Equity Units evidenced by Certificates theretofore cancelled by the Purchase Contract Agent or delivered to the Purchase Contract Agent for cancellation or deemed cancelled pursuant to the provisions of this Agreement; and
     (iii) Equity Units evidenced by Certificates in exchange for or in lieu of which other Certificates have been authenticated, executed on behalf of the Holder and delivered pursuant to this Agreement, other than any such Certificate in respect of which there shall have been presented to the Purchase Contract Agent proof satisfactory to it that such Certificate is held by a protected purchaser (within the meaning of the UCC) in whose hands the Equity Units evidenced by such Certificate are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite number of the Equity Units have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Equity Units owned by the Company or any Affiliate of the Company shall be disregarded and deemed not to be Outstanding Equity Units, except that, in determining whether the Purchase Contract Agent shall be authorized and protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Equity Units that a Responsible Officer of the Purchase Contract Agent actually knows to be so owned shall be so disregarded. Equity Units so owned that have been pledged in good faith may be regarded as Outstanding Equity Units if the pledgee establishes to the satisfaction of the Purchase Contract Agent the pledgee’s right so to act with respect to such Equity Units and that the pledgee is not the Company or any Affiliate of the Company. “Outstanding Corporate Units” means Corporate Units that are Outstanding Equity Units, and “Outstanding Treasury Units” means Treasury Units that are Outstanding Equity Units.
     “Payment Date” means each February 1, May 1, August 1 and November 1 of each year, commencing August 1, 2008.
     “Person” means a company, an individual, corporation, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization or government or any agency or political subdivision thereof or any other entity.
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     “Plan” means an employee benefit plan that is subject to ERISA, a plan or individual retirement account that is subject to Section 4975 of the Code or any entity whose assets are considered assets of any such plan.
     “Pledge” means the pledge under the Pledge Agreement of the Debentures, the Pledged Treasury Portfolio or the Qualifying Treasury Securities, as the case may be, in each case constituting a part of the Equity Units.
     “Pledge Agreement” means the Pledge Agreement, dated as of the date hereof, among the Company, Wilmington Trust Company, as Collateral Agent, Custodial Agent and Securities Intermediary, and the Purchase Contract Agent, on its own behalf and as attorney-in-fact for the Holders from time to time of the Equity Units, as amended from time to time.
     “Predecessor Corporate Unit Certificate,” of any particular Corporate Unit Certificate, means every previous Corporate Unit Certificate evidencing all or a portion of the rights and obligations of the Company and the Holder under the Corporate Units evidenced thereby; and, for the purposes of this definition, any Corporate Unit Certificate authenticated and delivered under Section 3.10 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Corporate Unit Certificate shall be deemed to evidence the same rights and obligations of the Company and the Holder as the mutilated, destroyed, lost or stolen Corporate Unit Certificate.
     “Predecessor Treasury Unit Certificate,” of any particular Treasury Unit Certificate, means every previous Treasury Unit Certificate evidencing all or a portion of the rights and obligations of the Company and the Holder under the Treasury Units evidenced thereby; and, for the purposes of this definition, any Treasury Unit Certificate authenticated and delivered under Section 3.10 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Treasury Unit Certificate shall be deemed to evidence the same rights and obligations of the Company and the Holder as the mutilated, destroyed, lost or stolen Treasury Unit Certificate.
     “Principal Amount” in respect of a series of Debentures, means the principal amount of such Debentures payable at the final stated maturity.
     “Prospectus” means the prospectus relating to the delivery of shares or any securities in connection with an Early Settlement pursuant to Section 5.07 or a Cash Merger Early Settlement of Stock Purchase Contracts pursuant to Section 5.04(b)(ii), in the form in which first filed, or transmitted for filing, with the Securities and Exchange Commission after the effective date of the Registration Statement pursuant to Rule 424(b) under the Securities Act, including the documents incorporated by reference therein as of the date of such Prospectus.
     “Purchase Contract Agent” means the Person named as the “Purchase Contract Agent” in the first paragraph of this Agreement until a successor Purchase Contract Agent shall have become such pursuant to the applicable provisions of this Agreement, and thereafter “Purchase Contract Agent” shall mean such Person or any subsequent successor who is appointed pursuant to this Agreement.
     “Qualifying Treasury Securities” means the First Qualifying Treasury Securities, the Second Qualifying Treasury Securities and the Third Qualifying Treasury Securities (each, a “Qualifying Treasury Security”), and “applicable Qualifying Treasury Securities” at any time means the Qualifying Treasury Securities comprising part of a Treasury Unit at such time.
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     “Quotation Agent” means any primary U.S. government securities dealer in New York City selected by the Company.
     “Record Date” for any distribution and Contract Adjustment Payment payable on any Payment Date means the 15th day of the calendar month preceding the calendar month in which the relevant Payment Date falls.
     “Reference Price” means $38.00.
     “Registration Statement” means a registration statement under the Securities Act prepared by the Company covering, inter alia, the delivery by the Company of any securities in connection with an Early Settlement on the Early Settlement Date or a Cash Merger Early Settlement of Stock Purchase Contracts on the Cash Merger Early Settlement Date under Section 5.04(b)(ii), including all exhibits thereto and the documents incorporated by reference in the Prospectus contained in such registration statement, and any post-effective amendments thereto.
     “Remarketing,” in respect of a series of Debentures, has the meaning set forth in the Supplemental Indenture related to that series of Debentures.
     “Remarketing Agent”, in respect of a series of Debentures, has the meaning set forth in the Supplemental Indenture related to that series of Debentures.
     “Remarketing Agent’s Fee,” in respect of a series of Debentures, has the meaning set forth in the Supplemental Indenture related to that series of Debentures.
     “Remarketing Agreement” means a Remarketing Agreement, dated as of the date hereof, among the Company, Citigroup Global Markets Inc.; J.P. Morgan Securities Inc. and the Purchase Contract Agent, as amended from time to time.
     “Remarketing Period,” in respect of a series of Debentures, means the 30-day period ending on the date that is not less than three Business Days prior to the date one month before the applicable Stock Purchase Date, as specified by the Company.
     “Remarketing Period Start Date,” in respect of any Remarketing Period, means the first day of such Remarketing Period.
     “Remarketing Price per Debenture” means, with respect to each $1,000 Principal Amount of Debentures of any series, an amount in cash equal to the quotient of the Treasury Portfolio Purchase Price divided by the number of Debentures of such series, each $1,000 Principal Amount of such Debentures being one Debenture, included in the applicable Remarketing that are held as components of Corporate Units.
     “Remarketing Settlement Date” means, as applicable, the First Remarketing Settlement Date, the Second Remarketing Settlement Date or the Third Remarketing Settlement Date.
     “Responsible Officer” shall mean, when used with respect to the Purchase Contract Agent, any officer within the corporate trust department of the Purchase Contract Agent, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Purchase Contract Agent who customarily performs functions similar to those performed by the Persons
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who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Purchase Contract Agreement.
     “Second Qualifying Treasury Security” means a zero-coupon U.S. Treasury security (CUSIP No. 912820NA1) having a principal amount of $1,000 and maturing on April 30, 2011.
     “Second Remarketing Settlement Date” means the third Business Day immediately succeeding the date of a Successful Remarketing of the Series B-2 Debentures.
     “Second Stock Purchase Date” means May 1, 2011.
     “Securities Act” means the Securities Act of 1933, and any statute successor thereto, in each case as amended from time to time, and the rules and regulations promulgated thereunder.
     “Securities Intermediary” means Wilmington Trust Company, as Securities Intermediary under the Pledge Agreement until a successor Securities Intermediary shall have become such pursuant to the applicable provisions of the Pledge Agreement, and thereafter “Securities Intermediary” shall mean such successor or any subsequent successor who is appointed pursuant to the Pledge Agreement.
     “Separate Debentures” means Debentures that are no longer a component of Corporate Units and are included in a Remarketing pursuant to Section 5.02(a)(iii).
     “Separate Debentures Purchase Price” means, with respect to any Remarketing, the amount in cash equal to the product of (i) the Remarketing Price per Debenture and (ii) the number of Separate Debentures included in such Remarketing.
     “Series B-1 Debentures” means the 5.67% Series B-1 Junior Subordinated Debentures due February 15, 2041 of the Company.
     “Series B-2 Debentures” means the 5.82% Series B-2 Junior Subordinated Debentures due May 1, 2041 of the Company.
     “Series B-3 Debentures” means the 5.89% Series B-3 Junior Subordinated Debentures due August 1, 2041 of the Company.
     “Series of Debentures” means each of the Series B-1 Debentures, Series B-2 Debentures or Series B-3 Debentures.
     “Stated Amount” means, with respect to any one Corporate Unit or Treasury Unit:
     (i) from and including May 16, 2008 to but excluding the First Stock Purchase Date, $75.00;
     (ii) from and including the First Stock Purchase Date to but excluding the Second Stock Purchase Date, $50.00; and
     (iii) from and including the Second Stock Purchase Date to but excluding the Third Stock Purchase Date, $25.00.
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     “Stock Purchase Contract” means, with respect to any Equity Unit, the contract forming a part of such Equity Unit and obligating (i) the Company to sell, and the Holder of such Equity Unit to purchase, shares of Common Stock on each Stock Purchase Date and (ii) the Company to pay the Holder thereof Contract Adjustment Payments, in each case on the terms and subject to the conditions set forth in Article V.
     “Stock Purchase Date” means, as applicable, the First Stock Purchase Date, the Second Stock Purchase Date or the Third Stock Purchase Date. When used in connection with any series of Debentures, the term “applicable Stock Purchase Date” means the First Stock Purchase Date in the case of the Series B-1 Debentures, the Second Stock Purchase Date in the case of the Series B-2 Debentures and the Third Stock Purchase Date in the case of the Series B-3 Debentures.
     “Successful,” in respect of the Remarketing of a series of Debentures, has the meaning set forth in the applicable Supplemental Indenture.
     “Supplemental Indenture” means:
     (i) with respect to the Series B-1 Debentures, the Sixth Supplemental Indenture to the Base Indenture;
     (ii) with respect to the Series B-2 Debentures, the Seventh Supplemental Indenture to the Base Indenture; and
     (iii) with respect to the Series B-3 Debentures, the Eighth Supplemental Indenture to the Base Indenture;
each dated as of the date hereof, between the Company and the Trustee, as amended or supplemented from time to time. When used in connection with any series of Debentures, the term “applicable Supplemental Indenture” means the Supplemental Indenture under which such series of Debentures is issued.
     “Termination Date” means the date, if any, on which a Termination Event occurs.
     “Termination Event” means the occurrence of any of the following events:
     (i) at any time on or prior to the Third Stock Purchase Date, a judgment, decree or court order shall have been entered granting relief under the Bankruptcy Code, adjudicating the Company to be insolvent, or approving as properly filed a petition seeking reorganization or liquidation of the Company or any other similar applicable federal or state law and if such judgment, decree or order shall have been entered more than 60 days prior to the Third Stock Purchase Date, such decree or order shall have continued undischarged and unstayed for a period of 60 days;
     (ii) at any time on or prior to the Third Stock Purchase Date, a judgment, decree or court order for the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Company or of its property, or for the termination or liquidation of its affairs, shall have been entered and if such judgment, decree or order shall have been entered more than 60 days prior to the Third Stock Purchase Date, such judgment, decree or order shall have continued undischarged and unstayed for a period of 60 days; or
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     (iii) at any time on or prior to the Third Stock Purchase Date, the Company shall file a petition for relief under the Bankruptcy Code, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization or liquidation under the Bankruptcy Code or any other similar applicable federal or state law, or shall consent to the filing of any such petition, or shall consent to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of it or of its property, or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due.
     “Third Qualifying Treasury Security” means a zero-coupon U.S. Treasury security (CUSIP No. 912820NK9) having a principal amount of $1,000 and maturing on July 31, 2011.
     “Third Remarketing Settlement Date” means the third Business Day immediately succeeding the date of a Successful Remarketing of the Series B-3 Debentures.
     “Third Stock Purchase Date” means August 1, 2011.
     “Threshold Appreciation Price” means $45.60 per share of Common Stock.
     “Trading Day” means a day on which the Common Stock (i) at the close of regular way trading (not including extended or after hours trading) is not suspended from trading on any national or regional securities exchange or association or over-the-counter market that is the primary market for the trading the Common Stock at the close of business, and (ii) has traded at least once regular way on the national securities exchange or association or over-the-counter market that is the primary market for the trading of the Common Stock.
     “Treasury Portfolio” means, with respect to each Remarketing Settlement Date, a portfolio consisting of:
     (i) U.S. Treasury securities (or principal or interest strips thereof) that mature on or prior to the applicable Stock Purchase Date in an aggregate amount at maturity equal to the product of $25 and the number of Corporate Units outstanding;
     (ii) solely with respect to the First Remarketing Settlement Date, U.S. Treasury securities (or principal or interest strips thereof) that mature on or prior to the Interest Payment Date immediately succeeding the commencement of the Remarketing Period in an aggregate amount at maturity equal to the aggregate interest that would have accrued from and including the Interest Payment Date immediately preceding the commencement of the Remarketing Period to but excluding such Interest Payment Date (assuming no reset of the interest rate) on the aggregate Principal Amount of the Series B-1 Debentures equal to $25 for each Corporate Unit outstanding; and
     (iii) U.S. Treasury securities (or principal or interest strips thereof) that mature on or prior to the applicable Stock Purchase Date in an aggregate amount at maturity equal to the aggregate interest that would have accrued from and including the applicable Interest Payment Date immediately preceding such Remarketing Settlement Date (or, solely with respect to the First Remarketing Settlement Date, immediately succeeding such Remarketing Settlement Date) to but excluding the applicable Stock Purchase Date (assuming no reset of the interest rate) on the
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aggregate Principal Amount of the Series B-1 Debentures equal to $25 for each Corporate Unit outstanding;
provided that if the Company in its sole discretion determines that such U.S. Treasury securities are unavailable, the Company may substitute one or more short-term discount obligations issued by an Affiliate of the Company that are issued on the applicable Remarketing Settlement Date, accrete interest at an arm’s length rate, have the same aggregate principal amount at maturity as the U.S. Treasury securities for which they are substituted and mature on or prior to the applicable dates referred to above.
     “Treasury Portfolio Purchase Price” means, with respect to each Remarketing Settlement Date, the lowest aggregate ask-side price quoted by a primary U.S. government securities dealer to the Quotation Agent between 9:00 a.m. and 11:00 a.m., New York City time, on the date of a Successful Remarketing for the purchase of the Treasury Portfolio for settlement on the applicable Remarketing Settlement Date.
     “Treasury Units” means, following the substitution of Qualifying Treasury Securities for Debentures as collateral to secure a Holder’s obligations under the applicable Stock Purchase Contract, the collective rights and obligations of a Holder of a Treasury Unit Certificate in respect of such Treasury Securities, subject to the Pledge thereof, and the related Stock Purchase Contract.
     “Treasury Unit Certificate” means a certificate evidencing the rights and obligations of a Holder in respect of the number of Treasury Units specified on such certificate.
     “Trustee” means The Bank of New York, as trustee pursuant to the Indenture, or its successor in interest in such capacity, or any successor trustee appointed as provided in the Indenture.
     “Vice President” means any vice president, whether or not designated by a number or a word or words added before or after the title “Vice President.”
     “VWAP” per share of the Common Stock on any Trading Day means the per share volume weighted average price as displayed on Bloomberg (or any successor service) page AIG UN <Equity> AQR in respect of the period from 9:30 a.m. to 4:00 p.m., New York City time, on the relevant Trading Day; or, if such volume weighted average price is unavailable, VWAP means the market value per share of Common Stock on such Trading Day as determined by a nationally recognized independent investment banking firm retained for this purpose by the Company.
     (f) The following terms have the meanings set forth in the Section of this Agreement or in the other agreement set forth below.
     
Act
  Section 1.04(a)
Applicants
  Section 7.12(b)
Cash Merger
  Section 5.04(b)(ii)
Cash Merger Early Settlement
  Section 5.04(b)(ii)
Cash Merger Early Settlement Date
  Section 5.04(b)(ii)
Cash Merger Early Settlement Right
  Section 5.04(b)(ii)
Collateral
  Pledge Agreement
Collateral Account
  Pledge Agreement
Constituent Person
  Section 5.04(b)(i)
Deferred Contract Adjustment Payments
  Section 5.11(a)
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Dividend Threshold Amount
  Section 5.04(a)(iv)
Early Settlement
  Section 5.07(a)
Early Settlement Amount
  Section 5.07(b)
Early Settlement Date
  Section 5.07(b)
Early Settlement Rate
  Section 5.07(c)
Event of Default
  Indenture
Exchange Property Unit
  Section 5.04(b)(i)
expiration date
  Section 5.04(a)(v)
Expiration Date
  Section 1.04(e)
Expiration Time
  Section 5.04(a)(v)
final judgment
  Section 5.10(g)
Indemnitees
  Section 7.07(c)
Pledged Debentures
  Pledge Agreement
Pledged Treasury Securities
  Pledge Agreement
Proceeds
  Pledge Agreement
Purchase Price
  Section 5.01(a)
Purchased Shares
  Section 5.04(a)(v)
record date
  Section 5.04(a)
Reorganization Event
  Section 5.04(b)(i)
Security Register
  Section 3.05
Security Registrar
  Section 3.05
Senior Debt
  Each Supplemental Indenture
Settlement Rate
  Section 5.01(a)
Settlement with Cash
  Section 5.02(b)
Special Record Date
  Section 5.11(b)
Stock Purchase Contract Settlement Fund
  Section 5.03
UCC
  Pledge Agreement
     Section 1.02 Compliance Certificates and Opinions.
     Except as otherwise expressly provided by this Agreement, upon any application or request by the Company to the Purchase Contract Agent to take any action in accordance with any provision of this Agreement, the Company shall furnish to the Purchase Contract Agent an Officers’ Certificate stating that all conditions precedent, if any, provided for in this Agreement relating to the proposed action have been complied with, if requested by the Purchase Contract Agent.
     Section 1.03 Form of Documents Delivered to Purchase Contract Agent.
     In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which its certificate or opinion is based are erroneous. Any such certificate or
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Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.
     Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Agreement, they may, but need not, be consolidated and form one instrument.
     Section 1.04 Acts of Holders; Record Dates.
     (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Agreement to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Purchase Contract Agent and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Agreement and (subject to Section 7.01) conclusive in favor of the Purchase Contract Agent and the Company, if made in the manner provided in this Section.
     (b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner that the Purchase Contract Agent deems sufficient.
     (c) The ownership of Equity Units shall be proved by the Security Register.
     (d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Equity Units shall bind every future Holder of the same Equity Units and the Holder of every Certificate evidencing such Equity Units issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Purchase Contract Agent or the Company in reliance thereon, whether or not notation of such action is made upon such Certificate.
     (e) The Company may set any date as a record date for the purpose of determining the Holders of Outstanding Equity Units entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Agreement to be given, made or taken by Holders of Equity Units. If any record date is set pursuant to this paragraph, the Holders of the Outstanding Corporate Units and the Outstanding Treasury Units, as the case may be, on such record date, and no other Holders, shall be entitled to take the relevant action with respect to the Corporate Units or the Treasury Units, as the case may be, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken prior to or on the applicable Expiration Date (as defined below) by Holders of the requisite number of Outstanding Equity Units on such record date. The Company may establish the same or different record dates and expiration dates for Holders of Corporate Units and Treasury Units. Nothing contained in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and be of no effect), and nothing contained in this paragraph shall be construed to render ineffective any action taken by Holders of the
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requisite number of Outstanding Equity Units on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Purchase Contract Agent in writing and to each Holder of Equity Units in the manner set forth in Section 1.06.
     With respect to any record date set pursuant to this Section 1.04(e), the Company may designate any date as the “Expiration Date” and from time to time may change the Expiration Date to any earlier or later day; provided that no such change shall be effective unless notice of the proposed new Expiration Date is given to the Purchase Contract Agent in writing, and to each Holder of Equity Units in the manner set forth in Section 1.06, prior to or on the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the Company shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day after the applicable record date.
     Section 1.05 Notices.
     Any notice or communication is duly given if in writing and delivered in person or mailed by first-class mail (registered or certified, return receipt requested) or overnight air courier guaranteeing next day delivery, to the others’ address; provided that notice shall be deemed given to the Purchase Contract Agent only upon receipt thereof:
     If to the Purchase Contract Agent:
The Bank of New York
101 Barclay Street-8W
New York, New York 10286
Attention: Corporate Trust Administration
Telephone: (212) 815-2923
Facsimile: (212) 815-5704
     If to the Company:
American International Group, Inc.
70 Pine Street
New York, New York 10270
Attention: Secretary
Facsimile: (212) 785-1584
     If to the Collateral Agent:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
Telephone: (302) 636-6453
Facsimile: (302) 636-4140
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     If to the Trustee:
The Bank of New York
101 Barclay Street-8W
New York, New York 10286
Attention: Corporate Trust Administration
Telephone: (212) 815-2923
Facsimile: (212) 815-5704
     The Purchase Contract Agent shall send to the Trustee at the telecopier number set forth above a copy of any notices in the form of Exhibits C, D, E or F it sends or receives.
     Section 1.06 Notice to Holders; Waiver.
     Where this Agreement provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at its address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed to any particular Holder, shall affect the sufficiency of such notice with respect to other Holders. Where this Agreement provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Purchase Contract Agent, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
     In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Purchase Contract Agent shall constitute a sufficient notification for every purpose hereunder.
     Section 1.07 Effect of Headings and Table of Contents.
     The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.
     Section 1.08 Successors and Assigns.
     All covenants and agreements in this Agreement by the Company and the Purchase Contract Agent shall bind their respective successors and assigns, whether so expressed or not.
     Section 1.09 Separability Clause.
     In case any provision in this Agreement or in any Equity Unit shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof and thereof shall not in any way be affected or impaired thereby.
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     Section 1.10 Benefits of Agreement.
     Nothing contained in this Agreement or in the Equity Units, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and, to the extent provided hereby, the Holders, any benefits or any legal or equitable right, remedy or claim under this Agreement. The Holders from time to time shall be beneficiaries of this Agreement and shall be bound by all of the terms and conditions hereof and of the Equity Units evidenced by their Certificates by their acceptance of delivery of such Certificates.
     Section 1.11 Governing Law.
     THIS AGREEMENT AND THE EQUITY UNITS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. The Company, the Purchase Contract Agent and the Holders from time to time of the Equity Units, acting through the Purchase Contract Agent as their attorney-in-fact, hereby submit to the exclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York City for the purposes of all actions, suits or proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. The Company, the Purchase Contract Agent and the Holders from time to time of the Equity Units, acting through the Purchase Contract Agent as their attorney-in-fact, irrevocably waive, to the fullest extent permitted by applicable law, any objection that they may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.
     Section 1.12 Legal Holidays.
     In any case where any Payment Date shall not be a Business Day (notwithstanding any other provision of this Agreement or the Equity Units), Contract Adjustment Payments or other distributions shall not be paid on such date, but Contract Adjustment Payments or such other distributions shall be paid on the next succeeding Business Day with the same force and effect as if made on such Payment Date. No interest shall accrue or be payable by the Company or to any Holder for the period from and after any such Payment Date.
     In any case where any Stock Purchase Date, Early Settlement Date or Cash Merger Early Settlement Date shall not be a Business Day (notwithstanding any other provision of this Agreement or the Equity Units), Stock Purchase Contracts shall not be performed and Early Settlement and Cash Merger Early Settlement shall not be effected on such date, but Stock Purchase Contracts shall be performed or Early Settlement or Cash Merger Early Settlement shall be effected, as applicable, on the next succeeding Business Day with the same force and effect as if made on such Stock Purchase Date, Early Settlement Date or Cash Merger Early Settlement Date, as applicable.
     Section 1.13 Counterparts.
     This Agreement may be executed in any number of counterparts by the parties hereto on separate counterparts, each of which, when so executed and delivered, shall be deemed an original, but all such counterparts shall together constitute one and the same instrument.
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     Section 1.14 Inspection of Agreement.
     A copy of this Agreement shall be available at all reasonable times during normal business hours at the Corporate Trust Office for inspection by any Holder or Beneficial Owner of an Equity Unit.
     Section 1.15 Appointment of Financial Institution as Agent for the Company.
     The Company may appoint a financial institution (which may be the Collateral Agent) to act as its agent in performing its obligations and in accepting and enforcing performance of the obligations of the Purchase Contract Agent and the Holders, under this Agreement and the Stock Purchase Contracts, by giving notice of such appointment in the manner provided in Section 1.05. Any such appointment shall not relieve the Company in any way from its obligations hereunder.
     Section 1.16 No Waiver.
     No failure on the part of the Company, the Purchase Contract Agent, the Collateral Agent, the Securities Intermediary or any of their respective agents to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by the Company, the Purchase Contract Agent, the Collateral Agent, the Securities Intermediary or any of their respective agents of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies herein are cumulative and are not exclusive of any remedies provided by law.
     Section 1.17 Force Majeure.
     In no event shall the Purchase Contract Agent be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Purchase Contract Agent shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.
ARTICLE II
CERTIFICATE FORMS
     Section 2.01 Forms of Certificates Generally.
     The Certificates (including the Stock Purchase Contract forming part of each Equity Unit evidenced thereby) shall be in substantially the form set forth in Exhibit A (in the case of Certificates evidencing Corporate Units) or Exhibit B (in the case of Certificates evidencing Treasury Units), with such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as may be required by the rules of any securities exchange on which the Equity Units are listed or any depositary therefor, or as may be determined by the officers of the Company executing such Certificates, as evidenced by their execution of the Certificates.
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     The definitive Certificates shall be produced in any manner as determined by the officers of the Company executing the Equity Units evidenced by such Certificates, consistent with the provisions of this Agreement, as evidenced by their execution thereof.
     Every Global Certificate authenticated, executed on behalf of the Holders and delivered hereunder shall bear a legend substantially in the form set forth in Exhibit A and Exhibit B for a Global Certificate.
     Section 2.02 Form of Purchase Contract Agent’s Certificate of Authentication.
     The form of the Purchase Contract Agent’s certificate of authentication of the Equity Units shall be in substantially the form set forth on the form of the applicable Certificates.
ARTICLE III
THE EQUITY UNITS
     Section 3.01 Amount; Form and Denominations.
     The aggregate number of Equity Units evidenced by Certificates authenticated, executed on behalf of the Holders and delivered hereunder is limited to 78,400,000, except for Certificates authenticated, executed and delivered upon registration of transfer of, in exchange for, or in lieu of, other Certificates pursuant to Section 3.04, Section 3.05, Section 3.09, Section 3.10, Section 3.13, Section 3.14, Section 5.07(f) or Section 8.05.
     The Certificates shall be issuable only in registered form and only in the Stated Amounts of a single Corporate Unit or Treasury Unit and any integral multiple thereof.
     Section 3.02 Rights and Obligations Evidenced by the Certificates.
     Each Corporate Unit Certificate shall evidence the number of Corporate Units specified therein