Exhibit 99.1

 

 

 

 

 

 

 

 

 

 

American International Group, Inc. (“AIG”).

 

AIG Credit Facility Trust, a new trust established for the sole benefit of the United States Treasury (“Trust”).

 

100,000 shares of Series C Perpetual, Convertible, Participating Preferred Stock, par value $5.00 per share (“Preferred Stock”).

 

$500,000 plus the lending commitment of the Federal Reserve Bank of New York (“NY Fed”); AIG’s board acknowledged the receipt of value at least equal to the aggregate par value of the shares of Preferred Stock in connection with their issuance.

 

Except where a class vote is required by law, the Preferred Stock will vote with the common stock on all matters submitted to AIG’s stockholders, and will be entitled to an aggregate number of votes equal to (i) the Number of Underlying Shares (as defined below), as adjusted pursuant to the anti-dilution provisions, minus (ii) the votes, if any, attributable to shares of common stock previously issued on any partial conversion of the Preferred Stock; provided that the number of votes attributable to the Preferred Stock shall not exceed the Threshold Percentage of the aggregate number of votes of the Preferred Stock and the shares of common stock then outstanding. The “Threshold Percentage” means a quotient obtained by dividing (x) the Number of Underlying Shares by (y) the sum of the Number of Underlying Shares and the Number of Outstanding Shares each as defined below and expressed as a percentage.

 

The Preferred Stock will be entitled to participate in any dividends paid on the common stock, and shall receive (i) the dividends attributable to the Number of Underlying Shares, as adjusted pursuant to the anti-dilution provisions, minus (ii) the dividends, if any, paid with respect to shares of common stock previously issued on any partial conversion of the Preferred Stock; provided that the dividends attributable to the Preferred Stock shall not exceed the Threshold Percentage of the aggregate amount of dividends paid on the Preferred Stock and the shares of common stock then outstanding.

 

Upon the effectiveness of the amendment to AIG’s restated certificate of incorporation described in clause (i) under “Stockholder vote,” the Preferred Stock will be convertible into a number of shares of common stock (the “Number of Underlying Shares”) equal to the excess of (a) the product of 3.9751244 times the Number of Outstanding Shares as of such date over (b) the sum of (i) 53,798,766 (the number of shares of common stock underlying the 2008 Warrants), (ii) the initial number of shares of common stock underlying any warrants or other securities convertible into, exchangeable for or representing the right to receive shares of common stock (other than the

Preferred Stock and the 2008 Warrants) that are beneficially owned by the Treasury (as defined below) (or any vehicle on its behalf) and (iii) so long as any shares of Preferred Stock are beneficially owned by the Treasury (or any vehicle on its behalf), any shares of common stock directly owned by the Treasury (or any vehicle on its behalf) as of such date other than (A) the shares of common stock referred to in (i) and (ii) above and (B) any shares of common stock received upon conversion of the Preferred Stock. The “Number of Outstanding Shares” means, as of any date, the number of shares of common stock outstanding as of the date of issuance of the Preferred Stock plus the number of shares of common stock, if any, issued on or prior to such date in settlement of AIG’s Equity Units. “Treasury” means either the United States Department of the Treasury or the United States Treasury.

 

The Preferred Stock will have customary anti-dilution provisions.

 

Perpetual.

 

$500,000 in aggregate.

 

At AIG’s 2009 annual meeting of stockholders, the stockholders will vote on, among other things, amendments to AIG’s certificate of incorporation to (i) permit AIG’s Board of Directors to issue classes of serial preferred stock that are not of equal rank and to cause AIG’s Series D Fixed Rate Cumulative Perpetual Preferred Stock and any other series of serial preferred stock subsequently issued to the United States Department of the Treasury to rank senior to the Preferred Stock and any other subsequently issued series of serial preferred stock that is not issued to the United States Department of the Treasury and (ii) eliminate any restriction on the pledging of all or substantially all of the property or assets of AIG. The Trust will have the right to cause AIG’s Board of Directors to call a special meeting of the stockholders or, if so elected by the Trust, direct that the following amendments be considered at an annual meeting. At such meeting, the stockholders, with the common stockholders voting as a separate class in the case of the matters in clause (i), will vote on (i) amendments to AIG’s certificate of incorporation to (a) reduce the par value of AIG’s common stock to $0.000001 per share and (b) increase the number of authorized shares of common stock to 19 billion and, if such amendments are not approved, (ii) amendments to AIG’s certificate of incorporation to decrease the par value of AIG’s serial preferred stock to $0.00004 and increase the number of authorized shares of AIG’s serial preferred stock to 13 billion, and amend the terms of the Preferred Stock to increase the number of shares of Preferred Stock and adjust the conversion ratio so that each share of Preferred Stock would be convertible into common stock on approximately a one-to-one basis.

So long as the Trust’s equity ownership, determined as the sum of its ownership of common stock received upon the conversion of the Preferred Stock and still owned by the Trust and the number of shares of common stock underlying the Preferred Stock owned by the Trust (whether or not the Preferred Stock is then convertible), shall equal or exceed 50% of the Number of Underlying Shares (as adjusted pursuant to the anti-dilution provisions), AIG shall not issue any capital stock, or any securities or instruments convertible or exchangeable into, or exercisable for, capital stock, without the written consent of the Trust other than (i)(x) issues of capital stock to satisfy any security or instrument existing on September 16, 2008 that is exercisable for, convertible into or exchangeable for common stock, (y) in respect of equity compensation awards issued in the ordinary course of business under AIG’s Amended and Restated 2007 Stock Incentive Plan or AIG’s Amended and Restated 2002 Stock Incentive Plan or (z) in respect of any tax-qualified plan approved in the ordinary course of business by the Board of Directors of AIG that meets the requirements of Sections 401(a) or 423 of the Internal Revenue Code and (ii) subsequent to written notice from the Trust that AIG’s corporate governance arrangements are satisfactory to the trustees (x) in respect of equity compensation awards issued under any equity compensation plan (including any material amendments thereto) approved by shareholders after September 16, 2008 in accordance with the shareholder approval requirements of the NYSE Listed Company Manual or (y) in any one year, up to 0.5% of the outstanding shares of common stock pursuant to any other employee benefit plan, employment contract or similar arrangement that is approved by the Compensation and Management Resources Committee of the Board of Directors of AIG.

 

AIG and its board will work in good faith with the trustees of the Trust to ensure corporate governance arrangements satisfactory to the trustees.

 

AIG will enter into a customary agreement providing for demand registration rights for the Preferred Stock and the underlying common stock, will apply for the listing on the NYSE of the common stock underlying the Preferred Stock, and will take such other steps as the NY Fed may reasonably request to facilitate the transfer of the Preferred Stock or common stock received on conversion of the Preferred Stock.

 

AIG will use its reasonable best efforts to take all actions necessary or appropriate for obtaining any regulatory approvals, notices, waivers or consents related to the issuance and acquisition of the Preferred Stock or the conversion thereof that are reasonably determined by AIG to be material and will assist the Trust in such matters.

AIG will take all actions necessary or expedient for obtaining NYSE approval for the issuance and voting of the Preferred Stock, including actions required of the audit committee of the board of AIG to take advantage of the exemption from the NYSE’s stockholder approval requirements set forth in Section 312.05 of the NYSE Listed Company Manual.

 

AIG will take all actions necessary or expedient in order to exempt the acquisition and ownership of the Preferred Stock and any common stock issued upon conversion of the Preferred Stock from (i) the requirements of any applicable “moratorium”, “control share”, “fair price” or other anti-takeover laws and regulations of any jurisdiction, including Section 203 of the Delaware General Corporation Law, and (ii) any other applicable provision of the organizational documents of AIG or the comparable organizational documents of any subsidiary of AIG.