sv4
As filed
with the Securities and Exchange Commission on October 8,
2010
Registration
No. 333-
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
Form S-4
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
AMERICAN INTERNATIONAL GROUP,
INC.
(Exact name of Registrant as
specified in its charter)
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Delaware
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6331
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13-2592361
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(State or Other Jurisdiction
of
Incorporation or Organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification No.)
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70 Pine Street
New York, New York
10270
(212) 770-7000
(Address, including zip code,
and telephone number, including area code, of Registrants
principal executive offices)
Kathleen E.
Shannon, Esq.
Senior Vice President and Deputy
General Counsel
American International Group,
Inc.
70 Pine Street
New York, New York
10270
(212) 770-7000
(Name, address, including zip
code, and telephone number, including area code, of agent for
service)
Copies To:
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Robert W. Reeder III, Esq.
Ann Bailen Fisher, Esq.
Glen T. Schleyer, Esq.
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
(212) 558-4000
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Craig B. Brod, Esq.
Jeffrey D. Karpf, Esq.
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, New York 10006
(212) 225-2000
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Approximate date of commencement of proposed sale of the
securities to the public: The offering of the
securities will commence promptly following the filing of the
Registration Statement. No tendered securities will be accepted
for exchange until after this registration statement has been
declared effective.
If the securities being registered on this Form are being
offered in connection with the formation of a holding company
and there is compliance with General Instruction G, check
the following
box. o
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
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Large accelerated filer þ
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company o
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(Do not check if a smaller reporting company)
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If applicable, place an X in the box to designate the
appropriate rule provision relied upon in conducting this
transaction:
Exchange Act
Rule 13e-4(i)
(Cross-Border Issuer Tender
Offer) o
Exchange Act
Rule 14d-1(d)
(Cross-Border Third Party Tender
Offer) o
CALCULATION
OF THE REGISTRATION FEE
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Proposed Maximum
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Proposed Maximum
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Amount of
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Amount to be
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Offering Price
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Aggregate
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Registration
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Title of Class of Securities to be Registered
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Registered(1)
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per Share
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Offering Price(2)
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Fee(3)
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Common Stock, par value $2.50 per share
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7,348,942
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N/A
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$
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394,729,104
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$
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28,145
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(1)
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This Registration Statement
registers the maximum number of shares of the Registrants
common stock, par value $2.50 per share, that may be issued in
connection with the exchange offer by the Registrant for up to
74,480,000 Corporate Units.
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(2)
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Estimated solely for the purpose of
calculating the registration fee pursuant to
Rules 457(f)(1) and (3) and 457(c) under the
Securities Act of 1933, as amended. The proposed maximum
aggregate offering price was calculated in accordance with
Rule 457(c) under the Securities Act as follows:
(a) the product of (i) $8.57, the average of the high
and low prices per Corporate Unit as reported on the New York
Stock Exchange on October 6, 2010 and (ii) 74,480,000,
the maximum number of Corporate Units that could be exchanged in
the exchange offer, minus (b) $243,564,496, which
represents the maximum aggregate amount of cash to be paid by
the Registrant in the exchange offer.
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(3)
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Computed in accordance with
Section 6(b) of the Securities Act of 1933, as amended, by
multiplying 0.00007130 by the proposed maximum aggregate
offering price.
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The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Securities
and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
The
information in this Offer to Exchange may change. We may not
complete the exchange offer and issue these securities until the
registration statement filed with the Securities and Exchange
Commission is effective. This Offer to Exchange is not an offer
to sell these securities and it is not soliciting an offer to
buy these securities in any jurisdiction where the offer or
solicitation is not permitted.
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Subject to Completion, Dated
October 8, 2010.
American
International Group, Inc.
Offer to Exchange
0.09867 Shares of Common Stock Plus $3.2702 in Cash
for Each Outstanding Equity Unit consisting of a Corporate
Unit
Up to an Aggregate of 74,480,000 Corporate Units
(CUSIP No. 026874115)
We are offering to exchange 0.09867 shares of our common
stock, par value $2.50 per share, plus $3.2702 in cash, for each
validly tendered and accepted Equity Unit consisting of a
Corporate Unit, up to an aggregate of 74,480,000 Corporate
Units, which represents approximately 95% of the outstanding
Corporate Units (as it may be adjusted, the Maximum
Amount), subject to the terms and conditions set forth in
this document and in the related letter of transmittal. Each
Corporate Unit has a stated amount of $75.00 and consists of a
stock purchase contract issued by us and a 1/40, or 2.5%,
undivided beneficial ownership interest in (i) our
Series B-1
Junior Subordinated Debentures initially due February 15,
2041, (ii) our
Series B-2
Junior Subordinated Debentures initially due May 1, 2041
and (iii) our
Series B-3
Junior Subordinated Debentures initially due August 1, 2041
(such series of Debentures, collectively, the
Debentures), each with a principal amount of $1,000.
On October 7, 2010, 78,400,000 Corporate Units were
outstanding. The total compensation offered per Corporate Unit
is described in the table below.
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Total Consideration per
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Maximum
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Corporate Unit
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Amount of
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Shares of
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Common
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NYSE
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Outstanding
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Corporate Units
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Common
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Stock
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CUSIP No.
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Ticker
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Corporate Units
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to be Repurchased
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Cash
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Stock
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CUSIP No.
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026874115
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AIG-PrA
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78,400,000
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74,480,000
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$
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3.2702
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0.09867
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026874784
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Corporate Units validly tendered and not withdrawn will be
subject to proration as described in The Exchange
Offer Proration if more than the Maximum
Amount of Corporate Units are validly tendered and not withdrawn
prior to the expiration date of the exchange offer. The Maximum
Amount is initially 74,480,000 Corporate Units. However, if we
determine in our reasonable judgment, based on consultation with
the New York Stock Exchange (NYSE), that the NYSE is
likely to delist the Corporate Units as a result of the
consummation of the exchange offer, then we will reduce the
Maximum Amount to an amount that we determine, in our reasonable
judgment, is not likely to result in a delisting of the
Corporate Units, as described in The Exchange
Offer Proration.
A tendering holder will receive for each validly tendered and
accepted Corporate Unit, the same number of shares and the same
cumulative amount of cash per Corporate Unit that a holder would
receive if the holder did not tender into the exchange offer and
instead held Corporate Units through the final stock purchase
date. The stock and cash so received will be the result of
netting payments from two separate transactions a
repurchase of the debentures and a cancellation of the stock
purchase units as described later in this document.
The exchange offer will expire
at 11:59 p.m., New York City time, on November 10,
2010, unless we extend it or terminate it earlier. You may
withdraw Corporate Units that you tender at any time before the
exchange offer expires. In addition, you may withdraw any
Corporate Units after December 7, 2010, which is 40
business days after the date of commencement of the exchange
offer, if we have not accepted them for exchange.
The exchange offer is subject to the conditions described in
The Exchange Offer Conditions to the Exchange
Offer, including, among other things, the effectiveness of
the registration statement of which this document forms a part
and the continued listing of the Corporate Units on the NYSE
after the exchange offer. We reserve the right to terminate or
extend the exchange offer if any condition of the exchange offer
is not satisfied and otherwise to amend the exchange offer in
any respect.
Our common stock is listed on the NYSE under the symbol
AIG. On October 7, 2010, the day before
commencement of the exchange offer, the last reported sale price
of the Corporate Units on the NYSE was $8.64 per Unit, and the
last reported sale price of our common stock on the NYSE was
$40.47 per share. The shares of our common stock to be issued in
the exchange offer are registered under the Securities Act of
1933 and are expected to be, before the settlement of the
exchange offer, approved for listing on the NYSE.
You must make your own decision whether to tender any Corporate
Units in the exchange offer and, if so, as to the number of
Corporate Units to tender. None of us, the dealer managers, the
exchange agent, the information agent or any other person makes
any recommendation as to whether or not holders of outstanding
Corporate Units should tender their Corporate Units for exchange
in the exchange offer. Prior to expiration of the exchange
offer, AIG will file with the Securities and Exchange Commission
its Quarterly Report on
Form 10-Q
for the quarterly period ended September 30, 2010, which
will contain financial and other information as of, and for the
quarterly period ended, September 30, 2010.
Before tendering your Corporate Units, you should carefully
consider the risk factors set forth in Risk Factors
beginning on page 14, as well as the risk factors set forth
in Item 1A of Part II of AIGs Quarterly Report
on
Form 10-Q
for the quarterly period ended June 30, 2010, Item 1A
of Part II of AIGs Quarterly Report on
Form 10-Q
for the quarterly period ended March 31, 2010 and in
Item 1A of Part I of AIGs Annual Report on
Form 10-K
for the year ended December 31, 2009, as amended, and the
information set forth in AIGs Current Report on Form 8-K
filed on September 30, 2010. In addition, in determining
whether to tender Corporate Units in the exchange offer, you
should also carefully consider the risks relating to holding the
Equity Units described under Risk Factors
Risks Relating to the Equity Units in the prospectus
supplement, dated May 12, 2008, to the prospectus, dated
July 13, 2007.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR DETERMINED IF THIS DOCUMENT IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The
dealer managers for the exchange offer are:
Deutsche Bank
Securities
The date of this document
is ,
2010.
TABLE OF
CONTENTS
Unless otherwise mentioned or unless the context requires
otherwise, all references in this document to the
Company, AIG, we,
our, us and similar references mean
American International Group, Inc. and its subsidiaries.
All of the Corporate Units were issued in book-entry form, and
all of the Corporate Units are currently represented by one or
more global certificates held for the account of The Depository
Trust Company (DTC).
Should you have any questions as to the procedures for tendering
your Corporate Units, please call your broker, dealer,
commercial bank, trust company or other nominee, or call our
information agent at its telephone number set forth on the back
cover page of this document.
You may tender your Corporate Units by transferring them through
DTCs Automated Tender Offer Program (ATOP) or
following the other procedures described under The
Exchange Offer Procedures for Tendering Corporate
Units.
We are not providing for guaranteed delivery procedures and
therefore you must allow sufficient time for the necessary
tender procedures to be completed during normal business hours
of DTC on or prior to the expiration date. If you hold your
Corporate Units through a broker, dealer, commercial bank, trust
company or other nominee, you should consider that such entity
may require you to take action with respect to the exchange
offer a number of days before the expiration date in order for
such entity to tender Corporate Units on your behalf on or prior
to the expiration date. Tenders not received by Global
Bondholder Services Corporation, the exchange agent for the
exchange offer, on or prior to the expiration date will be
disregarded and of no effect unless we exercise our right to
extend the exchange offer or waive this condition to the
exchange offer.
We are incorporating by reference into this document important
business and financial information that is not included in or
delivered with this document. This information is available
without charge to you upon written or oral request. Requests
should be directed to AIGs Investor Relations Department,
70 Pine Street, New York, New York 10270, telephone
212-770-6293.
In order to obtain timely delivery, requests must be made no
later than five business days before the expiration date. See
Where You Can Find More Information for further
information.
We are responsible only for the information contained in this
document or information contained in documents incorporated by
reference in this document. We have not authorized anyone to
provide you with information different from that contained in
this document or any amendment or supplement hereto. This
document is an offer to exchange only the Corporate Units as
described herein and only under circumstances and in
jurisdictions where it is lawful to do so. The information
contained in this document is accurate only as of its date.
i
CAUTIONARY
STATEMENT REGARDING PROJECTIONS AND OTHER INFORMATION ABOUT
FUTURE EVENTS
This document and other publicly available documents, including
the documents incorporated herein by reference, may include, and
AIGs officers and representatives may from time to time
make projections regarding, financial information and statements
concerning future economic performance and events, including
plans and objectives relating to the recently completed and
proposed transactions with the Federal Reserve Bank of New York
(FRBNY) and the United States Department of the
Treasury (the Department of the Treasury), asset
dispositions, liquidity, collateral posting requirements,
management, operations, products and services, and assumptions
underlying these projections and statements. These projections
and statements are not historical facts but instead represent
only AIGs belief regarding future events, many of which,
by their nature, are inherently uncertain and outside AIGs
control. These projections and statements may address, among
other things:
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the outcome of the transactions with the FRBNY and the
Department of the Treasury;
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the number, size, terms, cost, proceeds and timing of
dispositions and their potential effect on AIGs
businesses, financial condition, results of operations, cash
flows and liquidity (and AIG at any time and from time to time
may change its plans with respect to the sale of one or more
businesses);
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AIGs long-term business mix which will depend on the
outcome of AIGs asset disposition program;
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AIGs exposures to subprime mortgages, monoline insurers
and the residential and commercial real estate markets;
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the separation of AIGs businesses from AIG parent company;
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AIGs ability to retain and motivate its employees; and
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AIGs strategy for customer retention, growth, product
development, market position, financial results and reserves.
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It is possible that AIGs actual results and financial
condition will differ, possibly materially, from the anticipated
results and financial condition indicated in these projections
and statements. Factors that could cause AIGs actual
results to differ, possibly materially, from those in the
specific projections and statements include:
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a failure to close transactions contemplated in AIGs
restructuring plan;
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developments in global credit markets; and
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such other factors as discussed throughout Part I,
Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations and in
Part II, Item 1A. Risk Factors of AIGs Quarterly
Report on
Form 10-Q
for the quarterly period ended June 30, 2010; throughout
Part I, Item 2. Managements Discussion and
Analysis of Financial Condition and Results of Operations and in
Part II, Item 1A. Risk Factors of AIGs Quarterly
Report on
Form 10-Q
for the quarterly period ended March 31, 2010, and
throughout Part II, Item 7. Managements
Discussion and Analysis of Financial Condition and Results of
Operations and in Part I, Item 1A. Risk Factors of
AIGs Annual Report on
Form 10-K
for the year ended December 31, 2009 (including Amendment
No. 1 on
Form 10-K/A
filed on March 31, 2010 and Amendment No. 2 on
Form 10-K/A
filed on August 24, 2010, collectively, the 2009
Annual Report on
Form 10-K).
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AIG is not under any obligation (and expressly disclaims any
obligation) to update or alter any projection or other
statement, whether written or oral, that may be made from time
to time, whether as a result of new information, future events
or otherwise.
ii
WHERE YOU
CAN FIND MORE INFORMATION
AIG is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the Exchange
Act), and files with the Securities and Exchange
Commission (the SEC) proxy statements, Annual
Reports on
Form 10-K,
Quarterly Reports on
Form 10-Q
and Current Reports on
Form 8-K,
as required of a U.S. listed company. You may read and copy
any document AIG files at the SECs public reference room
in Washington, D.C. at 100 F Street, NE,
Room 1580, Washington, D.C. 20549. Please call the SEC
at
1-800-SEC-0330
for further information on the public reference room. AIGs
SEC filings are also available to the public through:
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The SECs website at www.sec.gov.
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The New York Stock Exchange, 20 Broad Street, New York, New
York 10005.
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AIGs common stock is listed on the NYSE and trades under
the symbol AIG.
AIG has filed with the SEC a registration statement on
Form S-4
relating to the exchange offer. This document is part of the
registration statement and does not contain all the information
in the registration statement. Whenever a reference is made in
this document to a contract or other document, please be aware
that the reference is not necessarily complete and that you
should refer to the exhibits that are part of the registration
statement for a copy of the contract or other document. You may
review a copy of the registration statement at the SECs
public reference room in Washington, D.C. as well as
through the SECs internet site noted above.
The SEC allows AIG to incorporate by reference the
information AIG files with the SEC (other than information that
is deemed furnished to the SEC) which means that AIG
can disclose important information to you by referring to those
documents, and later information that AIG files with the SEC
will automatically update and supersede that information as well
as the information contained in this document. AIG incorporates
by reference the documents listed below and any filings made
with the SEC under Section 13(a), 13(c), 14, or 15(d) of
the Exchange Act after the time of initial filing of the
registration statement (or post-effective amendment) and before
effectiveness of the registration statement (or post-effective
amendment), and after the date of this document and until the
exchange offer is completed (except for information in these
documents or filings that is deemed furnished to the
SEC):
(1) Annual Report on
Form 10-K
for the year ended December 31, 2009 (including the
portions of our definitive proxy statement for the 2010 Annual
Meeting of Shareholders incorporated by reference therein),
Amendment No. 1 on
Form 10-K/A,
filed on March 31, 2010, and Amendment No. 2 on
Form 10-K/A,
filed on August 24, 2010.
(2) Quarterly Report on
Form 10-Q
for the quarterly period ended June 30, 2010 and Quarterly
Report on
Form 10-Q
for the quarterly period ended March 31, 2010.
(3) Current Reports on
Form 8-K
filed on January 25, 2010, January 29, 2010,
January 29, 2010, February 5, 2010, February 8,
2010, February 26, 2010, March 5, 2010, March 11,
2010, April 1, 2010, April 2, 2010, April 8,
2010, April 12, 2010, May 7, 2010, May 13, 2010,
May 14, 2010, May 17, 2010, May 17, 2010,
May 28, 2010, June 3, 2010, July 15, 2010,
July 16, 2010, August 2, 2010, August 6, 2010,
August 6, 2010, August 11, 2010, September 27,
2010, September 30, 2010, October 4, 2010,
October 4, 2010 and October 8, 2010.
(4) The description of common stock in the registration
statement on
Form 8-A,
dated September 20, 1984, filed pursuant to
Section 12(b) of the Exchange Act.
Prior to expiration of the exchange offer, AIG will file with
the SEC its Quarterly Report on
Form 10-Q
for the quarterly period ended September 30, 2010, which
will contain financial and other information as of, and for the
quarterly period ended, September 30, 2010.
AIG will provide without charge to each person, including any
beneficial owner, to whom this document is delivered, upon his
or her written or oral request, a copy of any or all of the
reports or documents referred to above that have been
incorporated by reference into this document excluding exhibits
to those documents unless they are
iii
specifically incorporated by reference into those documents. You
can request those documents from AIGs Investor Relations
Department, 70 Pine Street, New York, New York 10270, telephone
212-770-6293,
or you may obtain them from AIGs corporate website at
www.aigcorporate.com. Except for the documents
specifically incorporated by reference into this document,
information contained on AIGs website or that can be
accessed through its website does not constitute a part of this
document. AIG has included its website address only as an
inactive textual reference and does not intend it to be an
active link to its website.
In order to ensure timely delivery of the requested
documents, requests should be made no later than
November 3, 2010. In the event that we
extend the exchange offer, you must submit your request at least
five business days before the expiration date, as it may be
extended.
iv
ABOUT
AMERICAN INTERNATIONAL GROUP, INC.
AIG, a Delaware corporation, is a holding company which, through
its subsidiaries, is engaged in a broad range of insurance and
insurance-related activities in the United States and abroad.
AIGs principal executive offices are located at 70 Pine
Street, New York, New York 10270, and its main telephone number
is
(212) 770-7000.
The Internet address for AIGs corporate website is
www.aigcorporate.com. Except for the documents referred
to under Where You Can Find More Information, which
are specifically incorporated by reference into this document,
information contained on AIGs website or that can be
accessed through its website does not constitute a part of this
document. AIG has included its website address only as an
inactive textual reference and does not intend it to be an
active link to its website.
On September 30, 2010, AIG entered into an agreement in
principle with the Department of the Treasury, the FRBNY and the
AIG Credit Facility Trust for a series of integrated
transactions (the Recapitalization) to recapitalize
AIG. The transactions constituting the Recapitalization, all of
which are to occur substantially simultaneously at the closing
of the Recapitalization, involve three primary components.
First, under the plan, AIG expects to repay and terminate its
credit facility with the FRBNY in full, using proceeds from
asset dispositions and other funds. Second, the plan calls for
AIG to repurchase and retire a portion of the interests of the
FRBNY and the Department of the Treasury in two special purpose
vehicles that hold assets of AIG, using the proceeds of asset
monetizations and an additional drawdown of funds available to
AIG through the Department of the Treasurys Troubled Asset
Relief Program (TARP). Third, under the plan, AIG
expects to issue common stock to the Department of the Treasury
in exchange for the outstanding TARP preferred shares and the
Series C preferred shares held by the AIG Credit Facility
Trust, and to issue up to 75 million warrants with a strike
price of $45.00 per share to existing common shareholders. Upon
the exchange, the Department of the Treasury would own
approximately 92.1% of the common stock of AIG. Generally, any
of the parties may terminate the Recapitalization if it is not
completed by March 15, 2011. For more information on the
Recapitalization, including risk factors relating thereto, you
should refer to AIGs Current Report on
Form 8-K
filed on September 30, 2010.
1
QUESTIONS
AND ANSWERS ABOUT THE EXCHANGE OFFER
These answers to questions that you may have as a holder of
Corporate Units, as well as the summary that follows, provide an
overview of material information regarding the exchange offer
that is included elsewhere or incorporated by reference in this
document. To fully understand the exchange offer and the other
considerations that may be important to your decision about
whether to participate in the exchange offer, you should
carefully read this document in its entirety, including
Risk Factors, as well as the information
incorporated by reference in this document. For further
information regarding AIG, see Where You Can Find More
Information.
Each settlement rate, the threshold appreciation price and
the reference rate described in this document have been adjusted
to reflect the
one-for-twenty
reverse common stock split that became effective June 30,
2009.
What is
the purpose of the exchange offer?
The purpose of this exchange offer is to reduce our overall
indebtedness by retiring the Debentures that form a part of the
Corporate Units exchanged, to reduce the principal amount of
Debentures that we are required to remarket in 2011 and to
mitigate the potential impact on our interest expense of any
increase in the interest rate on the Debentures that may result
from that remarketing.
What are
the key terms of the exchange offer?
We are offering to exchange 0.09867 shares of our common
stock, par value $2.50 per share, plus $3.2702 in cash for each
validly tendered and accepted Corporate Unit, up to an aggregate
of the Maximum Amount of our outstanding Corporate Units,
subject to the terms and conditions set forth in this document
and in the related letter of transmittal. The Maximum Amount is
initially 74,480,000 Corporate Units. However, if we determine
in our reasonable judgment, based on consultation with the NYSE,
that the NYSE is likely to delist the Corporate Units as a
result of the consummation of the exchange offer, then we will
reduce the Maximum Amount to an amount that we determine, in our
reasonable judgment, is not likely to result in a delisting of
the Corporate Units.
The consideration a tendering holder will receive for each
validly tendered and accepted Corporate Unit
0.09867 shares of common stock and $3.2702 in
cash is the same number of shares and the same
cumulative amount of cash per Corporate Unit that a holder would
receive if the holder did not tender into the exchange offer and
instead held Corporate Units through the final stock purchase
date. That number of shares and amount of cash is the result of
netting the consideration payable in two separate
transactions the repurchase of the debentures
underlying the Corporate Units for shares and cash and the
cancellation of the stock purchase contracts underlying the
Corporate Units for cash. The consideration payable in each of
those netting transactions is as follows:
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The consideration payable by the Company to repurchase the
Debentures underlying each exchanged Corporate Unit will be
0.09867 shares of common stock plus an amount of cash that
the Company will calculate so that the fair market value of
those shares and that cash will equal the principal amount of
and accrued interest on those Debentures to but excluding the
settlement date.
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The consideration payable by a tendering holder to cancel the
stock purchase contract underlying each exchanged Corporate Unit
will be an amount equal to the cash component of the repurchase
price for the Debentures underlying such Corporate Unit
(calculated as described in the preceding sentence) minus
$3.2702.
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As mentioned above, the consideration payable in those two
transactions will be netted so that tendering holders will
receive 0.09867 shares of common stock and $3.2702 in cash
for each exchanged Corporate Unit and will not be required to
make any cash payment to the Company.
Because each Corporate Unit represents a 1/40 undivided
beneficial ownership interest in three Debentures having a
principal amount of $1,000 each, you may exchange the Corporate
Units in the exchange offer only in integral multiples of 40
Corporate Units.
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What
amount of Corporate Units is being sought in the exchange offer?
Will all validly tendered Corporate Units be accepted?
We are offering to exchange up to an aggregate of the Maximum
Amount (as described above) of our outstanding Corporate Units.
If more than the Maximum Amount of Corporate Units are validly
tendered and not withdrawn prior to the expiration date of the
exchange offer, we will prorate the Corporate Units that we
accept in the exchange offer. For more information regarding the
proration, see the section of this document entitled The
Exchange Offer Proration. Any Corporate Units
tendered but not accepted because of proration will be returned
to the tendering holder.
What is a
Corporate Unit and how does it differ from a Treasury
Unit?
Each Corporate Unit consists of a stock purchase contract to
purchase our common stock on three stock purchase dates and a
1/40 undivided beneficial ownership interest in each of
(i) our
Series B-1
Junior Subordinated Debentures initially due February 15,
2041, (ii) our
Series B-2
Junior Subordinated Debentures initially due May 1, 2041
and (iii) our
Series B-3
Junior Subordinated Debentures initially due August 1,
2041, each with a principal amount of $1,000, or after a
successful remarketing of the applicable series of Debentures,
in a portfolio of U.S. Treasury securities, which we refer
to as the Treasury portfolio. The interest in the Debentures or
the Treasury portfolio, as applicable, is pledged to secure the
obligation of the holder of the Corporate Unit to purchase our
common stock on the relevant stock purchase date.
Equity Units may also consist of Treasury Units. Each Treasury
Unit consists of a stock purchase contract issued by us and a
1/40, or 2.5%, beneficial ownership interest in zero-coupon
U.S. Treasury securities. On October 7, 2010, no
Treasury Units were outstanding.
A holder of Corporate Units may create Treasury Units by
substituting interests in the applicable qualifying treasury
securities for such holders ownership interests in each
series of Debentures then forming part of their Corporate Units.
For more information on Corporate Units, Treasury Units, how to
create Treasury Units and how to recreate Corporate Units, see
Description of the Equity Units.
Can I
tender the Treasury Units instead of the Corporate Units in the
exchange offer?
No. This exchange offer is only for Corporate Units, so you will
not be able to tender, and we will not accept, Treasury Units in
this exchange offer. If you hold Treasury Units and want to
participate in this exchange offer, you may recreate Corporate
Units from Treasury Units as explained below and in more detail
under Description of the Equity Units
Recreating Corporate Units.
If I
participate by tendering my Corporate Units, will I receive the
quarterly interest payments and contract adjustment payments
that are payable on November 1, 2010, February 1,
2011, May 1, 2011 and August 1, 2011?
The quarterly interest payments and contract adjustment payments
that are payable on November 1, 2010 will not be affected
by this exchange offer. You will receive those payments whether
or not you tender your Corporate Units.
If your Corporate Units are accepted in this exchange offer, you
will not receive the quarterly distributions that are payable on
the Corporate Units on February 1, 2011, May 1, 2011
and August 1, 2011, but you will not be losing the value
represented by those distributions because the cash payment you
will receive in exchange for each Corporate Unit validly
tendered and accepted for exchange will equal the cumulative
amount of those distributions.
How does
the amount of common stock I will receive if I tender my
Corporate Units compare to the amount I would receive on the
Corporate Units if I do not tender?
The 0.09867 shares of our common stock that you will
receive in the exchange offer for each Corporate Unit validly
tendered and accepted for exchange is the same number that you
would receive for each of your Corporate Units that is not
tendered and accepted (assuming our stock price stays near
current levels), and in any event is the maximum number of
shares of our common stock deliverable under the terms of each
Corporate Unit.
3
Will
fractional shares be issued in the exchange offer?
We will not issue fractional shares of our common stock in the
exchange offer. Instead, the number of shares of our common
stock you receive in the exchange offer will be rounded up or
down to the nearest whole number, with any fractional share of
0.5 or greater being rounded up and any fractional share of less
than 0.5 being rounded down, and we will not make payments of
cash in lieu of any fractional share that would otherwise have
been issued.
How does
the cash I will receive if I tender my Corporate Units compare
to the payments I would receive if I do not tender?
The $3.2702 cash payment for each Corporate Unit you validly
tender and that we accept for exchange is exactly equal to the
cumulative amount of cash per Corporate Unit that a holder would
receive if the holder did not tender into the exchange offer and
instead held Corporate Units through the final stock purchase
date. See Description of the Equity Units
Current Payments for more information regarding the
scheduled payments under the Corporate Units.
When does
the exchange offer expire? Can AIG extend, amend or terminate
the exchange offer?
The exchange offer will expire at 11:59 p.m., New York City
time, on November 10, 2010 (unless we extend it or
terminate it early). Subject to applicable law, we reserve the
right to (1) extend the exchange offer; (2) waive any
and all conditions to or amend the exchange offer in any
respect; or (3) terminate the exchange offer. Any
extension, waiver, amendment or termination will be followed as
promptly as practicable by a public announcement thereof, such
announcement in the case of an extension to be issued no later
than 9:00 a.m., New York City time, on the next business
day after the last previously scheduled expiration date. See
The Exchange Offer Expiration Date; Extension;
Termination; Amendment.
May I
withdraw Corporate Units that I have previously
tendered?
You may withdraw any Corporate Units that you previously
tendered in the exchange offer at any time prior to
11:59 p.m., New York City time, on the expiration date
(currently scheduled for November 10, 2010), by following
the procedures described under the caption The Exchange
Offer Withdrawals of Tenders. In addition, you
may withdraw any Corporate Units after December 7, 2010,
which is 40 business days after the date of the commencement of
the exchange offer, if we have not accepted them for exchange.
Will AIG
be filing its Third Quarter
Form 10-Q
before the exchange offer expires?
Prior to expiration of the exchange offer, we will file with the
SEC our Quarterly Report on
Form 10-Q
for the quarterly period ended September 30, 2010, which
will contain financial and other information as of, and for the
quarterly period ended, September 30, 2010. In determining
whether to tender Corporate Units in the exchange offer, you
should carefully consider such information to be included in our
Quarterly Report on
Form 10-Q
for the quarterly period ended September 30, 2010.
May I
tender only a portion of the Corporate Units that I
hold?
Yes. You do not have to tender all of your Corporate Units to
participate in the exchange offer. However, only integral
multiples of 40 Corporate Units can be exchanged in the exchange
offer.
If the
exchange offer is consummated and I do not participate in the
exchange offer or exchange all my Corporate Units in the
exchange offer, how will my rights and obligations under my
unexchanged Corporate Units be affected?
The terms of your Corporate Units, if any, that remain
outstanding after the consummation of the exchange offer will
not change as a result of the exchange offer, and the Debentures
forming part of your Corporate Units will therefore remain
subject to remarketing. For a further description of the terms
of the Corporate Units and the stock purchase contracts and
Debentures underlying them, see Description of the Equity
Units, Description of the Stock Purchase
Contracts and Description of the Debentures.
4
How will
the exchange offer affect the trading market for the Corporate
Units that are not exchanged?
Depending on the number of Corporate Units that are accepted for
exchange in the exchange offer, the trading market for the
Corporate Units that remain outstanding after the exchange offer
is expected to be more limited and may cease to exist. Such
reduction in the trading market may decrease the price and
increase the volatility of the Corporate Units that remain
outstanding following the completion of the exchange offer,
which price and volatility may fluctuate significantly depending
on the volume of trading in the Corporate Units.
Although we do not currently intend to do so, we may, to the
extent permitted by applicable law, after the settlement date of
the exchange offer, purchase Corporate Units in the open market,
in privately negotiated transactions, through subsequent tender
or exchange offers or otherwise. Any other purchases may be made
on the same terms or on terms that are more or less favorable to
holders than the terms of this exchange offer. In addition,
following completion of the exchange offer, we may repurchase
Debentures in a remarketing, in the open market, in privately
negotiated transactions or otherwise.
What does
AIG intend to do with the Corporate Units that are tendered in
the exchange offer?
Corporate Units accepted for exchange by us in the exchange
offer will be retired and cancelled.
Are AIG,
the dealer managers, the exchange agent or the information agent
making a recommendation regarding whether holders should tender
in the exchange offer?
Neither we, the dealer managers, the exchange agent nor the
information agent are making any recommendation regarding
whether you should tender or refrain from tendering your
Corporate Units in the exchange offer.
Accordingly, you must make your own determination as to whether
to tender your Corporate Units in the exchange offer and, if so,
the number of Corporate Units to tender. Before making your
decision, we urge you to carefully read this document in its
entirety, including the information set forth under Risk
Factors, and the other documents incorporated by reference
in this document. See Where You Can Find More
Information.
What
expenses will AIG incur to effect the exchange offer?
If the maximum of 74,480,000 Corporate Units are validly
tendered and accepted, we expect to incur an aggregate of
approximately $265 million in cash expenses, including the
cash portion of the exchange offer consideration and dealer
managers compensation.
Will I
receive a physical certificate for the shares of AIG common
stock that are delivered in the exchange offer?
No. We have adopted direct company registration of our common
stock. If your Corporate Units are accepted for exchange in the
exchange offer, you will not receive stock certificates
evidencing your ownership of the common stock issued in the
exchange offer. Instead, if you are the holder of those shares
of common stock, you will be provided with a statement
reflecting the number of shares registered in your account. Your
common stock will be held in an account maintained by Wells
Fargo Bank, N.A., our transfer agent.
Will the
common stock to be issued in the exchange offer be listed for
trading?
Yes. The shares of our common stock to be issued in the exchange
offer are expected to be approved for listing on the NYSE before
the settlement of the exchange offer. Generally, the common
stock you receive in the exchange offer will be freely tradable,
unless you are considered an affiliate of ours, as
that term is defined for purposes of the Securities Act of 1933.
Is the
exchange offer subject to any minimum tender or other
conditions?
You may exchange Corporate Units in the exchange offer only in
integral multiples of 40 Corporate Units. Otherwise, the
exchange offer is not subject to any minimum tender condition.
Our obligation to exchange common stock for the Corporate Units
in the exchange offer is, however, subject to a number of
conditions that must be satisfied or waived by us, including,
among others, that:
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there has not been any change or development that in our
reasonable judgment materially reduces the anticipated benefits
to us of the exchange offer or that has had, or could reasonably
be expected to have, a material adverse effect on us, our
businesses, condition (financial or otherwise) or prospects;
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the registration statement of which this document forms a part
has become and remains effective;
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we have obtained all governmental approvals and third party
consents which we, in our reasonable judgment, consider
necessary for the completion of the exchange offer as
contemplated by this document; and
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we have determined, in our reasonable judgment, based on
consultation with the NYSE, that the NYSE is not likely to
delist the Corporate Units as a result of the consummation of
the exchange offer.
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For more information regarding the conditions to the exchange
offer (including conditions we cannot waive), see the section of
this document entitled The Exchange Offer
Conditions to the Exchange Offer.
How do I
participate in the exchange offer?
Any beneficial owner whose Corporate Units are held of record by
a broker, dealer, commercial bank, trust company or other
nominee and who wishes to tender Corporate Units should contact
such nominee promptly and instruct such entity to tender
Corporate Units on such beneficial owners behalf. See
What must I do to participate if my Corporate Units are
held of record by a broker, dealer, commercial bank, trust
company or other nominee? below for more information.
You may tender your Corporate Units by transferring them through
DTCs ATOP or following the other procedures described
under The Exchange Offer Procedures for
Tendering Corporate Units.
What must
I do to participate if my Corporate Units are held of record by
a broker, dealer, commercial bank, trust company or other
nominee?
If you wish to tender your Corporate Units and they are held of
record by a broker, dealer, commercial bank, trust company or
other nominee, you should contact such entity promptly and
instruct it to tender Corporate Units on your behalf.
If you hold your Corporate Units through a broker, dealer,
commercial bank, trust company or other nominee, you should keep
in mind that such entity may require you to take action with
respect to the exchange offer a number of days before the
expiration date in order for such entity to tender Corporate
Units on your behalf on or prior to the expiration date. You are
urged to instruct your broker, dealer, commercial bank, trust
company or other nominee at least five business days prior to
the expiration date in order to allow adequate processing time
for your instruction.
Should you have any questions as to the procedures for tendering
your Corporate Units, please call your broker, dealer,
commercial bank, trust company or other nominee, or call our
information agent, Global Bondholder Services Corporation, at
its telephone number set forth on the back cover page of this
document.
We are not providing for guaranteed delivery procedures and
therefore you must allow sufficient time for the necessary
tender procedures to be completed during normal business hours
of DTC on or prior to the expiration date. If you hold your
Corporate Units through a broker, dealer, commercial bank, trust
company or other nominee, you should keep in mind that such
entity may require you to take action with respect to the
exchange offer a number of days before the expiration date in
order for such entity to tender Corporate Units on your behalf
on or prior to the expiration date. Tenders not received by the
exchange agent on or prior to the expiration date will be
disregarded and of no effect.
What
happens if some or all of my Corporate Units are not accepted
for exchange?
Any tendered Corporate Units that are not accepted for exchange
will be returned without expense to the tendering holder by
being credited to the account maintained at DTC from which they
were delivered and returned promptly after the expiration or
termination of the exchange offer.
6
Will I
have to pay any fees or commissions if I tender my Corporate
Units?
If your Corporate Units are held through a broker or other
nominee who tenders the Corporate Units on your behalf (other
than those tendered through one of the dealer managers), your
broker may charge you a commission for doing so. You should
consult with your broker or nominee to determine whether any
charges will apply.
If I
tender Corporate Units in the exchange offer, when will I
receive the shares of common stock issuable upon the
exchange?
We will issue the applicable shares of our common stock, and
cause them to be delivered, upon the terms of the exchange offer
and pursuant to applicable law in exchange for the Corporate
Units validly tendered in the exchange offer promptly after the
expiration date of the exchange offer and our acceptance of the
validly tendered Corporate Units. We currently expect to issue
and deliver shares on the third business day after the
expiration date. For more information, see The Exchange
Offer Acceptance; Exchange of Corporate Units.
What
risks should I consider in deciding whether or not to tender my
Corporate Units?
In deciding whether to participate in the exchange offer, you
should carefully consider the discussion of risks and
uncertainties affecting our business, the Corporate Units and
our common stock described, incorporated or referred to under
Risk Factors, and the documents incorporated by
reference in this document. See Where You Can Find More
Information.
What are
the federal income tax consequences of participating in the
exchange offer?
There is no clear authority governing the U.S. federal
income tax treatment of the exchange offer. We intend to treat
the exchange offer as (1) a repurchase of your interests in
the Debentures in exchange for common stock and an amount of
cash, which, when added to the fair market value of the common
stock received, will equal the principal amount of your
1/40 interests in the Debentures plus any accrued but
unpaid interest to but excluding the settlement date of the
exchange offer, and (2) a cancellation of the stock
purchase contract forming part of your Corporate Units in
exchange for a cash payment to the Company. For additional
information, see Material U.S. Federal Income Tax
Consequences.
Whom
should I contact if I have questions about the exchange
offer?
If you have questions regarding the exchange offer, please
contact one of the dealer managers, Banc of America Securities
LLC or Citigroup Global Markets Inc. You may call Banc of
America Securities LLC toll free at
888-292-0070
or
980-683-3215
(collect) or Citigroup Global Markets Inc. toll free at
(800) 558-3745
or
(212) 723-6106
(collect). If you have questions regarding the procedures for
tendering in the exchange offer, require additional exchange
offer materials or require assistance in tendering your
Corporate Units, please contact Global Bondholder Services
Corporation, the information agent. You may call the information
agent toll-free at
(866) 873-7700.
You may also write to the information agent or the dealer
managers at their respective addresses set forth on the back
cover of this document.
7
SUMMARY
TERMS OF THE EXCHANGE OFFER
The following summary highlights material information
contained in this document. It may not contain all of the
information that is important to you and is qualified in its
entirety by the more detailed information included or
incorporated by reference in this document. You should carefully
consider the information contained in and incorporated by
reference in this document, including the information set forth
under the heading Risk Factors beginning on
page 14 in this document, the information set forth under
Risk Factors in our 2009 Annual Report on
Form 10-K,
our Quarterly Report on
Form 10-Q
for the quarterly period ended June 30, 2010 and our
Quarterly Report on
Form 10-Q
for the quarterly period ended March 31, 2010, and the
information set forth in our Current Report on Form
8-K filed on
September 30, 2010.
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Offeror |
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American International Group, Inc. |
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Securities Subject to the Exchange Offer |
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Up to an aggregate of 74,480,000 Corporate Units, as adjusted. |
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Each Corporate Unit has a stated amount of $75.00 and consists
of a stock purchase contract issued by us and a 1/40, or 2.5%,
undivided beneficial ownership interest in (i) our
Series B-1
Junior Subordinated Debentures initially due February 15,
2041 (the
Series B-1
Debentures), (ii) our
Series B-2
Junior Subordinated Debentures initially due May 1, 2041
(the
Series B-2
Debentures) and (iii) our
Series B-3
Junior Subordinated Debentures initially due August 1, 2041
(the
Series B-3
Debentures), each with a principal amount of $1,000. |
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For a further description of the terms of the Corporate Units
and the stock purchase contracts and Debentures underlying them,
see Description of the Equity Units,
Description of the Stock Purchase Contracts and
Description of the Debentures. |
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Consideration Offered in the Exchange Offer |
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We are offering to exchange 0.09867 shares of our common
stock, par value $2.50 per share, plus $3.2702 in cash for each
validly tendered and accepted Corporate Unit, up to an aggregate
of the Maximum Amount of Corporate Units, on the terms and
subject to the conditions set forth in this document and in the
related letter of transmittal. See Maximum Amount
below. |
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The consideration a tendering holder will receive for each
validly tendered and accepted Corporate Unit
0.09867 shares of common stock and $3.2702 in
cash is the same number of shares and the same
cumulative amount of cash per Corporate Unit that a holder would
receive if the holder did not tender into the exchange offer and
instead held Corporate Units through the final stock purchase
date. That number of shares and amount of cash is the result of
netting the consideration payable in two separate
transactions the repurchase of the debentures
underlying the Corporate Units for shares and cash and the
cancellation of the stock purchase contracts underlying the
Corporate Units for cash. The consideration payable in each of
those netting transactions is as follows: |
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The consideration payable by the Company to
repurchase the Debentures underlying each exchanged Corporate
Unit will be 0.09867 shares of common stock plus an amount
of cash that the Company will calculate so that the fair market
value of those shares and that cash will equal the principal
amount of and accrued interest on those Debentures to but
excluding the settlement date.
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The consideration payable by a tendering holder to
cancel the stock purchase contract underlying each exchanged
Corporate Unit will be an amount equal to the cash component of
the repurchase price for the Debentures underlying such
Corporate Unit (calculated as described in the preceding
sentence) minus $3.2702.
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As mentioned above, the consideration payable in those two
transactions will be netted so that tendering holders will
receive 0.09867 shares of common stock and $3.2702 in cash
for each exchanged Corporate Unit and will not be required to
make any cash payment to the Company. |
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Because each Corporate Unit represents a 1/40 undivided
beneficial ownership interest in a Debenture of each series
having a principal amount of $1,000, you may exchange the
Corporate Units in the exchange offer only in integral multiples
of 40 Corporate Units. |
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Any Corporate Units not exchanged will remain outstanding. The
Corporate Units validly tendered and accepted for exchange in
the exchange offer will be retired and cancelled. |
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See The Exchange Offer Terms of the Exchange
Offer. |
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Maximum Amount |
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The Maximum Amount is initially 74,480,000 Corporate Units.
However, if we determine in our reasonable judgment, based on
consultation with the NYSE, that the NYSE is likely to delist
the Corporate Units as a result of the consummation of the
exchange offer, then we will reduce the Maximum Amount to an
amount that we determine, in our reasonable judgment, is not
likely to result in a delisting of the Corporate Units. |
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Expiration Date and Withdrawal Rights |
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The exchange offer will expire at 11:59 p.m., New York City
time, on November 10, 2010 (unless we extend or earlier
terminate it). The term expiration date means such
date and time or, if we extend the exchange offer, the latest
date and time to which we extend the exchange offer. See
The Exchange Offer Expiration Date; Extension;
Termination; Amendment. |
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You may withdraw any Corporate Units that you previously
tendered in the exchange offer at any time prior to the time it
expires and after December 7, 2010, which is 40 business
days from the date of commencement of the exchange offer, if we
have not accepted them for exchange. See The Exchange
Offer Withdrawals of Tenders. |
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Extensions; Waivers and Amendments; Termination |
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Subject to applicable law, we reserve the right to
(1) extend the exchange offer; (2) waive any and all
conditions to or amend the exchange offer in any respect; or
(3) terminate the exchange offer. Any extension, waiver,
amendment or termination will be followed as promptly as
practicable by a public announcement thereof, such announcement
in the case of an extension to be issued no later than
9:00 a.m., New York City time, on the next business day
after the last previously scheduled expiration date. See
The Exchange Offer Expiration Date; Extension;
Termination; Amendment. |
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Proration of Corporate Units |
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We are offering to exchange up to an aggregate of the Maximum
Amount of our outstanding Corporate Units. If more than the |
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Maximum Amount of Corporate Units are validly tendered and not
withdrawn prior to the expiration date of the exchange offer, we
will prorate the Corporate Units that we accept in the exchange
offer and will accept for purchase not more than the Maximum
Amount of Corporate Units on a pro rata basis. See Maximum
Amount above. Any Corporate Units tendered but not
accepted because of proration will be returned to you. See
The Exchange Offer Proration. |
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Fractional Shares |
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We will not issue fractional shares of our common stock in the
exchange offer. Instead, the number of shares of our common
stock received by each registered holder whose Corporate Units
are accepted for exchange in the exchange offer will be rounded
up or down to the nearest whole number, with any fractional
share of 0.5 or greater being rounded up and any fractional
share of less than 0.5 being rounded down. We will not make
payments of cash in lieu of any fractional share that would
otherwise have been issued. |
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Certain Consequences to Non-Tendering Holders |
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The terms of the Corporate Units not exchanged in the exchange
offer will not change as a result of the exchange offer, and the
Debentures forming part of your Corporate Units will therefore
remain subject to remarketing. For a description of the terms of
the Corporate Units and the stock purchase contracts and
Debentures underlying them, see Description of the Equity
Units, Description of the Stock Purchase
Contracts and Description of the Debentures. |
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Depending on the number of Corporate Units that are accepted for
exchange in the exchange offer, the trading market for the
Corporate Units that remain outstanding after the Exchange Offer
may be more limited. A reduced trading volume of the Corporate
Units may decrease the price and increase the volatility of the
trading price of the Corporate Units that remain outstanding
following the Exchange Offer. See Risk Factor
Risks Relating to a Decision not to Tender and Holding Corporate
Units After the Exchange Offer. |
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Source of Cash to be Paid in the Exchange Offer; Common Stock to
be Issued |
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We intend to fund the cash component of the exchange
consideration from our available cash, which may include further
draws on our credit facility with the FRBNY (the FRBNY
Credit Facility). |
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The shares of our common stock to be issued in the exchange
offer are available from our authorized but unissued shares of
common stock. |
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See The Exchange Offer Source of Cash to be
Paid in the Exchange Offer; Common Stock to be Issued. |
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Conditions to the Exchange Offer |
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The exchange offer is subject to a number of conditions that
must be satisfied or waived by us, including, among others, that |
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there has not been any change or development that in
our reasonable judgment materially reduces the anticipated
benefits to us of the exchange offer or that has had, or could
reasonably be expected to have, a material adverse effect on us,
our businesses, condition (financial or otherwise) or prospects;
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the registration statement of which this document
forms a part has become and remains effective;
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we have obtained all governmental approvals and
third party consents which we, in our reasonable judgment,
consider necessary for the completion of the exchange offer as
contemplated by this document; and
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we have determined, in our reasonable judgment,
based on consultation with the NYSE, that the NYSE is not likely
to delist the Corporate Units as a result of the consummation of
the exchange offer.
|
|
|
|
Our obligation to exchange is not subject to any minimum tender
condition. For more information regarding the conditions to the
exchange offer, see the section of this document entitled
The Exchange Offer Conditions to the Exchange
Offer. |
|
Settlement Date |
|
The settlement date for the exchange offer will be a date
promptly following the expiration date. We currently expect the
settlement date to be the third business day after the
expiration date. See The Exchange Offer
Acceptance; Exchange of Corporate Units. |
|
No Appraisal Rights |
|
No appraisal rights are available to holders of Corporate Units
in connection with the exchange offer. |
|
Regulatory Approvals; Third Party Consents; Effectiveness under
Federal Securities Laws |
|
As of October 8, 2010, we have obtained consent to the
exchange offer of (i) the FBRNY under our senior secured
FRBNY Credit Facility, (ii) AIG Credit Facility Trust (the
Trust) under the Series C Perpetual,
Convertible, Participating Preferred Stock Purchase Agreement,
dated as of March 1, 2009, between the Trust and American
International Group, Inc., and (iii) the Department of the
Treasury under the Securities Exchange Agreement, dated as of
April 17, 2009, and the Securities Purchase Agreement,
dated as of April 17, 2009, each between American
International Group, Inc. and the Department of the Treasury. In
addition, the registration statement of which this document
forms a part must be declared effective by the SEC before, and
remain effective at, the time we accept any Corporate Unit
validly tendered and settle the exchange offer. |
|
|
|
We are not aware of any other regulatory approvals or third
party consents that are required for completing the exchange
offer. |
|
Procedure for Tendering Corporate Units |
|
Any beneficial owner whose Corporate Units are held of record by
a broker, dealer, commercial bank, trust company or other
nominee and who wishes to tender Corporate Units should contact
such nominee promptly and instruct such entity to tender
Corporate Units on such beneficial owners behalf. Any such
entity may require you to take action with respect to the
exchange offer a number of days before the expiration date in
order for such entity to tender Corporate Units on your behalf
on or prior to the expiration date. |
|
|
|
Should you have any questions as to the procedures for tendering
your shares, please call your broker, dealer, commercial bank,
trust company or other nominee, or call our information agent at
its telephone number set forth on the back cover page of this
document. |
11
|
|
|
|
|
We urge you to instruct your broker, dealer, commercial bank,
trust company or other nominee at least five business days prior
to the expiration date in order to allow adequate processing
time for your instruction. |
|
|
|
You may tender your Corporate Units by transferring them through
DTCs ATOP or following the other procedures described
under The Exchange Offer Procedures for
Tendering Corporate Units. |
|
|
|
We are not providing for guaranteed delivery procedures and
therefore you must allow sufficient time for the necessary
tender procedures to be completed during normal business hours
of DTC on or prior to the expiration date. Tenders not received
by the exchange agent on or prior to the expiration date will be
disregarded and of no effect. |
|
Risk Factors |
|
You should consider carefully all of the information included
and incorporated by reference in this document and, in
particular, you should evaluate the specific factors set forth,
incorporated or referred to in the section entitled Risk
Factors before deciding whether to participate in the
exchange offer. |
|
Material U.S. Federal Income Tax Consequences |
|
There is no clear authority governing the U.S. federal income
tax treatment of the exchange offer. We intend to treat the
exchange offer as (1) a repurchase of your interests in the
Debentures in exchange for common stock and an amount of cash,
which, when added to the fair market value of the common stock
received, will equal the principal amount of your 1/40 interests
in the Debentures plus any accrued but unpaid interest to but
excluding the settlement date of the exchange offer, and
(2) a cancellation of the stock purchase contract forming
part of your Corporate Units in exchange for a cash payment to
the Company. For additional information, see Material U.S.
Federal Income Tax Consequences. |
|
Brokerage Commissions |
|
You are not required to pay any brokerage commissions to the
dealer managers, the exchange agent, the information agent or us
in connection with the exchange offer. However, if your
Corporate Units are held through a broker or other nominee who
tenders the Corporate Units on your behalf (other than those
tendered through one of the dealer managers), your broker may
charge you a commission for doing so. |
|
Dealer Managers |
|
Banc of America Securities LLC, Citigroup Global Markets Inc.
and Deutsche Bank Securities Inc. |
|
Information Agent and Exchange Agent |
|
Global Bondholder Services Corporation |
|
Market Trading of Corporate Units |
|
The Corporate Units are listed on the NYSE under the symbol
AIG-PrA, and our common stock is listed on the NYSE
under the symbol AIG. On October 7, 2010, the
day before commencement of the exchange offer, the last reported
sale price of the Corporate Units on the NYSE was $8.64 per
Unit, and the last reported sale price of our common stock on
the NYSE was $40.47 per share. The shares of our common stock to
be issued in the exchange offer are expected to be, before the
settlement of the exchange offer, approved for listing on the
NYSE. The exchange offer is subject to, among other things, the |
12
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|
|
|
|
condition that we have determined, in our reasonable judgment,
based on consultation with the NYSE, that the NYSE is not likely
to delist the Corporate Units as a result of the consummation of
the exchange offer. |
|
|
|
See Price Range of Common Stock and Corporate Units;
Dividends. |
|
Further Information |
|
If you have questions about the terms of the exchange offer,
please contact the dealer managers or the information agent.
Requests for additional copies of this document and the letter
of transmittal, or questions regarding the procedures for
tendering your Corporate Units, may be directed to the
information agent. The contact information for the dealer
managers, information agent and exchange agent are set forth on
the back cover page of this document. |
|
|
|
As required by the Securities Act of 1933, we filed a
registration statement relating to the exchange offer with the
SEC. This document is a part of that registration statement. |
|
|
|
See also Where You Can Find More Information. |
13
RISK
FACTORS
Before tendering Corporate Units in the exchange offer, you
should consider carefully each of the following risk factors, as
well as the risk factors set forth in Item 1A of
Part II of AIGs Quarterly Report on
Form 10-Q
for the quarterly period ended June 30, 2010, Item 1A
of Part II of AIGs Quarterly Report on
Form 10-Q
for the quarterly period ended March 31, 2010, in
Item 1A of Part I of AIGs 2009 Annual Report on
Form 10-K
and in AIGs Current Report on
Form 8-K
filed on September 30, 2010 (see Where You Can Find
More Information in this document). In addition, in
determining whether to tender Corporate Units in the exchange
offer, you should carefully consider the risks relating to
holding the Equity Units described under Risk
Factors Risks Relating to the Equity Units in
the prospectus supplement, dated May 12, 2008, to the
prospectus, dated July 13, 2007.
Risks
Relating to the Exchange Offer
By
tendering your Corporate Units, you will forgo the possibility
of being relieved of your obligation to purchase our common
stock under the terms of the stock purchase contracts if we were
to become subject to a bankruptcy or similar
proceeding.
As a holder of our common stock rather than Corporate Units, in
addition to surrendering the right to receive quarterly interest
and contract adjustment payments, you will forgo the possibility
of being relieved of your obligation to purchase common stock
with the proceeds of the remarketing or the interests in the
Debentures forming part of your Corporate Units. Under the
purchase contract, your obligation to purchase our common stock
would terminate upon the occurrence of certain events of
bankruptcy, insolvency or reorganization with respect to us. If
such an event were to occur, you would not be required to
acquire shares of our common stock worth significantly less than
the contract price. Thus, if such a termination event were to
occur between completion of the exchange and any stock purchase
date, you already would have purchased the common stock even
though you would not have had to purchase common stock under the
stock purchase agreement if you had waited to do so on that
stock purchase date. See Description of the Stock Purchase
Contracts Termination.
We
have not obtained a third-party determination that the exchange
offer is fair to holders of the Corporate Units.
None of us, the dealer managers, the exchange agent or the
information agent makes any recommendation as to whether you
should exchange your Corporate Units in the exchange offer. We
have not retained, and do not intend to retain, any unaffiliated
representative to act on behalf of the holders of the Corporate
Units for purposes of negotiating the exchange offer or
preparing a report concerning the fairness of the exchange
offer. You must make your own independent decision regarding
your participation in the exchange offer.
We may
repurchase any Corporate Units that are not tendered in the
exchange offer on terms that are more favorable to the holders
of the Corporate Units than the terms of the exchange
offer.
Although we do not currently intend to do so, we may, to the
extent permitted by applicable law, after the settlement date of
the exchange offer, purchase Corporate Units in the open market,
in privately negotiated transactions, through subsequent tender
or exchange offers or otherwise. Any other purchases may be made
on the same terms or on terms that are more or less favorable to
holders than the terms of this exchange offer. If we decide to
repurchase Corporate Units on terms that are more favorable than
the terms of the exchange offer, those holders that decide not
to participate in the exchange offer could be better off than
those that participated in the exchange offer. Following
completion of the exchange offer, we may also repurchase
Debentures in a remarketing, in the open market, in privately
negotiated transactions or otherwise.
Certain
aspects of the U.S. federal income tax consequences of
exchanging the Corporate Units are unclear.
We intend to treat the exchange offer as (1) a repurchase
of your interests in the Debentures in exchange for common stock
and an amount of cash, which, when added to the fair market
value of the common stock received, will equal the principal
amount of your 1/40 interests in the Debentures plus any
accrued but unpaid interest to but excluding the settlement date
of the exchange offer, and (2) a cancellation of the stock
purchase contract forming
14
part of your Corporate Units in exchange for a cash payment to
the Company. However, there is no clear authority governing the
U.S. federal income tax treatment of the exchange offer,
and the Internal Revenue Service (IRS) may challenge
such treatment and a court may sustain such a challenge. If the
IRS were to challenge our characterization of the exchange offer
successfully, the IRSs recharacterization could adversely
affect you. You are urged to consult your own tax advisors
concerning the consequences of participating in the exchange
offer. See Material U.S. Federal Income Tax
Consequences.
Risks
Relating to Failure to Consummate the Exchange Offer
Failure
to complete the exchange offer successfully could negatively
affect the price of our common stock.
Several conditions must be satisfied or waived in order to
complete the exchange offer, including among others that there
has been no change or development that in our reasonable
judgment materially reduces the anticipated benefits to us of
the exchange offer or that has had, or could reasonably be
expected to have, a material adverse effect on us, our
businesses, condition (financial or otherwise) or prospects, and
there has been no specified change in market conditions or
regulation. See The Exchange Offer Conditions
to the Exchange Offer. The foregoing conditions may not be
satisfied and, if they are not satisfied or waived, the exchange
offer may not occur or may be delayed.
If the exchange offer is not completed or is delayed, the market
price of our common stock or the Corporate Units may decline to
the extent that the current market price of our common stock or
the Corporate Units reflects a market assumption that the
exchange offer has been or will be completed.
Failure
to complete the exchange offer successfully could negatively
impact our interest expense and our ability to obtain additional
debt financing.
This exchange offer is part of our ongoing strategy to reduce
our overall indebtedness and to mitigate the potential impact on
our interest expense of any increase in the interest rate on the
Debentures that may result from their remarketing. Failure to
complete the exchange offer successfully will result in our
having to remarket a greater principal amount of the Debentures,
and remarketing may increase our interest expense if the
interest rate on any series of Debentures is reset at a higher
level following their remarketing and make it more difficult or
more expensive for us to issue any new debt securities or to
find additional financing.
Risks
Relating to a Decision Not to Tender and Holding Corporate Units
After the Exchange Offer
Corporate
Units that you continue to hold after the exchange offer are
expected to become less liquid following the exchange
offer.
Depending on the number of Corporate Units that are accepted for
exchange in the exchange offer, the trading market for the
Corporate Units that remain outstanding after the exchange offer
is expected to be more limited . Such reduction in the trading
market may decrease the price and increase the volatility of the
Corporate Units that remain outstanding following the completion
of the exchange offer, which price and volatility may fluctuate
significantly depending on the volume of trading in the
Corporate Units. While it is a condition for the closing of this
exchange offer that the Corporate Units not be delisted from
NYSE as a result of the consummation of the exchange offer,
there can be no assurance that subsequent market or other
events, including a reduction in the number of holders, will not
cause the NYSE to delist the Corporate Units.
15
USE OF
PROCEEDS
We will not receive any net cash proceeds from the exchange
offer.
PRICE
RANGE OF COMMON STOCK AND CORPORATE UNITS; DIVIDENDS
Our common stock and the Corporate Units are listed on the NYSE
under the symbols AIG and AIG-PrA,
respectively. AIG common stock is also listed on stock exchanges
in Ireland and Tokyo. The following table sets forth the high
and low sales price and dividends declared per share of our
common stock and high and low sales price per Corporate Unit on
the NYSE during the periods shown, which have been adjusted to
reflect the
one-for-twenty
reverse common stock split that became effective June 30,
2009.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Corporate Units
|
|
|
|
|
|
|
Common
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
Low Sale
|
|
High Sale
|
|
Dividends
|
|
Low Sale
|
|
High Sale
|
|
|
Price
|
|
Price
|
|
Paid
|
|
Price
|
|
Price
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter (through October 7, 2010)
|
|
|
38.30
|
|
|
|
41.40
|
|
|
|
|
|
|
|
8.30
|
|
|
|
8.70
|
|
Third Quarter
|
|
|
32.50
|
|
|
|
42.19
|
|
|
|
|
|
|
|
6.61
|
|
|
|
9.96
|
|
Second Quarter
|
|
|
32.11
|
|
|
|
45.90
|
|
|
|
|
|
|
|
8.78
|
|
|
|
11.34
|
|
First Quarter
|
|
|
21.54
|
|
|
|
38.45
|
|
|
|
|
|
|
|
9.00
|
|
|
|
12.72
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
27.40
|
|
|
|
47.42
|
|
|
|
|
|
|
|
8.90
|
|
|
|
12.67
|
|
Third Quarter
|
|
|
8.22
|
|
|
|
55.90
|
|
|
|
|
|
|
|
6.30
|
|
|
|
13.75
|
|
Second Quarter
|
|
|
19.40
|
|
|
|
43.80
|
|
|
|
|
|
|
|
3.90
|
|
|
|
10.83
|
|
First Quarter
|
|
|
6.60
|
|
|
|
40.00
|
|
|
|
|
|
|
|
3.47
|
|
|
|
11.35
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
27.00
|
|
|
|
99.20
|
|
|
|
|
|
|
|
3.67
|
|
|
|
14.00
|
|
Third Quarter
|
|
|
25.00
|
|
|
|
621.80
|
|
|
|
4.40
|
|
|
|
3.57
|
|
|
|
65.00
|
|
Second Quarter
|
|
|
527.40
|
|
|
|
990.00
|
|
|
|
4.00
|
|
|
|
59.29
|
|
|
|
79.05
|
|
First Quarter
|
|
|
770.00
|
|
|
|
1,188.40
|
|
|
|
4.00
|
|
|
|
|
|
|
|
|
|
As of September 30, 2010, there were
135,138,428 shares of common stock outstanding, held by
approximately 44,038 record holders, and approximately
78,400,000 Corporate Units outstanding, held by one record
holder, the nominee for DTC. As of October 7, 2010, no
Treasury Units were outstanding. On October 7, 2010, the
last reported sale price of our common stock on the NYSE was
$40.47 per share and the last reported sale price of Corporate
Units on the NYSE was $8.64 per Unit. The exchange offer is
subject to, among other things, the condition that we have
determined, in our reasonable judgment, based on consultation
with the NYSE, that the NYSE is not likely to delist the
Corporate Units as a result of the consummation of the exchange
offer. The NYSE will consider delisting the outstanding
Corporate Units if, following the exchange, the number of
publicly held outstanding Corporate Units is less than 100,000,
the number of holders of outstanding Corporate Units is less
than 100, the aggregate market value of the outstanding
Corporate Units is less than $1 million, or for any other
reason based on the suitability for the continued listing of the
outstanding Corporate Units in light of all pertinent facts as
determined by the NYSE.
16
Future dividends will be payable on our common stock only when,
as and if declared by our board of directors and will be
dependent upon regulatory requirements, business conditions,
earnings, our cash requirements and other relevant factors.
Under the FRBNY Credit Facility, we are currently restricted
from declaring or paying dividends on the common stock.
Moreover, pursuant to the terms of each of our Series E
Fixed Rate Non-Cumulative Perpetual Preferred Stock, par value
$5.00 per share (the Series E Preferred Stock)
and our Series F Fixed Rate Non-Cumulative Perpetual
Preferred Stock, par value $5.00 per share (the
Series F Preferred Stock), we are not able to
declare or pay any cash dividends on the common stock or on any
of our preferred stock ranking junior to such series of
preferred stock for any period until dividends on each of the
Series E Preferred Stock and Series F Preferred Stock
have been paid for such period. We have not paid dividends on
the Series E Preferred Stock and Series F Preferred
Stock since their issuance in 2009, and no dividends have been
paid on our common stock since the third quarter of 2008. For a
discussion of certain restrictions on the payment of dividends
to AIG by some of its insurance subsidiaries, see our Quarterly
Report on
Form 10-Q
for the quarterly period ended June 30, 2010, our Quarterly
Report on
Form 10-Q
for the quarterly period ended March 31, 2010 and our 2009
Annual Report on
Form 10-K,
all of which are incorporated by reference herein.
17
CAPITALIZATION
The following tables set forth our cash and capitalization, as
of June 30, 2010, on an actual basis and on an as
adjusted basis to reflect the completion of the exchange
offer assuming (1) a maximum number of 74,480,000 Corporate
Units would be validly tendered and accepted in the exchange
offer, which represents the high participation scenario of the
exchange offer; and (2) an aggregate of 39,200,000
Corporate Units, or 50% of the issued and outstanding Corporate
Units, would be validly tendered and accepted in the exchange
offer, which represents a low participation scenario of the
exchange offer. The actual number of Corporate Units validly
tendered and accepted in the exchange offer could be lower or
higher than the number presented in the low participation
scenario below. These tables assume the cash consideration will
be paid for from our available cash. These tables should be read
in conjunction with our consolidated financial statements and
the related notes in our Quarterly Report on
Form 10-Q
for the quarterly period ended June 30, 2010, which is
incorporated by reference into this document.
|
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|
|
|
|
|
|
|
|
|
|
|
At June 30, 2010
|
|
|
|
|
|
|
As Adjusted
|
|
|
As Adjusted
|
|
|
|
|
|
|
for a High
|
|
|
for a Low
|
|
|
|
|
|
|
Participation
|
|
|
Participation
|
|
Capitalization (Condensed)
|
|
Actual
|
|
|
Scenario(1)
|
|
|
Scenario(2)
|
|
|
|
(In millions, except share data)
|
|
|
Cash
|
|
$
|
2,840
|
|
|
$
|
2,524
|
|
|
$
|
2,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
FRBNY Credit Facility
|
|
|
26,457
|
|
|
|
26,457
|
|
|
|
26,457
|
|
Other long-term debt
|
|
|
108,286
|
|
|
|
102,793
|
|
|
|
105,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
$
|
134,743
|
|
|
$
|
129,250
|
|
|
$
|
131,852
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
Series E; $5.00 par value; shares issued: 400,000, at
aggregate liquidation value
|
|
$
|
41,605
|
|
|
$
|
41,605
|
|
|
$
|
41,605
|
|
Series F; $5.00 par value; shares issued: 300,000,
aggregate liquidation value: $7,543
|
|
|
7,378
|
|
|
|
7,378
|
|
|
|
7,378
|
|
Series C; $5.00 par value; shares issued: 100,000,
aggregate liquidation value: $0.5
|
|
|
23,000
|
|
|
|
23,000
|
|
|
|
23,000
|
|
Common stock, $2.50 par value; 5,000,000,000 shares
authorized; shares issued: 141,777,208 (actual); 149,126,150
(High Participation); 145,645,072 (Low Participation)
|
|
|
354
|
|
|
|
372
|
|
|
|
364
|
|
Treasury stock, at cost; 6,660,908 shares of common stock
|
|
|
(873
|
)
|
|
|
(873
|
)
|
|
|
(873
|
)
|
Additional paid-in capital
|
|
|
6,297
|
|
|
|
11,767
|
|
|
|
9,176
|
|
Accumulated deficit
|
|
|
(12,120
|
)
|
|
|
(12,231
|
)
|
|
|
(12,187
|
)
|
Accumulated other comprehensive income
|
|
|
9,829
|
|
|
|
9,829
|
|
|
|
9,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total AIG shareholders equity
|
|
$
|
75,470
|
|
|
$
|
80,847
|
|
|
$
|
78,292
|
|
Noncontrolling interests
|
|
|
27,254
|
|
|
|
27,254
|
|
|
|
27,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
$
|
102,724
|
|
|
$
|
108,101
|
|
|
$
|
105,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
237,467
|
|
|
$
|
237,351
|
|
|
$
|
237,398
|
|
|
|
|
|
|
|
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(1) |
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Assuming a maximum number of 74,480,000 Corporate Units would be
validly tendered and accepted in the exchange offer, which
represents the high participation scenario of the exchange offer. |
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(2) |
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Assuming an aggregate of 39,200,000 Corporate Units, or 50% of
the issued and outstanding Corporate Units, would be validly
tendered and accepted in the exchange offer, which represents a
low participation scenario of the exchange offer. |
18
THE
EXCHANGE OFFER
Purpose
of the Exchange Offer
The purpose of this exchange offer is to reduce our overall
indebtedness by retiring the Debentures that form a part of the
Corporate Units exchanged, to reduce the principal amount of
Debentures that we are required to remarket in December 2010 and
2011 and to mitigate the potential impact on our interest
expense of any increase in the interest rate on the Debentures
that may result from that remarketing.
Terms of
the Exchange Offer
We are offering to exchange 0.09867 shares of our common
stock plus $3.2702 in cash for each validly tendered and
accepted Corporate Unit, up to an aggregate of the Maximum
Amount of our outstanding Corporate Units, upon the terms and
conditions set forth in this document and in the related letter
of transmittal. The Corporate Units can be exchanged only in
integral multiples of 40 Corporate Units in the exchange offer.
Corporate Units validly tendered and not withdrawn will be
subject to proration as described in The Exchange
Offer Proration, if more than the Maximum
Amount of Corporate Units are validly tendered and not withdrawn
prior to the expiration date of the exchange offer. The Maximum
Amount is initially 74,480,000 Corporate Units. However, if we
determine in our reasonable judgment, based on consultation with
the NYSE, that the NYSE is likely to delist the Corporate Units
as a result of the consummation of the exchange offer, then we
will reduce the Maximum Amount to an amount that we determine,
in our reasonable judgment, is not likely to result in a
delisting of the Corporate Units. See The Exchange
Offer Proration.
Any Corporate Unit tendered but not accepted shall remain
outstanding upon completion of the exchange offer. Corporate
Units accepted in the exchange offer, including the underlying
stock purchase contracts and Debentures, will be retired and
cancelled.
The consideration a tendering holder will receive for each
validly tendered and accepted Corporate Unit
0.09867 shares of common stock and $3.2702 in
cash is the same number of shares and the same
cumulative amount of cash per Corporate Unit that a holder would
receive if the holder did not tender into the exchange offer and
instead held Corporate Units through the final stock purchase
date. That number of shares and amount of cash is the result of
netting the consideration payable in two separate
transactions the repurchase of the debentures
underlying the Corporate Units for shares and cash and the
cancellation of the stock purchase contracts underlying the
Corporate Units for cash. The consideration payable in each of
those netting transactions is as follows:
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The consideration payable by the Company to repurchase the
Debentures underlying each exchanged Corporate Unit will be
0.09867 shares of common stock plus an amount of cash that
the Company will calculate so that the fair market value of
those shares and that cash will equal the principal amount of
and accrued interest on those Debentures to but excluding the
settlement date.
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The consideration payable by a tendering holder to cancel the
stock purchase contract underlying each exchanged Corporate Unit
will be an amount equal to the cash component of the repurchase
price for the Debentures underlying such Corporate Unit
(calculated as described in the preceding sentence) minus
$3.2702.
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As mentioned above, the consideration payable in those two
transactions will be netted so that tendering holders will
receive 0.09867 shares of common stock and $3.2702 in cash
for each exchanged Corporate Unit and will not be required to
make any cash payment to the Company.
This exchange offer is only for Corporate Units, so you will not
be able to tender, and we will not accept, Treasury Units in the
exchange offer. If you hold Treasury Units and want to
participate in this exchange offer, you may recreate Corporate
Units from Treasury Units as described in Description of
the Equity Units Recreating Corporate Units.
By tendering your Corporate Units, you will give up your right
to receive quarterly contract adjustment payments and interest
payments on the Debentures forming part of the Corporate Units
payable on and after the date of settlement of the exchange
offer, but you will not be losing the value represented by those
payments because the
19
cash payment you will receive in exchange for each Corporate
Unit validly tendered and accepted for exchange will equal the
cumulative amount of scheduled distributions on the Corporate
Units remaining through the final stock purchase date.
Proration
We will accept up to the Maximum Amount of validly tendered
Corporate Units in the exchange offer. The Maximum Amount is
initially 74,480,000 Corporate Units. However, if we determine
in our reasonable judgment, based on consultation with the NYSE,
that the NYSE is likely to delist the Corporate Units as a
result of the consummation of the exchange offer, then we will
reduce the Maximum Amount to an amount that we determine, in our
reasonable judgment, is not likely to result in a delisting of
the Corporate Units. In this case, we will, if necessary, extend
the exchange offer so that it expires at least ten business days
after we announce the change and provide holders with notice of
such extension and the new Maximum Amount as described below
under Expiration Date; Extension; Termination;
Amendment. The NYSE will consider delisting the
outstanding Corporate Units if, following the exchange, the
number of publicly held Corporate Units is less than 100,000,
the number of holders of Corporate Units is less than 100, the
aggregate market value of the Corporate Units is less than
$1 million or for any other reason based on the suitability
for the continued listing of the Corporate Units in light of all
pertinent facts as determined by the NYSE.
If the number of Corporate Units validly tendered and not
withdrawn on or prior to the expiration date of the exchange
offer is more than the Maximum Amount, we will accept Corporate
Units from all holders that validly tender Corporate Units, on a
pro rata basis with appropriate adjustment for integral
multiples of 40 Units as described below such that no more than
the Maximum Amount of Corporate Units are accepted. If the
number of Corporate Units validly tendered and not withdrawn on
or prior to the expiration date of the exchange offer is less
than or equal to the Maximum Amount, we will accept for exchange
all such Corporate Units. Any Corporate Units tendered but not
accepted because of proration will be returned to the tendering
holder. We will announce any proration percentage after the
expiration of the exchange offer.
If, for any reason, proration of tendered Corporate Units is
required, we will determine the final proration factor promptly
after the expiration date of the exchange offer in a manner
consistent with
Rule 13e-4(f)(3)
of the Exchange Act. Proration for each holder validly tendering
Corporate Units will be based on the ratio of the Maximum Amount
to the total number of Corporate Units validly tendered by all
holders. This ratio (rounded to four decimal points) will be
applied to holders tendering Corporate Units to determine the
number of Corporate Units, rounded down as nearly as practicable
to the nearest integral multiples of 40 Corporate Units, that
will be purchased from each holder pursuant to the exchange
offer. For instance, if 76,350,000 Corporate Units are validly
tendered and not withdrawn, the proration factor would be 0.9755
(74,480,000 divided by 76,350,000, assuming the continuous
listing conditions would be met after accepting all 74,480,000
Corporate Units). Accordingly, a holder who validly tendered
100,000 Corporate Units would have 97,520 Corporate Units
accepted for exchange by us (0.9755 multiplied by 100,000,
rounded down to the nearest integral multiple of 40 Corporate
Units), and we would return 2,480 Corporate Units to such holder.
The proration percentage and the results of the exchange offer
will be announced by press release as promptly as practical
after the expiration date of the exchange offer.
As described in the section of this document entitled
Material U.S. Federal Income Tax Consequences,
you may be required to recognize taxable gain or loss with
respect to the Debentures that are part of your Corporate Units.
If you are required to recognize taxable gain or loss with
respect to such Debentures, the amount of gain or loss
recognized by you will depend in part on the adjusted basis you
have in the Debentures that are part of your Corporate Units. If
any of your Debentures has an adjusted basis that is different
from any of your other Debentures and we prorate the tendered
Corporate Units, you may wish to designate which of the
Corporate Units are to be purchased in the exchange. The letter
of transmittal provides you the opportunity to designate the
order of priority in which Corporate Units are to be purchased,
if we prorate the tendered Corporate Units.
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Expiration
Date; Extension; Termination; Amendment
The exchange offer will expire at 11:59 p.m., New York City
time, on November 10, 2010, unless extended or earlier
terminated by us. The term expiration date means
such date and time or, if we extend the exchange offer, the
latest date and time to which we extend the exchange offer.
We expressly reserve the right to extend the period of time that
the exchange offer is open, and, if we elect to extend the
exchange offer, delay acceptance for exchange of the Corporate
Units tendered in the exchange offer, by giving oral or written
notice to the exchange agent and by a public announcement no
later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date.
During any such extension, all Corporate Units you have
previously tendered in the exchange offer will remain subject to
the exchange offer and subject to your right to withdraw them,
as described under Withdrawals of
Tenders.
We expressly reserve the right, regardless of whether or not the
conditions to the exchange offer have been satisfied but subject
to applicable law, to terminate the exchange offer prior to the
time it expires or to amend it in any respect. If we terminate
or amend the exchange offer, we will notify the exchange agent
by oral or written notice and will issue a timely public
announcement regarding the termination or amendment. Upon
termination of the exchange offer for any reason, any Corporate
Units previously tendered in the exchange offer will be promptly
returned to the tendering holders.
If we make a material change in the terms of the exchange offer
or the information concerning the exchange offer, or waive a
material condition of the exchange offer prior to the expiration
date, we will extend the exchange offer, if and to the extent
required by law, including
Rule 13e-4
under the Exchange Act.
If we make a change in the number of Corporate Units sought or
the amount of consideration offered in the exchange, we will
promptly disseminate disclosure regarding the change and extend
the exchange offer, if required by law including
Rule 13e-4
under the Exchange Act and
Rule 14e-1
under the Exchange Act, so that the exchange offer remains open
a minimum of ten business days from the date we disseminate that
disclosure.
Conditions
to the Exchange Offer
We will not be required to accept for exchange, or to issue
common stock or to deliver any exchange consideration in respect
of, any Corporate Units tendered pursuant to the exchange offer,
and we may terminate, extend or amend the exchange offer and may
(subject to
Rule 14e-1
under the Exchange Act) postpone the acceptance for exchange of
and issuance of common stock in respect of any Corporate Units
so tendered in the exchange offer, unless each of the following
conditions are satisfied prior to the expiration date:
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there shall not have been any change or development that in our
reasonable judgment materially reduces the anticipated benefits
to us of the exchange offer or that has had, or could reasonably
be expected to have, a material adverse effect on us, our
businesses, condition (financial or otherwise) or prospects;
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there shall not have been instituted or threatened in writing
any action, proceeding or investigation by or before any
governmental authority, including any court, governmental,
regulatory or administrative branch or agency, tribunal or
instrumentality, that relates in any manner to the exchange
offer and that in our reasonable judgment makes it advisable to
us to terminate the exchange offer;
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we shall have obtained all governmental approvals and third
party consents which we, in our reasonable judgment, consider
necessary for the completion of the exchange offer as
contemplated by this document and all such approvals or consents
shall remain in effect;
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we shall have determined, in our reasonable judgment, based on
consultation with the NYSE, that the NYSE is not likely to
delist the Corporate Units as a result of the consummation of
the exchange offer;
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there shall not have occurred:
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any general suspension of or limitation on prices for trading in
securities in the United States securities or financial markets;
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any disruption in the trading of our common stock;
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a declaration of a banking moratorium or any suspension of
payments with respect to banks in the United States; or
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a commencement or significant worsening of a war or armed
hostilities or other national or international calamity,
including but not limited to, catastrophic terrorist attacks
against the United States or its citizens; and
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the registration statement of which this document forms a part
shall have become effective, no stop order suspending its
effectiveness shall have been issued, and no proceedings for
that purpose shall have been instituted or shall be pending or,
to our knowledge, shall be contemplated or threatened by the SEC.
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We expressly reserve the right to amend or terminate the
exchange offer and to reject for exchange any Corporate Units
not previously accepted for exchange, if any of the conditions
to the exchange offer specified above are not satisfied. In
addition, we expressly reserve the right, at any time or at
various times prior to the expiration date, to waive any
conditions to the exchange offer, in whole or in part, except as
to the requirement that the registration statement be declared
effective, the requirement that the governmental approvals and
third party consents be obtained and the requirement that the
Corporate Units remain listed on the NYSE after the exchange
offer, which conditions we cannot waive. We will give oral or
written notice of any amendment, non-acceptance, termination or
waiver to the exchange agent as promptly as practicable,
followed by a timely press release.
These conditions are for our sole benefit, and we may assert
them regardless of the circumstances that may give rise to them,
or waive them in whole or in part, at any or at various times
prior to the expiration date in our sole discretion. If we fail
at any time to exercise any of the foregoing rights, this
failure will not constitute a waiver of such right. Each such
right will be deemed an ongoing right that we may assert at any
time or at various times prior to the expiration date.
Fractional
Shares
We will not issue fractional shares of our common stock in the
exchange offer. Instead, the number of shares of our common
stock received by each registered holder whose Corporate Units
are accepted for exchange in the exchange offer will be rounded
up or down to the nearest whole number, with any fractional
share of 0.5 or greater being rounded up and any fractional
share of less than 0.5 being rounded down. We will not make
payments of cash in lieu of any fractional share that would
otherwise have been issued.
Procedures
for Tendering Corporate Units
All of the Corporate Units were issued in book-entry form, and
all of the Corporate Units are currently represented by one or
more global certificates held for the account of DTC.
Any beneficial owner whose Corporate Units are held of record by
a broker, dealer, commercial bank, trust company or other
nominee and who wishes to tender Corporate Units should contact
such nominee promptly and instruct such entity to tender
Corporate Units on such beneficial owners behalf.
You may tender your Corporate Units by transferring them through
DTCs Automated Tender Offer Program (ATOP) or
following the other procedures described under The
Exchange Offer Procedures for Tendering Corporate
Units.
How to
Tender If You Are a Beneficial Owner but Not a DTC
Participant
Any beneficial owner whose Corporate Units are held of record by
a broker, dealer, commercial bank, trust company or other
nominee and who wishes to tender Corporate Units should contact
such nominee promptly and instruct such entity to tender
Corporate Units on such beneficial owners behalf.
If you hold your Corporate Units through a broker, dealer,
commercial bank, trust company or other nominee, you should keep
in mind that such entity may require you to take action with
respect to the exchange offer a number of days before the
expiration date in order for such entity to tender Corporate
Units on your behalf on or prior to the expiration date.
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How to
Tender If You Are a DTC Participant
To participate in the offer, a DTC participant must:
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comply with the ATOP procedures of DTC described below; or
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(i) complete and sign and date the Letter of Transmittal,
or a facsimile of the Letter of Transmittal; (ii) have the
signature on the Letter of Transmittal guaranteed if the Letter
of Transmittal so requires; and (iii) mail or deliver the
Letter of Transmittal or facsimile thereof to the exchange agent
prior to the expiration date.
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In addition, either:
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the exchange agent must receive, prior to the expiration date, a
properly transmitted agents message; or
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the exchange agent must receive, prior to the expiration date, a
timely confirmation of book-entry transfer of such Corporate
Units into the exchange agents account at DTC according to
the procedure for book-entry transfer described below, the
letter of transmittal and any other documents required by the
letter of transmittal.
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Tenders of Corporate Units pursuant to the procedures described
above, and acceptance thereof by us, will constitute a binding
agreement between the tendering holder and us upon the terms and
subject to the conditions of the exchange offer, which agreement
will be governed by the laws of the State of New York.
No documents should be sent to us, the dealer managers or the
information agent. Delivery of a letter of transmittal or an
agents message transmitted through ATOP is at the election
and risk of the person delivering or transmitting, and delivery
will be deemed made only when actually received by the exchange
agent.
By tendering Corporate Units pursuant to the exchange offer, you
will be deemed to have agreed that the delivery and surrender of
the Corporate Units is not effective, and the risk of loss of
the Corporate Units does not pass to the exchange agent, until
receipt by the exchange agent of the items listed above together
with all accompanying evidences of authority and any other
required documents in form satisfactory to us. In all cases, you
should allow sufficient time to assure delivery to the exchange
agent on or prior to the expiration date.
By tendering Corporate Units pursuant to the exchange offer, you
will be deemed to have made the representations and warranties
set forth in the letter of transmittal, including that you have
full power and authority to tender, sell, exchange, assign and
transfer the Corporate Units tendered thereby, that you have
complied with the short tendering rule described under
Compliance with Short Tendering
Rule below, and that when such Corporate Units are
accepted for exchange by us, we will acquire good title thereto,
free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim or right. You
will also be deemed to have agreed to, upon request, execute and
deliver any additional documents deemed by the exchange agent or
by us to be necessary or desirable to complete the sale,
assignment and transfer of the Corporate Units tendered thereby.
We have not provided guaranteed delivery provisions in
connection with the exchange offer. You must tender your
Corporate Units in accordance with the procedures set forth
herein.
Tendering
through DTCs ATOP
The exchange agent will establish an account at DTC with respect
to the Corporate Units for purposes of the exchange offer, and
any financial institution that is a DTC participant may make
book-entry delivery of eligible Corporate Units by causing DTC
to transfer such Corporate Units into the exchange agents
account in accordance with DTCs procedures for such
transfer.
The exchange agent and DTC have confirmed that Corporate Units
held in book-entry form through DTC that are to be tendered in
the exchange offer are eligible for ATOP. To effectively tender
Corporate Units eligible for ATOP that are held through DTC, DTC
participants may, in lieu of physically completing and signing
the letter of transmittal and delivering it to the exchange
agent, electronically transmit their acceptance through ATOP,
and DTC will then verify the acceptance, execute a book-entry
delivery to the exchange agents account at DTC and send an
agents message to the exchange agent for its acceptance.
The confirmation of a book-entry transfer into the
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exchange agents account at DTC as described above is
referred to herein as a book-entry confirmation.
Delivery of documents to DTC does not constitute delivery to the
exchange agent.
The term agents message means a message
transmitted by DTC to, and received by, the exchange agent and
forming a part of the book-entry confirmation, which states that
DTC has received an express acknowledgment from the DTC
participant described in such agents message, stating that
such participant has received and agrees to be bound by the
terms and conditions of the exchange offer as set forth in this
document and the letter of transmittal, and that we may enforce
such agreement against such participant.
If you desire to tender your Corporate Units on the expiration
date through ATOP, you should note that you must allow
sufficient time for completion of the ATOP procedures during the
normal business hours of DTC on such date.
Signature
Guarantees
All signatures on a letter of transmittal or a notice of
withdrawal, as the case may be, must be guaranteed by a
recognized participant in the Securities Transfer Agents
Medallion Program, the NYSE Medallion Signature Program or the
Stock Exchange Medallion Program (each, a Medallion
Signature Guarantor) unless the Corporate Units tendered
or withdrawn, as the case may be, pursuant thereto are tendered
(1) by the DTC participant whose name appears on a security
position listing as the owner of Corporate Units who has not
completed the box entitled Special Payment Instructions or
Special Delivery Instructions on the letter of transmittal or
(2) for the account of a member firm of a registered
national securities exchange, a member of Financial Industry
Regulatory Authority, Inc. or a commercial bank or trust company
having an office or correspondent in the United States. If
Corporate Units are registered in the name of a person other
than the signer of a letter of transmittal or a notice of
withdrawal, as the case may be, or if delivery of the common
stock is to be made or tendered Corporate Units that are not
accepted are to be returned to a person other than the holder,
then the signature on the letter of transmittal accompanying the
tendered Corporate Units must be guaranteed by a Medallion
Signature Guarantor as described above.
Determination
of Validity
All questions as to the form of all documents and the validity
and eligibility (including time of receipt) and acceptance of
tenders and withdrawals of Corporate Units will be determined by
us, in our sole discretion, which determination shall be final
and binding. Alternative, conditional or contingent tenders will
not be considered valid. We reserve the absolute right to reject
any or all tenders of Corporate Units that are not in proper
form or the acceptance of which would, in our opinion, be
unlawful. We also reserve the right to waive any defects,
irregularities or conditions of tender as to particular
Corporate Units. A waiver of any defect or irregularity with
respect to the tender of one Corporate Unit shall not constitute
a waiver of the same or any other defect or irregularity with
respect to the tender of any other Corporate Units except to the
extent we may otherwise so provide. Our interpretations of the
terms and conditions of the exchange offer, including the
instructions in the letter of transmittal, will be final and
binding on all parties. Tenders of Corporate Units shall not be
deemed to have been made until any defects or irregularities
have been waived by us or cured within a time period that we
will determine. None of us, the exchange agent, the dealer
managers, the information agent or any other person will be
under any duty to give notice of any defects or irregularities
in tenders of Corporate Units, or will incur any liability to
you for failure to give any such notice.
Withdrawals
of Tenders
You may withdraw Corporate Units that you tender at any time
prior to 11:59 p.m., New York City time, on the expiration
date (currently scheduled for November 10, 2010), unless we
extend it. In addition, you may withdraw Corporate Units that
you tender that are not accepted by us for exchange after
December 7, 2010, which is 40 business days after the date
of commencement of the exchange offer.
For a withdrawal of a tender of Corporate Units to be effective,
a written or facsimile transmission notice of withdrawal must be
received by the exchange agent on or prior to the expiration
date, by mail, fax or hand delivery or by a properly transmitted
Request Message through ATOP. A form of notice of
withdrawal is filed as an exhibit
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to the registration statement of which this document forms a
part and is available on the website maintained by the exchange
agent. Any notice of withdrawal must:
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specify the name of the person who tendered the Corporate Units
to be withdrawn and the name of the DTC participant whose name
appears on the security position listing as the owner of such
Corporate Units, if different from that of the person who
deposited the Corporate Units,
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specify the aggregate amount of the Corporate Units to be
withdrawn,
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unless transmitted through ATOP, be signed by the holder thereof
in the same manner as the original signature on the letter of
transmittal, including any required signature
guarantee(s), and
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if the letter of transmittal was executed by a person other than
the DTC participant whose name appears on a security position
listing as the owner of Corporate Units, be accompanied by a
properly completed irrevocable proxy that authorized such person
to effect such withdrawal on behalf of such holder.
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Withdrawal of Corporate Units can only be accomplished in
accordance with the foregoing procedures.
Holders may not rescind their valid withdrawals of tendered
Corporate Units. However, Corporate Units validly withdrawn may
thereafter be retendered at any time on or prior to the
expiration date by following the procedures described under
Procedures for Tendering Corporate Units.
All questions as to the form and validity (including time of
receipt) of any notice of withdrawal of a tender will be
determined by us, which determination shall be final and
binding. We reserve the absolute right to reject any or all
attempted withdrawals of Corporate Units that are not in proper
form or the acceptance of which would, in our opinion, be
unlawful. We also reserve the right to waive any defects,
irregularities or conditions of a withdrawal as to particular
Corporate Units. A waiver of any defect or irregularity with
respect to the withdrawal of one Corporate Unit shall not
constitute a waiver of the same or any other defect or
irregularity with respect to the withdrawal of any other
Corporate Units except to the extent we may otherwise so
provide. Withdrawals of Corporate Units shall not be deemed to
have been made until any defects or irregularities have been
waived by us or cured. None of us, the exchange agent, the
dealer managers, the information agent or any other person will
be under any duty to give notification of any defect or
irregularity in any notice of withdrawal of a tender or incur
any liability for failure to give any such notification.
Any Corporate Units withdrawn will be deemed not to have been
validly tendered for purposes of the exchange offer and no
exchange consideration will be issued in exchange unless the
Corporate Units so withdrawn are validly re-tendered. Any
Corporate Units that have been tendered but which are
effectively withdrawn will be credited to the account maintained
at DTC from which they were delivered and returned without
expense promptly after the effective withdrawal.
Acceptance;
Exchange of Corporate Units
We will issue the exchange consideration, and cause it to be
delivered, upon the terms and subject to the conditions of the
exchange offer, including the proration described above, and
pursuant to applicable law, in exchange for Corporate Units
validly tendered but not withdrawn in the exchange offer
promptly after the expiration date of the exchange offer and our
acceptance of the validly tendered Corporate Units. We currently
expect the settlement date of the exchange offer to be the third
business day after the expiration date. Valid tenders of the
Corporate Units pursuant to the exchange offer will be accepted
only in integral multiples of 40 Corporate Units.
In all cases, we will only accept the Corporate Units validly
tendered and not withdrawn, and the exchange consideration for
Corporate Units accepted for exchange by us pursuant to the
exchange offer will only be made, after the exchange agent
receives, prior to the expiration date:
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a properly transmitted agents message; or
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a timely confirmation of book-entry transfer of such Corporate
Units into the exchange agents account at DTC according to
the procedure for book-entry transfer described below, the
letter of transmittal and any other documents required by the
letter of transmittal.
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For purposes of the exchange offer, we will be deemed to have
accepted Corporate Units for exchange if, as and when we give
oral (promptly confirmed in writing) or written notice thereof
to the exchange agent.
We will deliver the exchange consideration in exchange for
Corporate Units accepted for exchange in the exchange offer as
soon as practicable after the expiration of the exchange offer
and the determination of the final proration factor, by issuing
the common stock and depositing the exchange consideration on
the settlement date with the exchange agent, which will act as
agent for you for the purpose of receiving the exchange
considerations and transmitting the exchange considerations to
you. Tendering holders of the Corporate Units should indicate in
the applicable box in the letter of transmittal or to the
book-entry transfer facility in the case of holders that
electronically transmit their acceptance through ATOP the name
and address to which delivery of the exchange consideration for
the Corporate Units accepted for exchange is to be sent, if
different from the name and address of the person signing the
letter of transmittal or transmitting such acceptance through
ATOP.
If, for any reason, acceptance for exchange of validly tendered
Corporate Units pursuant to the exchange offer is delayed, or we
are unable to accept for exchange validly tendered Corporate
Units pursuant to the exchange offer, then the exchange agent
may, nevertheless, on behalf of us, retain (subject to
Rule 13e-4
and
Rule 14e-1
described above) tendered Corporate Units, without prejudice to
our rights described under Expiration Date;
Extension; Termination; Amendment,
Conditions to the Exchange Offer and
Withdrawals of Tenders above.
We expressly reserve the right, subject to applicable law, to
(1) delay acceptance for exchange of Corporate Units
tendered under the exchange offer or the delivery of the
exchange consideration in exchange for the Corporate Units
accepted for purchase (subject to
Rule 14e-1
under the Exchange Act, which requires that we pay the
consideration offered or return the Corporate Units deposited by
or on behalf of the holders promptly after the termination or
withdrawal of the exchange offer), or (2) terminate the
exchange offer at any time.
You will not be obliged to pay brokerage commissions or fees to
the dealer managers, the exchange agent, the information agent
or us with respect to the exchange offer.
We have adopted direct company registration of our common stock.
Holders of the Corporate Units accepted for exchange in the
exchange offer will not receive stock certificates evidencing
their ownership of the common stock issued in the exchange
offer. Instead, they will be provided with a statement
reflecting the number of shares registered in their accounts.
Under no circumstances will we pay interest on the exchange
consideration regardless of any delay in making such payment.
Return of
Unaccepted Corporate Units
Any tendered Corporate Units that are not accepted for exchange
by us, including due to proration, will be returned without
expense to the tendering holder. Corporate Units will be
credited to the account maintained at DTC from which they were
delivered and returned promptly after the expiration or
termination of the exchange offer.
Certain
Matters Relating to
Non-U.S.
Jurisdictions
Although we will mail this document to holders of the Corporate
Units to the extent required by U.S. law, this document is
not an offer or solicitation of an offer to sell, purchase or
exchange securities in any jurisdiction in which such offer,
solicitation, sale, purchase or exchange is not permitted.
Countries outside the United States generally have their own
legal requirements that govern securities offerings made to
persons resident in those countries and often impose stringent
requirements about the form and content of offers made to the
general public. We have not taken any action under those
non-U.S. regulations
to facilitate a public offer to exchange outside the United
States. Therefore, the ability of any
non-U.S. person
to tender Corporate Units in the exchange offer will depend on
whether there is an exemption available under the laws of such
persons home country that would permit the person to
participate in the exchange offer without the need for us to
take any action to facilitate a public offering in that country
or otherwise. For example, some countries exempt transactions
from the rules governing public offerings if they involve
persons who meet certain eligibility requirements relating to
their status as sophisticated or professional investors.
Non-U.S. holders
should consult their advisors in considering whether they may
participate in the exchange offer in accordance with the laws of
their home countries and, if they do participate, whether there
26
are any restrictions or limitations on transactions in the
common stock that may apply in their home countries. We and the
dealer managers cannot provide any assurance about whether such
limitations may exist. By signing or being deemed to sign the
letter of transmittal, you are representing that if you are
located outside the United States the offer to you and your
acceptance of it does not contravene the applicable laws where
you are located.
Regulatory
Approvals; Third Party Consents; Effectiveness under Federal
Securities Laws
We have obtained consent to the exchange offer of (i) the
FBRNY under our senior secured FRBNY Credit Facility,
(ii) the Trust under the Series C Perpetual,
Convertible, Participating Preferred Stock Purchase Agreement,
dated as of March 1, 2009, between the Trust and American
International Group, Inc., and (iii) the Department of the
Treasury under the Securities Exchange Agreement, dated as of
April 17, 2009, and the Securities Purchase Agreement,
dated as of April 17, 2009, each between American
International Group, Inc. and the Department of the Treasury. We
are not aware of any other regulatory approvals or third party
consents that are required for completing the exchange offer.
In addition, the registration statement of which this document
forms a part must be declared effective by the SEC before, and
must remain effective at, the time we accept any Corporate Unit
validly tendered and settle the exchange offer.
Source of
Cash to be Paid in the Exchange Offer; Common Stock to be
Issued
If Corporate Units aggregating 74,480,000 units, the
maximum amount of Corporate Units that could be exchanged in the
exchange offer, are validly tendered and accepted for exchange
by us, we will (1) issue up to 7,348,942 shares of
common stock to exchanging holders and (2) pay an aggregate
of approximately $243,564,496 in cash to exchanging holders. The
shares of our common stock to be issued in the exchange offer
are available from our authorized but unissued shares of common
stock. We intend to fund the cash component of the exchange
consideration from our available cash and we may, if necessary,
fund the cash from further draws on the FRBNY Credit Facility.
The FRBNY Credit Facility was established in September 2008 with
a five-year term, and is secured by pledges of the capital stock
and assets of certain of AIGs subsidiaries. The interest
rate payable on outstanding borrowings is three-month LIBOR plus
3.0 percent per annum. As of June 30, 2010,
$13.3 billion remained available under the FRBNY Credit
Facility. See About American International Group,
Inc. above, Note 14 to the Consolidated Financial
Statement included in our Current Report on
Form 8-K
filed on August 6, 2010 and our Current Report on
Form 8-K
filed on September 30, 2010 for more information regarding
the FRBNY Credit Facility.
Exchange
Agent
Global Bondholder Services Corporation has been appointed as the
exchange agent for the exchange offer. We have agreed to pay the
exchange agent reasonable and customary fees for its services
and will reimburse the exchange agent for its reasonable actual
out-of-pocket
expenses. All executed letters of transmittal and any other
required documents should be sent or delivered to the exchange
agent at the address set forth on the back cover of this
document. Delivery of a letter of transmittal to an address or
transmission of the letter of transmittal via facsimile other
than as set forth on the back cover of this document does not
constitute a valid delivery of the letter of transmittal.
Information
Agent
Global Bondholder Services Corporation has been appointed as the
information agent for the exchange offer. We have agreed to pay
the information agent reasonable and customary fees for its
services and will reimburse the information agent for its
reasonable actual
out-of-pocket
expenses. Any questions and requests for assistance or requests
for additional copies of this document or of the letter of
transmittal should be directed to the information agent at the
address set forth on the back cover of this document.
27
Dealer
Managers
The dealer managers for the exchange offer are Banc of America
Securities LLC, Citigroup Global Markets Inc. and Deutsche Bank
Securities Inc., who will perform services customarily provided
by investment banking firms acting as dealer managers of
exchange offers of a like nature, including, but not limited to,
soliciting tenders of Corporate Units pursuant to the exchange
offer and communicating generally regarding the exchange offer
with banks, brokers, custodians, nominees and other persons,
including holders of Corporate Units. We have agreed to pay the
dealer managers compensation for their services as dealer
managers in connection with this exchange offer, which
compensation is 0.32% of the aggregate stated amount of the
Corporate Units accepted for exchange in the exchange offer.
The dealer managers and their affiliates have rendered and may
in the future render various investment banking, lending and
commercial banking services and other advisory services to us
and our subsidiaries. Certain of these relationships involve
transactions that are material to us and our affiliates and for
which the dealer managers have received significant fees. In
addition, the dealer managers
and/or their
affiliates serve as agents and lenders under certain of our
existing credit facilities. Banc of America Securities LLC and
Citigroup Global Markets Inc. are also acting as financial
advisors to us in connection with the Recapitalization. The
dealer managers have received, and may in the future receive,
customary compensation from us and our subsidiaries for such
services. The dealer managers may from time to time hold
Corporate Units and shares of our common stock in their
proprietary accounts, and, to the extent they own Corporate
Units in these accounts at the time of the exchange offer, the
dealer managers may tender these Corporate Units, although a
dealer manager will not be paid a fee for Corporate Units
tendered by that dealer manager for its own account. Subject to
applicable law, during the course of the exchange offer, the
dealer managers may trade shares of our common stock for their
own account or for the accounts of their customers. As a result,
the dealer managers may hold a long or short position in our
common stock.
With respect to jurisdictions located outside of the United
States, the offers may be conducted through affiliates of the
dealer managers that are registered
and/or
licensed to conduct the offers in such jurisdictions.
Citigroup Global Markets Inc. and J.P. Morgan Securities
Inc. are the remarketing agents for the Debentures that are part
of the Corporate Units and will receive a fee in connection with
a successful remarketing of such Debentures in an amount equal
to 0.25% of the Treasury portfolio price applicable to the
Debentures.
Fees and
Expenses
We will bear the fees and expenses of soliciting tenders for the
exchange offer. We are making the principal solicitation by mail
and overnight courier. However, where permitted by applicable
law, additional solicitations may be made by facsimile,
telephone or in person by the dealer managers and information
agent, as well as by officers and regular employees of ours and
those of our affiliates. We will also pay the exchange agent and
the information agent reasonable and customary fees for their
services and will reimburse them for their reasonable actual
out-of-pocket
expenses. We will indemnify each of the exchange agent, the
dealer managers and the information agent against certain
liabilities and expenses in connection therewith, including
liabilities under the federal securities laws.
Transfer
Taxes
We will pay all transfer taxes applicable to the exchange and
transfer of Corporate Units pursuant to the exchange offer,
except if:
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the delivery of the common stock and payment of other exchange
consideration is being made to, or if Corporate Units not
tendered or not accepted for payment are registered in the name
of, any person other than the holder of Corporate Units tendered
thereby;
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the Corporate Units are credited in the name of any person other
than the person(s) signing the letter of transmittal or
electronically transmitting acceptance through ATOP, as
applicable; or
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transfer tax is imposed for any reason other than the exchange
of our common stock for Corporate Units in connection with the
exchange offer,
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then the amount of any transfer taxes, whether imposed on the
registered owner or any other persons, will be payable by the
tendering holder. If satisfactory evidence of payment of such
taxes or exemption from them is not submitted with the letter of
transmittal, the Company will be entitled to bill the amount of
such transfer taxes directly to the tendering holder.
Brokerage
Commissions
Holders that tender their Corporate Units to the exchange agent
do not have to pay a brokerage fee or commission to us, the
dealer managers, the exchange agent or the information agent in
connection with the tender of such securities. However, if a
tendering holder handles the transaction through its bank,
broker, custodian or nominee, that holder may be required to pay
that bank, broker, custodian or nominee brokerage fees or
commissions.
No
Appraisal Rights
No appraisal or dissenters rights are available to holders
of Corporate Units under applicable law in connection with the
exchange offer.
No
Recommendation
None of us, the trustee, the dealer managers, the exchange agent
or the information agent makes any recommendation as to whether
you should exchange your Corporate Units in the exchange offer.
We have not retained, and do not intend to retain, any
unaffiliated representative to act on behalf of the holders of
the Corporate Units for purposes of negotiating the exchange
offer or preparing a report concerning the fairness of the
exchange offer. The value of the exchange consideration to be
issued in the exchange offer may not equal or exceed the value
of the Corporate Units tendered. You must make your own
independent decision regarding your participation in the
exchange offer.
Accounting
Treatment
As a result of the exchange offer, we will:
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record an increase to stockholders equity in an amount
equal to (a) the carrying amount of the Debentures retired
plus the accrued interest on the Debentures retired plus the
unpaid portion of contract adjustment payments that were
recorded when the Corporate Units were originally issued on the
stock purchase contracts cancelled, less (b) the net cash
we pay in connection with the exchange (including for
transaction expenses),
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reduce our liabilities by an amount equal to the amount referred
to in (a) above minus any amount of the net cash we pay in
connection with the exchange that we fund through
borrowings and
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record a loss in our income statement in an amount equal to the
transaction expenses we pay in connection with the exchange
offer plus the amount by which the consideration allocated to
the Debentures retired exceeds their carrying amount.
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The carrying amount of the Debentures underlying all of the
outstanding Corporate Units is approximately $100 million
lower than their principal amount (due to unamortized debt
issuance costs). We expect to record a loss as a result of the
exchange offer that does not differ materially from the
transaction expenses we pay in connection with the exchange
offer (mainly the fees of the dealer managers described under
The Exchange Offer Dealer Managers) plus
unamortized debt issuance costs associated with the Debentures
underlying exchanged Corporate Units.
Compliance
with Short Tendering Rule
It is a violation of
Rule 14e-4
under the Exchange Act for a person, directly or indirectly, to
tender Corporate Units for such persons own account unless
the person so tendering (a) has a net long position equal
to or greater than the aggregate principal amount of the
Corporate Units being tendered and (b) will cause such
Corporate Units
29
to be delivered in accordance with the terms of the exchange
offer.
Rule 14e-4
provides a similar restriction applicable to the tender or
guarantee of a tender on behalf of another person.
A tender of Corporate Units in response to the exchange offer
under any of the procedures described above will constitute a
binding agreement between the tendering holder and us with
respect to the exchange offer upon the terms and subject to the
conditions of the exchange offer, including the tendering
holders acceptance of the terms and conditions of the
exchange offer, as well as the tendering holders
representation and warranty that (a) such holder has a net
long position in the Corporate Units being tendered pursuant to
the exchange offer within the meaning of
Rule 14e-4
under the Exchange Act and (b) the tender of such Corporate
Units complies with
Rule 14e-4.
Consequences
of Failure to Exchange Corporate Units
The terms of the Corporate Units not exchanged in the exchange
offer will not change as a result of the exchange offer, and the
Debentures forming part of your Corporate Units will therefore
remain subject to remarketing. For a description of the terms of
the Corporate Units and the stock purchase contracts and
Debentures underlying them, see Description of the Equity
Units, Description of the Stock Purchase
Contracts and Description of the Debentures.
In addition, Debentures included in the Corporate Units not
exchanged in the exchange offer will continue to be subject to
remarketing.
Depending on the amount of Corporate Units that are accepted for
exchange in the exchange offer, the trading market for the
Corporate Units that remain outstanding after the exchange offer
is expected to be more limited. The 74,480,000 Corporate Units,
which is the maximum number of Corporate Units that could be
exchanged in the exchange offer, represent approximately 95% of
the total outstanding Corporate Units. Such reduction in the
trading market may decrease the price and increase the
volatility of the Corporate Units that remain outstanding
following the completion of the exchange offer, which price and
volatility may fluctuate significantly depending on the volume
of trading in the Corporate Units.
In addition, although we do not currently intend to do so, we
may, to the extent permitted by applicable law, after the
settlement date of the exchange offer, purchase Corporate Units
in the open market, in privately negotiated transactions,
through subsequent tender or exchange offers or otherwise. Any
other purchases may be made on the same terms or on terms that
are more or less favorable to holders than the terms of this
exchange offer. Following completion of the exchange offer, we
may also repurchase Debentures in a remarketing, in the open
market, in privately negotiated transactions or otherwise.
Corporate
Units Ownership
Neither we, nor to the best of our knowledge, any of our
executive officers, directors, controlling persons, other
affiliates, associates or subsidiaries nor, to the best of our
knowledge, any of our subsidiaries or controlling
persons directors or executive officers, nor any
associates or subsidiaries of any of the foregoing, (a) own
any Corporate Units, or (b) have effected any transactions
involving the Corporate Units during the 60 day period
prior to the date of this document.
30
DESCRIPTION
OF CAPITAL STOCK
References to AIG, us, we
or our in this section mean American International
Group, Inc. and do not include the subsidiaries of American
International Group, Inc. Also, in this section, references to
holders mean those who own capital stock or
depositary shares registered in their own names, on the books
that we maintain for this purpose.
The section summarizes some of the terms of our capital
stock, securities exercisable for our common stock and debt
instruments and agreements containing restrictions relating to
our capital stock. This summary does not purport to be complete
and is qualified by the documents governing those terms which
contain the full legal text of the matters described in this
section. Such documents have been filed with the SEC or
incorporated by reference as exhibits to the registration
statement of which this document forms a part, to our 2009
Annual Report on
Form 10-K
or to Post-Effective Amendment No. 1 to our registration
statement on
Form S-3,
filed on August 9, 2010 (File
No. 333-160645).
You should refer to these documents for more information.
See About American International Group, Inc. for
a discussion of the expected impact of the Recapitalization on
our capital structure.
Common
Stock
AIGs authorized capital stock includes
5,000,000,000 shares of common stock (par value $2.50 per
share). As of September 30, 2010, there were
135,138,428 shares of common stock outstanding.
All of the outstanding shares of our common stock are fully paid
and nonassessable. Subject to the prior rights of the holders of
shares of preferred stock that may be issued and outstanding,
the holders of common stock are entitled to receive:
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dividends when, as and if declared by our board of directors out
of funds legally available for the payment of dividends (AIG is
subject to contractual restrictions on its ability to pay
dividends); and
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in the event of dissolution of AIG, to share ratably in all
assets remaining after payment of liabilities and satisfaction
of the liquidation preferences, if any, of then outstanding
shares of preferred stock, as provided in AIGs amended and
restated certificate of incorporation.
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Each holder of common stock is entitled to one vote for each
share held of record on all matters presented to a vote at a
shareholders meeting, including the election of directors.
Holders of common stock have no cumulative voting rights or
preemptive rights to purchase or subscribe for any additional
shares of common stock or other securities, and there are no
conversion rights or redemption or sinking fund provisions with
respect to the common stock. Authorized but unissued shares of
common stock may be issued without shareholder approval.
AIG has adopted direct company registration of its common stock.
Holders of shares of common stock will not receive stock
certificates evidencing their share ownership. Instead, they
will be provided with a statement reflecting the number of
shares registered in their accounts.
Preferred
Stock
We may issue preferred stock in one or more series. We may also
reopen a previously issued series of preferred stock
and issue additional preferred stock of that series. This
section summarizes terms of the preferred stock that apply
generally to all series. The specific terms of a series of
preferred stock may vary from the terms described here.
AIGs authorized capital stock includes
100,000,000 shares of preferred stock, par value $5.00 per
share. Each series of preferred stock is governed by Delaware
law.
The authorized but unissued shares of preferred stock are
available for issuance from time to time at the discretion of
our board of directors without shareholder approval. Our board
of directors is authorized to divide the
31
preferred stock into series and, with respect to each series, to
determine the designations, the powers, preferences and rights
and the qualifications, limitations and restrictions of the
series, including:
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dividend rights;
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conversion or exchange rights;
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voting rights;
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redemption rights and terms;
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liquidation preferences;
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sinking fund provisions;
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the serial designation of the series; and
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the number of shares constituting the series.
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We may, at our option, instead of offering whole individual
shares of any series of preferred stock, offer depositary shares
evidenced by depositary receipts. The rights of holders of
preferred stock may be adversely affected by the rights of
holders of existing preferred stock or preferred stock that may
be issued in the future. Our board of directors may cause shares
of preferred stock to be issued in public or private
transactions for any proper corporate purpose.
Preferred stock will be fully paid and nonassessable when
issued, which means that our holders will have paid their
purchase price in full and that we may not ask them to surrender
additional funds. Unless otherwise provided in the document
governing the terms of the applicable series of preferred stock,
holders of preferred stock will not have preemptive or
subscription rights to acquire more stock of AIG.
All preferred stock will be issued in direct company
registration form on the books and records of AIG. Purchasers of
shares of preferred stock will be provided with a statement
reflecting the number of shares registered in their accounts.
Series C
Preferred Stock
On March 4, 2009, we issued to AIG Credit Facility Trust, a
trust established for the sole benefit of the United States
Treasury (the Trust), 100,000 shares of our
Series C Perpetual, Convertible, Participating Preferred
Stock, par value $5.00 per share (the Series C
Preferred Stock), pursuant to the Series C Perpetual,
Convertible, Participating Preferred Stock Purchase Agreement,
dated as of March 1, 2009 (the Series C Purchase
Agreement), between the Trust and us.
The Trust currently holds the Series C Preferred Stock for
the sole benefit of the United States Treasury. The holders of
the Series C Preferred Stock have preferential liquidation
rights over the holders of our common stock and, to the extent
permitted by law, vote with the our common stock on all matters
submitted to our shareholders. The Series C Preferred Stock
is entitled to (i) a percentage of the voting power of our
shareholders entitled to vote on any particular matter, except
where a vote of the common stock only is required, and
(ii) a percentage of the aggregate dividend rights of the
outstanding shares of our common stock and the Series C
Preferred Stock, in each case, on an as converted basis, which
percentage represented, as of September 30, 2010,
approximately 79.8 percent of each of such voting power and
total dividends payable. No dividends have been paid on the
Series C Preferred Stock since its issuance in 2009. The
Series C Preferred Stock will become convertible into
common stock upon the subsequent amendment of our Amended and
Restated Certificate of Incorporation, which amendment will need
to be approved by a separate class vote of the holders of our
common stock. Upon such amendment, the Series C Preferred
Stock will be convertible into a number of shares of our common
stock representing its voting power at that time. The
Series C Preferred Stock has a $5.00 per share liquidation
preference, plus an amount equal to all previously declared and
unpaid dividends, and the holders the Series C Preferred
Stock are entitled to receive the distribution upon our
liquidation payable with respect to the shares of our common
stock issuable upon conversion of the Series C Preferred
Stock.
Shares of the Series C Preferred Stock are not subject to
any redemption or sinking fund.
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Series D
Preferred Stock
Our Series D Fixed Rate Cumulative Perpetual Preferred
Stock, par value $5.00 per share (the Series D
Preferred Stock), was exchanged for our Series E
Fixed Rate Non-Cumulative Perpetual Preferred Stock, par value
$5.00 per share (the Series E Preferred Stock),
on April 17, 2009, pursuant to the Securities Exchange
Agreement dated as of April 17, 2009 (the
Series E Securities Exchange Agreement),
between us and the Department of the Treasury. The Series D
Preferred Stock was eliminated thereupon.
Series E
Preferred Stock
On April 17, 2009, we issued to the Department of the
Treasury 400,000 shares of the Series E Preferred
Stock, in exchange for the then outstanding Series D
Preferred Stock, pursuant to the Series E Securities
Exchange Agreement.
Dividends on the Series E Preferred Stock are payable, if,
as and when declared by our board of directors or a duly
authorized committee thereof, on a non-cumulative basis, out of
assets legally available therefor, in cash, at the rate per
annum of 10 percent of the liquidation preference of
$104,011.44 per share (the Series E Liquidation
Preference). The Series E Preferred Stock ranks
senior to the common stock and the Series C Preferred Stock
and any other series of preferred stock subsequently issued by
us to any person other than the Department of the Treasury with
respect to the payment of dividends and amounts upon
liquidation, dissolution and winding up of AIG, and ranks
pari passu with the Series F Fixed Rate
Non-Cumulative Perpetual Preferred Stock.
We may redeem the Series E Preferred Stock at the
Series E Liquidation Preference, plus unpaid dividends for
the then-current dividend period, at any time that the Trust, or
any successor entity, beneficially owns less than
30 percent of our voting securities and no holder of the
Series E Preferred Stock controls or has the potential to
control us.
Holders of the Series E Preferred Stock are entitled to
vote for the election of the greater of two additional members
of our board of directors and a number of directors (rounded
upward) equal to 20 percent of the total number of our
directors if dividends payable on the shares of the
Series E Preferred Stock have not been paid for four or
more dividend periods, whether or not consecutive (including for
this purpose the period during which the Series D Preferred
Stock was outstanding). We have not paid dividends on the
Series E Preferred Stock since its issuance in 2009, and as
of September 30, 2010, two directors were elected by the
holders of the Series E Preferred Stock together with the
holders of the Series F Preferred Stock.
Pursuant to the Series E Securities Exchange Agreement, we
will be obligated, at the request of the Department of the
Treasury, to file a registration statement under the Securities
Act of 1933 with respect to the Series E Preferred Stock
for resales of the Series E Preferred Stock.
In addition, the Series E Preferred Stock is subject to a
replacement capital covenant (the Replacement Capital
Covenant), whereby we agree for the benefit of the holders
of its 6.25% Notes due 2036 (CUSIP No. 026874AZ0) that
we may not redeem or purchase, and none of our subsidiaries may
purchase, all or any part of the Series E Preferred Stock
at any time prior to April 17, 2012 except with the
proceeds obtained from the issuance by us or any such subsidiary
of certain replacement capital securities as set forth in the
Replacement Capital Covenant.
Pursuant to the Series E Securities Exchange Agreement, the
Department of the Treasury has the right to exchange the shares
of the Series E Preferred Stock for a new series of our
serial preferred stock with the same terms as the terms of the
Series E Preferred Stock, except that the liquidation
preference of such new series will be $10,000 per share, or such
amount per share as may be reasonably specified by the
Department of the Treasury based on the number of shares of the
new serial preferred stock to be exchanged.
The Series E Preferred Stock is not convertible into our
common stock or any other class or series of our securities
other than described in the preceding paragraph and is not
subject to any sinking fund or any other similar obligation for
its repurchase or retirement.
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Series F
Preferred Stock
On April 17, 2009, we issued to the Department of the
Treasury 300,000 shares of our Series F Fixed Rate
Non-Cumulative Perpetual Preferred Stock, par value $5.00 per
share (the Series F Preferred Stock), pursuant
to the Securities Purchase Agreement, dated as of April 17,
2009 (the Series F Purchase Agreement), between
us and the Department of the Treasury. Pursuant to the
Series F Purchase Agreement, the Department of the Treasury
agreed to provide up to $29.835 billion (the
Department of the Treasury Commitment) in exchange
for increases in the liquidation preference of the Series F
Preferred Stock.
The terms of the Series F Preferred Stock are substantially
the same as the Series E Preferred Stock, except that the
Series F Preferred Stock is not subject to a replacement
capital covenant. The liquidation preference of the
Series F Preferred Stock was initially $0 per share and
will be increased pro rata by the amount of each drawdown
of the Department of the Treasury Commitment. As of
September 30, 2010, AIG had drawn down on the Department of
the Treasury Commitment in the amount of approximately
$7.543 billion. As a result, the liquidation preference of
the Series F Preferred Stock had increased to
$25,143.56 per share as of September 30, 2010.
The Series F Preferred Stock ranks senior to the common
stock, ranks pari passu with the Series E Preferred
Stock and ranks senior to the Series C Preferred Stock and
any other series of preferred stock subsequently issued by us to
any person other than the Department of the Treasury with
respect to the payment of dividends and amounts upon
liquidation, dissolution and winding up of AIG.
Pursuant the Series F Purchase Agreement, we will be
obligated, at the request of the Department of the Treasury, to
file a registration statement under the Securities Act of 1933
with respect to the Series F Preferred Stock for resales of
Series F Preferred Stock.
Pursuant to the Series F Purchase Agreement, the Department
of the Treasury has the right to exchange the shares of each of
the Series F Preferred Stock for a new series of our serial
preferred stock with the same terms as the respective terms of
the Series F Preferred Stock, except that the liquidation
preference of such new series will be $10,000 per share, or such
amount per share as may be reasonably specified by the
Department of the Treasury based on the number of shares of the
new serial preferred stock to be exchanged.
The Series F Preferred Stock is not convertible into our
common stock or any other class or series of our securities
other than described in the preceding paragraph and is not
subject to any sinking fund or any other similar obligation for
their repurchase or retirement.
We have not paid dividends on the Series F Preferred Stock
since its issuance in 2009, and as of September 30, 2010,
two directors were elected by the holders of the Series F
Preferred Stock together with the holders of the Series E
Preferred Stock.
Impact
on Dividend of Common Stock
Pursuant to the terms of our Series C Preferred Stock, we
are not able to declare or pay a dividend on our common stock
unless we simultaneously declare and pay such dividend on the
Series C Preferred Stock. Pursuant to the terms of each of
our Series E Preferred Stock and our Series F
Preferred Stock, we are not able to declare or pay any cash
dividends on the common stock or on any of our preferred stock
ranking junior to such series of preferred stock for any period
until dividends on each of the Series E Preferred Stock and
Series F Preferred Stock have been paid for such period. We
have not paid dividends on the Series E Preferred Stock and
Series F Preferred Stock since their issuance in 2009, and
no dividends have been paid on the our common stock since the
third quarter of 2008. As of September 30, 2010, two
directors were elected by the holders of the Series E
Preferred Stock and Series F Preferred Stock pursuant to
the terms of those securities.
Other
Restrictions under Series C Purchase Agreement,
Series E Securities Exchange Agreement and Series F
Purchase Agreement
Pursuant to the Series C Purchase Agreement, so long as the
Trust owns and is entitled to own upon conversion of the
Series C Preferred Stock, in aggregate, 50% or more of the
shares of our common stock convertible under and converted from
the Series C Preferred Stock, we may not, without the prior
written consent of the Trust, subject to
34
certain exceptions, issue or grant (i) any capital stock;
(ii) any rights or securities exercisable or exchangeable
for or convertible into any capital stock; or (iii) any
stock appreciation rights, phantom stock rights, or any other
profit participation rights, or any rights or options to acquire
any such rights.
Among other things, the Series E Securities Exchange
Agreement and the Series F Purchase Agreement restrict our
ability and the ability of our subsidiaries to, subject to
certain exceptions, (i) declare or pay any dividend or
distribution on the common stock, or (ii) repurchase any
shares of our common stock or other capital stock, without
consent of the Department of the Treasury, prior to the earlier
of (x) April 17, 2012, and (y) when the
Department of the Treasury and its affiliate cease to be holders
of the Series E Preferred Stock or Series F Preferred
Stock, as the case may be.
Warrants
Series D
Warrant
On November 25, 2008, we issued to the Department of the
Treasury a warrant (the Series D Warrant) to
purchase up to 2,689,938 shares of our common stock, as
adjusted to reflect the effect of the
one-for-twenty
reverse stock split of our common stock. The Series E
Securities Exchange Agreement permits the Department of the
Treasury in certain circumstances to elect to exchange the
Series D Warrant for 2,689,938 shares of our
Series C Preferred Stock instead of our common stock. The
Series D Warrant is currently exercisable at an exercise
price of $50 per share. The ultimate number of shares of common
stock or Series C Preferred Stock to be issued under the
terms of the Series D Warrant and the exercise price of the
Series D Warrant are also subject to certain customary
anti-dilution adjustments as set forth in the Series D
Warrant certificate, including among others, upon the issuances,
in certain circumstances, of common stock or securities
convertible into common stock.
The Series D Warrant has a term of 10 years and is
exercisable at any time, in whole or in part. The Series D
Warrant is not subject to any contractual restrictions on
transfer other than such as are necessary to ensure compliance
with U.S. federal and state securities laws. The Department
of the Treasury has agreed that it will not exercise any voting
rights with respect to the common stock issued upon exercise of
the Series D Warrant. We will be obligated, at the request
of the Department of the Treasury, to file a registration
statement with respect to the Series D Warrant and the
common stock for which the Series D Warrant can be
exercised. If the Series D Preferred Stock is redeemed in
whole or is transferred in whole to one or more third parties,
we may repurchase the Series D Warrant then held by the
Department of the Treasury at any time thereafter for its fair
market value so long as no holder of the Series D Warrant
controls or has the potential to control us.
Series F
Warrant
On April 17, 2009, we issued to the Department of the
Treasury a warrant (the Series F Warrant) to
purchase up to 150 shares of our common stock, as adjusted
to reflect the effect of the
one-for-twenty
reverse stock split of our common stock, pursuant to the
Series F Purchase Agreement. The Series F Warrant is
currently exercisable at an exercise price of $0.00002 per
share. The ultimate number of shares of common stock to be
issued under the terms of the Series F Warrant and the
exercise price of the Series F Warrant are subject to
certain customary anti-dilution adjustments as set forth in the
Series F Warrant certificate, including among others, upon
the issuances, in certain circumstances, of common stock or
securities convertible into common stock.
The Series F Warrant has a term of 10 years and is
exercisable at any time, in whole or in part. The Series F
Warrant is not subject to any contractual restrictions on
transfer other than such as are necessary to ensure compliance
with U.S. federal and state securities laws. The Department
of the Treasury has agreed that it will not exercise any voting
rights with respect to the common stock issued upon exercise of
the Series F Warrant. We will be obligated, at the request
of the Department of the Treasury, to file a registration
statement with respect to the Series F Warrant and the
common stock for which the Series F Warrant can be
exercised. If the Series F Preferred Stock is redeemed in
whole or is transferred in whole to one or more unaffiliated
third parties, we may repurchase the Series F Warrant and
any common stock issuable upon exercise of the Series F
Warrant then held by the Department of the Treasury at any time
thereafter for their fair market value so long as the Department
of the Treasury does not control or have the potential to
control us.
35
Impact of
Other Securities and Other Restrictions
Junior
Subordinated Debentures
We have previously issued junior subordinated debentures that
contain provisions that restrict our activities with respect to
our common stock. Specifically, the issued debentures provide
that if an event of default has occurred and is continuing with
respect to the issued debentures or we have given notice of our
election to defer interest payments on the issued debentures but
the related deferral period has not yet commenced or a deferral
period is continuing, then we will not, and will not permit any
of our subsidiaries to, subject to certain exceptions under the
applicable series of the junior subordinated debentures:
(a) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with
respect to, any shares of our capital stock, (b) make any
payment of principal of, or interest or premium, if any, on, or
repay, purchase or redeem any of our debt securities that upon
our liquidation rank pari passu with or junior to the
issued debentures or (c) make any guarantee payments with
respect to any of our guarantees of the securities of any
subsidiary if such guarantee ranks pari passu with, or
junior in interest to, the issued debentures.
In addition, if any deferral period for certain of the issued
debentures lasts longer than one year, neither we nor any of our
subsidiaries will be permitted to purchase, redeem or otherwise
acquire any securities ranking junior to or pari passu
with any common stock, certain qualifying warrants and
certain qualifying non-cumulative preferred stock, the proceeds
of which were used to settle deferred interest during the
relevant deferral period until the first anniversary of the date
on which all deferred interest has been paid, subject to the
exceptions listed above. However, if we are involved in a
business combination where immediately after its consummation
more than 50% of the surviving or resulting entitys voting
stock is owned by the shareholders of the other party to the
business combination or continuing directors cease for any
reason to constitute a majority of the surviving or resulting
entitys board of directors, then the one-year restriction
on repurchases described in the previous sentence will not apply
to any deferral period that is terminated on the next interest
payment date following the date of consummation of the business
combination.
As of June 30, 2010, we had $11.4 billion aggregate
principal amount of such junior subordinated debentures
outstanding in various series, and we have not deferred any
interest payment under such junior subordinated debentures.
FRBNY
Credit Facility
We entered into a senior secured credit facility (the
FRBNY Credit Facility) with the Federal Reserve Bank
of New York (FRBNY) under the Credit Agreement,
dated as of September 22, 2008, as amended from time to
time, between us and the FRBNY.
Under the FRBNY Credit Facility, we are currently restricted
from declaring or paying dividends or distributions on the
common stock, or repurchasing any common stock subject to
certain exceptions in connection with the employee benefits
plans. So long as no default shall have occurred thereunder, the
FRBNY Credit Facility permits payments of non-cumulative cash
dividends on our Series E Preferred Stock and Series F
Preferred Stock at a rate not to exceed 10% per annum.
36
DESCRIPTION
OF THE EQUITY UNITS
The section summarizes some of the terms of the Equity Units.
This summary does not purport to be complete and is qualified by
the documents governing those terms which contain the full legal
text of the matters described in this section. Such documents
have been filed with the SEC or incorporated by reference as
exhibits to the registration statement of which this document
forms a part. You should refer to these documents for more
information.
The Equity Units were issued on May 16, 2008 under the
purchase contract agreement and pledge agreement between us and
The Bank of New York Mellon (formally known as The Bank of New
York), whom we refer to as the purchase contract agent, and
Wilmington Trust Company, as collateral agent, custodial
agent and securities intermediary (the collateral
agent). Equity Units may be either Corporate Units or
Treasury Units. The Equity Units initially consisted of
78,400,000 Corporate Units, each with a stated amount of $75,
which will reduce by $25 on each stock purchase date.
Corporate
Units
Each Corporate Unit consists of a unit comprising:
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(a)
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a stock purchase contract under which, subject to a
holders early settlement right as described under
Description of the Stock Purchase Contracts
Early Settlement,
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(1)
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the holder is obligated to purchase from us, and we are
obligated to sell to the holder, for $25, a number of shares of
our common stock equal to the applicable settlement rate
described below under Description of the Stock Purchase
Contracts Purchase of Common Stock (which
settlement rate is subject to anti-dilution adjustments under
the circumstances set forth under Description of the Stock
Purchase Contracts Anti-Dilution Adjustments)
on each of February 15, 2011, May 1, 2011 and
August 1, 2011, or the next business day (as defined
herein) if any such day is not a business day (each such date, a
stock purchase date); and
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(2)
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we are obligated to pay the holder quarterly contract adjustment
payments:
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from and including the issue date to but excluding the first
stock purchase date at an annual rate of 2.7067% on the initial
stated amount of $75 per stock purchase contract;
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from and including the first stock purchase date to but
excluding the second stock purchase date at an annual rate of
2.6450% on the adjusted stated amount of $50 per stock purchase
contract; and
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from and including the second stock purchase date to but
excluding the third stock purchase date at an annual rate of
2.6100% on the adjusted stated amount of $25 per stock purchase
contract.
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(b)
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a 1/40, or 2.5%, undivided beneficial ownership interest in one
or more of the following Debentures, each with a principal
amount of $1,000:
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(1)
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a
Series B-1
Junior Subordinated Debenture, or
Series B-1
Debenture, initially due February 15, 2041;
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(2)
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a
Series B-2
Junior Subordinated Debenture, or
Series B-2
Debenture, initially due May 1, 2041; and
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(3)
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a
Series B-3
Junior Subordinated Debenture, or
Series B-3
Debenture, initially due August 1, 2041.
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The
Series B-1
Debentures, the
Series B-2
Debentures and the
Series B-3
Debentures are referred to collectively as the
Debentures. On the remarketing settlement date for
any series of Debentures, the undivided beneficial ownership
interest in such Debenture will be replaced with an interest in
a portfolio of U.S. Treasury securities, which we refer to
as the Treasury portfolio.
Upon the initial issuance of the Equity Units, the purchase
price of each Equity Unit was allocated between the related
stock purchase contract and the related beneficial interest in
each Debenture in proportion to their respective
37
fair market values at the time of issuance. We reported the fair
market value of each such 1/40, or 2.5%, undivided beneficial
ownership interest with a principal amount of $1,000 as $25 and
the fair market value of the stock purchase contract as $0. This
position generally is binding on the beneficial owner of each
Equity Unit but not on the IRS.
As long as an Equity Unit is in the form of a Corporate Unit,
your beneficial interest in the Debentures (or, in the case of
successful remarketing after the applicable remarketing
settlement date and prior to the applicable stock purchase date,
the Treasury portfolio) forming a part of the Corporate Unit
remains pledged to us through the collateral agent to secure
your obligation to purchase shares of our common stock under the
stock purchase contract forming part of such Corporate Unit.
Holders of Corporate Units receive interest paid on Debentures
pledged in relation to their Equity Units despite our security
interest.
Creating
Treasury Units
Each holder of 40 Corporate Units has the right at any time
other than during a blackout period as described below to create
Treasury Units by substituting interests in the applicable
qualifying treasury securities (as described below) for such
holders ownership interests in the Debentures held by the
collateral agent, in an amount at maturity equal to the
principal amount of the Debentures for which substitution is
being made. Because qualifying treasury securities are issued in
integral multiples of $1,000, holders of Corporate Units may
make this substitution only in integral multiples of 40
Corporate Units. Accordingly, prior to the close of business on
the second business day prior to the first remarketing period
start date (as defined under Description of the Stock
Purchase Contracts Remarketing), to create
Treasury Units from Corporate Units a holder must substitute a
qualifying treasury security with a principal amount of $1,000
described in each of the three bullet points below for each 40
Corporate Units. After the first remarketing period (or if the
remarketing of the
Series B-1
Debentures is successful, after the first stock purchase date)
and prior to the close of business on the second business day
prior to the second remarketing period start date, to create
Treasury Units from Corporate Units a holder must substitute a
qualifying treasury security described in each of the second and
third bullet points below with a principal amount of $1,000 for
each 40 Corporate Units. After the second remarketing period (or
if the remarketing of the
Series B-2
Debentures is successful, after the second stock purchase date)
and prior to the close of business on the second business day
prior to the third remarketing period start date, to create
Treasury Units from Corporate Units a holder must substitute a
qualifying treasury security described in the third bullet point
below with a principal amount of $1,000 for each 40 Corporate
Units. Substitutions will not be permitted following the close
of business on the second business day prior to a remarketing
period start date and prior to the end of the applicable
remarketing period or, if the applicable remarketing is
successful, the applicable stock purchase date. We refer to the
periods during which substitutions are not permitted as
blackout periods.
The interests in the applicable qualifying treasury
securities that must be substituted in order to create
each Treasury Unit consist of:
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until the first stock purchase date, a 1/40, or 2.5%, undivided
beneficial ownership interest in a zero-coupon
U.S. Treasury security (CUSIP No. 912820GC5) that
matures on such stock purchase date with a principal amount at
maturity of $1,000;
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until the second stock purchase date, a 1/40, or 2.5%, undivided
beneficial ownership interest in a zero-coupon
U.S. Treasury security (CUSIP No. 921820NA1) that
matures on the day prior to such stock purchase date with a
principal amount at maturity of $1,000; and
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until the third stock purchase date, a 1/40, or 2.5%, undivided
beneficial ownership interest in a zero-coupon
U.S. Treasury security (CUSIP No. 912820NK9) that
matures on the day prior to such stock purchase date with a
principal amount at maturity of $1,000.
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These substitutions will create Treasury Units, and the
applicable series of Debentures will be released to the holder
and be separately tradable from the Treasury Units.
38
Each Treasury Unit consists of a unit with an initial stated
amount of $75, which will reduce by $25 on each stock purchase
date, and consists of:
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(a)
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a stock purchase contract under which, subject to a
holders early settlement right:
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(1)
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the holder is obligated to purchase from us, and we are
obligated to sell to the holder, not later than on each stock
purchase date, for $25 in cash, a number of shares of our common
stock equal to the settlement rate described below under
Description of the Stock Purchase Contracts
Purchase of Common Stock (which settlement rate will be
subject to anti-dilution adjustment under the circumstances set
forth in Description of the Stock Purchase
Contracts Anti-Dilution Adjustments), and
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(2)
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we are obligated to pay the holder quarterly contract adjustment
payments:
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from and including the issue date to but excluding the first
stock purchase date, at an annual rate of 2.7067% on the initial
stated amount of $75 per stock purchase contract;
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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
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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; and
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(b)
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a 1/40, or 2.5%, undivided beneficial ownership interest in the
applicable qualifying treasury securities.
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To create 40 Treasury Units, a Corporate Unit holder must:
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deposit with the collateral agent $1,000 principal amount at
maturity of each qualifying treasury security then constituting
part of a Treasury Unit, which must be purchased in the open
market at the Corporate Unit holders expense, and
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transfer 40 Corporate Units to the purchase contract agent
accompanied by a notice stating that the holder has deposited
each such qualifying treasury security with the collateral agent
and requesting the release to the holder of the Debentures
relating to 40 Corporate Units.
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Upon the deposit and receipt of an instruction from the purchase
contract agent, the collateral agent will release the related
Debentures from the pledge under the pledge agreement, free and
clear of our security interest, to the purchase contract agent.
The purchase contract agent then will:
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cancel the 40 Corporate Units,
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transfer the related Debentures to the holder, and
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deliver 40 Treasury Units to the holder.
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The qualifying treasury securities will be substituted for the
Debentures and will be pledged to us through the collateral
agent to secure the holders obligation to purchase common
stock under the related stock purchase contracts. The related
Debentures released to the holder thereafter will trade
separately from the resulting Treasury Units.
Recreating
Corporate Units
Each holder of 40 Treasury Units has the right at any time other
than during a blackout period as described below to recreate
Corporate Units by substituting interests in the applicable
Debentures for such holders ownership interest in the
qualifying treasury securities held by the collateral agent, in
an amount equal to the principal amount at maturity of the
qualifying treasury securities for which substitution is being
made. Because qualifying treasury securities are issued in
integral multiples of $1,000, holders of Treasury Units may make
this substitution only in integral multiples of 40 Treasury
Units. Accordingly, prior to the close of business on the second
business day prior to the first remarketing period start date,
to recreate Corporate Units from Treasury Units a holder must
substitute Debentures of each series with a principal amount of
$1,000 for each 40 Treasury Units. After the first remarketing
39
period (or if the remarketing of the
Series B-1
Debentures is successful, after the first stock purchase date)
and prior to the close of business on the second business day
prior to the second remarketing period start date, to recreate
Corporate Units from Treasury Units a holder must substitute
Series B-2
Debentures and
Series B-3
Debentures with a principal amount of $1,000 for each 40
Treasury Units. After the second remarketing period (or if the
remarketing of the
Series B-2
Debentures is successful, after the second stock purchase date)
and prior to the close of business on the second business day
prior to the third remarketing period start date, to recreate
Corporate Units from Treasury Units a holder must substitute
Series B-3
Debentures with a principal amount of $1,000 for each 40
Treasury Units. Substitutions are not permitted during blackout
periods.
These substitutions will recreate Corporate Units, and the
applicable qualifying treasury securities will be released to
the holder and be separately tradable from the Corporate Units.
To recreate 40 Corporate Units, a Treasury Unit holder must:
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deposit with the collateral agent the following Debentures, each
with a principal amount of $1,000, which must be purchased in
the open market at the Corporate Unit holders expense:
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a
Series B-3
Debenture; and
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if prior to the second stock purchase date, a
Series B-2
Debenture, and
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if prior to the first stock purchase date, a
Series B-1
Debenture, and
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transfer 40 Treasury Units to the purchase contract agent
accompanied by a notice stating that the Treasury Unit holder
has deposited $1,000 principal amount of Debentures with the
collateral agent and requesting the release to the holder of the
qualifying treasury securities relating to the Treasury Units.
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Upon the deposit and receipt of an instruction from the purchase
contract agent, the collateral agent will release the related
qualifying treasury securities from the pledge under the pledge
agreement, free and clear of our security interest, to the
purchase contract agent. The purchase contract agent will then:
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cancel the 40 Treasury Units,
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transfer the related qualifying treasury securities to the
holder, and
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deliver 40 Corporate Units to the holder.
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The substituted Debentures will be pledged to us through the
collateral agent to secure the Corporate Unit holders
obligation to purchase common stock under the related stock
purchase contracts.
Holders that elect to substitute pledged securities, thereby
creating Treasury Units or recreating Corporate Units, will be
responsible for any fees or expenses payable in connection with
the substitution.
Current
Payments
Each holder of Corporate Units is entitled to receive quarterly
cash distributions consisting of interest payments on the
holders undivided beneficial ownership interest in each
series of Debentures (or pro rata distributions on the
applicable ownership interest in the Treasury portfolio if it
has replaced a series of Debentures as a component of Corporate
Units) and quarterly contract adjustment payments payable by us:
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from and including the issue date to but excluding the first
stock purchase date:
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interest at the annual rate of 5.67% on your 1/40, or 2.5%,
interest in a
Series B-1
Debenture with a principal amount of $1,000;
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interest at the annual rate of 5.82% on your 1/40, or 2.5%,
interest in a
Series B-2
Debenture with a principal amount of $1,000;
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interest at the annual rate of 5.89% on your 1/40, or 2.5%,
interest in a
Series B-3
Debenture with a principal amount of $1,000, and
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contract adjustment payments at the annual rate of 2.7067% on
the initial stated amount of $75 per stock purchase contract;
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from and including the first stock purchase date to but
excluding the second stock purchase date:
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interest at the annual rate of 5.82% on your 1/40, or 2.5%,
interest in a
Series B-2
Debenture with a principal amount of $1,000;
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interest at the annual rate of 5.89% on your 1/40, or 2.5%,
interest in a
Series B-3
Debenture with a principal amount of $1,000;
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contract adjustment payments at the annual rate of 2.6450% on
the adjusted stated amount of $50 per stock purchase
contract; and
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from and including the second stock purchase date to but
excluding the third stock purchase date, interest at the annual
rate of 5.89% on your 1/40, or 2.5%, interest in a
Series B-3
Debenture with a principal amount of $1,000, and contract
adjustment payments at the annual rate of 2.6100% on the
adjusted stated amount of $25 per stock purchase contract.
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These payments are subject to deferral as described under
Deferral of Payments on Equity Units and
are subordinated to our obligations as described under
Ranking.
Holders of Treasury Units are entitled to receive quarterly
contract adjustment payments payable by us:
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from and including the issue date 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;
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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
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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.
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These payments are subject to deferral as described under
Deferral of Payments on Equity Units and
are subordinated to our obligations as described under
Ranking.
If an early settlement date occurs due to a cash merger as
described in Description of the Stock Purchase
Contracts Early Settlement upon Cash Merger,
contract adjustment payments will cease to accrue on the early
settlement date. If any other early settlement of the stock
purchase contracts occurs (in the case of an early settlement
other than upon a cash merger), contract adjustment payments
will cease to accrue on the most recent quarterly payment date
on or before such other early settlement, and if the early
settlement date falls after the record date for a contract
adjustment payment and prior to the contract adjustment payment
date, the holder electing early settlement must pay to the
purchase contract agent, on the early settlement date, the
amount of such contract adjustment payment, unless such payment
has been deferred as described below under
Deferral of Payments on Equity Units.
There will be no distributions in respect of the qualifying
treasury securities that are a component of the Treasury Units
but holders of the Treasury Units will continue to receive the
scheduled quarterly interest payments on the Debentures that
were released to them when the Treasury Units were created for
as long as they hold the Debentures. We make these payments on
the Corporate Units and the Treasury Units quarterly in arrears
on February 1, May 1, August 1 and November 1 of each
year, but if any of these days is not a business day, we make
the payment on the next business day and no interest will be
payable as a result of that delay. Following a successful
remarketing of any series of Debentures, unless we have elected
to remarket that series of Debentures as floating-rate
Debentures, interest on such series of Debentures will be
payable on a semi-annual basis on May 1 and November 1 of each
year in the case of the
Series B-1
Debentures and
Series B-3
Debentures or on February 1 and August 1 of each year in
the case of the
Series B-2
Debentures, in each case commencing on the next such date
following the applicable stock purchase date.
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Deferral
of Payments on Equity Units
We may defer contract adjustment payments in respect of the
Equity Units at any time and from time to time. Deferred
contract adjustment payments will accrue interest until paid,
compounded on each payment date for the Equity Units, at the
annual rate of 5.67%. If on the third stock purchase date we do
not pay all accrued and unpaid contract payments in cash, 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 our sole
discretion, either a number of shares of our 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 payments payable to such holder
divided by the greater of the applicable market value and
$250.34, subject to anti-dilution adjustments, or additional
Debentures (additional Debentures), in our sole
discretion, in a principal amount equal to the aggregate amount
of deferred contract payments. The additional Debentures will
mature on the later of August 1, 2014 and the date five
years after the commencement of the deferral period, 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 us, rank pari passu with the Debentures and
our outstanding parity securities and be subject to deferral on
the same basis as the Debentures and be redeemable at our option
at any time at their principal amount plus accrued and unpaid
interest thereon through the date of redemption.
We may also defer the payment of interest on any series of
Debentures on any interest payment date prior to the applicable
remarketing period start date. Deferred interest will accrue
interest until paid, compounded on each interest payment date,
at the annual rate originally applicable to such series of
Debentures. We may pay deferred interest in cash or in the form
of additional Debentures in a principal amount equal to the
aggregate amount of deferred interest at any time; provided that
if any deferred interest has not been paid on or prior to the
applicable stock purchase date, we must pay it, in cash or in
the form of additional Debentures in a principal amount equal to
the aggregate amount of deferred interest on such date, to the
holders of such series of Debentures, whether or not they
participate in the applicable remarketing.
Subject to certain exceptions described under Description
of the Debentures Dividend and Other Payment
Stoppages during Interest Deferral and under Certain Other
Circumstances, if we have given notice of our election to
defer or are deferring any contract adjustment payments or
interest payments or if any additional Debentures are
outstanding, we and our subsidiaries generally may not make
payments on or redeem or purchase our capital stock or our debt
securities or guarantees ranking pari passu with or
junior to the Debentures.
During any deferral period, interest will continue to accrue on
the Debentures and holders of Debentures or Corporate Units that
are outstanding will be required to accrue such deferred
interest income on a constant-yield basis in the form of
original issue discount for U.S. federal income tax
purposes prior to the receipt of cash attributable to such
income, regardless of the method of accounting used by the
holders.
As of October 7, 2010, the day before commencement of the
exchange offer, we have not deferred any payment on the Equity
Units.
Ranking
Each series of Debentures constitutes one series of AIGs
junior subordinated debentures and was issued by AIG under the
junior subordinated debt indenture, dated as of March 13,
2007, as supplemented (the junior debt
indenture). The Debentures rank pari passu with
our:
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$1,000,000,000 aggregate principal amount of 6.25%
Series A-1
Junior Subordinated Debentures,
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£750,000,000 aggregate principal amount of 5.75%
Series A-2
Junior Subordinated Debentures,
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1,000,000,000 aggregate principal amount of 4.875%
Series A-3
Junior Subordinated Debentures,
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$750,000,000 aggregate principal amount of 6.45%
Series A-4
Junior Subordinated Debentures,
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$1,100,000,000 aggregate principal amount of 7.70%
Series A-5
Junior Subordinated Debentures,
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$4,000,000,000 aggregate principal amount of 8.175%
Series A-6
Junior Subordinated Debentures,
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750,000,000 aggregate principal amount of 8.000%
Series A-7
Junior Subordinated Debentures, and
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£900,000,000 aggregate principal amount of 8.625%
Series A-8
Junior Subordinated Debentures (collectively, the
outstanding parity securities).
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We may issue additional series of junior subordinated debentures
that rank pari passu with the Debentures.
The Debentures and our obligations to make contract adjustment
payments are unsecured, rank junior in payment to all of our
existing and future senior debt, as defined under
Description of the Debentures
Subordination, including the senior secured debt under the
FRBNY Credit Facility, and are effectively subordinated to all
liabilities of our subsidiaries. Substantially all of our
existing indebtedness, other than the outstanding parity
securities, is senior debt, and a significant amount of our
existing indebtedness consists of our senior secured debt under
the FRBNY Credit Facility. Each series of Debentures will
automatically cease to be subordinated and become senior,
unsecured obligations of AIG upon the applicable remarketing
settlement date.
Voting
and Certain Other Rights
Holders of stock purchase contracts forming part of the
Corporate Units or Treasury Units, in such capacities, have no
voting or other rights in respect of the common stock.
Listing
of the Securities
The Corporate Units are listed on the NYSE under the symbol
AIG-PrA. Unless and until substitution has been made
as described under Creating Treasury
Units or Recreating Corporate
Units, the Debentures will not trade separately from the
Corporate Units or Treasury Units. The Debentures (or after a
successful remarketing of any series of Debentures and prior to
the applicable stock purchase date, the interest in the Treasury
portfolio) trade as a unit with the stock purchase contract
component of the Corporate Units, and the qualifying treasury
security component will trade as a unit with the stock purchase
contract component of the Treasury Units. If the Treasury Units
or the Debentures of any series are separately traded to a
sufficient extent that applicable exchange listing requirements
are met, we may endeavor, but are not obligated, to list the
Treasury Units or the Debentures of such series on the same
exchange as the Corporate Units are then listed, including, if
applicable, the NYSE.
Subsequent
Repurchases
Following completion of the exchange offer, to the extent
permitted by applicable law, we may repurchase additional
Corporate Units in the open market, in privately negotiated
transactions or otherwise. Future purchases of Corporate Units
may be on terms that are more or less favorable than those of
the exchange offer. Future repurchases, if any, will depend on
many factors, including market conditions and the condition of
our business.
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DESCRIPTION
OF THE STOCK PURCHASE CONTRACTS
This section summarizes some of the terms of the purchase
contract agreement, stock purchase contracts, pledge agreement,
remarketing agreement and junior debt indenture. The summary
does not purport to be complete and is qualified by the purchase
contract agreement, pledge agreement, remarketing agreement and
junior debt indenture, which contain the full legal text of the
matters described in this section. Such documents have been
filed with the SEC or incorporated by reference as exhibits to
the registration statement of which this document forms a part.
You should refer to these documents for more information.
As used under this caption, Description of the Stock
Purchase Contracts, references to we,
us, our and other similar references
mean American International Group, Inc., excluding, unless
otherwise expressly stated or the context otherwise requires,
its subsidiaries.
Purchase
of Common Stock
Subject to a holders early settlement right as described
below under Early Settlement and
Early Settlement upon Cash Merger, each
stock purchase contract underlying a Corporate Unit or Treasury
Unit obligates the holder of the stock purchase contract to
purchase, and us to sell, on each of the three stock purchase
dates, for $25 in cash, a number of newly issued shares of our
common stock equal to the settlement rate. The settlement rate
will, subject to adjustment under the circumstances described in
Anti-Dilution Adjustments and
Early Settlement upon Cash Merger, be as
follows:
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If the applicable market value of our common stock is equal to
or greater than the threshold appreciation price of $912.00, the
settlement rate will be 0.02741 shares of our common stock,
which is approximately equal to $25 divided by the threshold
appreciation price, and which we refer to as the minimum
settlement rate.
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If the applicable market value of our common stock is less than
the threshold appreciation price but greater than the reference
price of $760.00, a number of shares of our common stock equal
to $25 divided by the applicable market value.
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If the applicable market value of our common stock is less than
or equal to the reference price of $760.00, the settlement rate
will be 0.03289 shares of our common stock, which is
approximately equal to $25 divided by the reference price, and
which we refer to as the maximum settlement rate and
together with the minimum settlement rate as the fixed
settlement rates.
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Based on the applicable market value of our common stock as of
October 7, 2010, the date before the commencement of the
exchange offer, the settlement rate would be 0.03289, the
maximum settlement rate, on each stock purchase date.
Each settlement rate, the threshold appreciation price and the
reference rate have been adjusted to reflect the
one-for-twenty
reverse common stock split that became effective June 30,
2009.
If you elect to settle your stock purchase contract early in the
manner described under Early Settlement,
the number of shares of our common stock issuable upon
settlement of each $25 portion of the stated amount of such
stock purchase contract will be equal to the minimum settlement
rate, subject to adjustment as described under
Anti-Dilution Adjustments.
The applicable market value with respect to any
stock purchase contract date means the average of the volume
weighted average price per share of our common stock (or
exchange property units, as defined under
Anti-Dilution Adjustments, in which the
stock purchase contracts will be settled following a
reorganization event) on each of the 20 consecutive trading days
ending on the third trading day immediately preceding such stock
purchase date, which 20-trading day period we refer to as the
observation period, subject to anti-dilution
adjustments under the circumstances set forth under
Anti-Dilution Adjustments below.
Following a reorganization event, references to the purchase or
issuance of shares of our common stock pursuant to stock
purchase contracts will be construed to be references to
settlement into exchange property units, and references to the
purchase or issuance of any specified number of shares of common
stock upon the settlement of stock purchase contracts will be
construed to be references to settlements into the same number
of exchange property units. For
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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 volume
weighted average price per share of such common stock on each of
the 20 consecutive trading days ending on the third trading day
immediately preceding the applicable stock purchase date 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 our board of directors, whose determination shall be
conclusive and described in a board resolution).
The threshold appreciation price represents a 20% appreciation
over the reference price.
Volume weighted average price or VWAP
per share of our common stock on any trading day means such
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
such trading day; or, if such price is not available, the volume
weighted average price means the market value per share of our
common stock on such day as determined by a nationally
recognized independent investment banking firm retained by us
for this purpose.
A trading day means a day on which the common stock:
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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 at the close of business, and
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has traded at least once regular way on the national or regional
securities exchange or association or
over-the-counter
market that is the primary market for the trading of our common
stock.
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We will not issue any fractional shares of common stock pursuant
to the stock purchase contracts. In lieu of fractional shares
otherwise issuable (calculated on an aggregate basis) in respect
of stock purchase contracts being settled by a holder of Equity
Units on each stock purchase date, the holder will be entitled
to receive an amount in cash equal to the fraction of a share
multiplied by the closing sales price of our common stock on the
trading day immediately preceding the applicable stock purchase
date.
On the business day immediately preceding each stock purchase
date, unless:
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a holder of Corporate Units or Treasury Units has settled or
provided for the settlement of the related stock purchase
contracts prior to such stock purchase date through the early
delivery of cash to the purchase contract agent in the manner
described under Early Settlement,
Early Settlement upon Cash Merger or
Notice to Settle with Cash, or
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an event described under Termination has
occurred,
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then,
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in the case of Corporate Units where the Treasury portfolio has
replaced the applicable series of Debentures as a component of
the Corporate Units, a portion of the proceeds equal to the
stated amount of $25 per Corporate Unit of the applicable
ownership interest in the Treasury portfolio, when paid at
maturity, will automatically be applied to satisfy in full the
holders obligation to purchase common stock under the
related stock purchase contracts on such stock purchase date,
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in the case of Corporate Units where the Treasury portfolio has
not replaced the Debentures as a component of the Corporate
Units, we will exercise our rights as a secured creditor in
compliance with applicable law, including, without limitation,
disposition of that series of Debentures or applying that series
of Debentures (but not any additional Debentures issued to pay
deferred interest on such Debentures) against your obligation to
purchase shares of our common stock under the related stock
purchase contracts on such stock purchase date, and
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in the case of Treasury Units, the principal amount of the
applicable qualifying treasury securities, when paid at
maturity, will automatically be applied to satisfy in full the
holders obligation to purchase common stock under the
related stock purchase contracts on such stock purchase date.
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The common stock will then be issued and delivered to the holder
or the holders designee, upon presentation and (on or
after the third stock purchase date) surrender of the Corporate
Units or Treasury Units (which, in the case of Equity Units
evidenced by physical certificates, must be made by presentation
and surrender of such certificates) and payment by the holder of
any transfer or similar taxes payable in connection with the
issuance of the common stock to any person other than the
holder. Until the delivery of the shares of our common stock,
the holder of an Equity Unit will have no rights as a
shareholder of AIG; holders of Equity Units will become record
holders of our common stock at the close of business on the
delivery date of the shares of our common stock.
Each holder of Corporate Units or Treasury Units, by acceptance
of these securities, is deemed to have:
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irrevocably agreed to be bound by the terms and provisions of
the related stock purchase contracts and the pledge agreement
and to have agreed to perform its obligations thereunder for so
long as the holder remains a holder of the Corporate Units or
Treasury Units, and
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duly appointed the purchase contract agent as the holders
attorney-in-fact to enter into and perform the related stock
purchase contracts and pledge agreement on behalf of and in the
name of the holder.
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In addition, each beneficial owner of Corporate Units or
Treasury Units, by acceptance of the beneficial interest
therein, is deemed to have agreed to treat:
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itself as the owner of the applicable ownership interests in the
related Debentures, Treasury portfolio or qualifying treasury
securities, as the case may be, and
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the Debentures as indebtedness for all U.S. federal income
tax purposes.
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Remarketing
Pursuant to a remarketing agreement among us, the purchase
contract agent and the remarketing agents, the remarketing
agents will attempt to remarket the Debentures of each series
held by Corporate Unit holders as part of Corporate Units during
the applicable remarketing period and Debentures of such series
that are not part of Corporate Units but whose holders have
elected to participate in the remarketing as described under
Description of the Debentures Optional
Remarketing. Each remarketing will take place during a
30-day
period (a remarketing period) ending on a date that
is not less than three business days prior to the date one month
prior to the applicable stock purchase date. We refer to the
first day of each remarketing period as a remarketing
period start date. If a successful remarketing occurs,
settlement will take place on the third business day following
the date of the successful remarketing, or the remarketing
settlement date.
For each remarketing, the remarketing agents will be required to
use commercially reasonable efforts to obtain a price for the
remarketed Debentures that results in proceeds, net of the 0.25%
remarketing fee, of at least 100% of the sum of the Treasury
portfolio purchase price and the separate Debentures purchase
price, as defined below. To obtain that price, the remarketing
agents, in consultation with us, may reset the interest rate on
the series of Debentures being remarketed at a new fixed or
floating rate as described below. We have the right to postpone
the remarketing in our absolute discretion on any day prior to
the last five business days of a remarketing period. A
remarketing will be considered successful and no further
attempts to remarket will be made if the resulting proceeds, net
of the 0.25% remarketing fee, are at least 100% of the sum of
the Treasury portfolio purchase price and the separate
Debentures purchase price.
The separate Debentures purchase price means the
amount in cash equal to the product of (A) the remarketing
price per Debenture (as defined below) and (B) the number
of Debentures included in such remarketing that are not part of
Corporate Units, which we refer to as separate
Debentures.
In the event of a successful remarketing, each holder of a
separate Debenture will receive the remarketing price per
Debenture, which, for each $1,000 principal amount of
Debentures, is an amount in cash equal to the quotient of the
Treasury portfolio purchase price divided by the number of
Debentures included in such remarketing that are held as
components of Corporate Units. Each holder of a Corporate Unit
whose Debenture of the applicable series is included in a
successful remarketing will receive an applicable ownership
interest in the Treasury portfolio equal to the remarketing
price per Debenture.
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In the event of a successful remarketing of the Debentures of
any series, on the applicable remarketing settlement date, the
portion of the proceeds from the remarketing equal to the
separate Debentures purchase price will be paid to holders of
separate Debentures remarketed in a remarketing, and the portion
of the proceeds from the remarketing equal to the Treasury
portfolio purchase price will be applied to purchase the
Treasury portfolio consisting of:
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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 equal to the principal
amount of the Debentures that were formerly included in
Corporate Units but that were remarketed, and
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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 immediately preceding interest payment date to but excluding
the applicable stock purchase date (assuming no reset of the
interest rate) on the aggregate principal amount of the
Debentures that were formerly included in the Corporate Units
but that were remarketed.
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In the event we determine that the foregoing U.S. Treasury
securities are not available, we may substitute for such
U.S. Treasury securities one or more short-term discount
obligations of one of our affiliates that are issued on the
applicable remarketing settlement date, accrete interest at an
arms-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 stock
purchase date.
The Treasury portfolio will be substituted for the Debentures of
the applicable series as a component of the Corporate Units and
will be pledged to us through the collateral agent to secure the
Corporate Unit holders obligation under the stock purchase
contracts to purchase shares of our common stock on the
applicable stock purchase date. On or promptly following the
applicable remarketing settlement date, the remarketing agent
will remit to the purchase contract agent any remaining portion
of the proceeds for the benefit of the holders of the Corporate
Units, the Debentures component of which were included in the
remarketing. On the applicable stock purchase date, a portion of
the proceeds from the Treasury portfolio equal to the principal
amount of the Debentures previously included in the Corporate
Units will automatically be applied to satisfy the Corporate
Unit holders obligation to purchase common stock under the
stock purchase contracts on such stock purchase date and
proceeds from the Treasury portfolio equal to the interest
payment (assuming no reset of the interest rate) that would have
accrued to the holders of Corporate Units on the Debentures (to
but excluding the applicable stock purchase date) previously
included in the Corporate Units on the applicable stock purchase
date will be paid to the holders of the Corporate Units.
As used in this context, Treasury portfolio purchase
price means 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 described above for
settlement the third business day immediately following such
date. Quotation agent means any primary
U.S. government securities dealer in New York City selected
by us.
In connection with an attempted remarketing of a series of
Debentures, the remarketing agent may reset the rate on such
series of Debentures at a new fixed or floating rate. If the
remarketing is successful and the rate is reset, the reset rate
will apply to all outstanding Debentures of that series, whether
or not the holders participated in such remarketing, and will
become effective on the applicable remarketing settlement date.
The interest rate on each series of Debentures will be the reset
rate or, if we have elected to remarket such series of
Debentures as floating-rate Debentures, the applicable index
plus the reset spread determined by the remarketing agents, in
consultation with us, such that the proceeds from such
remarketing, net of the 0.25% remarketing fee, will be at least
equal to 100% of the sum of the Treasury portfolio purchase
price and the separate Debentures purchase price. The interest
will be payable semi-annually if the Debentures are successfully
remarketed at a fixed rate or quarterly if the Debentures are
successfully remarketed at a floating rate.
We will cause a notice of any failed remarketing to be published
on the business day immediately following the end 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. In addition,
we will request, not later than seven nor
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more than 15 calendar days prior to each remarketing period
start date, that the depositary notify its participants holding
Debentures, Corporate Units and Treasury Units of the
remarketing.
If the Debentures have not been successfully remarketed during
the remarketing period, the interest rate on the Debentures will
not be reset.
Early
Settlement
Subject to the conditions described below, a holder of Corporate
Units or Treasury Units may settle the related stock purchase
contracts in cash at any time, other than during a blackout
period, on or prior to the second business day immediately
preceding any stock purchase date by delivering the related
Corporate Unit or Treasury Units (which, if they are in
certificated form, must be surrendered at the offices of the
purchase contract agent) and an Election to Settle Early form
duly completed in accordance with the applicable procedures of
the depositary (or, if the Equity Units are certificated, by
completing the form of Election to Settle Early on
the reverse side of such certificate completed and executed as
indicated), accompanied by payment to us in immediately
available funds of an amount equal to:
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the initial or adjusted stated amount per stock purchase
contract multiplied by the number of stock purchase contracts
being settled, plus
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if the delivery is made with respect to any stock purchase
contract during the period after the close of business on any
record date next preceding any quarterly payment date and prior
to the opening of business on such payment date, an amount equal
to the contract adjustment payments payable on the payment date
with respect to all such stock purchase contracts.
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If a holder of a Corporate Unit or Treasury Unit settles a stock
purchase contract early (other than pursuant to the merger early
settlement right as described below), such holder will not be
entitled to any accrued contract adjustment payments, and if the
early settlement date falls after the record date for a contract
adjustment payment and prior to the contract adjustment payment
date, the holder electing early settlement must pay to the
purchase contract agent, on the early settlement date, the
amount of such contract adjustment payment, unless such payment
has been deferred as described below under Description of
the Equity Units Deferral of Payments on Equity
Units.
Holders of Equity Units may settle early only in integral
multiples of 40 Equity Units.
So long as the Equity Units are evidenced by one or more global
security certificates deposited with the depositary, procedures
for early settlement will also be governed by standing
arrangements between the depositary and the purchase contract
agent. The early settlement right is also subject to the
condition that, if required under the U.S. federal
securities laws, we have a registration statement under the
Securities Act in effect and a prospectus available covering the
shares of common stock and other securities, if any, deliverable
upon settlement of a stock purchase contract. We have agreed
that, if required under the U.S. federal securities laws,
we will use our commercially reasonable efforts to have a
registration statement in effect and a prospectus available
covering those shares of common stock and other securities to be
delivered in respect of the stock purchase contracts being
settled, in each case in a form that may be used in connection
with the early settlement right.
Upon early settlement of the stock purchase contracts related to
any Corporate Units or Treasury Units:
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except as described below in Early Settlement
upon Cash Merger, the holder will receive the minimum
settlement rate per $25 stated amount of each Corporate
Unit or Treasury Unit, subject to adjustment under the
circumstances described under Anti-Dilution
Adjustments, accompanied by an appropriate prospectus if
required by law,
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the Debentures or the qualifying treasury securities, as the
case may be, related to the Corporate Units or Treasury Units
will be transferred to the holder free and clear of our security
interest,
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the holders right to receive future contract adjustment
payments and any accrued and unpaid contract adjustment payments
for the period since the most recent quarterly payment date will
terminate (unless such early settlement occurs after the close
of business on a record date and on or prior to the next
succeeding
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payment date, in which case the contract adjustment payment due
and payable on such payment date will be paid, on such payment
date, to the person who was the record holder of the applicable
Equity Units on the applicable record date), and
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no adjustment will be made to or for the holder on account of
any accrued and unpaid contract adjustment payments, except as
referred to in the previous bullet.
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If the purchase contract agent receives a Corporate Unit or
Treasury Unit as described above accompanied by the completed
Election to Settle Early (as described above) and
required immediately available funds, from a holder of Corporate
Units or Treasury Units by 5:00 p.m., New York City time,
on a business day and all conditions to early settlement have
been satisfied, that day will be considered the settlement date.
If the purchase contract agent receives the above after
5:00 p.m., New York City time, on a business day or at any
time on a day that is not a business day, the next business day
will be considered the settlement date. Upon early settlement of
stock purchase contracts in the manner described above,
surrender of the related Corporate Units or Treasury Units and
payment of any transfer or similar taxes payable by the holder
in connection with the issuance of the related common stock to
any person other than the holder of the Corporate Units or
Treasury Units, we will cause the shares of common stock being
purchased to be issued, and the related Debentures or qualifying
treasury securities, as the case may be, securing the stock
purchase contracts to be released from the pledge under the
pledge agreement described in Pledged
Securities and Pledge Agreement and transferred, within
three business days following the settlement date, to the
purchasing holder or the holders designee.
Notice to
Settle with Cash
A holder of an Equity Unit (other than a Corporate Unit as to
which an interest in the Treasury portfolio has replaced an
interest in a series of Debentures) may settle the obligation to
purchase shares of our common stock on any stock purchase date
with separate cash. A holder of an Equity Unit wishing to settle
this obligation with separate cash must notify the purchase
contract agent by presenting and surrendering the certificate
evidencing the Corporate Unit or Treasury Unit, as the case may
be, at the offices of the purchase contract agent with the form
of Notice to Settle by Separate Cash on the reverse
side of the certificate completed and executed as indicated
after the end of the applicable Remarketing Period and on or
prior to 11:00 a.m., New York City time, on the second
business day immediately preceding the applicable stock purchase
date and, on or prior to 11:00 a.m., New York City time, on
the business day immediately preceding the applicable stock
purchase date deliver to the collateral agent $25 in cash for
each stock purchase contract.
Holders of Equity Units may settle with separate cash only in
integral multiples of 40 Equity Units.
If a holder of a Corporate Unit with respect to which an
interest in the Treasury portfolio has not replaced an interest
in a series of Debentures as a component of the Corporate Unit
has given notice of its intention to settle the obligation to
purchase shares of our common stock on any stock purchase date
with separate cash and such holder fails to deliver the cash to
the collateral agent on the business day immediately preceding
the applicable stock purchase date, its Notice to Settle
by Separate Cash shall automatically be deemed withdrawn
and without effect.
If a holder of a Treasury Unit has given notice of its intention
to settle the obligation to purchase shares of our common stock
on any stock purchase date under the related stock purchase
contract with separate cash fails to deliver the cash to the
collateral agent on the business day immediately preceding any
stock purchase date, the proceeds from the applicable qualifying
treasury securities will automatically be applied to satisfy
such holders obligation to purchase common stock under the
related stock purchase contract on such stock purchase date.
Early
Settlement upon Cash Merger
If we are involved in an event described in the first or second
bullet point in the definition of reorganization events under
Reorganization Events below, in each
case in which at least 10% of the consideration received by
holders of our common stock consists of cash or cash
equivalents, which we refer to as a cash
merger, then following the cash merger, each holder of
a stock purchase contract will have the right to accelerate and
settle such contract early at the settlement rate determined as
if the applicable market value equaled the stock price (as
defined below), and receive, under certain circumstances, an
additional make-whole number of shares, which we refer to as
49
the make-whole shares. Our obligation to deliver
make-whole shares is subject to the condition that at the time
of settlement, if so required under the U.S. federal
securities laws, there is in effect a registration statement and
a prospectus available covering the common stock and other
securities, if any, to be delivered in respect of the stock
purchase contracts being settled. We refer to this right as the
merger early settlement right.
The definition of reorganization events under
Reorganization Events below includes a phrase relating to
a sale of all or substantially all of our assets. There is no
precise, established definition of the phrase
substantially all under applicable law. Accordingly,
your right to accelerate and settle such contract early as a
result of a sale of substantially all of our assets may be
uncertain.
We will provide each of the holders with a notice of the
completion of a cash merger within five business days thereof.
The notice will specify a date, which we refer to as the
cash merger early settlement date, which shall be at
least ten days after the date of the notice but no later than
the earlier of (i) 20 days after the date of such
notice and (ii) two business days prior to the next stock
purchase date, by which each holders merger early
settlement right must be exercised. The notice will set forth,
among other things, the applicable settlement rate and the
amount of the cash, securities and other consideration
receivable by the holder upon settlement. To exercise the merger
early settlement right, you must deliver to the purchase
contract agent, three business days before the cash merger early
settlement date, your Corporate Units or Treasury Units (by
delivery of certificates if they are held in certificated form),
and payment of a purchase price in immediately available funds
equal to the initial or adjusted stated amount per stock
purchase contract multiplied by the number of stock purchase
contracts being settled, less the amount of any accrued and
unpaid contract adjustment payments (unless such cash merger
early settlement date occurs after the related record date for
such contract adjustment payments and before the related payment
date, in which case the applicable purchase price shall not be
reduced by the amount of any accrued and unpaid contract
adjustment payments).
If you exercise the merger early settlement right, we will
deliver to you on the cash merger early settlement date, in
respect of each such Equity Unit so settled the kind and amount
of securities, cash or other property that you would have been
entitled to receive in the cash merger as a holder of a number
of shares of our common stock at the settlement rate described
above, for each $25 stated amount of each Corporate Unit or
Treasury Unit, and the make-whole shares, calculated as
described below for each stock purchase contract being settled.
You will also receive the Debentures or qualifying treasury
securities underlying the Corporate Units or Treasury Units, as
the case may be. If you do not elect to exercise your merger
early settlement right, or if your exercise is not effective
because the required registration statement is not effective (as
described below), your Corporate Units or Treasury Units will
remain outstanding and subject to normal settlement, without the
make-whole shares, on the stock purchase dates with the
securities, cash or other property holders of our common stock
were entitled to receive in the cash merger. If required under
the U.S. federal securities laws, there will be a
registration statement in effect and a prospectus available
covering the common stock and other securities, if any, to be
delivered in respect of the stock purchase contracts being
settled, in each case in a form that may be used in connection
with the early settlement upon a cash merger.
Holders of the Equity Units may exercise the merger early
settlement right only in integral multiples of 40 Equity
Units. If an interest in the Treasury portfolio has replaced the
Debentures of any series as a component of Corporate Units,
holders of the Corporate Units will receive, on the next stock
purchase date, $1,000 in cash for each 40 Corporate Units as to
which they have exercised their merger early settlement right,
representing their interest in the Treasury portfolio.
Calculation
of Make-Whole Shares
The number of make-whole shares applicable to a merger early
settlement will be 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, which we refer to as
the effective date, and the price, which we refer to
as the stock price, paid per share for our
common stock in such cash merger. If holders of our common stock
receive only cash in such transaction, the stock price will be
the cash amount paid per share. Otherwise, the stock price will
be the average of
50
the closing prices per share of our common stock on each of the
20 consecutive trading days ending on the trading day
immediately preceding the effective date of such cash merger.
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Stock Prices
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Effective Date
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$200.00
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$400.00
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$600.00
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$760.00
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$800.00
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$912.00
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$1000.00
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$1200.00
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$1400.00
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$1600.00
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$2400.00
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February 15, 2011
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0.0069
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0.0031
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0.0003
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0.0000
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0.0000
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0.0042
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0.0027
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0.0012
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0.0007
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0.0004
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0.0001
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February 16, 2011
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0.0069
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0.0031
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0.0003
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0.0000
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0.0000
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0.0043
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0.0026
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0.0012
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0.0007
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0.0004
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0.0001
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May 1, 2011
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0.0029
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0.0013
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0.0002
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0.0000
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0.0000
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0.0020
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0.0013
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0.0005
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0.0002
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0.0002
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0.0000
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May 2, 2011
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0.0026
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0.0012
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0.0001
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0.0000
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0.0000
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0.0018
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0.0012
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0.0004
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0.0002
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0.0002
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0.0000
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August 1, 2011
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0.0000
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0.0000
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0.0000
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0.0000
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0.0000
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0.0000
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0.0000
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0.0000
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0.0000
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0.0000
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0.0000
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The stock prices and make-whole share amounts set forth in the
table will be adjusted upon the occurrence of certain events
requiring anti-dilution adjustments to the fixed settlement
rates as set forth under Anti-Dilution
Adjustments. Each stock price and number of make-whole
shares has been adjusted to reflect the
one-for-twenty
reverse common stock split that became effective June 30,
2009.
The exact stock price and effective date applicable to a cash
merger may not be set forth in the table, in which case:
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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 $2400.00 per share (subject
to adjustment as described above), then the make-whole share
amount will be zero; and
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if the stock price is less than $200.00 per share (subject to
adjustment as described above), which we refer to as 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.
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Contract
Adjustment Payments
Contract adjustment payments in respect of Corporate Units and
Treasury Units are set:
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from and including the issue date to the first stock purchase
date at an annual rate of 2.7067% on the initial stated amount
of $75 per stock purchase contract;
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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
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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.
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Contract adjustment payments payable for any period are computed
on the basis of a
360-day year
of twelve
30-day
months. Contract adjustment payments accrued from the date of
issuance of the stock purchase contracts and are payable
quarterly in arrears on February 1, May 1, August 1
and November 1 of each year.
Contract adjustment payments are payable to the holders of stock
purchase contracts as they appear on the books and records of
the purchase contract agent at the close of business on the
relevant record dates, which (unless otherwise specified) is on
the 15th day of the month prior to the month in which the
relevant payment date falls. These distributions are paid
through the purchase contract agent, who holds amounts received
in respect of the contract adjustment payments for the benefit
of the holders of the stock purchase contracts relating to the
Corporate Units. Subject to any applicable laws and regulations
and so long as the Equity Units are in book-entry form, each
such payment will be made as described under
Book-Entry System.
We have the right to defer contract adjustment payments as
described under Description of the Equity
Units Deferral of Payments on Equity Units. We
will be subject to the restrictions described under
Description
51
of the Debentures Dividend and Other Payment
Stoppages during Interest Deferral and under Certain Other
Circumstances at any time we have given notice of such a
deferral or a deferral period is continuing or additional
Debentures are outstanding.
If any date on which contract adjustment payments are to be made
on the stock purchase contracts related to the Corporate Units
or Treasury Units is not a business day, then payment of the
contract adjustment payments payable on that date will be made
on the next succeeding day which is a business day, with the
same force and effect as if made on that payment date, and no
interest or payment will be paid in respect of the delay. A
business day means any day other than a Saturday, Sunday or any
other day on which banking institutions or trust companies in
New York City are permitted or required by any applicable law to
close.
Our obligations with respect to contract adjustment payments are
subordinated and junior in right of payment to the same extent
as the Debentures are subordinated to our other obligations. For
a discussion of this subordination, see Description of the
Equity Units Ranking.
Anti-Dilution
Adjustments
Each fixed settlement rate will be adjusted, without
duplication, if certain events occur:
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(1)
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the issuance of our common stock as a dividend or distribution
to all holders of our common stock, or a subdivision or
combination of our common stock, in which event each fixed
settlement rate will be adjusted based on the following formula:
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SR1
=
SR0
x
(OS1
/
OS0)
where,
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SR0
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=
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the fixed settlement rate in effect at the close of business on
the record date
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SR1
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=
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the fixed settlement rate in effect immediately after the record
date
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OS0
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=
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the number of shares of our common stock outstanding at the
close of business on the record date prior to giving effect to
such event
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OS1
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=
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the number of shares of our common stock that would be
outstanding immediately after, and solely as a result of, such
event
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(2)
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the issuance to all holders of our common stock of certain
rights, options or warrants entitling them for a period expiring
60 days or less from the date of issuance of such rights,
options or warrants to purchase shares of our common stock at
less than the current market price of our common stock as of the
record date, in which event each fixed settlement rate will be
adjusted based on the following formula:
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SR1
=
SR0
x
(OS0
+
X) / (OS0
+ Y)
where,
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SR0
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=
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the fixed settlement rate in effect at the close of business on
the record date
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SR1
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=
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the fixed settlement rate in effect immediately after the record
date
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OS0
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=
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the number of shares of our common stock outstanding at the
close of business on the record date
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X
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=
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the total number of shares of our common stock issuable pursuant
to such rights, options or warrants
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Y
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=
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the aggregate price payable to exercise such rights divided by
the average of the VWAP of our common stock over each of the ten
consecutive trading days prior to the business day immediately
preceding the announcement of the issuance of such rights
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However, each fixed settlement rate will be readjusted to the
extent that any such rights or warrants are not exercised prior
to their expiration.
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(3)
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the dividend or other distribution to all holders of our common
stock of shares of our capital stock (other than common stock),
rights to acquire our capital stock or evidences of our
indebtedness or our assets
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52
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(excluding any dividend, distribution or issuance covered by
clauses (1) or (2) above or (4) or
(5) below) in which event each fixed settlement rate will
be adjusted based on the following formula:
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SR1
=
SR0
x
SP0
/
(SP0
FMV)
where,
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SR0
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=
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the fixed settlement rate in effect at the close of business on
the record date
|
SR1
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=
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the fixed settlement rate in effect immediately after the record
date
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SP0
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=
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the current market price as of the record date
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FMV
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=
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the fair market value (as determined in good faith by our board
of directors, whose good faith determination will be
conclusive), on the record date, of the shares of capital stock,
rights to acquire capital stock, evidences of indebtedness or
assets so distributed, expressed as an amount per share of our
common stock
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However, if the transaction that gives rise to an adjustment
pursuant to this clause (3) is one pursuant to which the
payment of a dividend or other distribution on our common stock
consist of shares of capital stock of, or similar equity
interests in, a subsidiary or other business unit of ours,
(i.e., a spin-off) that are, or, when issued, will be, traded on
a U.S. securities exchange, then each fixed settlement rate
will instead be adjusted based on the following formula:
SR1
=
SR0
x
(FMV0
+
MP0) / MP0
where,
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SR0
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=
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the fixed settlement rate in effect at the close of business on
the record date
|
SR1
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=
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the fixed settlement rate in effect immediately after the record
date
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FMV0
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=
|
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the average of the VWAP of the capital stock or similar equity
interests distributed to holders of our common stock applicable
to one share of our common stock over each of the 10 consecutive
trading days commencing on and including the third trading day
after the date on which ex-distribution trading
commences for such dividend or distribution with respect to our
common stock on the NYSE or such other national or regional
exchange or market that is at that time the principal market for
our common stock
|
MP0
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=
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the average of the VWAP of our common stock over each of the 10
consecutive trading days commencing on and including the third
trading day after the date on which ex-distribution
trading commences for such dividend or distribution with
respect to our common stock on the NYSE or such other national
or regional exchange or market that is at that time the
principal market for our common stock
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(4)
|
we make a distribution consisting exclusively of cash to all
holders of our common stock, excluding (a) any cash
dividend on our common stock to the extent that the aggregate
cash dividend per share of our common stock does not exceed
(i) $4.40 in the then current fiscal quarter in the case of
a regular quarterly dividend or (ii) $17.60 in the prior
twelve months in the case of a regular annual dividend (each
such number, the dividend threshold amount),
(b) any cash that is distributed as part of a distribution
referred to in clause (3) above, and (c) any
consideration payable in connection with a tender or exchange
offer made by us or any of our subsidiaries referred to in
clause (5) below, in which event, each fixed settlement
rate will be adjusted based on the following formula:
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SR1
=
SR0
x
SP0
/
(SP0
C)
where,
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SR0
|
|
=
|
|
the fixed settlement rate in effect at the close of business on
the record date
|
SR1
|
|
=
|
|
the fixed settlement rate in effect immediately after the record
date
|
SP0
|
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=
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the current market price as of the record date
|
C
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=
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the excess of the amount in cash per share we distribute to
holders of our common stock over the dividend threshold amount
|
53
The dividend threshold amount is subject to adjustment on an
inversely proportional basis whenever the fixed settlement rates
are adjusted, but no adjustment will be made to the dividend
threshold amount for any adjustment made to the fixed settlement
rates pursuant to this clause (4). For the avoidance of doubt,
the dividend threshold amount will be zero in the case of a cash
dividend amount that is not a regular quarterly or annual
dividend. Each dividend threshold amount has been adjusted to
reflect the
one-for-twenty
reverse common stock split that became effective June 30,
2009.
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(5)
|
we or one or more of our subsidiaries make purchases of our
common stock pursuant to a tender offer or exchange offer by us
or one of our subsidiaries for our common stock to the extent
that the cash and value of any other consideration included in
the payment per share of our common stock validly tendered or
exchanged exceeds the VWAP per share of our common stock on the
trading day next succeeding the last date on which tenders or
exchanges may be made pursuant to such tender or exchange offer
(the tender/exchange offer expiration date), in
which event each fixed settlement rate will be adjusted based on
the following formula:
|
SR1
=
SR0
x [(FMV +
(SP1
x
OS1)] / (SP1
x
OS0)
where,
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|
|
SR0
|
|
=
|
|
the fixed settlement rate in effect at the close of business on
the tender/exchange offer expiration date
|
SR1
|
|
=
|
|
the fixed settlement rate in effect immediately after the
tender/exchange offer expiration date
|
FMV
|
|
=
|
|
the fair market value (as determined in good faith by our board
of directors, whose good faith determination will be
conclusive), on the tender/exchange offer expiration date, of
the aggregate value of all cash and any other consideration paid
or payable for shares validly tendered or exchanged and not
withdrawn as of the tender/exchange offer expiration date (the
purchased shares)
|
OS1
|
|
=
|
|
the number of shares of our common stock outstanding as of the
last time tenders or exchanges may be made pursuant to such
tender or exchange offer (the expiration time) less
any purchased shares
|
OS0
|
|
=
|
|
the number of shares of our common stock outstanding at the
expiration time, including any purchased shares
|
SP1
|
|
=
|
|
the average of the VWAP of our common stock over each of the ten
consecutive trading days commencing with the trading day
immediately after the tender/exchange offer expiration date.
|
In addition, in no event will we adjust the fixed settlement
rate to the extent that the adjustment would reduce the
conversion price below the par value per share of our common
stock.
Current market price of our common stock on any day,
means the average of the VWAP of our 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 paragraph,
ex-date
means the first date on which the shares of our common stock
trade on the applicable exchange or in the applicable market,
regular way, without the right to receive such issuance or
distribution.
Record date means, for purpose of this section, with
respect to any dividend, distribution or other transaction or
event in which the holders of our common stock have the right to
receive any cash, securities or other property or in which our
common stock (or other applicable security) is exchanged for or
converted into any combination of cash, securities or other
property, the date fixed for determination of holders of our
common stock entitled to receive such cash, securities or other
property (whether such date is fixed by our board of directors
or by statute, contract or otherwise).
In addition, we may make such increases in each fixed settlement
rate as we deem advisable. We may only make such a discretionary
adjustment if we make the same proportionate adjustment to each
fixed settlement rate. No adjustment in the settlement rate will
be required unless such adjustment would require an increase or
decrease of at least one percent; provided that any such minor
adjustments that are not required to be made will be carried
54
forward and taken into account in any subsequent adjustment, and
provided, further, that any such adjustment of less than
one percent that has not been made shall be made (x) upon
the end of the issuers fiscal year and (y) upon the
stock purchase date or any early settlement date.
Reorganization
Events
The following events, in each case as a result of which holders
of our common stock are entitled to receive stock, other
securities, other property or assets (including cash or any
combination thereof) with respect to or in exchange for our
common stock, are defined as reorganization events:
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any consolidation or merger of AIG with or into another person
or of another person with or into AIG (other than a
consolidation or merger in which AIG is the continuing
corporation and in which its shares of common stock outstanding
immediately prior to the consolidation or merger are not
exchanged for cash, securities or other property of another
person); or
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any sale, transfer, lease or conveyance to another person of all
or substantially all of the assets of AIG; or
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any statutory share exchange of shares of common stock of AIG
with another person (other than in connection with a merger or
acquisition); or
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|
any liquidation, dissolution or
winding-up
of AIG (other than as a result of or after the occurrence of a
termination event (as defined below under
Termination)).
|
The foregoing paragraph includes a phrase relating to a sale of
all or substantially all of our assets. There is no precise,
established definition of the phrase substantially
all under applicable law. Accordingly, your right to
accelerate and settle such contract early as a result of a sale
of substantially all of our assets may be uncertain.
Following the effective date of a reorganization event, the
settlement rate relating to the Equity Units shall thereafter be
determined by reference to, and settled in lieu of the
applicable number of shares of our common stock through the
delivery of a corresponding number of, exchange property units.
An exchange property unit means the kind and amount
of securities, cash and other property receivable in such
reorganization event (without any interest thereon, and without
any right to dividends or distribution thereon which have a
record date that is prior to the applicable stock purchase date,
cash merger early settlement date or early settlement date) per
share of our common stock by a holder of common stock that is
not a person with which we are consolidated or into which we are
merged or which merged into us or to which such sale, transfer,
lease or conveyance was made, or with whom shares were exchanged
pursuant to any such statutory share exchange, as the case may
be, which person we refer to as a constituent person, or an
affiliate of a constituent person, to the extent such
reorganization event provides for different treatment of common
stock held by our affiliates and non-affiliates. In the event
holders of our common stock have the opportunity to elect the
form of consideration to be received in such transaction, the
exchange property unit that holders of the Corporate Units or
Treasury Units will be entitled to receive will be deemed to be
the weighted average of the types and amounts of consideration
received by the holders of our common stock that affirmatively
make an election.
In the event of such a reorganization event, the person formed
by such consolidation or merger or the person to whom such sale,
transfer, lease or conveyance was made or with whom such
statutory share exchange was made shall execute and deliver to
the purchase contract agent an agreement, providing that the
holder of each Equity Unit that remains outstanding after the
reorganization event, if any, shall have the rights described in
the preceding paragraph. Such supplemental agreement shall
provide for adjustments to the amount of any securities
constituting all or a portion of an exchange property unit
which, for events subsequent to the effective date of such
reorganization event, shall be as nearly equivalent as may be
practicable to the adjustments provided for under
Anti-Dilution Adjustments. The
provisions described in the preceding three paragraphs shall
similarly apply to successive reorganization events.
Holders have the right to settle their obligations under the
Equity Units early in the event of certain cash mergers as
described above under Early Settlement upon
Cash Merger.
55
General
Provisions with Respect to Adjustments
Adjustments to the settlement rate will be calculated to the
nearest 1/10,000th of a share. No adjustment in the
settlement rate will be required unless the adjustment would
require an increase or decrease of at least one percent in the
settlement rate. If any adjustment is not required to be made
because it would not change the settlement rate by at least one
percent, then the adjustment will be carried forward and taken
into account in any subsequent adjustment, provided that effect
shall be given to all anti-dilution adjustments not later than
the applicable stock purchase date, cash merger early settlement
date or an early settlement date for Equity Units.
The fixed settlement rates will not be adjusted:
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upon the issuance of shares of our common stock or securities
convertible into, or exercisable or exchangeable for, common
stock in public or private transactions at any price we deem
appropriate;
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upon the issuance of any shares of our common stock pursuant to
any present or future plan providing for the reinvestment of
dividends or interest payable on our securities and the
investment of additional optional amounts in shares of our
common stock under any plan of that type;
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upon the issuance of any shares of our common stock or options
or rights to purchase those shares or any other award that
relates to, or has a value derived from the value of, our common
stock, in each case issued pursuant to any present or future
employee, director or consultant benefit plan or program of or
assumed by us or any of our subsidiaries;
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upon the issuance of any shares of our common stock pursuant to
any option, warrant, right or exercisable, exchangeable or
convertible security outstanding as of the date the Equity Units
were first issued;
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for a change in the par value or no par value of the common
stock; or
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for accumulated and unpaid dividends.
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We will be required, as soon as practicable after the fixed
settlement rates are adjusted, to provide written notice of the
adjustment to the holders of Equity Units.
Each adjustment to the fixed settlement rates will result in a
corresponding adjustment to the number of shares of our common
stock issuable upon early settlement of a stock purchase
contract.
If an adjustment is made to the fixed settlement rates, an
adjustment also will be made to the reference price and the
threshold appreciation price on an inversely proportional basis
solely to determine which of the clauses of the definition of
settlement rate will be applicable on each stock purchase date
or any cash merger early settlement date occurring after the
date of such adjustment.
In the event that we adopt a shareholder rights plan, holders
will receive upon settlement of the Equity Units into shares of
common stock, in addition to the shares, the rights under the
rights plan, unless prior to any settlement, the shareholder
rights plan expires or terminates or the rights have separated
from the shares of common stock, in which case the settlement
rate will be adjusted at the time of separation as if we
distributed, to all holders of our common stock, shares of our
common stock, evidences of debt or other assets issuable upon
exercise of the rights as described above, subject to
readjustment in the event of the expiration, termination or
redemption of such rights. A distribution of rights pursuant to
such a shareholder rights plan will not trigger a settlement
rate adjustment pursuant to paragraphs (2) or
(3) above. We currently do not have a shareholder rights
plan.
In the event of a taxable distribution to holders of shares of
our common stock that results in an adjustment of each fixed
settlement rate or an increase in each fixed settlement rate in
our discretion, holders of Corporate Units and Treasury Units
may, in certain circumstances, be deemed to have received a
distribution subject to U.S. federal income tax as a
dividend. In addition,
non-U.S. holders
of Corporate Units and Treasury Units may, in certain
circumstances, be deemed to have received a distribution subject
to U.S. federal withholding tax requirements.
You may be treated as receiving a constructive distribution from
us for U.S. federal income tax purposes with respect to the
stock purchase contracts if (1) the settlement rate is
adjusted (or fails to be adjusted) and, as a result of the
adjustment (or failure to adjust), your proportionate interest
in our assets or earnings and profits is increased, and
(2) the adjustment (or failure to adjust) is not made
pursuant to a bona fide, reasonable anti-dilution formula. Thus,
under certain
56
circumstances, an increase in (or a failure to decrease) the
settlement rate might give rise to a taxable dividend to you
even though you will not receive any cash in connection with the
increase in (or failure to decrease) the settlement rate. In
addition,
non-U.S. holders
of Equity Units may, in certain circumstances, be deemed to have
received a distribution subject to U.S. federal withholding
tax. See Certain United States Federal Income Tax
Consequences Taxation of the Stock Purchase
Contract Adjustment to Settlement Rate and
Non-U.S. Holders
in the prospectus supplement, dated May 12, 2008, to the
prospectus, dated July 13, 2007, relating to the issuance
of the Equity Units.
In addition, we may increase the settlement rate if our board of
directors deems it advisable to avoid or diminish any income tax
to holders of our common stock resulting from any dividend or
distribution of shares (or rights to acquire shares) or from any
event treated as a dividend or distribution for income tax
purposes or for any other reason.
Termination
The stock purchase contracts, and our rights and obligations and
the rights and obligations of the holders of the Corporate Units
and Treasury Units under the stock purchase contracts, including
the right and obligation to purchase shares of common stock and
the right to receive accrued contract adjustment payments, will
immediately and automatically terminate, without any further
action, upon the termination of the stock purchase contracts as
a result of our bankruptcy, insolvency or reorganization, which
we refer to as a termination event. In the event of
such a termination of the stock purchase contracts as a result
of our bankruptcy, insolvency or reorganization, holders of the
stock purchase contracts will not have a claim in bankruptcy
under the stock purchase contract with respect to our issuance
of shares of common stock or the right to receive contract
adjustment payments.
Upon any termination, the collateral agent will release the
related interests in the Debentures or Treasury portfolio or
qualifying treasury securities, as the case may be, held by it
to the purchase contract agent for distribution to the holders
of Equity Units. Upon any termination, however, the release and
distribution may be subject to a delay. In the event that we
become the subject of a case under the U.S. Bankruptcy
Code, the delay may occur as a result of the imposition of the
automatic stay under the Bankruptcy Code or the exercise of the
bankruptcy courts power under Section 105(a) of the
Bankruptcy Code. In addition, if we become the subject of a case
under the U.S. Bankruptcy Code, the foregoing will be
subject to the equitable jurisdiction and powers of the
bankruptcy court.
If the holders stock purchase contract is terminated as a
result of our bankruptcy, insolvency or reorganization, such
holder will have no right to receive any accrued contract
adjustment payments.
Pledged
Securities and Pledge Agreement
Pledged securities are pledged to us through the collateral
agent, for our benefit, pursuant to the pledge agreement to
secure the obligations of holders of Corporate Units and
Treasury Units to purchase shares of common stock under the
related stock purchase contracts. The rights of holders of
Corporate Units and Treasury Units to the related pledged
securities are subject to our security interest created by the
pledge agreement.
No holder of Corporate Units or Treasury Units is permitted to
withdraw the pledged securities related to the Corporate Units
or Treasury Units from the pledge arrangement except:
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to substitute qualifying treasury securities for the related
Debentures, as provided for under Description of the
Equity Units Creating Treasury Units,
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to substitute Debentures for the related qualifying treasury
securities, as provided for under Description of the
Equity Units Recreating Corporate
Units, or
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upon the termination or early settlement of the related stock
purchase contracts.
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Subject to the security interest and the terms of the purchase
contract agreement and the pledge agreement, each holder of
Corporate Units is entitled through the purchase contract agent
and the collateral agent to all of the proportional rights of a
holder of the related Debentures or Treasury portfolio,
including voting and redemption rights. Each holder of Treasury
Units retains beneficial ownership of the related qualifying
treasury securities
57
pledged in respect of the related stock purchase contracts. We
have no interest in the pledged securities other than our
security interest.
Except as described in Certain Provisions of the Purchase
Contract Agreement and the Pledge Agreement
General, the collateral agent will, upon receipt of
payments, if any, on the pledged securities, distribute the
payments to the purchase contract agent, which will in turn
distribute those payments, together with contract adjustment
payments received from us, to the persons in whose names the
related Corporate Units or Treasury Units are registered at the
close of business on the record date immediately preceding the
date of payment.
Book-Entry
System
DTC, which we refer to along with its successors in this
capacity as the depositary, acts as securities
depositary for the Corporate Units and Treasury Units. The
Corporate Units and Treasury Units were issued only as fully
registered securities and have been and will be issued, except
in the limited circumstances described below, in the form of
global certificates registered in the name of Cede &
Co., the depositarys nominee. One or more fully registered
global security certificates, representing the total aggregate
number of Corporate Units and Treasury Units, have been issued
and deposited with the depositary or its custodian.
The laws of some jurisdictions may require that some purchasers
of securities take physical delivery of securities in definitive
form. These laws may impair the ability to transfer beneficial
interests in the Corporate Units and Treasury Units so long as
the Corporate Units and Treasury Units are represented by global
security certificates.
DTC advises that DTC is a limited-purpose trust company
organized under the New York Banking Law, a banking
organization within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a clearing
corporation within the meaning of the New York Uniform
Commercial Code and a clearing agency registered
pursuant to the provisions of Section 17A of the Exchange
Act. DTC holds securities that DTC participants deposit with
DTC. DTC also facilitates the post-trade settlement among DTC
participants of sales and other securities transactions in
deposited securities through electronic computerized book-entry
transfers and pledges between DTC participants accounts.
This eliminates the need for physical movement of securities
certificates. DTC participants include both U.S. and
non-U.S. securities
brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is a wholly
owned subsidiary of The Depository Trust & Clearing
Corporation (DTCC). DTCC is the holding company for
DTC, National Securities Clearing Corporation and Fixed Income
Clearing Corporation, all of which are registered clearing
agencies. DTCC is owned by the users of its regulated
subsidiaries. Indirect access to the DTC system is also
available to others such as both U.S. and
non-U.S. brokers
and dealers, banks, trust companies and clearing corporations
that clear through or maintain a custodial relationship with a
DTC participant, either directly or indirectly. The rules
applicable to DTC and DTC participants are on file with the SEC.
In the event that:
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the depositary notifies us that it is unwilling or unable to
continue as depositary for the global security certificates and
no successor depositary has been appointed within 90 days
after this notice,
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the depositary at any time ceases to be a clearing agency
registered under the Exchange Act when the depositary is
required to be so registered to act as the depositary and no
successor depositary has been appointed within 90 days
after we learn that the depositary has ceased to be so
registered,
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to the extent permitted by the depositary, we, in our sole
discretion, determine that the global security certificates
shall be so exchangeable, or
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there shall have occurred and be continuing an event of default
with respect to the Debentures,
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certificates for the Corporate Units or Treasury Units will be
printed and delivered in exchange for beneficial interests in
the global security certificates. Any global Corporate Unit or
Treasury Unit, or portion thereof, that is exchangeable pursuant
to the preceding sentence will be exchangeable for Corporate
Unit or Treasury Unit certificates, as the case may be,
registered in the names directed by the depositary. We expect
that these instructions will be based upon directions received
by the depositary from its participants with respect to
ownership of beneficial interests in the global security
certificates.
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As long as the depositary or its nominee is the registered owner
of the global security certificates, the depositary or its
nominee, as the case may be, will be considered the sole owner
and holder of the global security certificates and all Corporate
Units and Treasury Units represented by these certificates and
all stock purchase contracts, Debentures and qualifying treasury
securities that are components thereof for all purposes under
the Corporate Units, Treasury Units and the purchase contract
agreement, pledge agreement and junior debt indenture. Except in
the limited circumstances referred to above, owners of
beneficial interests in global security certificates:
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are not entitled to have the Corporate Units or the Treasury
Units represented by these global security certificates
registered in their names,
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do not receive and are not entitled to receive physical delivery
of Corporate Unit or Treasury Unit certificates in exchange for
beneficial interests in global security certificates, and
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are not considered to be holders of the global security
certificates or any Corporate Units or Treasury Units
represented by these certificates or any stock purchase
contracts, Debentures or qualifying treasury securities that are
components thereof for any purpose under the Corporate Units,
Treasury Units or the purchase contract agreement, pledge
agreement and junior debt indenture.
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All payments on the Corporate Units and Treasury Units
represented by the global security certificates and all
transfers and deliveries of related Debentures, qualifying
treasury securities, Treasury portfolio and common stock are
made to the depositary or its nominee, as the case may be, as
the holder of the securities.
Ownership of beneficial interests in the global security
certificates is limited to participants or persons that hold
beneficial interests through participants that have accounts
with the depositary or its nominee. Ownership of beneficial
interests in global security certificates is shown only on, and
the transfer of those ownership interests will be effected only
through, records maintained by the depositary or its nominee,
with respect to participants interests, or any
participant, with respect to interests of persons held through
the participant. Procedures for settlement of stock purchase
contracts on the stock purchase dates or upon early settlement
are governed by arrangements among the depositary, participants
and persons that may hold beneficial interests through
participants. Payments, transfers, deliveries, exchanges and
other matters relating to beneficial interests in global
security certificates may be subject to various policies and
procedures adopted by the depositary from time to time. None of
us, the purchase contract agent or any agent of us or the
purchase contract agent has any responsibility or liability for
any aspect of the depositarys or any participants
records relating to, or for payments made on account of,
beneficial interests in global security certificates, or for
maintaining, supervising or reviewing any of the
depositarys records or any participants records
relating to these beneficial ownership interests or for the
performance by the depositary or its direct participants or
indirect participants under the rules and procedures governing
the depositary.
Although the depositary has agreed to the foregoing procedures
in order to facilitate transfers of interests in the global
security certificates among participants, the depositary is
under no obligation to perform or continue to perform these
procedures, and these procedures may be discontinued at any time.
59
CERTAIN
PROVISIONS OF THE PURCHASE CONTRACT
AGREEMENT AND THE PLEDGE AGREEMENT
This summary summarizes some of the terms of the purchase
contract agreement and the pledge agreement. This summary does
not purport to be complete and is qualified by the purchase
contract agreement and pledge agreement, which contain the full
legal text of the matters described in this section. Such
documents have been filed with the SEC or incorporated by
reference as exhibits to the registration statement of which
this document forms a part. You should refer to these documents
for more information.
As used under this caption, Certain Provisions of the
Purchase Contract Agreement and the Pledge Agreement,
references to we, us, our
and other similar references mean American International Group,
Inc., excluding, unless otherwise expressly stated or the
context otherwise requires, its subsidiaries.
General
Except as described in Description of the Stock Purchase
Contracts Book-Entry System, payments on the
Equity Units will be made, stock purchase contracts (and
documents relating to the Corporate Units, Treasury Units and
stock purchase contracts) will be settled, and transfers of the
Corporate Units and Treasury Units will be registrable, at the
office of the purchase contract agent in the Borough of
Manhattan, New York City. In addition, if the Corporate Units
and Treasury Units do not remain in book-entry form, payments on
the Equity Units may be made, at our option, by check mailed to
the address of the holder entitled to payment as shown on the
security register or, at our option, by a wire transfer to the
account designated by the holder by a prior written notice.
Shares of common stock will be delivered on each stock purchase
date (or earlier upon early settlement), or, if the stock
purchase contracts have terminated, the related pledged
securities will be delivered (potentially after a delay as a
result of the imposition of the automatic stay under the
Bankruptcy Code or the exercise of the bankruptcy courts
power under Section 105(a) of the Bankruptcy Code, see
Description of the Stock Purchase Contracts
Termination) at the office of the purchase contract agent
upon presentation and surrender of the applicable Equity Units
(including by book-entry transfer).
If you fail to present and (in the case of the third stock
purchase date) surrender (including by book-entry transfer) the
Corporate Units or Treasury Units to the purchase contract agent
on or prior to any stock purchase date, the shares of common
stock issuable upon settlement of the related stock purchase
contract on such stock purchase date will be registered in the
name of the purchase contract agent. The shares, together with
any distributions, will be held by the purchase contract agent
as agent for your benefit until the Equity Units are presented
and surrendered or you provide satisfactory evidence that the
applicable certificate has been destroyed, lost or stolen,
together with any indemnity that may be required by the purchase
contract agent and us.
If a stock purchase contract terminates prior to the third stock
purchase date, the related pledged securities are transferred to
the purchase contract agent for distribution to the holders, and
if a holder fails to present and surrender (including by
book-entry transfer) the holders Corporate Units or
Treasury Units to the purchase contract agent, the related
pledged securities delivered to the purchase contract agent and
payments on the pledged securities will be held by the purchase
contract agent as agent for the benefit of the holder until the
applicable Equity Units are presented or the holder provides the
evidence and indemnity described above.
The purchase contract agent will have no obligation to invest or
to pay interest on any amounts held by the purchase contract
agent pending payment to any holder.
No service charge will be made for any registration of transfer
or exchange of the Corporate Units or Treasury Units, except for
any tax or other governmental charge that may be imposed in
connection with a transfer or exchange.
Modification
The purchase contract agreement and the pledge agreement contain
provisions permitting us and the purchase contract agent, and in
the case of the pledge agreement, the collateral agent, to
modify the stock purchase contracts,
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the purchase contract agreement or the pledge agreement without
the consent of the holders for any of the following purposes:
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to evidence the succession of another person to our obligations;
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to add to the covenants for the benefit of holders or to
surrender any of our rights or powers under those agreements;
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to evidence and provide for the acceptance of appointment of a
successor purchase contract agent or a successor collateral
agent or securities intermediary;
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to make provision with respect to the rights of holders pursuant
to the requirements applicable to reorganization events;
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to cure any ambiguity or to correct or supplement any provisions
that may be inconsistent; or
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to make any other provisions that do not materially adversely
affect the interests of the holders of Equity Units.
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The purchase contract agreement and the pledge agreement contain
provisions permitting us and the purchase contract agent, and in
the case of the pledge agreement, the collateral agent, with the
consent of the holders of a majority of the Equity Units at the
time outstanding to modify the terms of the stock purchase
contracts, the purchase contract agreement or the pledge
agreement. However, no such modification may, without the
consent of the holder of each outstanding Equity Unit affected
by the modification,
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subject to our deferral rights, change any payment date for any
contract adjustment payment,
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change the amount or type of pledged securities related to the
stock purchase contract, impair the right of the holder of any
pledged securities to receive distributions on the pledged
securities or otherwise adversely affect the holders
rights in or to the pledged securities,
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change the place or currency of payment of or reduce any
contract adjustment payments,
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impair the right to institute suit for the enforcement of the
stock purchase contract or payment of any contract adjustment
payments,
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reduce the number of shares of common stock or the amount of any
other property or securities purchasable under the stock
purchase contract, increase the price to purchase shares of
common stock or any other property or securities upon settlement
of the stock purchase contract, change any stock purchase date
or the right to early settlement or cash merger early settlement
or otherwise materially adversely affect the holders
rights under the stock purchase contract, or
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reduce the above-stated percentage of outstanding stock purchase
contracts the consent of the holders of which is required for
the modification or amendment of the provisions of the stock
purchase contracts, the purchase contract agreement or the
pledge agreement.
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If any amendment or proposal referred to in the second preceding
paragraph would adversely affect only the Corporate Units or the
Treasury Units, then only the affected class of holders will be
entitled to vote on the amendment or proposal, and the amendment
or proposal will not be effective except with the consent of the
holders of not less than a majority of the affected class or of
all of the holders of the affected classes, as applicable.
No
Consent to Assumption
Each holder of Corporate Units or Treasury Units, by acceptance
of these securities, has under the terms of the purchase
contract agreement and the Corporate Units or Treasury Units, as
applicable, been deemed expressly to have withheld any consent
to the assumption (i.e., affirmance) of the related stock
purchase contracts by us or our trustee if we become the subject
of a case under the U.S. Bankruptcy Code or other similar
state or federal law for reorganization or liquidation.
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Consolidation,
Merger, Sale or Conveyance
We covenant in the purchase contract agreement that we will not
consolidate or merge with any other person or convey, transfer
or lease our properties and assets as an entirety or
substantially as an entirety to another person, unless
(1) the successor or transferee is a person organized and
existing under the laws of the United States of America, a
U.S. state or the District of Columbia and that successor
or transferee expressly assumes our obligations under the stock
purchase contracts, the purchase contract agreement, the pledge
agreement, the junior debt indenture, the Debentures and the
remarketing agreement and (2) the successor or transferee
is not, immediately after the transaction, in default of its
payment obligations under the stock purchase contracts, the
purchase contract agreement, the pledge agreement, the junior
debt indenture, the Debentures or the remarketing agreement.
Title
We, the purchase contract agent and the collateral agent may
treat the registered owner of any Corporate Units or Treasury
Units as the absolute owner of the Corporate Units or Treasury
Units for the purpose of making payment and settling the related
stock purchase contracts and for all other purposes.
Replacement
of Equity Unit Certificates
This section only applies to the Corporate Units and Treasury
Units not held through DTC as described under Description
of the Stock Purchase Contracts Book-Entry
System.
Any mutilated Corporate Unit or Treasury Unit certificate will
be replaced by us at the expense of the holder upon surrender of
the certificate to the purchase contract agent. Corporate Unit
or Treasury Unit certificates that become destroyed, lost or
stolen will be replaced by us at the expense of the holder upon
delivery to us and the purchase contract agent of evidence of
their destruction, loss or theft satisfactory to us and the
purchase contract agent. In the case of a destroyed, lost or
stolen Corporate Unit or Treasury Unit certificate, an indemnity
satisfactory to the purchase contract agent and us may be
required at the expense of the holder of the Corporate Units or
Treasury Units evidenced by the certificate before a replacement
will be issued.
We will not be obligated to issue any Corporate Unit or Treasury
Unit certificates on or after the business day immediately
preceding the third stock purchase date (or after early
settlement) or after the stock purchase contracts have
terminated. The purchase contract agreement will provide that,
in lieu of the delivery of a replacement Corporate Unit or
Treasury Unit certificate following the stock purchase date (or
early settlement), the purchase contract agent, upon delivery of
the evidence and indemnity described above, will deliver the
shares of common stock issuable pursuant to the stock purchase
contracts included in the Corporate Units or Treasury Units
evidenced by the certificate, or, if the stock purchase
contracts have terminated prior to the third stock purchase
date, transfer the pledged securities included in the Corporate
Units or Treasury Units evidenced by the certificate.
Governing
Law
The purchase contract agreement, the pledge agreement and the
stock purchase contracts are governed by, and construed in
accordance with, the laws of the State of New York.
Information
Concerning the Purchase Contract Agent
The Bank of New York Mellon is the purchase contract agent. The
purchase contract agent acts as the agent for the holders of
Corporate Units and Treasury Units from time to time. The
purchase contract agreement does not obligate the purchase
contract agent to exercise any discretionary actions in
connection with a default under the terms of the Corporate Units
and Treasury Units or the purchase contract agreement. In
addition, The Bank of New York Mellon is the trustee under the
junior debt indenture and the principal paying agent and
registrar for the Debentures. See Description of the
Debentures About the Trustee. We have entered,
and from time to time may continue to enter, into banking or
other relationships with The Bank of New York Mellon or its
affiliates.
The purchase contract agreement contains provisions limiting the
liability of the purchase contract agent and providing for the
circumstances under which the purchase contract agent may resign
or be replaced. Any resignation or replacement would be
effective upon the acceptance of appointment by a successor.
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Information
Concerning the Collateral Agent
Wilmington Trust Company is the collateral agent and
securities intermediary. The collateral agent acts solely as our
agent and does not assume any obligation or relationship of
agency or trust for or with any of the holders of the Corporate
Units or Treasury Units, except for the obligations owed by a
pledgee of property to the owner of the property under the
pledge agreement and applicable law.
The pledge agreement contains provisions limiting the liability
of the collateral agent and providing for the circumstances
under which the collateral agent may resign or be replaced. This
resignation or replacement would be effective upon the
acceptance of appointment by a successor.
Miscellaneous
The purchase contract agreement provides that we will pay the
fees and expenses of the collateral agent and the retention of
the purchase contract agent.
Should you elect to substitute the related pledged securities to
create Treasury Units or recreate Corporate Units, you will be
responsible for any fees or expenses payable in connection with
that substitution, as well as any commissions, fees or other
expenses incurred in acquiring the pledged securities to be
substituted, and we will not be responsible for any of those
fees or expenses.
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DESCRIPTION
OF THE DEBENTURES
This section is a summary of some of the terms of our
Debentures and the junior debt indenture. This summary does not
purport to be complete and is qualified by the Debentures and
the junior debt indenture, which, together with the
Trust Indenture Act of 1939, as amended (the
Trust Indenture Act), contain the full legal
text of the matters described in this section. Such documents
have been filed with the SEC or incorporated by reference as
exhibits to the registration statement of which this document
forms a part. You should refer to these documents and the
Trust Indenture Act for more information.
As used under this caption, Description of the
Debentures, references to we, us,
our and other similar references mean American
International Group, Inc., excluding, unless otherwise expressly
stated or the context otherwise requires, its subsidiaries.
General
The Debentures were issued under the junior subordinated debt
indenture, dated as of March 13, 2007, between us and The
Bank of New York Mellon, as indenture
trustee, as amended and supplemented by three
supplemental indentures, dated as of May 16, 2008, between
us and the indenture trustee (as so amended and supplemented,
the junior debt indenture). The Debentures
were issued in three series:
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Series B-1
Junior Subordinated Debentures initially due February 15,
2041 (the
Series B-1
Debentures);
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Series B-2
Junior Subordinated Debentures initially due May 1, 2041
(the
Series B-2
Debentures); and
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Series B-3
Junior Subordinated Debentures initially due August 1, 2041
(the Series B-3 Debentures).
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The
Series B-1
Debentures, the
Series B-2
Debentures and the
Series B-3
Debentures are referred to collectively as the
Debentures. Each series was issued in an
aggregate principal amount of $1,960,000,000.
We are a holding company that conducts substantially all of our
operations through subsidiaries. As a result, we depend on
dividends, distributions and other payments from our
subsidiaries to fund payments on the Debentures. Further, the
majority of our investments are held by our regulated
subsidiaries. In light of our current financial situation and
the retained deficit resulting from the losses recorded in
recent quarters, certain of our regulated subsidiaries have been
restricted from making dividend payments, or advancing funds, to
us, and we expect these restrictions to continue. In the case of
subsidiaries not currently subject to these restrictions, these
subsidiaries may be limited in their ability to make dividend
payments or advance funds to us in the future because of the
need to support their own capital levels.
The indenture trustee is the security registrar and the paying
agent for the Debentures. Debentures forming a part of the
Corporate Units were issued in fully registered certificated
form, without coupons, and are in denomination of $1,000 and
integral multiples of $1,000.
The Debentures may be transferred or exchanged, without service
charge but upon payment of any taxes or other governmental
charges payable in connection with any registration of transfer
or exchange of the Debentures, at the office described below.
Principal and interest with respect to certificated Debentures
are payable, the transfer of the Debentures is registrable and
Debentures are exchangeable for Debentures of a like aggregate
principal amount in denominations of $1,000 and integral
multiples of $1,000, at the office or agency maintained by us
for this purpose in New York City. We have designated the
corporate trust office of the indenture trustee as that office
for purposes of registering transfers and exchange of the
Debentures.
The Debentures are not subject to a sinking fund provision. The
entire principal amount of the Debentures will mature and
initially become due and payable, together with any accrued and
unpaid interest thereon, on February 15, 2041 in the case
of the
Series B-1
Debentures, May 1, 2041 in the case of the
Series B-2
Debentures and August 1, 2041 in the case of the
Series B-3
Debentures. We may elect with respect to any series of
Debentures prior to the applicable remarketing period start date
to move the maturity date up to a date no earlier than the date
two years after the applicable stock purchase date. As described
below under Put Option Following a Failed
Remarketing, holders of separate Debentures have the right
to require us to purchase their Debentures under certain
circumstances.
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The junior debt indenture does not contain any financial
covenants or any restrictions on the payment of dividends, the
making of investments, the incurrence of indebtedness,
redemption or, except as set forth under Put
Option Following a Failed Remarketing, repurchase of
securities by us.
The junior debt indenture does not contain provisions that
afford holders of the Debentures protection in the event we are
involved in a highly leveraged transaction or other similar
transaction that may adversely affect such holders. The junior
debt indenture does not limit our ability to issue or incur
other unsecured debt or issue preferred stock.
Ranking
The Debentures are our junior subordinated obligations. The
Debentures are subordinated in right of payment to all
senior debt as described under
Subordination. The Debentures rank
pari passu with our:
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$1,000,000,000 aggregate principal amount of 6.25%
Series A-1
Junior Subordinated Debentures,
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£750,000,000 aggregate principal amount of 5.75%
Series A-2
Junior Subordinated Debentures,
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1,000,000,000 aggregate principal amount of 4.875%
Series A-3
Junior Subordinated Debentures,
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$750,000,000 aggregate principal amount of 6.45%
Series A-4
Junior Subordinated Debentures,
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$1,100,000,000 aggregate principal amount of 7.70%
Series A-5
Junior Subordinated Debentures,
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$4,000,000,000 aggregate principal amount of 8.175%
Series A-6
Junior Subordinated Debentures,
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750,000,000 aggregate principal amount of 8.000%
Series A-7
Junior Subordinated Debentures, and
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£900,000,000 aggregate principal amount of 8.625%
Series A-8
Junior Subordinated Debentures (collectively, the
outstanding parity securities).
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We may issue additional series of junior subordinated Debentures
that rank pari passu with the Debentures.
Interest
Each Debenture bears interest, from the issuance date, payable
quarterly in arrears on February 1, May 1, August 1
and November 1 of each year, commencing August 1, 2008, to
the person in whose name the Debenture is registered at the
close of business on the 15th day of the month prior to the
month in which the relevant interest payment date falls (unless
otherwise specified), at an annual rate of 5.67% in the case of
the
Series B-1
Debentures, 5.82% in the case of the
Series B-2
Debentures and 5.89% in the case of the
Series B-3
Debentures.
Following a successful remarketing of any series of Debentures
(other than any series that we elect to remarket as
floating-rate Debentures), such series of Debentures will bear
interest at the reset rate and be payable on a semi-annual basis.
The applicable interest rate on the Debentures may be reset to
the reset rate upon successful remarketing as described above
under Description of the Stock Purchase
Contracts Remarketing and below under
Market Reset Rate. The reset rate will
become effective on the remarketing settlement date if the
Debentures are successfully remarketed. If the Debentures are
not successfully remarketed, the interest rate on the Debentures
will not be reset.
The amount of interest payable on the Debentures for any period
is computed (1) for any full quarterly or semi-annual
period on the basis of a
360-day year
of twelve
30-day
months and (2) 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. In the event that any date on which interest is payable
on the Debentures is not a business day, then payment of the
interest payable on such date will be made on the next day that
is a business day (and without any interest or other payment in
respect of any such delay), with the same force and effect as if
made on such originally scheduled date. If we elect to remarket
the Debentures of any series as floating-rate Debentures, we may
change these conventions effective on the remarketing settlement
date so that they will be consistent for Debentures that bear
interest at a rate based on the applicable index.
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Option to
Defer Interest Payments
We may elect at one or more times to defer payment of interest
on each series of Debentures for one or more consecutive
interest periods until the applicable stock purchase date. As of
October 7, 2010, the day before commencement of the
exchange offer, we have not deferred any payment of interest on
any series of Debentures and we currently do not intend to
exercise our option to defer interest on the Debentures.
Deferred interest on each series of Debentures will bear
interest at the interest rate then applicable to such series of
Debentures, compounded on each interest payment date, subject to
applicable law. As used in this document, a deferral
period refers to the period beginning on an interest
payment date with respect to which we elect to defer interest
and ending on the earlier of (i) the applicable stock
purchase date and (ii) the next interest payment date on
which we have paid all accrued and previously unpaid interest on
such series of Debentures.
We will give the holders of the Debentures and the indenture
trustee written notice of our election to begin a deferral
period at least one business day before the record date for the
next interest payment date. However, our failure to pay interest
on any interest payment date will itself constitute the
commencement of a deferral period unless we pay such interest
within five business days after the interest payment date,
whether or not we provide a notice of deferral. We may pay
deferred interest in cash or in the form of additional
Debentures in a principal amount equal to the aggregate amount
of deferred interest at any time; provided that if any
deferred interest has not been paid on or prior to the
applicable stock purchase date, we must pay it, in cash or in
the form of additional Debentures in a principal amount equal to
the aggregate amount of deferred interest on such date, to the
holders of such series of Debentures, whether or not they
participate in the applicable remarketing. We will set a special
record date for the payment of any deferred interest, whether in
cash or in the form of additional Debentures, that we make on a
date that is not an interest payment date for the applicable
series of Debentures. A failure to pay interest will not give
rise to an event of default unless we fail to pay interest,
including compounded interest, in cash or in additional
Debentures within 30 days after the applicable stock
purchase date.
If we have paid all deferred interest on the Debentures, we can
again defer interest payments on Debentures as described above.
The junior debt indenture does not limit the number or frequency
of interest deferral periods.
Dividend
and Other Payment Stoppages during Interest Deferral and under
Certain Other Circumstances
We have agreed that:
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until the applicable stock purchase date for any series of
Debentures,
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if an event of default has occurred and is continuing;
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we have given notice of our election to defer interest payments
but the related deferral period has not yet commenced; or
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a deferral period is continuing with respect to such series of
Debentures;
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we have given notice of our 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
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additional Debentures are outstanding,
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then we will not, and will not permit any of our subsidiaries to:
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declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to,
any shares of our capital stock;
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make any payment of principal of, or interest or premium, if
any, on, or repay, purchase or redeem any of our debt securities
that upon our liquidation rank pari passu with, or junior
to, the Debentures; or
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make any guarantee payments regarding any guarantee by us of
securities of any of our subsidiaries if the guarantee ranks
pari passu with, or junior in interest to, the Debentures.
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The restrictions listed above do not apply to:
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purchases, redemptions or other acquisitions of shares of our
capital stock in connection with:
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any employment benefit plan or other compensatory contract or
arrangement; or the Assurance Agreement, dated as of
June 27, 2005, by AIG 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); or
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a dividend reinvestment, stock purchase plan or other similar
plan;
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any exchange or conversion of any class or series of our capital
stock (or any capital stock of a subsidiary of AIG) for any
class or series of our capital stock or of any class or series
of our indebtedness for any class or series of our capital stock;
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the purchase of fractional interests in shares of our capital
stock in accordance with the conversion or exchange provisions
of such capital stock or the security being converted or
exchanged;
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any declaration of a dividend in connection with any
shareholders rights plan, or the issuance of rights,
equity securities or other property under any shareholders
rights plan, or the redemption or repurchase of rights in
accordance with any shareholders rights plan;
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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
on a parity with or junior to such equity securities;
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any payment of current interest or deferred interest on pari
passu securities during a deferral period that is made
pro rata to the amounts due on pari passu
securities and the Debentures;
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any payment of deferred interest or principal on pari passu
securities that, if not made, would cause us to breach the
terms of the instrument governing such pari passu
securities; or
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the repayment or redemption of any security necessary to avoid a
breach of the instrument governing the same.
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Market
Reset Rate
If the remarketing of any series of Debentures is successful and
the rate is reset, the reset rate or the applicable index plus
the reset spread will apply to all outstanding Debentures of
that series, whether or not the holders participated in such
remarketing, and will become effective on the applicable
remarketing settlement date. The interest rate on each series of
Debentures will be the reset rate or, if we have elected to
remarket such series of Debentures as floating-rate Debentures,
the applicable index plus the reset spread determined by the
remarketing agent, in consultation with us, such that the
proceeds from such remarketing, net of the 0.25% remarketing
fee, will be at least equal to 100% of the sum of the Treasury
portfolio purchase price and the separate Debentures purchase
price. The reset rate may be higher or lower than the current
rate of interest on such series of Debentures. Furthermore, if
we elect to purchase any series of Debentures in the applicable
remarketing, it may adversely affect the reset rate and the
liquidity of such series of Debentures.
Unless we elect that any series of Debentures will bear interest
at a floating rate if successfully remarketed, interest will be
payable semi-annually on each series of Debentures at the reset
rate from and including the applicable remarketing settlement
date on May 1 and November 1 of each year in the case of the
Series B-1
Debentures and the
Series B-3
Debentures and on February 1 and August 1 of each year in the
case of the
Series B-2
Debentures. The interest payment dates for any series of
Debentures will not change if we elect that such series of
Debentures will bear interest at a floating rate if successfully
remarketed. If a successful remarketing of the Debentures does
not occur, the interest rate will not be reset and the
Debentures will continue to bear interest at the initial
interest rate, payable quarterly.
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Optional
Redemption
At any time on or after the date two years after the applicable
stock purchase date for any series of Debentures (or after such
later date as we may determine prior to the remarketing period
start date for such series of Debentures), we may redeem, at our
option, the Debentures of such series, in whole or in part, at a
price equal to the greater of $1,000 per Debenture plus accrued
and unpaid interest, if any, to the date of redemption and a
make-whole redemption price, upon not less than 30 nor more than
60 days notice. In connection with a remarketing, we
may in our discretion eliminate or change the terms of our right
to redeem the Debentures of any series.
Redemption Procedures
We will mail, or cause the trustee to mail, every redemption
notice to the holders of record of the Debentures to be redeemed
at their respective last addresses appearing on our books. Such
mailing will be at least 30 days and not more than
60 days before the date fixed for redemption. Any
Debentures to be redeemed pursuant to the notice will, on the
date fixed for redemption, become due and payable at the
redemption price. From and after such date such Debentures will
cease to bear interest. Upon surrender of any such Debentures
for redemption in accordance with said notice, the Debentures to
be redeemed will be paid by us at the redemption price. If any
Debentures called for redemption are not so paid upon surrender
thereof for redemption, the redemption price will, until paid,
bear interest from the redemption date at the applicable
interest rate for the Debentures.
Modification
of the Terms of the Debentures in Connection with a Successful
Remarketing
Not later than the date 30 days prior to the remarketing
period start date for any series of Debentures, without the
consent of any of the holders of the Debentures, in consultation
with the remarketing agent, we may (but will not be required to)
make any of the following elections:
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move up the maturity date of the Debentures of such series to
any date not earlier than the date two years after the
applicable stock purchase date;
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modify our right to redeem the Debentures by providing that we
will not be entitled to redeem such Debentures prior to a later
date or that the redemption price will equal the principal
amount of such Debentures plus accrued and unpaid interest
through the date of redemption; or
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provide that the Debentures of such series will bear interest at
a floating rate equal to an applicable index plus a reset spread
to be determined in the remarketing, in which case we may also
elect to modify the business day and day count convention to
conform to market practice for floating-rate Debentures bearing
interest at a rate determined by reference to such index.
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Any such elections shall be made by irrevocable notice to the
indenture trustee, who will notify the holders of the Corporate
Units and separate Debentures of such series at least
15 days prior to the applicable remarketing period start
date. Any such election to move up the maturity date or modify
the redemption terms will be effective when made, and any such
election to provide for a floating rate will be effective on the
applicable remarketing settlement date.
In the case of any successful remarketing the following
Debenture terms will be modified without any action by any
person:
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the Debentures will cease to be subject to the subordination
provisions described under
Subordination; and
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we will no longer be able to defer interest as described under
Option to Defer Interest Payments.
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Optional
Remarketing
On or prior to the second business day immediately preceding the
remarketing period start date for any series of Debentures, but
no earlier than the interest payment date immediately preceding
such date, holders of Debentures of the applicable series that
are not components of Corporate Units may elect to have their
Debentures remarketed in the same manner and at the same price
as Debentures that are components of Corporate Units by
delivering their
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Debentures along with a notice of this election to the custodial
agent. The custodial agent will hold the Debentures in an
account separate from the collateral account in which the
pledged securities will be held. Holders of Debentures electing
to have their Debentures remarketed will also have the right to
withdraw the election on or prior to the second business day
immediately preceding the initial remarketing date. Holders of
Treasury Units that are also holders of Debentures that are not
part of the Corporate Units may also participate in any
remarketing by recreating Corporate Units from their Treasury
Units at any time on or prior to the second business day
immediately prior to the remarketing period start date.
Put
Option Following a Failed Remarketing
If the Debentures of any series have not been successfully
remarketed prior to the applicable stock purchase date, the
holders of the Debentures of such series that are not part of
Corporate Units will have the right to put their Debentures, but
not any additional Debentures issued to pay deferred interest on
such Debentures, to us on such stock purchase date, upon at
least two business days prior notice to the trustee, at a
price equal to their principal amount, plus accrued and unpaid
interest.
Consolidation,
Merger, Sale of Assets and Other Transactions
So long as any Debentures are outstanding, we may not
consolidate or merge with any other person or convey, transfer
or lease our properties and assets as an entirety or
substantially as an entirety to another person unless:
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the successor or purchaser is a person organized under the laws
of the United States, any state within the United States or the
District of Columbia;
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the successor or purchaser expressly assumes our obligations
under the junior debt indenture and the Debentures; and
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immediately after the transaction, no event of default, and no
event which, if notice was given
and/or a
certain period of time passed, would become an event of default
shall exist.
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Except as described above, neither the junior debt indenture nor
the Debentures contain change of control or similar provisions
intended to protect you by requiring us to repurchase or redeem
the Debentures if we become involved in a merger or other
significant corporate event. In addition, except as described
above, no junior debt indenture provision prohibits us from
consolidating or merging with another company.
Events of
Default
The following events are events of default with
respect to the Debentures until the applicable stock purchase
date:
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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 applicable
stock purchase date; or
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default in the payment of the principal of any Debenture at the
final maturity date or upon a call for redemption; or
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certain events of bankruptcy, insolvency and reorganization
involving AIG.
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After the applicable stock purchase date, the events of
default with respect to the Debentures will be as
described below:
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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 applicable
stock purchase date; or
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default in the payment of the principal of any Debenture at the
final maturity date or upon a call for redemption, and
continuance of such default for a period of 5 days;
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default in the performance, or breach of any other covenant or
warranty of the junior debt indenture for 60 days after we
receive a notice of default stating we are in breach from either
the indenture trustee or holders of 25% of the principal amount
of Debentures of the affected series; or
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certain events of bankruptcy, insolvency and reorganization
involving AIG.
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Remedies
If an Event of Default Occurs
All remedies available upon the occurrence of an event of
default under the junior debt indenture will be subject to the
restrictions described below under
Subordination for so long as they apply.
If an event of default occurs, the indenture trustee will have
special duties. In that situation, the indenture trustee will be
obligated to use its rights and powers under the junior debt
indenture, and to use the same degree of care and skill in doing
so that a prudent person would use in that situation in
conducting his or her own affairs. If an event of default of the
type described in the first bullet point in the definition of
that term has occurred and has not been cured, the indenture
trustee or the holders of at least 25% in principal amount of
the Debentures may declare the entire principal amount of all
the then Debentures to be due and immediately payable. This is
called a declaration of acceleration of maturity. If an event of
default involving the bankruptcy, insolvency and reorganization
involving AIG has occurred, the principal amount of all then
outstanding Debentures will immediately become due and payable.
In the case of any other default or breach of the junior debt
indenture by AIG prior to the stock purchase date, including an
event of default under the second bullet point in the definition
of that term, there is no right to declare the principal amount
of the Debentures immediately due and payable.
The holders of a majority in aggregate outstanding principal
amount of Debentures of any series may, on behalf of the holders
of all the Debentures of such series, waive any default or event
of default, except an event of default under the second or third
bullet point above or a default with respect to a covenant or
provision which under the junior debt indenture cannot be
modified or amended without the consent of the holder of each
outstanding Debenture of such series.
Except in cases of an event of default, where the indenture
trustee has the special duties described above, the indenture
trustee is not required to take any action under the junior debt
indenture at the request of any holders unless the holders offer
the indenture trustee reasonable protection from expenses and
liability called an indemnity. If indemnity reasonably
satisfactory to the indenture trustee is provided, the holders
of a majority in principal amount of the outstanding Debentures
may direct the time, method and place of conducting any lawsuit
or other formal legal action seeking any remedy available to the
indenture trustee. These majority holders may also direct the
indenture trustee in performing any other action under the
junior debt indenture with respect to the Debentures.
Before you bypass the indenture trustee and bring your own
lawsuit or other formal legal action or take other steps to
enforce your rights or protect your interests under the junior
debt indenture, the following must occur:
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a holder of the Debenture must give the indenture trustee
written notice that an event of default has occurred and remains
uncured;
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the holders of 25% in principal amount of all Debentures of the
relevant series must make a written request that the indenture
trustee take action because of the default, and they must offer
reasonable indemnity to the indenture trustee against the cost,
expenses and liabilities of taking that action; and
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the indenture trustee must have not taken action for
60 days after receipt of the above notice and offer of
indemnity.
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We give to the indenture trustee every year a written statement
of certain of our officers certifying that to their knowledge we
are in compliance with the junior debt indenture, or else
specifying any default.
Subordination
Holders of the Debentures should recognize that contractual
provisions in the junior debt indenture may prohibit us from
making payments on the Debentures. The Debentures are
subordinate and junior in right of payment, to the extent and in
the manner stated in the junior debt indenture, to all of our
senior debt, as defined in the junior debt indenture, including
our senior secured debt.
The junior debt indenture defines senior debt as all
indebtedness and obligations of, or guaranteed or assumed by, us:
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for borrowed money;
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evidenced by bonds, debentures, notes or other similar
instruments; and
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that represent obligations to policyholders of insurance or
investment contracts;
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in each case, whether existing now or in the future, and all
amendments, renewals, extensions, modifications and refundings
of any indebtedness or obligations of that kind. Senior debt
includes our senior secured debt under the FRBNY Credit
Facility. Senior debt also includes any subordinated or junior
subordinated debt that by its terms is not expressly pari
passu or subordinated to the Debentures; all guarantees of
securities issued by any trust, partnership or other entity
affiliated with us that is, directly or indirectly, our
financing vehicle; and intercompany debt. The Debentures rank
pari passu with the outstanding parity securities. The
junior debt indenture does not restrict or limit in any way our
ability to incur senior debt. As of September 30, 2010, we
had approximately $67.4 billion of outstanding senior debt.
Senior debt excludes:
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trade accounts payable and accrued liabilities arising in the
ordinary course of business; and
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any indebtedness, guarantee or other obligation that is
specifically designated as being subordinate, or not superior,
in right of payment to the Debentures (including the outstanding
parity securities).
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The junior debt indenture provides that, unless all principal of
and any premium or interest on the senior debt has been paid in
full, no payment or other distribution may be made with respect
to any Debentures in the following circumstances:
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in the event of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization, assignment for
creditors or other similar proceedings or events involving us or
our assets; or
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any event of default with respect to any senior debt for
borrowed money having at the relevant time an aggregate
outstanding principal amount of at least $100 million has
occurred and is continuing and has been accelerated (unless the
event of default has been cured or waived or ceased to exist and
such acceleration has been rescinded); or
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in the event the Debentures have been declared due and payable
prior to the final maturity date.
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If the indenture trustee under the junior debt indenture or any
holders of the Debentures receive any payment or distribution
that is prohibited under the subordination provisions, then the
indenture trustee or the holders will have to repay that money
to the holders of the senior debt.
The subordination provisions do not prevent the occurrence of an
event of default. This means that the indenture trustee under
the junior debt indenture and the holders of the Debentures can
take action against us, but they will not receive any money
until the claims of the holders of senior debt have been fully
satisfied.
Modification
There are four types of changes we can make to the junior debt
indenture and the Debentures.
Changes Requiring Approval of All
Holders. First, there are changes that cannot be
made to the Debentures without specific approval of each holder
of a Debenture affected by the change. Affected Debentures may
be all or less than all of the Debentures issued under that
junior debt indenture or all or less than all of the Debentures
of a series. Following is a list of those types of changes:
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change the stated maturity of the principal or interest on a
Debenture;
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reduce any amounts due on a Debenture;
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reduce the amount of principal payable upon acceleration of the
maturity of a Debenture (including the amount payable on an
original issue discount security) following a default;
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change the currency of payment on a Debenture;
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impair a holders right to sue for payment;
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reduce the percentage of holders of Debentures whose consent is
needed to modify or amend the junior debt indenture;
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reduce the percentage of holders of Debentures whose consent is
needed to waive compliance with certain provisions of the junior
debt indenture or to waive certain defaults;
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modify any other aspect of the provisions dealing with
modification and waiver of the junior debt indenture;
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modify the put right of holders of separate Debentures upon a
failed remarketing;
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modify the rate reset or remarketing provisions of the
Debentures, it being understood that the elimination of the
subordination and interest deferral provisions, any reset of the
interest rate or modification of the maturity date or redemption
provisions of the Debentures in connection with a successful
remarketing is permitted under the junior debt indenture and
does not require any modification to the provisions of the
junior debt indenture.
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We may, with the indenture trustees consent, execute,
without the consent of any holder of the Debentures, any
supplemental indenture for the purpose of creating any new
series of junior subordinated debentures.
Changes Requiring a Majority Vote. The second
type of change to the junior debt indenture and the Debentures
is the kind that requires a vote in favor by holders of
Debentures owning a majority of the principal amount of the
particular series affected or, if so provided and to the extent
permitted by the Trust Indenture Act, of particular
Debentures affected thereby. Most changes fall into this
category, except for clarifying changes and certain other
changes that would not adversely affect in any material respect
holders of the Debentures. We may also obtain a waiver of a past
default from the holders of Debentures owning a majority of the
principal amount of the particular series affected. However, we
cannot obtain a waiver of a payment default or any other aspect
of the junior debt indenture or the Debentures listed in the
first category described above under Changes
Requiring Approval of All Holders unless we obtain the
individual consent of each holder to the waiver.
Changes Not Requiring Approval. The third type
of change does not require any vote by holders of the
Debentures. This type is limited to clarifications and certain
other changes that would not adversely affect in any material
respect holders of the Debentures.
We may also make changes or obtain waivers that do not adversely
affect in any material respect a particular Debenture, even if
they affect other Debentures. In those cases, we do not need to
obtain the approval of the holder of that Debenture; we need
only obtain any required approvals from the holders of the
affected Debentures.
Modification of Subordination Provisions. We
may not modify the subordination provisions of the junior debt
indenture in a manner that would adversely affect in any
material respect the outstanding Debentures, without the consent
of the holders of a majority in principal amount of the
particular series affected or, if so provided and to the extent
permitted by the Trust Indenture Act, of particular
Debentures affected thereby. Also, we may not modify the
subordination provisions of any outstanding Debentures without
the consent of each holder of our senior debt that would be
adversely affected thereby. The term senior
indebtedness is defined under
Subordination. However, the elimination
of the subordination provisions of the Debentures in connection
with a successful remarketing is permitted under the junior debt
indenture and does not require any modification to the
provisions of the junior debt indenture.
Defeasance;
Satisfaction and Discharge
The defeasance or covenant defeasance provisions of the junior
debt indenture will apply to the Debentures of any series that
bears interest at a fixed rate after the applicable stock
purchase date. The satisfaction and discharge provisions of the
junior debt indenture apply to the Debentures.
Full
Defeasance
If there is a change in U.S. federal tax law, as described
below, we can legally release ourselves from any payment or
other obligations on the Debentures, called full defeasance, if
we put in place the following other arrangements for holders to
be repaid:
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We must deposit in trust for the benefit of all holders of the
Debentures a combination of money and notes or bonds of the
U.S. government or a U.S. government agency or
U.S. government-sponsored entity (the
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obligations of which are backed by the full faith and credit of
the U.S. government) that will generate enough cash to make
interest, principal and any other payments on the Debentures on
their various due dates.
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There must be a change in current U.S. federal tax law or
an IRS ruling that lets us make the above deposit without
causing the holders to be taxed on the Debentures any
differently than if we did not make the deposit and just repaid
the Debentures ourselves. Under current federal tax law, the
deposit and our legal release from the obligations pursuant to
the Debentures would be treated as though we took back your
Debentures and gave you your share of the cash and notes or
bonds deposited in trust. In that event, you could recognize
gain or loss on the Debentures you give back to us.
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We must deliver to the indenture trustee a legal opinion of our
counsel confirming the tax law change described above.
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No event or condition may exist that, under the provisions
described above under Subordination
above, would prevent us from making payments of principal,
premium or interest on those Debentures on the date of the
deposit referred to above or during the 90 days after that
date.
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If we ever did accomplish full defeasance, as described above,
you would have to rely solely on the trust deposit for repayment
on the Debentures. You could not look to us for repayment in the
unlikely event of any shortfall.
Covenant
Defeasance
Under current U.S. federal tax law, we can make the same
type of deposit as described above and we will be released from
some of the restrictive covenants under the Debentures. This is
called covenant defeasance. In that event, you would lose the
protection of these covenants but would gain the protection of
having money and U.S. government or U.S. government
agency notes or bonds set aside in trust to repay the
Debentures. In order to achieve covenant defeasance, we must do
the following:
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We must deposit in trust for the benefit of all holders of the
Debentures a combination of money and notes or bonds of the
U.S. government or a U.S. government agency or
U.S. government-sponsored entity (the obligations of which
are backed by the full faith and credit of the
U.S. government) that will generate enough cash to make
interest, principal and any other payments on the Debentures on
their various due dates.
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We must deliver to the indenture trustee a legal opinion of our
counsel confirming that under current U.S. federal income
tax law we may make the above deposit without causing the
holders to be taxed on the Debentures any differently than if we
did not make the deposit and just repaid the Debentures
ourselves.
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If we accomplish covenant defeasance, the events of default
described under Events of Default would
no longer apply.
If we accomplish covenant defeasance, you can still look to us
for repayment of the Debentures if there were a shortfall in the
trust deposit. In fact, if one of the remaining events of
default occurred (such as a bankruptcy) and the Debentures
become immediately due and payable, there may be such a
shortfall.
Subsequent
Repurchases
Following completion of the exchange offer, we may repurchase
Debentures in a remarketing, in the open market, in privately
negotiated transactions or otherwise. Future purchases of
Debentures may be on terms that are more or less favorable than
those of the exchange offer. Future repurchases, if any, will
depend on many factors, including market conditions and the
condition of our business.
Governing
Law
The junior debt indenture and the Debentures are governed by,
and shall be construed in accordance with, the laws of the State
of New York.
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About the
Trustee
The Bank of New York Mellon is the trustee under the junior debt
indenture and is the principal paying agent and registrar for
the Debentures. The Bank of New York Mellon also acts as
purchase contract agent in connection with the Equity Units. We
have entered, and from time to time may continue to enter, into
banking or other relationships with The Bank of New York Mellon
or its affiliates. See Certain Provisions of the Purchase
Contract Agreement and the Pledge Agreement
Information Concerning the Purchase Contract Agent in this
document for further information regarding The Bank of New York
Mellon.
The Bank of New York Mellon is one of our lenders and from time
to time provides other banking services to us and our
subsidiaries.
In addition, The Bank of New York Mellon serves as the trustee
for our senior debt securities, our subordinated debt securities
and the warrants issued under our warrant indenture, as well as
the trustee under any amended and restated trust agreement and
capital securities subordinated guarantee that we enter into in
connection with the issuance of capital securities.
Consequently, if an actual or potential event of default occurs
with respect to any of these securities, trust agreements or
subordinated guarantees, the trustee may be considered to have a
conflicting interest for purposes of the Trust Indenture
Act of 1939. In that case, the trustee may be required to resign
under one or more of the indentures, trust agreements or
subordinated guarantees and we would be required to appoint a
successor trustee. For this purpose, a potential
event of default means an event that would be an event of
default if the requirements for giving us default notice or for
the default having to exist for a specific period of time were
disregarded.
Agreement
by Purchasers of Certain Tax Treatment
Each Debenture provides that, by acceptance of the Debenture or
a beneficial interest therein, you intend that the Debenture
constitutes debt and you agree to treat it as debt for
U.S. federal, state and local tax purposes in the manner
described under Certain United States Federal Income Tax
Consequences in the prospectus supplement dated
May 12, 2008 relating to the Equity Units and its
accompanying prospectus dated July 13, 2007.
Book-Entry
System
Debentures which are released from the pledge following
substitution or settlement of the stock purchase contracts will
be issued in the form of one or more global certificates, which
are referred to as global securities, registered in the name of
the depositary or its nominee. Except under the limited
circumstances described below or except upon recreation of
Corporate Units, Debentures represented by the global securities
will not be exchangeable for, and will not otherwise be issuable
as, Debentures in certificated form. The global securities
described above may not be transferred except by the depositary
to a nominee of the depositary or by a nominee of the depositary
to the depositary or another nominee of the depositary or to a
successor depositary or its nominee. For additional information
concerning the depositary and its book-entry system, see
Description of the Stock Purchase Contracts
Book-Entry System above and Legal Ownership and
Book-Entry Issuance in the prospectus dated July 13,
2007.
The laws of some jurisdictions may require that some purchasers
of securities take physical delivery of the securities in
certificated form. These laws may impair the ability to transfer
beneficial interests in such a global security.
Except as provided below, owners of beneficial interests in such
a global security are not entitled to receive physical delivery
of Debentures in certificated form and are not considered the
holders (as defined in the junior debt indenture) thereof for
any purpose under the junior debt indenture, and no global
security representing Debentures shall be exchangeable, except
for another global security of like denomination and tenor to be
registered in the name of the depositary or its nominee or a
successor depositary or its nominee. Accordingly, each
beneficial owner must rely on the procedures of the depositary,
or if such person is not a participant, on the procedures of the
participant through which such person owns its interest to
exercise any rights of a holder under the junior debt indenture.
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In the event that:
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the depositary notifies us that it is unwilling or unable to
continue as a depositary for the global security certificates,
and no successor depositary has been appointed within
90 days after this notice,
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the depositary at any time ceases to be a clearing agency
registered under the Exchange Act when the depositary is
required to be so registered to act as the depositary and no
successor depositary has been appointed within 90 days
after we learn that the depositary has ceased to be so
registered,
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to the extent permitted by the depositary, we in our sole
discretion determine that the global securities shall be
exchangeable, or
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an event of default occurs and is continuing with respect to the
Debentures;
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certificates for the Debentures will be printed and delivered in
exchange for beneficial interests in the global security
certificates. Any global Debenture that is exchangeable pursuant
to the preceding sentence shall be exchangeable for Debenture
certificates registered in the names directed by the depositary.
We expect that these instructions will be based upon directions
received by the depositary from its participants with respect to
ownership of beneficial interests in the global security
certificates. In addition, as noted above, interests in global
securities may be exchanged for Debentures in certificated form
in connection with the recreation of Corporate Units.
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COMPARISON
OF RIGHTS BETWEEN CORPORATE UNITS AND COMMON STOCK
The following summarizes the material differences between the
rights of holders of Corporate Units and of holders of the
common stock to be issued in the exchange offer. The discussion
below is a summary and is qualified by our amended and restated
certificate of incorporation, our bylaws, the purchase contract
agreement and the pledge agreement governing the Corporate
Units, the junior debt indentures governing the Debentures, the
Trust Indenture Act of 1939, applicable Delaware law and
other documents referred to herein, which contain the full legal
text of the matters described in this section. We urge you to
read these documents for more information on the terms of the
Corporate Units and the common stock.
Ranking
Common Stock: In any liquidation, dissolution
or winding up of AIG, our common stock would rank below all debt
claims against us, including the Debentures that are part of the
Corporate Units. As a result, holders of our common stock will
not be entitled to receive any payment or other distribution of
assets upon the liquidation or dissolution until after our
obligations to our debt holders have been satisfied. In
addition, holders of shares of our preferred stock will have
priority over holders of our common stock with respect to the
distribution of our assets in the event of our liquidation or
dissolution.
Corporate Units: The Debentures and our
obligations to make contract adjustment payments are unsecured,
rank junior in payment to all of our existing and future senior
debt and are effectively subordinated to all liabilities of our
subsidiaries. Senior debt means all indebtedness and
obligations of, or guaranteed or assumed by, us (i) for
borrowed money; (ii) evidenced by bonds, debentures, notes
or other similar instruments; and (iii) that represent
obligations to policyholders of insurance or investment
contracts, in each case, whether existing now or in the future,
and all amendments, renewals, extensions, modifications and
refundings of any indebtedness or obligations of that kind.
Senior debt includes our senior secured debt under the FRBNY
Credit Facility. Senior debt also includes any subordinated or
junior subordinated debt that by its terms is not expressly
pari passu or subordinated to the Debentures; all
guarantees of securities issued by any trust, partnership or
other entity affiliated with us that is, directly or indirectly,
our financing vehicle; and intercompany debt. Each series of
Debentures rank pari passu with outstanding parity securities,
as defined in Description of the Debentures
Ranking.
Governing
Documents
Corporate Units: Holders of Corporate Units
have their rights set forth in (i) the purchase contract
agreement, dated as of May 16, 2008, between us and The
Bank of New York Mellon (formerly known as The Bank of New
York), as purchase contract agent; (ii) the pledge
agreement, dated as of May 16, 2008, among us, Wilmington
Trust Company, as collateral agent, custodial agent and
securities intermediary, and The Bank of New York Mellon, as the
purchase contract agent; (iii) the remarketing agreement,
dated as of May 16, 2008, among us, Citigroup Global
Markets Inc. and J.P. Morgan Securities Inc. and The Bank
of New York Mellon, as the purchase contract agent; and
(iv) the junior debt indenture.
Common Stock: Holders of shares of our common
stock have their rights set forth in, and may enforce their
rights under, our amended and restated certificate of
incorporation, our bylaws and Delaware law.
Payments
Corporate Units: Holders of Corporate Units
are entitled to quarterly contract adjustment payments on stock
purchase contacts, quarterly interest payments on Debentures, or
both, as described under Description of the Equity
Units Current Payments. These payments are
subject to deferral as described under Description of the
Equity Units Deferral of Payments on Equity
Units and early settlement as described under
Description of the Stock Purchase Contracts
Early Settlement upon Cash Merger, and are subordinated to
the senior debt as described under Description of the
Equity Units Ranking.
Common Stock: Holders of shares of our common
stock are entitled to receive ratable dividends only when, as
and if declared by our board of directors out of funds legally
available for such purpose. Under the FRBNY Credit Facility, we
are currently restricted from declaring or paying dividends on
the common stock. Moreover, pursuant to
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the terms of each of our Series E Preferred Stock and our
Series F Preferred Stock, we are not able to declare or pay
any cash dividends on the common stock or on any of our
preferred stock ranking junior to such series of preferred stock
for any period until dividends on each of the Series E
Preferred Stock and Series F Preferred Stock have been paid
for such period. We have not paid dividends on the Series E
Preferred Stock and Series F Preferred Stock since their
issuance in 2009 and no dividends have been paid on our common
stock since the third quarter of 2008. For a discussion of
certain restrictions on the payment of dividends to AIG by some
of its insurance subsidiaries, see our 2009 Annual Report on
Form 10-K,
our Quarterly Report on
Form 10-Q
for the quarterly period ended June 30, 2010 and our
Quarterly Report on
Form 10-Q
for the quarterly period ended March 31, 2010, all of which
are incorporated by reference herein.
Redemption
Corporate Units: The Debentures of each series
are redeemable at our option, in whole or in part, at any time,
on or after the date two years after the applicable stock
purchase date at a price equal to the greater of their principal
amount, plus accrued and unpaid interest, if any, to the date of
redemption and a make-whole redemption price. The make-whole
redemption price will be calculated based upon the present value
determined in accordance with customary financial practice of
the principal amount and interest that would have been payable
from the redemption date to the maturity date of the relevant
Debentures to be redeemed. This amount will be discounted on a
quarterly basis at the rate per annum equal to the yield to
maturity of the Treasury security having a maturity comparable
to the relevant debenture, plus 0.25%. Not later than
30 days prior to the remarketing period start date for any
series of Debentures, we have the right to (i) modify our
right to redeem the Debentures of such series so that it
commences on a date later than the date two years after the
applicable stock purchase date and (ii) change the formula
for determining the make-whole redemption price or change the
redemption price to equal the principal amount of the
Debentures, plus accrued and unpaid interest, if any, to the
date of redemption. See Description of the
Debentures Optional Redemption.
Common Stock: The shares of our common stock
are not subject to redemption.
Listing
Corporate Units: The Corporate Units are
listed on the NYSE under the symbol AIG-PrA. The
exchange offer is subject to, among other things, the condition
that we determine in our reasonable judgment, based on
consultation with the NYSE, that the NYSE is not likely to
delist the Corporate Units as a result of the consummation of
the exchange offer.
Common Stock: Our common stock is listed on
the NYSE under the symbol AIG. Our common stock is
also listed on stock exchanges in Ireland and Tokyo.
Voting
Rights
Corporate Units: Holders of stock purchase
contracts that are part of the Corporate Units or Treasury
Units, in such capacities, have no voting or other rights in
respect of the common stock.
Common Stock: Each holder of common stock is
entitled to one vote for each share held of record on all
matters submitted to a vote of shareholders, including the
election of directors. In addition, the holders of the Series C
Preferred Stock have the voting power to vote with the common
stock on all matters submitted to our shareholders to the extent
permitted by law. As of September 30, 2010, the holders of
the Series C Preferred Stock had approximately 79.8 percent
of the total voting power of AIGs shareholders that are
entitled to vote. See Description of Capital
Stock Preferred Stock for further description
of the voting power of the Trust and the Department of the
Treasury as holders of our Series E Preferred Stock and the
Series F Preferred Stock.
Maturity
Corporate Units: The entire principal amount
of the Debentures will mature and initially become due and
payable, together with any accrued and unpaid interest thereon,
on February 15, 2041 in the case of the
Series B-1
Debentures, May 1, 2041 in the case of the
Series B-2
Debentures and August 1, 2041 in the case of the
Series B-3
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Debentures. We may elect with respect to any series of
Debentures prior to the applicable remarketing period start date
to move the maturity date up to a date no earlier than the date
two years after the applicable stock purchase date. As described
under Description of the Debentures Put Option
Following a Failed Remarketing, holders of separate
Debentures will have the right to require us to purchase their
Debentures under certain circumstances.
Subject to a holders early settlement right as described
under Description of the Stock Purchase
Contracts Early Settlement, and
Description of the Stock Purchase Contracts
Early Settlement upon Cash Merger, each stock purchase
contract underlying a Corporate Unit or Treasury Unit will
obligate the holder of the stock purchase contract to purchase,
and us to sell, on each of February 15, 2011, May 1,
2011 and August 1, 2011, for $25 in cash, a number of newly
issued shares of our common stock equal to the settlement rate.
Common Stock: The concept of maturity is not
applicable to our common stock.
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MATERIAL
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following are the material U.S. federal income tax
consequences of the exchange offer. This summary is based on
interpretations of the Internal Revenue Code of 1986, as
amended, or the Code, regulations issued thereunder,
and rulings and decisions currently in effect (or in some cases
proposed), all of which are subject to change. Any such change
may be applied retroactively and may adversely affect the
U.S. federal income tax consequences described herein.
Except where indicated otherwise, this discussion only applies
to U.S. holders (as defined below) that hold their
Corporate Units as capital assets. This summary does not discuss
all of the tax consequences that may be relevant to particular
investors or to investors subject to special treatment under the
U.S. federal income tax laws, such as:
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securities or currency dealers or brokers, or traders in
securities electing
mark-to-market
treatment;
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banks, thrifts, or other financial institutions;
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insurance companies, regulated investment companies or real
estate investment trusts;
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small business investment companies or S corporations;
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investors that hold their Corporate Units through a partnership
or other entity that is treated as a partnership for
U.S. federal income tax purposes;
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U.S. holders whose functional currency is not the
U.S. dollar;
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retirement plans or other tax-exempt entities, or persons
holding the Corporate Units in tax-deferred or tax-advantaged
accounts;
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investors holding Corporate Units as part of a
straddle or a conversion transaction for
U.S. federal income tax purposes or investors holding
Equity Units that are a hedge or that are hedged against
interest rate or currency risks, or as part of some other
integrated investment; or
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investors subject to the alternative minimum tax.
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This summary also does not address the tax consequences to
shareholders or other equity holders in, or beneficiaries of, a
holder of Corporate Units or debentures, or any state, local or
foreign tax consequences of the exchange offer. Holders
considering participating in the exchange offer should consult
their own tax advisors concerning the application of
U.S. federal income tax laws to their particular situations
as well as any consequences of the exchange offer arising under
the laws of any other taxing jurisdiction.
For purposes of this discussion, U.S. holder
means a beneficial owner of Corporate Units that is:
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a citizen or resident of the United States;
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a corporation (or other entity that is treated as a corporation
for U.S. federal tax purposes) created or organized in or
under the laws of the United States or any state thereof
(including the District of Columbia);
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an estate, the income of which is subject to U.S. federal
income tax regardless of its source; or
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a trust, if a court within the United States is able to exercise
primary supervision over its administration, and one or more
U.S. persons (as determined for U.S. federal income
tax purposes) have the authority to control all of its
substantial decisions.
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Taxation
of Corporate Units General
We have treated each Corporate Unit for U.S. federal income
tax purposes as consisting of (a) a 1/40, or 2.5%,
undivided beneficial interest in a Debenture from each of the
three series and (b) a stock purchase contract, which
represents the right to receive contract adjustment payments and
the obligation to purchase, for $25, on each of the three stock
purchase dates, a number of shares of our common stock equal to
the settlement rate. The remainder of this summary assumes this
treatment will be respected for U.S. federal income tax
purposes. Consequently, you were required to allocate your
purchase price for the Corporate Units among the components
described above in
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proportion to their respective fair market values at the time of
purchase. This allocation established your initial
U.S. federal income tax basis in your interest in the
underlying debentures and stock purchase contract.
We treated the initial fair market value of the interests in
each of the three series of Debentures per each Corporate Unit
as $25 and the fair market value of the stock purchase contract
as $0 at the time of purchase. Holders of Corporate Units who
purchased their Equity Units from the Company agreed to treat
the Equity Units and to allocate the purchase price as described
above. This allocation is not, however, binding on the Internal
Revenue Service, or the IRS. The remainder of this
summary assumes that this allocation of the purchase price will
be respected for U.S. federal income tax purposes.
We treated the Debentures as variable rate debt
instruments that were issued with no more than a de
minimis amount of original issue discount (OID)
for U.S. federal income tax purposes. The remainder of this
summary assumes this characterization will be respected for
U.S. federal income tax purposes.
Taxation
of the Exchange Offer
Based on the advice of Sullivan & Cromwell LLP,
counsel to the Company, we intend to treat the exchange offer as
(1) a repurchase of your interests in the Debentures in
exchange for common stock and an amount of cash, which, when
added to the fair market value of the common stock received,
will equal the principal amount of your
1/40 interests
in the Debentures plus any accrued but unpaid interest to but
excluding the settlement date of the exchange offer, and
(2) a cancellation of the stock purchase contract forming
part of your Corporate Units in exchange for a cash payment to
the Company. This characterization of the exchange offer is
consistent with the form of the relevant documents. Except as
otherwise noted, the remainder of this summary assumes that the
exchange offer will be so treated.
Notwithstanding the above, there is no clear authority governing
the U.S. federal income tax treatment of the exchange offer
and alternative characterizations are possible. In the absence
of any exchange offer, for example, you would have received only
cash for your Debentures and you would have used that cash to
purchase common stock pursuant to a physical settlement of the
stock purchase contract. You should consult your tax advisor
about whether it might be reasonable to recharacterize the
exchange offer in this manner (or whether the IRS might seek to
so recharacterize it). Under such a recharacterization, you
would not recognize any loss in respect of a cancellation of the
stock purchase contract, but your initial basis in the
Debentures would carry over into the basis of the common stock
you received. See the section under the heading Certain
United States Federal Income Tax Consequences
Taxation of the Treasury Portfolio Acquisition and
Taxation of the Common Stock Acquisition of Common
Stock under the Stock Purchase Contracts in the prospectus
supplement, dated May 12, 2008, to the prospectus, dated
July 13, 2007, for a further description of this
alternative.
Treatment
of the Repurchase of the Debentures
With respect to the repurchase of your interests in the
Debentures pursuant to the exchange offer, you will recognize
gain or loss in an amount equal to the difference between
(i) the fair market value of the common stock and cash you
receive in exchange for your interests in the Debentures (not
including the portion therefore attributable to accrued but
unpaid interest) and (ii) your adjusted tax basis in your
interests in the Debentures. Your adjusted tax basis will
generally be equal to the amount you paid for your interests in
the Debentures, plus any market discount previously included in
income with respect to your interests in the Debentures. If you
purchased your Corporate Units at initial issuance at their
original offering price, you agreed to allocate your purchase
price as described above in Taxation of Corporate
Units General. You will therefore not
recognize any gain or loss in respect of the redemption of your
Debentures, but you will include any accrued but unpaid interest
in income. If you purchased your Corporate Units in the
secondary market, the amount you paid for your interest in the
Debentures will be the amount you allocated to your interests in
the Debentures, based on their fair market value at the time of
purchase. Except to the extent attributable to accrued but
unpaid interest or market discount, any gain or loss you
recognize will generally be capital gain or loss, which will be
long-term capital gain or loss if you held your interests in the
Debentures for more than one year. Subject to certain
exceptions, long-term capital gains of individuals are generally
eligible for reduced rates of taxation. The deduction of capital
losses is subject to limitations.
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Market Discount. You will be treated as if you
purchased your interests in the Debentures at a market discount
if the principal amount of your interests in the Debentures
exceeds the amount you paid for your interests in the Debentures
by more than a de minimis amount. The amount of any such
excess will be market discount. Under the market
discount rules of the Code, any gain recognized on the
repurchase of your interests in the Debentures generally would
be treated as ordinary income to the extent of accrued market
discount, unless you elected to include market discount in
income as it accrued.
Treatment
of the Cancellation of the Stock Purchase Contract
If you purchased your Corporate Units at initial issuance at
their original offering price, or when the stock purchase
contract forming part of the Corporate Units had positive value,
you will recognize a capital loss equal to the sum of
(i) the amount that you are treated as paying to the
Company to cancel the stock purchase contract and (ii) your
adjusted tax basis in the stock purchase contract. Such loss
will generally be long-term capital loss if you held the stock
purchase contract for more than one year. The deduction of
capital losses is subject to limitations. If you purchased your
Corporate Units at initial issuance at their original offering
price, you agreed to allocate your purchase price as described
above in Taxation of Corporate
Units General, in which case you allocated
nothing to the stock purchase contracts. You will therefore
recognize a capital loss equal to the amount you are treated as
paying the Company to cancel the stock purchase contract. If you
purchased your Corporate Units at initial issuance at their
original offering price, this amount should generally equal the
excess of (i) your initial basis in the Corporate Units over
(ii) the fair market value of the common stock plus any cash in
excess of amounts attributable to accrued but unpaid interest,
that you retain pursuant to the exchange offer.
If you purchased your Corporate Units when the stock purchase
contract had a negative value, the U.S. federal income tax
consequences of the cancellation of your stock purchase contract
are unclear. You should consult your tax advisor regarding the
U.S. federal income tax consequences of the cancellation of
your stock purchase contract under such circumstances.
Acquisition
and Taxation of Common Stock
Acquisition of Common Stock Pursuant to the Exchange
Offer. Your tax basis in a share of common
stock received pursuant to the exchange offer will be equal to
the fair market value of the share on the date of the exchange
offer. The holding period for shares of our common stock you
receive will begin on the day following your acquisition of the
stock.
Dividends on the Common Stock. Any
distribution with respect to common stock that we pay out of our
current or accumulated earnings and profits (as determined for
U.S. federal income tax purposes) on your common stock will
constitute a dividend and will be includible in income by you.
Any such dividend will be eligible for the dividends-received
deduction if you are an otherwise qualifying corporate
U.S. holder that meets the holding period and other
requirements for the dividends received deduction. Distributions
in excess of our current and accumulated earnings and profits
are treated first as a non-taxable return of capital to the
extent of your basis in the common stock, and then as capital
gain.
Disposition of Common Stock. Upon the
disposition of your common stock, you generally will recognize
capital gain or loss equal to the difference between the amount
realized and your adjusted tax basis in your common stock. Your
adjusted tax basis in the common stock at the time of any such
disposition should generally equal your initial tax basis in the
common stock, reduced by the amount of any cash distributions
that are not treated as dividends. Such capital gain or loss
generally will be long-term capital gain or loss if you held the
common stock for more than one year following the stock purchase
date. Subject to certain exceptions, long-term capital gains of
individuals are generally eligible for reduced rates of
taxation. The deductibility of capital losses is subject to
limitations.
Non-U.S.
Holders
The following discussion applies only to
non-U.S. holders.
For purposes of this discussion, a
non-U.S. holder
is a holder that is a beneficial owner of Corporate Units that
is not a United States person and is not a partnership for
U.S. federal income tax purposes. If you are a
non-U.S. holder
subject to special rules, such as a controlled foreign
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corporation or passive foreign investment
company, you should consult your own tax advisor to
determine the U.S. federal, state, local and foreign tax
consequences that may be relevant to you in your particular
circumstances. This discussion assumes, as noted above, that for
U.S. federal income tax purposes, the stock purchase
contracts and the Debentures will be respected as separate
securities and the Debentures will be classified as indebtedness.
Tax
Treatment of the Exchange Offer
Generally, any gain or income (other than gain treated as
interest) realized in connection with the exchange offer
generally will not be subject to U.S. federal income tax
unless:
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that gain is effectively connected with the conduct of a trade
or business by the
non-U.S. holder
in the United States; or
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the
non-U.S. holder
is an individual who is present in the United States for
183 days or more in the taxable year of that disposition,
and certain other condition are met.
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Accrued
Interest.
For a discussion of accrued interest on the Debentures, see the
section under the heading Certain United States
Federal Income Tax Consequences
Non-U.S. Holders
in the prospectus supplement, dated May 12, 2008, to the
prospectus, dated July 13, 2007. The 30% U.S. federal
withholding tax will not apply to any amount attributable to
accrued but unpaid interest received in the exchange offer,
provided that you are a
non-U.S. holder
and that:
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you do not actually (or constructively) own 10% or more of the
total combined voting power of all classes of our voting stock
within the meaning of the Code and the United States Treasury
Regulations;
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you are not a controlled foreign corporation that is related to
us through stock ownership;
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you are not a bank whose receipt of interest on the Debentures
is described in section 881(c)(3)(A) of the Code; and
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you provide your name and address on IRS
Form W-8BEN
(or other applicable form), and certify, under penalties of
perjury, that you are not a United States person, or if
Corporate Units are held through certain foreign intermediaries
or foreign partnerships, the certification requirements of
applicable United States Treasury Regulations are satisfied.
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Dividends
on Our Common Stock
We will generally withhold tax at a 30% rate on dividends paid
(including any deemed dividends as a result of a constructive
distribution) on our common stock acquired in the exchange offer
or such lower rate as may be specified by an applicable income
tax treaty. However, dividends that are effectively connected
with the conduct of a trade or business by the
non-U.S. holder
within the United States (and where a tax treaty applies, are
attributable to a United States permanent establishment of the
non-U.S. holder)
are not subject to the withholding tax, provided that the
holder satisfies the relevant certification requirement, but
instead are subject to U.S. federal income tax as described
below.
A
non-U.S. holder
of our common stock who wishes to claim the benefit of an
applicable treaty rate for dividends will be required to furnish
an IRS
Form W-8BEN
(or an acceptable substitute form) to claim such reduced rate. A
non-U.S. holder of our common stock who wishes to claim an
exemption from the 30% withholding tax for dividends that are
effectively connected with the conduct of a trade or business by
the non-U.S. holder within the United States will be required to
furnish an IRS
Form W-8ECI
(or an acceptable substitute form) stating that such payments
are not subject to the 30% withholding tax because they are
effectively connected with the
non-U.S. holders
trade or business in the United States. A
non-U.S. holder
eligible for a reduced rate of or an exemption from
U.S. federal withholding tax on payments, as described
above, may obtain a refund of any excess amounts withheld by
filing an appropriate claim for refund with the IRS.
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Non-U.S.
Holders Engaged in a U.S. Trade or Business
If a
non-U.S. holder
is engaged in a trade or business in the United States and
dividends on our common stock are effectively connected with the
conduct of that trade or business, such holder will be subject
to U.S. federal income tax on the interest or dividends on
a net income basis (although exempt from the 30% withholding
tax) in the same manner as if the holder were a United States
person as defined under the Code. The
non-U.S. holder
must satisfy certain certification and disclosure requirements
(as described above) in order to establish its exemption from
withholding on its effectively connected income. In addition, a
non-U.S. holder
that is a foreign corporation may be subject to a branch profits
tax equal to 30% (or lower applicable treaty rate) of its
earnings and profits for the taxable year, subject to
adjustments, that are effectively connected with the conduct by
the holder of a trade or business in the United States. For this
purpose, dividends on our common stock will be included in
earnings and profits.
Information
with respect to Foreign Financial Assets
Under recently enacted legislation, individuals that own
specified foreign financial assets with an aggregate
value in excess of $50,000 in taxable years beginning after
March 18, 2010 will generally be required to file an
information report with respect to such assets with their tax
returns. Specified foreign financial assets include
any financial accounts maintained by foreign financial
institutions, as well as any of the following, but only if they
are not held in accounts maintained by financial institutions:
(i) stocks and securities issued by
non-United
States persons, (ii) financial instruments and contracts
held for investment that have
non-United
States issuers or counterparties, and (iii) interests in
foreign entities. United States holders that are individuals are
urged to consult their tax advisors regarding the application of
this legislation to their ownership of the notes.
Backup
Withholding and Information Reporting
U.S. Holders. In general, you will
be subject to backup withholding with respect to payments you
receive in the exchange offer and with respect to payments made
on your shares of common stock and the proceeds received from
the sale of your shares of common stock unless you are an entity
that is exempt from backup withholding and, when required,
demonstrate this fact or:
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you provide your Taxpayer Identification Number, or
TIN, which, if you are an individual, would be your
Social Security Number;
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you certify that (i) the TIN you provide is correct,
(ii) you are a U.S. person and (iii) you are not
subject to backup withholding because (A) you are exempt
from backup withholding or (B) you have not been notified
by the IRS that you are subject to backup withholding due to
underreporting of interest or dividends or (C) you have
been notified by the IRS that you are no longer subject to
backup withholding; and
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you otherwise comply with the applicable requirements of the
backup withholding rules.
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In addition, such payments or proceeds received by you if you
are not a corporation or tax-exempt organization will generally
be subject to information reporting requirements.
Pursuant to recently enacted legislation, certain payments made
on our common stock to corporate U.S. holders after
December 31, 2011 may be subject to information reporting
and backup withholding.
Backup withholding is not an additional tax. The amount of any
backup withholding from a payment to you will be allowed as a
credit against your U.S. federal income tax liability and
may entitle you to a refund, provided that you furnish
the required information to the IRS.
Non-U.S. Holders. In
general (except as described below), backup withholding and
information reporting will not apply to payments received by a
non-U.S. holder
in the exchange offer and to dividends on our common stock paid
to a
non-U.S. holder,
or to proceeds from the disposition common stock by a
non-U.S. holder,
in each case, if the holder certifies under penalties of perjury
that it is a
non-United
States person and neither we nor our paying agent has actual
knowledge to the contrary.
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Any amounts withheld under the backup withholding rules will be
allowed as a credit against the
non-U.S. holders
U.S. federal income tax liability, provided the
required information is timely furnished to the IRS. In general,
if your Corporate Units or common stock are not held through a
qualified intermediary, the amount of payments made in the
exchange offer and the amount of dividends on our common stock,
the name and address of the beneficial owner and the amount, if
any, of tax withheld may be reported to the IRS.
THE U.S. FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE
DEPENDING UPON A HOLDERS PARTICULAR SITUATION. HOLDERS
SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE TAX CONSEQUENCES
TO THEM OF THE EXCHANGE OFFER, INCLUDING THE TAX CONSEQUENCES
UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
84
EMPLOYEE
RETIREMENT INCOME SECURITY ACT
A fiduciary of a pension, profit-sharing or other employee
benefit plan subject to the U.S. Employee Retirement Income
Security Act of 1974, as amended (ERISA) (each, a
Plan), should consider the fiduciary standards of
ERISA in the context of the Plans particular circumstances
before authorizing an investment in the securities offered
hereunder. Among other factors, the fiduciary should consider
whether the investment would satisfy the prudence and
diversification requirements of ERISA and would be consistent
with the documents and instruments governing the Plan, and
whether the investment would involve a prohibited transaction
under ERISA or the U.S. Internal Revenue Code (the
Code).
Section 406 of ERISA and Section 4975 of the Code
prohibit Plans, as well as individual retirement accounts, Keogh
plans any other plans that are subject to Section 4975 of
the Code (also Plans), from engaging in certain
transactions involving plan assets with persons who
are parties in interest under ERISA or
disqualified persons under the Code with respect to
the Plan. A violation of these prohibited transaction rules may
result in excise tax or other liabilities under ERISA or the
Code for those persons, unless exemptive relief is available
under an applicable statutory, regulatory or administrative
exemption. Employee benefit plans that are governmental plans
(as defined in Section 3(32) of ERISA), certain church
plans (as defined in Section 3(33) of ERISA) and
non-U.S. plans
(as described in Section 4(b)(4) of ERISA) (Non-ERISA
Arrangements) are not subject to the requirements of
Section 406 of ERISA or Section 4975 of the Code but
may be subject to similar provisions under applicable federal,
state, local,
non-U.S. or
other laws (Similar Laws).
The exchange of Corporate Units for our common stock and other
exchange consideration by a Plan or any entity whose underlying
assets include plan assets by reason of any
Plans investment in the entity (a Plan Asset
Entity) with respect to which we or certain of our
affiliates is or becomes a party in interest or disqualified
person may result in a prohibited transaction under ERISA or
Section 4975 of the Code, unless those securities are
acquired pursuant to an applicable exemption. The
U.S. Department of Labor has issued five prohibited
transaction class exemptions, or PTCEs, that may
provide exemptive relief if required for direct or indirect
prohibited transactions that may arise from the purchase or
holding of a security offered hereunder. These exemptions are
PTCE 84-14
(for certain transactions determined by independent qualified
professional asset managers),
PTCE 90-1
(for certain transactions involving insurance company pooled
separate accounts),
PTCE 91-38
(for certain transactions involving bank collective investment
funds),
PTCE 95-60
(for transactions involving certain insurance company general
accounts), and
PTCE 96-23
(for transactions managed by in-house asset managers). In
addition, ERISA Section 408(b)(17) and
Section 4975(d)(20) of the Code provide an exemption for
the purchase and sale of the securities offered hereby, provided
that neither the issuer of the securities offered hereby nor any
of its affiliates have or exercise any discretionary authority
or control or render any investment advice with respect to the
assets of any Plan involved in the transaction, and provided
further that the Plan pays no more and receives no less than
adequate consideration in connection with the
transaction (the service provider exemption). There
can be no assurance that all of the conditions of any such
exemptions will be satisfied. The assets of a Plan may include
the assets held in the general account of an insurance company
that are deemed to be plan assets under ERISA.
Any person participating in the exchange offer will be deemed to
have represented by participating in the exchange offer that it
either (1) is not a Plan, a Plan Asset Entity or a
Non-ERISA Arrangement and is not purchasing the security on
behalf of or with the assets of any Plan, a Plan Asset Entity or
Non-ERISA Arrangement or (2) the exchange of Corporate
Units for our common stock and other exchange consideration, and
subsequently holding of our common stock, will not constitute or
result in a non-exempt prohibited transaction under ERISA or the
Code or a similar violation under any applicable Similar Laws.
Due to the complexity of these rules and the penalties that may
be imposed upon persons involved in non-exempt prohibited
transactions, it is important that fiduciaries or other persons
considering participating in the exchange offer on behalf of or
with the assets of any Plan, a Plan Asset Entity or Non-ERISA
Arrangement consult with their counsel regarding the
availability of exemptive relief under any of the PTCEs listed
above, the service provider exemption or the potential
consequences of participating in the exchange offer under
Similar Laws, as applicable. Each participant in the exchange
offer has exclusive responsibility for ensuring that its
participating in the exchange offer and subsequently holding of
the common stock do not violate the fiduciary or prohibited
transaction rules of ERISA or the Code or any similar provisions
of Similar Laws. The issuance of common stock in
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the exchange offer to a Plan, Plan Asset Entity or Non-ERISA
Arrangement is in no respect a representation by us or any of
our affiliates or representatives that such a transaction meets
all relevant legal requirements with respect to investments by
any such Plans, Plan Asset Entities or Non-ERISA Arrangements
generally or any particular Plan, Plan Asset Entity or Non-ERISA
Arrangement or that participating in the exchange offer is
appropriate for such Plans, Plan Asset Entities or Non-ERISA
Arrangements generally or any particular Plan, Plan Asset Entity
or Non-ERISA Arrangement.
VALIDITY
OF THE COMMON STOCK
The validity of the common stock to be issued in the exchange
offer will be passed upon for us by Kathleen E. Shannon, Senior
Vice President and Deputy General Counsel of AIG, and
Sullivan & Cromwell LLP, New York, New York.
Ms. Shannon is regularly employed by AIG, participates in
various AIG employee benefit plans under which she may receive
shares of AIG common stock and currently beneficially owns less
than 1% of the outstanding shares of AIG common stock.
EXPERTS
The consolidated financial statements and the financial
statement schedules incorporated into this document by reference
to AIGs Current Report on
Form 8-K
dated August 6, 2010 and managements assessment of
the effectiveness of internal control over financial reporting
incorporated into this document by reference to AIGs
Annual Report on
Form 10-K
for the year ended December 31, 2009 have been so
incorporated in reliance upon the report (which report contains
an explanatory paragraph relating to AIGs dependence upon
the continued financial support of the U.S. government) of
PricewaterhouseCoopers LLP, an independent registered public
accounting firm, given on the authority of said firm as experts
in auditing and accounting.
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The
exchange agent for the exchange offer is:
Global
Bondholder Services Corporation
By
facsimile:
(For Eligible Institutions only):
(212) 430-3775/3779
Confirmation:
(212) 430-3774
Any questions or requests for assistance may be directed to the
dealer managers or the information agent at their respective
telephone numbers as set forth below. Any requests for
additional copies of this document, the letter of transmittal or
related documents may be directed to the information agent. A
holder may also contact such holders broker, dealer,
commercial bank, trust company or other nominee for assistance
concerning the exchange offer.
The
information agent for the exchange offer is:
Global
Bondholder Services Corporation
65
Broadway Suite 404
New York, New York 10006
Attn: Corporate Actions
Banks and Brokers call:
(212) 430-3774
Toll free
(866) 873-7700
The
dealer managers for the exchange offer are:
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BofA Merrill Lynch
Attn: Debt Advisory Services 214 North Tryon Street, 17th Floor Charlotte, NC 28255
Toll Free: (888) 292-0070 Collect: (980) 683-3215
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Citi
Attn: Liability Management Group 390 Greenwich Street, First Floor New York, New York 10013
Toll Free: (800) 558-3745 Collect: (212) 723-6106
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PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
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Item 20.
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Indemnification
of Directors and Officers
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The amended and restated certificate of incorporation of AIG
provides that AIG shall indemnify to the full extent permitted
by law any person made, or threatened to be made, a party to an
action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he
or she, or his or her testator or intestate, is or was a
director, officer or employee of AIG or serves or served any
other enterprise at the request of AIG. Section 6.4 of
AIGs by-laws contains a similar provision. The amended and
restated certificate of incorporation of AIG also provides that
a director will not be liable to AIG or its shareholders for
monetary damages for breach of fiduciary duty as a director,
except to the extent that the exemption from liability or
limitation thereof is not permitted by the Delaware General
Corporation Law.
Section 145 of the Delaware General Corporation Law permits
indemnification against expenses, fines, judgments and
settlements incurred by any director, officer, employee or agent
of a company in the event of pending, threatened or completed
civil, criminal, administrative or investigative proceedings, if
such person was, or was threatened to be, made a party by reason
of the fact that he or she is or was a director, officer,
employee or agent of the company. Section 145 also provides
that the indemnification provided for therein shall not be
deemed exclusive of any other rights to which those seeking
indemnification may otherwise be entitled.
AIG has entered into indemnification agreements with each of its
directors to the same effect as Section 6.4 of AIGs
by-laws.
In addition, AIG and its subsidiaries maintain a directors
and officers liability insurance policy.
See Exhibits Index which is incorporated herein by
reference.
The undersigned Registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in this registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission
pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20 percent
change in the maximum aggregate offering price set forth in the
Calculation of Registration Fee table in the
effective registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in this
registration statement or is contained in a form of prospectus
filed pursuant to Rule 424(b) that is part of the
registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
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(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under
the Securities Act of 1933 to any purchaser, each prospectus
filed pursuant to Rule 424(b) as part of a registration
statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses
filed in reliance on Rule 430A, shall be deemed to be part
of and included in the registration statement as of the date it
is first used after effectiveness; provided, however, that no
statement made in a registration statement or prospectus that is
part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of
contract of sale prior to such first use, supersede or modify
any statement that was made in the registration statement or
prospectus that was part of the registration statement or made
in any such document immediately prior to such date of first use.
(5) That, for the purpose of determining liability of the
registrant under the Securities Act of 1933 to any purchaser in
the initial distribution of the securities, in a primary
offering of securities of the undersigned Registrant pursuant to
this registration statement, regardless of the underwriting
method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any
of the following communications, the undersigned Registrant will
be a seller to the purchaser and will be considered to offer or
sell such securities to such purchaser:
(i) any preliminary prospectus or prospectus of the
undersigned Registrant relating to the offering required to be
filed pursuant to Rule 424;
(ii) any free writing prospectus relating to the offering
prepared by or on behalf of the undersigned Registrant or used
or referred to by the undersigned Registrant;
(iii) the portion of any other free writing prospectus
relating to the offering containing material information about
the undersigned Registrant or its securities provided by or on
behalf of the undersigned Registrant; and
(iv) any other communication that is an offer in the
offering made by the undersigned Registrant to the purchaser.
(b) That, for purposes of determining any liability under
the Securities Act of 1933, each filing of AIGs annual
report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant to
the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted against
the Registrant by such director, officer or controlling person
in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
(d) To respond to requests for information that is
incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business
day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means.
This includes information contained in documents filed
subsequent to the effective date of the registration statement
through the date of responding to the request.
(e) To supply by means of a post-effective amendment all
information concerning a transaction, and the company being
acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant has duly caused this registration
statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in The City of New York, State
of New York, on this
8th day
of October, 2010.
American International
Group, Inc.
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By:
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/s/ Robert
H. Benmosche
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Name: Robert H. Benmosche
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Title:
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President and Chief Executive Officer
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POWER OF
ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Robert H.
Benmosche and David L. Herzog, and each of them severally, his
or her true and lawful attorneys-in fact, with full power of
substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities to sign
this registration statement on
Form S-4
of American International Group, Inc. and any and all amendments
to such registration statement (including pre-effective and
post-effective amendments thereto) and to file the same, with
the exhibits hereto and thereto, and other documents in
connection herewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each
and every act and thing required and necessary to be done in and
about the foregoing as fully for all intents and purposes as he
or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities indicated on the date indicated.
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Signature
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Title
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Date
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/s/ Robert
H.
Benmosche (Robert
H. Benmosche)
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President, Chief Executive Officer and
Director (Principal Executive Officer)
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October 8, 2010
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/s/ David
L.
Herzog (David
L. Herzog)
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Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
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October 8, 2010
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/s/ Joseph
D.
Cook (Joseph
D. Cook)
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Vice President and Controller
(Principal Accounting Officer)
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October 8, 2010
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/s/ Laurette
T.
Koellner (Laurette
T. Koellner)
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Director
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October 8, 2010
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/s/ Donald
H.
Layton (Donald
H. Layton)
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Director
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October 8, 2010
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/s/ Christopher
S.
Lynch (Christopher
S. Lynch)
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Director
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October 8, 2010
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II-3
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Signature
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Title
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Date
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/s/ Arthur
C.
Martinez (Arthur
C. Martinez)
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Director
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October 8, 2010
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/s/ George
L. Miles,
Jr. (George
L. Miles, Jr.)
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Director
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October 8, 2010
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/s/ Henry
S.
Miller (Henry
S. Miller)
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Director
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October 8, 2010
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/s/ Robert
S.
Miller (Robert
S. Miller)
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Director
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October 8, 2010
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/s/ Suzanne
Nora
Johnson (Suzanne
Nora Johnson)
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Director
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October 8, 2010
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/s/ Morris
W.
Offit (Morris
W. Offit)
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Director
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October 8, 2010
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/s/ Ronald
A.
Rittenmeyer (Ronald
A. Rittenmeyer)
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Director
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October 8, 2010
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/s/ Douglas
M.
Steenland (Douglas
M. Steenland)
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Director
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October 8, 2010
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II-4
EXHIBITS INDEX
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Exhibit
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Number
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Description
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Location
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1.1
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Dealer Manager Agreement, dated as of October 8, 2010,
between AIG and Banc of America Securities LLC, Citigroup Global
Markets Inc. and Deutsche Bank Securities Inc.
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Filed Herewith.
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3(i)(a)
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Amended and Restated Certificate of Incorporation of AIG
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Incorporated by reference to Exhibit 3.1(a) to AIGs
Registration Statement on Form S-3, filed on July 17, 2009 (File
No. 333-160645)
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3(ii)(a)
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By-laws of AIG, amended August 10, 2009
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Incorporated by reference to Exhibit 3.1 to AIGs Current
Report on Form 8-K, filed June 16, 2008 (File No. 1-8787).
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4.1
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Specimen of certificate representing AIGs common stock,
par value $2.50 per share
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Incorporated by reference to Exhibit 4.1(a) to AIGs
Registration Statement on Form S-3, filed on July 17, 2009 (File
No. 333-160645)
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4.2
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Purchase Contract Agreement, dated as of May 16, 2008, between
AIG and The Bank of New York Mellon (formerly known as The Bank
of New York), as Purchase Contract Agent.
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Incorporated by reference to Exhibit 4.7 to AIGs Current
Report on Form 8-K, filed May 16, 2008 (File No. 1-8787).
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4.3
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Pledge Agreement, dated as of May 16, 2008, among AIG, The Bank
of New York Mellon (formerly known as The Bank of New York) as
the Purchase Contract Agent and Wilmington Trust Company, as
Collateral Agent, Custodial Agent and Securities Intermediary
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Incorporated by reference to Exhibit 4.9 to AIGs Current
Report on Form 8-K, filed May 16, 2008 (File No. 1-8787).
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4.4
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Junior Subordinated Debt Indenture between AIG and The Bank of
New York Mellon (formerly known as The Bank of New York), as
Trustee, dated as of March 13, 2007, the Sixth Supplemental
Indenture, dated as of May 16, 2008, the Seventh Supplemental
Indenture, dated as of May 16, 2008, and the Eighth Supplemental
Indenture, dated as of May 16, 2008, including the form of
junior subordinated debt security in Article Two thereof
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Junior Subordinated Debt Indenture, to AIGs Current Report
on Form 8-K, filed March 13, 2007 (File No. 1-8787); Sixth,
Seventh and Eighth Supplemental Indenture incorporated by
reference to Exhibits 4.1, 4.2 and 4.3, respectively, to
AIGs Current Report on Form 8-K, filed May 16, 2008
(File No. 1-8787)
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4.5
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Form of 5.67% Series B-1 Junior Subordinated Debenture
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Included in Exhibit 4.4.
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4.6
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Form of 5.82% Series B-2 Junior Subordinated Debenture
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Included in Exhibit 4.4.
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4.7
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Form of 5.89% Series B-3 Junior Subordinated Debenture
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Included in Exhibit 4.4.
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4.8
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Remarketing Agreement, dated as of May 16, 2008, among the
Company, Citigroup Global Markets Inc. and J.P. Morgan
Securities Inc. and The Bank of New York Mellon (formerly known
as The Bank of New York), as the purchase contract agent
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Filed Herewith.
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5.1
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Validity Opinion of Kathleen E. Shannon, Esq., Senior Vice
President and Deputy General Counsel
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Filed Herewith.
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8.1
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Tax Opinion of Sullivan & Cromwell LLP
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Filed Herewith.
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10.1
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Securities Purchase Agreement, dated as of November 25, 2008,
between AIG and United States Department of the Treasury
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Incorporated by reference to Exhibit 10.1 to AIGs Current
Report on Form 8-K, filed November 26, 2008 (File No. 1-8787).
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II-5
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Exhibit
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Number
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Description
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Location
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10.2
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Series C Perpetual, Convertible, Participating Preferred Stock
Purchase Agreement, dated as of March 1, 2009, between AIG
Credit Facility Trust, a trust established for the sole benefit
of the United States Treasury, and American International
Group, Inc.
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Incorporated by reference to Exhibit 10.1 to AIGs Current
Report on Form 8-K/A, filed March 13, 2009 (File No. 1-8787).
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10.3
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Amendment No. 2, dated October 7, 2010, to the Series C
Perpetual, Convertible Participating Preferred Stock Purchase
Agreement, between AIG Credit Facility Trust and AIG
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Incorporated by reference to Exhibit 10.1 to AIGs Current
Report on Form 8-K filed with the SEC on October 8, 2010
(File No. 1-8787).
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10.4
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Securities Exchange Agreement, dated as of April 17, 2009,
between the United States Department of the Treasury and AIG
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Incorporated by reference to Exhibit 10.1 to AIGs Current
Report on Form 8-K, filed on April 20, 2009 (File No. 1-8787).
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10.5
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Securities Purchase Agreement, dated as of April 17, 2009,
between AIG and the United States Department of the Treasury
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Incorporated by reference to Exhibit 10.1 to AIGs Current
Report on Form 8-K, filed on April 20, 2009 (File No. 1-8787).
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10.6
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Credit Agreement, dated as of September 22, 2008, between AIG
and Federal Reserve Bank of New York
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Incorporated by reference to Exhibit 99.1 to AlGs Current
Report on Form 8-K, filed September 26, 2008 (File No. 1-8787).
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10.7
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Amendment No. 2, dated as of November 9, 2008, to the Credit
Agreement dated as of September 22, 2008, between AIG and
Federal Reserve Bank of New York
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Incorporated by reference to Exhibit 10.4 to AIGs
Quarterly Report on Form 10-Q for the quarter ended September
30, 2008 (File No. 1-8787).
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10.8
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Amendment No. 3, dated as of April 17, 2009, to the Credit
Agreement, dated as of September 22, 2008, between AIG and
Federal Reserve Bank of New York
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Incorporated by reference to Exhibit 99.1 to AIGs Current
Report on Form 8-K, filed on April 20, 2009 (File No. 1-8787).
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10.9
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Amendment No. 4, dated as of December 1, 2009, to the Credit
Agreement dated as of September 22, 2008 between AIG and the
Federal Reserve Bank of New York
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Incorporated by reference to Exhibit 10.3 to AIGs Current
Report on Form 8-K filed with the SEC on December 1, 2009 (File
No. 1-8787).
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12
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Statement regarding computation of ratios of combined fixed
charges and preference dividends to earnings
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Incorporated by reference to Exhibit 12 to AIGs Annual
Report on Form 10-K for the year ended December 31, 2009 (File
No. 1-8787) and Exhibit 12 to AIGs Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2010 (File
No. 1-8787).
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21
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Subsidiaries of AIG
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Incorporated by reference to Exhibit 21 of AIGs Annual
Report on Form 10-K for the year ended December 31, 2009 (File
No. 1-8787).
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23.1
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Consent of PricewaterhouseCoopers LLP
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Filed Herewith.
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23.2
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Consent of Kathleen E. Shannon, Esq., Senior Vice President
and Deputy General Counsel
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(Included in Exhibit 5.1.)
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23.3
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Consent of Sullivan & Cromwell LLP
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(Included in Exhibit 8.1.)
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24
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Powers of Attorney
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(Included in the signature pages of this Registration Statement.)
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99.1
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Letter of Transmittal
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Filed Herewith.
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99.2
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Form of Notice of Withdrawal
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Filed Herewith.
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II-6