SERIES C PERPETUAL, CONVERTIBLE,
PARTICIPATING PREFERRED STOCK
PURCHASE AGREEMENT
SERIES
C PERPETUAL, CONVERTIBLE, PARTICIPATING PREFERRED STOCK PURCHASE
AGREEMENT (this “ Agreement ”), dated as of
March 1, 2009, between AIG CREDIT FACILITY TRUST, a trust
established for the sole benefit of the United States Treasury (the
“ Trust ”), and AMERICAN INTERNATIONAL GROUP,
INC., a Delaware corporation (the “ Company ”).
In this Agreement, references to the Trust shall include the
Trustees acting in their capacities as such trustees as the context
may require. Reference is made to Article 1 below for the
meaning of certain capitalized terms used herein.
A.
Pursuant to Section 13(3) of the Federal Reserve Act, 12
U.S.C. § 343, the Board of Governors of the Federal Reserve
System determined that unusual and exigent circumstances existed
both with respect to the financial condition of the Company and its
likely impact on the nation’s economic stability, and the
stability of the nation’s financial and banking systems, and
authorized the Federal Reserve Bank of New York (the “
FRBNY ”), subject to certain conditions, to extend
credit to the Company pursuant to a credit agreement, dated as of
September 22, 2008, between the Company and the FRBNY (as
amended from time to time, the “ Credit Agreement
”).
B.
The Company is obligated under the Credit Agreement to issue the
Shares (as defined below) to the Trust for the sole benefit of the
United States Treasury, and the issuance of the Shares to the Trust
is intended to provide compensation for the assumption of the risks
arising from the Credit Agreement and to reduce those
risks.
C.
Pursuant to Section 5.11 of the Credit Agreement, the Company
and the Trust are entering into this Agreement because the FRBNY
has determined that this Agreement is necessary to effect the
issuance of the Shares.
THEREFORE,
the parties hereto agree as follows:
Capitalized
terms used and not defined in this Agreement shall have the
meanings set forth in the Credit Agreement.
As
used in this Agreement, the following terms shall have the meanings
set forth below:
“
Charter ” means the Company’s Restated
Certificate of Incorporation, as amended from time to
time.
“
Common Stock ” has the meaning set forth in the
Certificate of Designations (as defined in Section 3.2
below).
“
Effective Date ” means the date on which this
Agreement shall have been executed and delivered by all of the
parties hereto.
“
Equity Units ” means the Equity Units issued by the
Company pursuant to the Purchase Contract Agreement.
“
Person ” means any individual, corporation, limited
liability company, partnership, joint venture, association,
joint-stock company, trust, estate, unincorporated organization,
government or political subdivision thereof, government agency or
instrumentality, or any other entity whatsoever.
“
Purchase Contract Agreement ” means the Purchase
Contract Agreement dated May 16, 2008 between the Company and
The Bank of New York.
“
Securities Act ” means the Securities Act of 1933, as
amended from time to time.
“
Series C Preferred Stock ” means the
Series C Perpetual, Convertible, Participating Preferred Stock
of the Company, the Certificate of Designations for which is
substantially in the form of Exhibit A hereto.
“
Series D Preferred Stock ” means the
Series D Fixed Rate Cumulative Perpetual Preferred Stock of
the Company.
“
Series D Preferred Stock Purchase Agreement ”
means the Securities Purchase Agreement dated as of
November 25, 2008, between the Company and United States
Department of the Treasury.
“
Underlying Shares ” mean shares of Common Stock or
other securities issuable upon conversion of the Series C
Preferred Stock.
“
SEC” means the U.S. Securities and Exchange Commission
or any successor thereto.
“
Trustees ” means the trustees of the Trust acting in
their capacities as such trustees.
“
Warrant ” means the warrant issued by the Company to
the United States Department of the Treasury concurrently with the
issuance of the Series D Preferred Stock.
2. PURCHASE
OF SERIES C PREFERRED STOCK
2.1. Agreement
to Sell and Purchase . On the basis of the representations and
warranties contained in this Agreement, on the Closing Date the
Company shall issue and sell to the Trust, and the Trust shall
purchase (the “ Purchase ”) from the Company,
100,000 (one hundred thousand) shares of Series C Preferred
Stock, par value $5.00 per share (the “ Shares
”), with an initial liquidation preference equal to $5 (five
dollars) per share ($500,000 (five hundred thousand dollars)
liquidation preference in the aggregate), at the purchase price of
$500,000 (five hundred thousand dollars), with an understanding
that additional and independently sufficient consideration was also
furnished by FRBNY in the form of its lending commitment under the
Credit Agreement (the “ Purchase Price
”).
2.2. Payment
and Delivery. Payment of the cash portion of the Purchase Price
was made to the Company by FRBNY at the closing of the Credit
Agreement as a credit against a fee payable by the Company in
accordance with Section 4.02(e) of the Credit Agreement.
Certificates for the Shares shall be registered for the sole
benefit of the United States Treasury in the name of the Trustees
in their capacities as trustees of the Trust. The certificates
evidencing the Shares shall be delivered to the Trust on the third
Business Day immediately succeeding the Effective Date (or such
later date as shall be agreed by the parties hereto) (the “
Closing Date ”), with any stock transfer taxes payable
in connection with the transfer
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of the Shares
to the Trust duly paid. Such payment and delivery are hereinafter
referred to as the “ Closing ”.
3.
CONDITIONS TO PURCHASER’S OBLIGATIONS
The
obligation of the Trust to accept delivery of the Shares on the
Closing Date is subject to the following conditions:
3.1. The Trust
shall have received on the Closing Date a certificate, dated the
Closing Date and signed by the Chief Executive Officer, the
President, any Executive or Senior Vice President or any Vice
President and a principal financial or accounting officer of the
Company, to the effect that the representations and warranties of
the Company contained in this Agreement are true and correct, in
all material respects, as of the Closing Date and that the Company
has complied, in all material respects, with all of the agreements
and satisfied all of the conditions on its part to be performed or
satisfied hereunder on or before the Closing Date.
3.2. The Company
shall have duly adopted and filed with the Secretary of State of
the State of Delaware the Certificate of Designations for the
Series C Preferred Stock substantially in the form of
Exhibit A hereto (the “ Certificate of
Designations ”) and such filing shall have been
accepted.
3.3. The Trust
shall have received on the Closing Date an opinion of
(i) Sullivan & Cromwell LLP, special counsel for the
Company, dated the Closing Date and in form and substance as set
forth in Exhibit B and (ii) Kathleen E. Shannon, Senior
Vice President, Secretary and Deputy General Counsel of the
Company, dated the Closing Date and in form and substance as set
forth in Exhibit C.
3.4. All corporate
and other proceedings in connection with the transactions
contemplated at the Closing hereby, and all documents and
instruments incident to such transactions, shall be reasonably
satisfactory in substance to the Trust and its counsel.
The
Company represents and warrants as of the Effective Date and the
Closing Date as follows:
4.1.
Organization; Powers . The Company (a) is duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, (b) has all requisite
corporate power and authority to own its property and assets and to
carry on its business, in all material respects, as now conducted
and as proposed to be conducted, (c) is qualified to do
business in, and is in good standing in, every jurisdiction where
such qualification is required, except where the failure so to
qualify could not reasonably be expected to result in a Material
Adverse Effect and (d) has the power and authority to execute,
deliver and perform its obligations under this
Agreement.
4.2.
Organizational Documents . The Company has made available to
the Trust a complete and correct copy of its Charter and bylaws,
each as amended to date (the “ Organizational
Documents ”). The Organizational Documents are in full
force and effect. The Company is not in violation of any provision
of its Organizational Documents.
4.3.
Authorization . The execution, delivery and performance of
this Agreement, including the issuance and delivery of the Shares
and the conversion thereof into the Underlying Shares,
(a) have been duly authorized by all requisite corporate and
shareholder
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action (other
than the actions contemplated in Sections 6.1, 6.2, 6.3, 6.6,
6.7 (with respect to Board of Director’s approval only) and
6.8 (with respect to clause (ii) of the second sentence only)) and
(b) will not to the best knowledge of the Company after due
investigation (i) result in the violation by the Company or
any Material Subsidiary of (A) any provision of law, statute,
rule or regulation that is applicable to the Company, any Material
Subsidiary or the transactions contemplated hereby, or of the
certificate or articles of incorporation or other constitutive
documents or bylaws of the Company or any Material Subsidiary,
(B) any order of any Governmental Authority or (C) any
provision of any indenture, agreement or other instrument to which
the Company or any Material Subsidiary is a party or by which any
of them or any of their property is or may be bound, (ii) be
in conflict with, result in a breach of, terminate or constitute
(alone or with notice or lapse of time or both) a default under, or
give rise to any right to terminate or accelerate or to require the
prepayment, repurchase or redemption of any obligation under any
such indenture, agreement or other instrument or (iii) result
in the creation or imposition of any Lien upon or with respect to
any property or assets now owned or hereafter acquired by the
Company or any Material Subsidiary, except in the case of clause
(b)(i)(A) for any actual or potential violations disclosed by the
Company to the Trust in writing as of the Effective Date and except
in the case of clauses (b)(i), (b)(ii) and (b)(iii) as would not,
individually or in the aggregate, have a Material Adverse Effect or
affect the validity of the Series C Preferred
Stock.
4.4.
Enforceability. This Agreement has been duly and validly
executed and delivered by the Company and (assuming due
authorization, execution and delivery by the Trust) shall
constitute the valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms,
except that rights to indemnification and contribution may be
limited under applicable law.
4.5. Valid
Issuance . When issued in accordance with the terms of this
Agreement, the Series C Preferred Stock will be duly
authorized, validly issued, fully paid and nonassessable, free and
clear of all liens and preemptive rights. The Underlying Shares
will be duly and validly reserved for issuance immediately after
the Company’s shareholders approve the Charter Amendment (as
defined in the Certificate of Designations). When issued and
delivered in accordance with the terms of this Agreement and the
Series C Preferred Stock, such Underlying Shares will be duly
authorized, validly issued, fully paid and nonassessable, free and
clear of all liens and preemptive rights.
4.6.
Governmental Approvals. Assuming the accuracy of the
Trust’s representations and warranties set out in
Section 5.1 and Section 5.2 of this Agreement and its
compliance with its obligations hereunder, to the best knowledge of
the Company after due investigation, no action, consent or approval
of, registration or filing with or any other action by any
Governmental Authority is or will be required to be taken, obtained
or made by the Company or any Material Subsidiary in connection
with this Agreement, except (a) such as have been made or
obtained and are in full force and effect, (b) such as have
been disclosed by the Company to the Trust in writing as of the
Effective Date, (c) the filings and registrations contemplated
by Sections 6.2, 6.6, 7.1 and 7.2 hereof and (d) if the
failure to take such action, obtain such consent or approval or
register or file with such Governmental Authority could not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
5.
ACKNOWLEDGMENTS AND AGREEMENTS OF THE TRUST
5.1. Purchase
of Restricted Shares . The Trust acknowledges that the Shares
and the Underlying Shares have not been registered under the
Securities Act or under any U.S. federal or state securities laws.
The Trust (a) is acquiring the Shares pursuant to an exemption
from registration under the Securities Act and with no present
intention to distribute them to any person in violation of the
Securities Act or any applicable U.S. federal or state securities
laws, (b) will not sell or otherwise dispose of any of the
Shares or the Underlying Shares, except in compliance with the
registration requirements or exemption provisions of the Securities
Act and any applicable U.S. federal or state securities laws, and
(c) including
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through such
advisors that it may retain or consult, has such knowledge and
experience in financial and business matters and in investments of
this type that it is capable of evaluating the merits and risks of
the Purchase and of making an informed investment
decision.
(a) The Trust
agrees that all certificates or other instruments representing the
Series C Preferred Stock will bear a legend substantially to
the following effect:
“THIS
SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF
THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY OR THE SHARES OF COMMON
STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, REGISTRATION.”
(b) In
addition, the Trust agrees that all certificates or other
instruments representing the Underlying Shares will bear a legend
substantially to the following effect:
“THE
SECURITIES REFERRED TO HEREIN HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY STATE SECURITIES LAWS. NEITHER SUCH SECURITIES
NOR ANY INTEREST OR PARTICIPATION THEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.”
(c) In the
event that any Series C Preferred Stock or Underlying Shares
(i) become registered under the Securities Act or
(ii) are eligible, in the opinion of counsel to the holder of
Series C Preferred Stock reasonably satisfactory to the
Company, to be transferred without restriction or any limitation in
accordance with Rule 144, the Company shall issue new
certificates or other instruments representing such Series C
Preferred Stock or Underlying Shares, which shall not contain the
applicable legends in Sections 5.2(a) and (b) above;
provided that the holder of the Series C Preferred Stock or
Underlying Shares, as applicable, surrenders to the Company the
previously issued certificates or other instruments.
The
Company covenants and agrees with the Trust that:
6.1. Board of
Directors Resolutions.
(a) The
Board of Directors of the Company (the “ Board of
Directors ”) shall adopt within 45 days of the
Effective Date resolutions pursuant to 8 Del. C. § 242(b), in
form and substance reasonably satisfactory to the Trustees, to
amend (i) the Charter to reduce the par value of the Common
Stock to $0.000001 per share, and increase the number of authorized
shares of Common Stock to 19 billion (the
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“
Common Stock Amendment Proposal ”), (ii) the
Charter to reduce the par value of the Company’s Serial
Preferred Stock (as defined in the Charter) to $0.00004 per share
and increase the number of authorized shares of the Company’s
Serial Preferred Stock to 13 billion (the “ Serial
Preferred Stock Amendment Proposal ”), (iii) the
Certificate of Designations such that (1) the number of shares
of Series C Preferred Stock authorized and outstanding upon
the effectiveness of the Serial Preferred Stock Amendment Proposal
shall be the Number of Underlying Shares (as defined in the
Certificate of Designations) as of the effective date of the Serial
Preferred Stock Amendment Proposal, (2) the Conversion Ratio
(as defined in the Certificate of Designations) as of any date
shall equal the quotient obtained by dividing (x) the Number
of Outstanding Shares (as defined in the Certificate of
Designations) as of such date by (y) the Number of Outstanding
Shares as of the effective date of such amendment and (3) the
liquidation preference per share of the Series C Preferred
Stock shall be $500,000 divided by the Number of Underlying Shares
as of the effective date of such amendment (the “
Series C Preferred Stock Amendment Proposal ”
and, collectively with the Common Stock Amendment Proposal and the
Serial Preferred Stock Amendment Proposal, the “ Special
Meeting Shareholder Proposals ”), (iv) the Charter
(A) to permit the Board of Directors to issue classes of
Serial Preferred Stock that are not of equal rank, such that the
Board of Directors or a duly authorized committee thereof may,
prior to issuance, in the resolution or resolutions providing for
the issue of shares of each particular series, provide whether the
shares of such series rank senior or junior to any other class of
Serial Preferred Stock as to the right to receive dividends and the
right to receive payments out of the assets of the Company upon
voluntary or involuntary liquidation, dissolution or winding up of
the Company and (B) to cause the Series D Preferred Stock
and any other series of Serial Preferred Stock subsequently issued
to the United States Department of the Tr
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