Exhibit 10.1
     
 
SECURITIES EXCHANGE AGREEMENT
dated as of
April 17, 2009
between
American International Group, Inc.
and
United States Department of the Treasury
 

 

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TABLE OF CONTENTS

              Page
Article 1
       
Exchange; Closing
       
 
       
1.1 Exchange
    1  
1.2 Closing
    1  
1.3 Interpretation
    3  
 
       
Article 2
       
Representations and Warranties
       
 
       
2.1 Disclosure
    4  
2.2 Representations and Warranties of the Company
    4  
2.3 Representations and Warranties of the Investor
    7  
 
       
Article 3
       
Covenants
       
 
       
3.1 Consummation of Exchange and Charter Amendment
    8  
3.2 Expenses
    9  
3.3 Exchange Listing
    9  
3.4 Certain Notifications Until Closing
    9  
3.5 Information and Confidentiality
    10  
3.6 Additional Inspection Rights
    10  
3.7 Exchange of Warrant
    11  
3.8 Exchange of Series E Preferred Stock
    12  
3.9 Compliance with the Employ American Workers Act
    12  
3.10 Compliance with Guidelines of the Home Affordable Modification Program
    12  
3.11 Internal Controls
    12  
 
       
Article 4
       
Additional Agreements
       
 
       
4.1 Purchase of Restricted Securities
    13  
4.2 Legends
    13  
4.3 Certain Transactions
    14  
4.4 Transfer of Series E Preferred Stock and Exchange Shares
    14  
4.5 Registration Rights
    14  
4.6 Depositary Shares
    26  
4.7 Restriction on Dividends and Repurchases
    26  
4.8 Repurchase of Investor Securities
    28  
4.9 Executive Compensation
    29  

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              Page
4.10 Restrictions on Lobbying
    32  
4.11 Restrictions on Expenses
    32  
4.12 Risk Management Committee
    32  
4.13 Dividend Rate Adjustment
    32  
 
       
Article 5
       
Miscellaneous
       
 
       
5.1 Termination
    33  
5.2 Survival of Representations and Warranties
    33  
5.3 Amendment
    33  
5.4 Waiver of Conditions
    33  
5.5 Governing Law: Submission to Jurisdiction, Etc
    34  
5.6 Notices
    34  
5.7 Definitions
    35  
5.8 Assignment
    35  
5.9 Severability
    35  
5.10 Entire Agreement
    36  
5.11 No Third Party Beneficiaries
    36  
5.12 Survival of Series D Preferred Stock Purchase Agreement
    36  

     
SCHEDULE A:
  ADDITIONAL TERMS AND CONDITIONS
SCHEDULE B:
  CAPITALIZATION
 
    LIST OF ANNEXES
 
   
ANNEX A:
  FORM OF CERTIFICATE OF DESIGNATIONS FOR PREFERRED STOCK
ANNEX B:
  FORM OF OPINION

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INDEX OF DEFINED TERMS

          Location of Term   Definition Affiliate  
5.7(c)
Agreement  
Recitals
Appraisal Procedure  
4.8(c)(i)
Benefit Plans  
1.2(d)(v)
Board of Directors  
2.2(e)
Business Combination  
5.8
business day  
1.3
Capitalization Date  
2.2(b)
Certificate of Designations  
1.2(d)(iv)
Certificate of Elimination  
1.2(d)(iii)
Charter  
2.2(a)
Closing  
1.2(a)
Closing Date  
1.2(a)
Common Stock  
2.1
Company  
Recitals
Company Material Adverse Effect  
2.1
Company Subsidiary; Company Subsidiaries  
2.2(d)(ii)
Compensation Regulations  
4.9(a)
Control  
4.8(c)(iii)
control; controlled by; under common control with  
5.7(c)
Covered Employee  
4.9(b)(3)
Credit Agreement  
3.5(a)
EESA  
1.2(d)(v)
Equity Interests  
5.7(b)
Exchange  
Recitals
Exchange Act  
3.4
Exchange Shares  
3.7(a)
Fair Market Value  
4.8(c)(ii)
FRBNY  
3.5(a)
Fund  
5.7(b)
Funds  
4.9(e)
GAAP  
2.1
Governmental Entities  
1.2(c)
Holder  
4.5(k)(i)
Holders’ Counsel  
4.5(k)(ii)
Indemnitee  
4.5(g)(i)
Information  
3.5(b)
Investor  
Recitals
Junior Stock  
4.7(c)
Parity Stock  
4.7(c)
Pending Underwritten Offering  
4.5(l)

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          Location of Term   Definition Permitted Repurchases  
4.7(a)(ii)
Piggyback Registration  
4.5(a)(iv)
Plans  
1.2(d)(v)
register; registered; registration  
4.5(k)(iii)
Registrable Securities  
4.5(k)(iv)
Registration Expenses  
4.5(k)(v)
Relevant Period  
1.2(d)(v)
Rule 144; Rule 144A; Rule 159A; Rule 405; Rule 415  
4.5(k)(vi)
SEC  
2.2(d)(iii)
Securities Act  
2.2(a)
Selling Expenses  
4.5(k)(vii)
Senior Executive Officers  
4.9(b)(1)
Senior Partners  
4.9(b)(1)
Series C Preferred Stock  
2.2(b)
Series C Preferred Stock Purchase Agreement  
3.7(a)
Series D Preferred Stock  
Recitals
Series D Preferred Stock Purchase Agreement  
4.7(a)
Series E Preferred Stock  
Recitals
Share Dilution Amount  
4.7(a)(ii)
Shelf Registration Statement  
4.5(a)(ii)
Signing Date  
2.1
Special Registration  
4.5(i)
Stockholder Proposal  
3.1(b)
subsidiary  
5.7(a)
Transfer  
4.4
Trust  
3.7(a)
Warrant  
3.7(a)
Warrant Exchange  
3.7(a)

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SECURITIES EXCHANGE AGREEMENT
Recitals:
     WHEREAS, on November 25, 2008, American International Group, Inc. (the
“Company”) issued to the United States Department of the Treasury (the
“Investor”) in a private placement 4,000,000 shares of the Series D Fixed Rate
Cumulative Perpetual Preferred Stock (the “Series D Preferred Stock”);
     WHEREAS, the Company and the Investor intend to exchange (the “Exchange”)
the 4,000,000 shares of Series D Preferred Stock for 400,000 shares of the
Series E Fixed Rate Non-Cumulative Perpetual Preferred Stock of the Company (the
“Series E Preferred Stock”);
     WHEREAS, the Exchange will be governed by this Securities Exchange
Agreement (including the Schedules and Annexes hereto) (the “Agreement”); and
     WHEREAS, the Investor has tendered consent to the issuance of the Series E
Preferred Stock.
     NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements set forth herein, the
parties agree as follows:
Article 1
Exchange; Closing
     1.1 Exchange. On the terms and subject to the conditions set forth in this
Agreement, the Investor agrees to deliver to the Company the share certificate
representing 4,000,000 shares of Series D Preferred Stock (the “Series D
Preferred Stock Certificate”) with an aggregate liquidation preference of
$40,000,000,000 and the Company agrees to deliver to the Investor a share
certificate representing 400,000 shares of the Series E Preferred Stock with an
aggregate liquidation preference of $41,604,576,000 in exchange for the Series D
Preferred Stock Certificate, at the Closing (as hereinafter defined).
     1.2 Closing.
     (a) On the terms and subject to the conditions set forth in this Agreement,
the closing of the Exchange (the “Closing”) will take place at the location
specified in Schedule A, at the time and on the date set forth in Schedule A, or
as soon as practicable thereafter, or at such other place, time and date as
shall be agreed between the Company and the Investor. The time and date on which
the Closing occurs is referred to in this Agreement as the “Closing Date”.
     (b) Subject to the fulfillment or waiver of the conditions to the Closing
in this Section 1.2, at the Closing (i) the Company will deliver the Series E
Preferred Stock to the Investor, as evidenced by one or more certificates dated
the Closing Date and bearing

 

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appropriate legends as hereinafter provided for and (ii) the Investor will
deliver the Series D Preferred Stock Certificate to the Company.
     (c) The respective obligations of each of the Investor and the Company to
consummate the Exchange are subject to the fulfillment (or waiver by the
Investor and the Company, as applicable) prior to the Closing of the conditions
that (i) any approvals or authorizations of all United States and other
governmental, regulatory or judicial authorities (collectively, “Governmental
Entities”) required for the consummation of the Exchange shall have been
obtained or made in form and substance reasonably satisfactory to each party and
shall be in full force and effect and all waiting periods required by United
States and other applicable law, if any, shall have expired and (ii) no
provision of any applicable United States or other law and no judgment,
injunction, order or decree of any Governmental Entity shall prohibit the
Exchange.
     (d) The obligation of the Investor to consummate the Exchange is also
subject to the fulfillment (or waiver by the Investor) at or prior to the
Closing of each of the following conditions:
     (i) (A) the representations and warranties of the Company set forth in
Sections 2.2(a) through (e) shall be true and correct in all material respects
as though made on and as of the Closing Date (other than representations and
warranties that by their terms speak as of another date, which representations
and warranties shall be true and correct in all material respects as of such
other date) and (B) the Company shall have performed in all material respects
all obligations required to be performed by it under this Agreement at or prior
to the Closing;
     (ii) the Investor shall have received a certificate signed on behalf of the
Company by a senior executive officer certifying to the effect that the
conditions set forth in Section 1.2(d)(i) have been satisfied;
     (iii) the Company shall have duly adopted, prior to the consummation of the
Exchange, and filed with the Secretary of State of Delaware, immediately after
the consummation of the Exchange, the certificate of elimination for the
Series D Preferred Stock (the “Certificate of Elimination”) and such filing
shall have been accepted;
     (iv) the Company shall have duly adopted, prior to the consummation of the
Exchange, and filed with the Secretary of State of Delaware, prior to the
consummation of the Exchange, the certificate of designations for the Series E
Preferred Stock in substantially the form attached hereto as Annex A (the
“Certificate of Designations”) and such filing shall have been accepted;
     (v) (A) the Company shall have taken all necessary action to effect such
changes to its existing compensation, bonus, incentive and other benefit plans,
arrangements and agreements (including golden parachute, severance and
employment agreements) (collectively, “Plans”, and together with all such plans,
arrangements and agreements hereafter adopted, created or entered into, “Benefit
Plans”) with respect to the Senior Executive Officers (and to the extent
necessary for such changes to be legally

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enforceable, each of the Senior Executive Officers shall have duly consented in
writing to such changes), as may be necessary, during the Relevant Period, in
order to comply with Section 111 of the Emergency Economic Stabilization Act of
2008, as amended (the “EESA”), including the provisions for Systemically
Significant Failing Institutions, as implemented by guidance or regulation
issued thereunder, including Notice 2008-PSSFI, that has been issued and is in
effect as of the Closing Date, including provisions prohibiting severance
payments to the Senior Executive Officers, (B) the Company shall have taken all
necessary action to effect such changes to its Plans with respect to the
U.S.-based Senior Partners (and to the extent necessary for such changes to be
legally enforceable, each of the U.S.-based Senior Partners shall have duly
consented in writing to such changes), as may be necessary, during the Relevant
Period, in order to comply with the requirements in Section 4.9 of this
Agreement (as the requirements referred to in such Section are in effect as of
the Closing Date), (C) the Company shall have used its best efforts to take all
necessary action to effect such changes to its Plans with respect to the other
Senior Partners (and to the extent necessary for such changes to be legally
enforceable, to have each of the other Senior Partners duly consent in writing
to such changes), as may be necessary, during the Relevant Period, in order to
comply with the requirements in Section 4.9 of this Agreement (as the
requirements referred to in such Section are in effect as of the Closing Date)
and (D) the Investor shall have received a certificate signed on behalf of the
Company by a senior executive officer certifying to the effect that the
conditions set forth in Section 1.2(d)(v)(A) and (B) have been satisfied;
“Relevant Period” means the period in which any obligation of the Company
arising from financial assistance provided under the Troubled Asset Relief
Program remains outstanding (excluding any period during which the Federal
government only holds warrants to purchase Common Stock);
     (vi) the Company shall have delivered to the Investor a written opinion
from counsel to the Company (which may be internal counsel), addressed to the
Investor and dated as of the Closing Date, in substantially the form attached
hereto as Annex B; and
     (vii) the Company shall have delivered certificates in proper form or, with
the prior consent of the Investor, evidence of shares in book-entry form,
evidencing the Series E Preferred Stock to the Investor or its designee(s).
     (e) The obligation of the Company to consummate the Exchange is also
subject to the condition that the Investor shall have delivered the Series D
Preferred Stock Certificate to the Company.
     1.3 Interpretation. When a reference is made in this Agreement to
“Recitals,” “Articles,” “Sections,” “Annexes” or “Schedules” such reference
shall be to a Recital, Article or Section of, or Annex or Schedule to, this
Agreement. The terms defined in the singular have a comparable meaning when used
in the plural, and vice versa. References to “herein”, “hereof”, “hereunder” and
the like refer to this Agreement as a whole and not to any particular section or
provision, unless the context requires otherwise. The table of contents and
headings contained in this Agreement are for reference purposes only and are not
part of this Agreement. Whenever

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the words “include,” “includes” or “including” are used in this Agreement, they
shall be deemed followed by the words “without limitation.” No rule of
construction against the draftsperson shall be applied in connection with the
interpretation or enforcement of this Agreement, as this Agreement is the
product of negotiation between sophisticated parties advised by counsel. All
references to “$” or “dollars” mean the lawful currency of the United States of
America. Except as expressly stated in this Agreement, all references to any
statute, rule or regulation are to the statute, rule or regulation as amended,
modified, supplemented or replaced from time to time (and, in the case of
statutes, include any rules and regulations promulgated under the statute) and
to any section of any statute, rule or regulation include any successor to the
section. References to a “business day” shall mean any day except Saturday,
Sunday and any day on which banking institutions in the State of New York
generally are authorized or required by law or other governmental actions to
close.
Article 2
Representations and Warranties
     2.1 Disclosure. “Company Material Adverse Effect” means a material adverse
effect on (i) the business, results of operation or financial condition of the
Company and its consolidated subsidiaries taken as a whole; provided, however,
that Company Material Adverse Effect shall not be deemed to include the effects
of (A) changes after the date of this Agreement (the “Signing Date”) in general
business, economic or market conditions (including changes generally in
prevailing interest rates, credit availability and liquidity, currency exchange
rates and price levels or trading volumes in the United States or foreign
securities or credit markets), or any outbreak or escalation of hostilities,
declared or undeclared acts of war or terrorism, in each case generally
affecting the industries in which the Company and its subsidiaries operate,
(B) changes or proposed changes after the Signing Date in generally accepted
accounting principles in the United States (“GAAP”) or regulatory accounting
requirements, or authoritative interpretations thereof, (C) changes or proposed
changes after the Signing Date in securities, insurance and other laws of
general applicability or related policies or interpretations of Governmental
Entities (in the case of each of these clauses (A), (B) and (C), other than
changes or occurrences to the extent that such changes or occurrences have or
would reasonably be expected to have a materially disproportionate adverse
effect on the Company and its consolidated subsidiaries taken as a whole
relative to comparable U.S. insurance or financial services organizations), or
(D) changes in the market price or trading volume of the Company’s common stock,
par value $2.50 per share (“Common Stock”), or any other equity, equity-related
or debt securities of the Company or its consolidated subsidiaries (it being
understood and agreed that the exception set forth in this clause (D) does not
apply to the underlying reason giving rise to or contributing to any such
change); or (ii) the ability of the Company to consummate the Exchange and the
other transactions contemplated by this Agreement and perform its obligations
hereunder on a timely basis.
     2.2 Representations and Warranties of the Company. The Company represents
and warrants to the Investor that as of the Signing Date and as of the Closing
Date (or such other date specified herein):

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     (a) Organization, Authority and Significant Subsidiaries. The Company has
been duly incorporated and is validly existing and in good standing under the
laws of the State of Delaware, with the necessary power and authority to own its
properties and conduct its business in all material respects as currently
conducted; except as has not had, individually or in the aggregate, and would
not reasonably be expected to have a Company Material Adverse Effect, the
Company has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other jurisdiction in
which it owns or leases properties or conducts any business so as to require
such qualification; each subsidiary of the Company that is a “significant
subsidiary” within the meaning of Rule 1-02(w) of Regulation S-X under the
Securities Act of 1933 (the “Securities Act”) has been duly organized and is
validly existing in good standing under the laws of its jurisdiction of
organization. The Restated Certificate of Incorporation of the Company, as
amended (the “Charter”) and bylaws of the Company, copies of which have been
provided to the Investor prior to the Signing Date, are true, complete and
correct copies of such documents as in full force and effect as of the Signing
Date.
     (b) Capitalization. The authorized capital stock of the Company, and the
outstanding capital stock of the Company (including securities convertible into,
or exercisable or exchangeable for, capital stock of the Company) as of the most
recent fiscal month-end preceding the Signing Date, or such other date as the
parties may agree (the “Capitalization Date”), is set forth on Schedule B. The
outstanding shares of capital stock of the Company have been duly authorized and
are validly issued and outstanding, fully paid and non-assessable, and subject
to no preemptive rights (and were not issued in violation of any preemptive
rights). As of the Signing Date, the Company does not have outstanding any
securities or other obligations providing the holder the right to acquire Common
Stock that is not reserved for issuance, and the Company has not made any other
commitment to authorize, issue or sell any Common Stock, except as specified on
Schedule B and including the Series C Perpetual, Convertible, Participating
Preferred Stock, par value $5.00 per share (the “Series C Preferred Stock”).
Since the Capitalization Date, the Company has not issued any shares of Common
Stock, other than (i) shares issued upon the exercise of stock options or
delivered under other equity-based awards or other convertible securities or
warrants which were issued and outstanding on the Capitalization Date and
disclosed on Schedule B and (ii) shares disclosed on Schedule B.
     (c) Series E Preferred Stock. The Series E Preferred Stock has been duly
and validly authorized, and, when issued and delivered pursuant to this
Agreement, such Series E Preferred Stock will be duly and validly issued and
fully paid and non-assessable, will not be issued in violation of any preemptive
rights, and, until the approval by the Company’s stockholders of the amendment
to the Charter to cause the Series D Preferred Stock and any other series of
Serial Preferred Stock (as defined in the Charter) issued to the Investor to
rank senior to the Series C Preferred Stock and any subsequently issued series
of Serial Preferred Stock (as defined in the Charter) that is not initially
issued to the Investor, will rank pari passu with all other series or classes of
the Company’s preferred stock, whether or not issued or outstanding, with
respect to the payment of dividends and the distribution of assets in the event
of any dissolution, liquidation or winding up of the Company.

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     (d) Authorization, Enforceability.
     (i) The Company has the corporate power and authority to execute and
deliver this Agreement and, subject to the approval of its stockholders
described in Section 3.1(b) and the corporate authorizations necessary to effect
the transactions contemplated by Sections 3.7 and 3.8, to carry out its
obligations hereunder (which includes the issuance of the Series E Preferred
Stock). The execution, delivery and performance by the Company of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Company and its
stockholders, and no further approval or authorization is required on the part
of the Company or its stockholders, except as described in Section 3.1(b) and
the corporate authorizations necessary to effect the transactions contemplated
by Sections 3.7 and 3.8. This Agreement is a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors’ rights
generally and general equitable principles, regardless of whether such
enforceability is considered in a proceeding at law or in equity.
     (ii) The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby and
compliance by the Company with the provisions hereof, will not (A) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration of,
or result in the creation of, any lien, security interest, charge or encumbrance
upon any of the properties or assets of the Company or any subsidiary of the
Company (each a “Company Subsidiary” and, collectively, the “Company
Subsidiaries”) under any of the terms, conditions or provisions of (i) subject
to the approval of the Company’s stockholders as described in Section 3.1(b) and
the corporate authorizations necessary to effect the transactions contemplated
by Sections 3.7 and 3.8, its organizational documents or (ii) any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which the Company or any Company Subsidiary is a
party or by which it or any Company Subsidiary may be bound, or to which the
Company or any Company Subsidiary or any of the properties or assets of the
Company or any Company Subsidiary may be subject, or (B) subject to compliance
with the statutes and regulations referred to in the next paragraph, violate any
statute, rule or regulation or any judgment, ruling, order, writ, injunction or
decree applicable to the Company or any Company Subsidiary or any of their
respective properties or assets except, in the case of clauses (A)(ii) and (B),
for those occurrences that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Company Material Adverse Effect.
     (iii) Other than the filing of the Certificate of Designations with the
Secretary of State of Delaware, the Certificate of Elimination with the
Secretary of State of

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Delaware, any current report on Form 8-K required to be filed with the
Securities and Exchange Commission (the “SEC”), such filings and approvals as
are required to be made or obtained under any state “blue sky” laws, the filing
of any proxy statement contemplated by Section 3.1(b), any filings or approvals
required in connection with the transactions contemplated by Sections 3.7 and
3.8 and such as have been made or obtained, no notice to, filing with, exemption
or review by, or authorization, consent or approval of, any Governmental Entity
is required to be made or obtained by the Company in connection with the
consummation by the Company of the Exchange except for any such notices,
filings, exemptions, reviews, authorizations, consents and approvals the failure
of which to make or obtain would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
     (e) Anti-takeover Provisions and Rights Plan. The Board of Directors of the
Company (the “Board of Directors”) has taken all necessary action to ensure that
the transactions contemplated by this Agreement and the consummation of the
transactions contemplated hereby will be exempt from any anti-takeover or
similar provisions of the Company’s Charter and bylaws, and any other provisions
of any applicable “moratorium”, “control share”, “fair price”, “interested
stockholder” or other anti-takeover laws and regulations of any jurisdiction.
The Company has taken all actions necessary to render any stockholders’ rights
plan of the Company inapplicable to this Agreement and the consummation of the
transactions contemplated hereby.
     (f) Offering of Securities. Neither the Company nor any person acting on
its behalf has taken any action (including any offering of any securities of the
Company under circumstances which would require the integration of such offering
with the offering of any of the Series E Preferred Stock under the Securities
Act, and the rules and regulations of the SEC promulgated thereunder), which
might subject the offering or issuance of any of the Series E Preferred Stock to
the Investor pursuant to this Agreement to the registration requirements of the
Securities Act.
     (g) Brokers and Finders. No broker, finder or investment banker is entitled
to any financial advisory, brokerage, finder’s or other fee or commission in
connection with this Agreement or the transactions contemplated hereby based
upon arrangements made by or on behalf of the Company or any Company Subsidiary
for which the Investor could have any liability.
     (h) No Inconsistent Agreement. Prior to the Signing Date, the Company has
not entered into an agreement with respect to its securities that is
inconsistent with the order of priority set forth in Section 4.5(a)(vi) for the
offering of securities under a Shelf Registration Statement pursuant to
Section 4.5(a)(ii) or a Piggyback Registration under Section 4.5(a)(iv).
     2.3 Representations and Warranties of the Investor. The Investor represents
and warrants to the Company that as of the Signing Date and as of the Closing
Date:
     (a) Ownership of Series D Preferred Stock. The Investor has good and
unencumbered title to 4,000,000 shares of Series D Preferred Stock, free and
clear of all pledges, security

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interests, liens, claims, encumbrances, rights of first refusal, and options of
any kind whatsoever (other than any applicable federal and state securities law
restrictions).
     (b) No Encumbrances. The Investor has full right, power and authority to
consummate the Exchange and upon completion of the Exchange the Company shall
receive the 4,000,000 shares of Series D Preferred Stock, free and clear of all
pledges, security interests, liens, claims, encumbrances, rights of first
refusal, and options of any kind whatsoever (other than any applicable federal
and state securities law restrictions).
Article 3
Covenants
     3.1 Consummation of Exchange and Charter Amendment. (a) Subject to the
terms and conditions of this Agreement, each of the parties will use its
commercially reasonable efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Exchange as promptly as practicable and otherwise to enable consummation of
the transactions contemplated hereby and shall use commercially reasonable
efforts to cooperate with the other party to that end.
     (b) At and prior to the next annual meeting of the Company’s stockholders
following the Closing Date, the Company shall take all action necessary under
all applicable laws and regulations and the Charter to vote at such meeting on a
proposal (the “Stockholder Proposal”) to amend the Charter to (i) permit the
Board of Directors to issue classes of Serial Preferred Stock (as defined in the
Charter) that are not of equal rank, such that the Board of Directors or a duly
authorized committee thereof may, prior to issuance, in the resolution or
resolutions providing for the issue of shares of each particular series, provide
whether the shares of such series rank senior or junior to any other class of
Serial Preferred Stock as to the right to receive dividends and the right to
receive payments out of the assets of the Company upon voluntary or involuntary
liquidation, dissolution or winding up of the Company and (ii) cause the
Series E Preferred Stock and any other series of Serial Preferred Stock
subsequently issued to the Investor to rank senior to the Series C Preferred
Stock and any other subsequently issued series of Serial Preferred Stock that is
not issued to the Investor, so that as a result of these amendments the Series C
Preferred Stock and any subsequently issued series of Serial Preferred Stock
that ranks pari passu with or junior to the Series C Preferred Stock would not
be entitled to vote on the subsequent creation or issuance of any such senior
Serial Preferred Stock. In connection with such meeting, the Company shall
prepare (and the Investor will reasonably cooperate with the Company to prepare)
and file with the SEC a preliminary proxy statement, shall use its reasonable
best efforts to respond to any comments of the SEC or its staff thereon and to
cause a definitive proxy statement related to such stockholders’ meeting to be
mailed to the Company’s stockholders not more than five business days after
clearance thereof by the SEC. The Company shall notify the Investor promptly of
the receipt of any comments from the SEC or its staff with respect to the proxy
statement and of any request by the SEC or its staff for amendments or
supplements to such proxy statement or for additional information and will
supply the Investor

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with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to such proxy statement. If at any time prior to such stockholders’
meeting there shall occur any event that is required to be set forth in an
amendment or supplement to the proxy statement, the Company shall as promptly as
practicable prepare and mail to its stockholders such an amendment or
supplement. Each of the Investor and the Company agrees promptly to correct any
information provided by it or on its behalf for use in the proxy statement if
and to the extent that such information shall have become false or misleading in
any material respect, and the Company shall as promptly as practicable prepare
and mail to its stockholders an amendment or supplement to correct such
information to the extent required by applicable laws and regulations. The
Company shall consult with the Investor prior to filing any proxy statement, or
any amendment or supplement thereto, and provide the Investor with a reasonable
opportunity to comment thereon. In the event that the approval of the
Stockholder Proposal is not obtained at such annual stockholders meeting, the
Company shall include a proposal to approve such proposal at a meeting of its
stockholders no less than once in each subsequent twelve-month period beginning
on June 1, 2009 until such approval is obtained or made.
     (c) None of the information supplied by the Company or any of the Company
Subsidiaries for inclusion in any proxy statement in connection with any such
stockholders meeting of the Company will, at the date it is filed with the SEC,
when first mailed to the Company’s stockholders and at the time of any
stockholders meeting, and at the time of any amendment or supplement thereof,
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
     3.2 Expenses. Unless otherwise provided in this Agreement, each of the
parties hereto will bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated under this Agreement,
including fees and expenses of its own financial or other consultants,
investment bankers, accountants and counsel.
     3.3 Exchange Listing. If requested by the Investor, the Company shall
promptly use its reasonable best efforts to cause the Series E Preferred Stock
to be approved for listing on a national securities exchange as promptly as
practicable following such request.
     3.4 Certain Notifications Until Closing. From the Signing Date until the
Closing, the Company shall promptly notify the Investor of (i) any fact, event
or circumstance of which it is aware and which would reasonably be expected to
cause any representation or warranty of the Company contained in this Agreement
to be untrue or inaccurate in any material respect or to cause any covenant or
agreement of the Company contained in this Agreement not to be complied with or
satisfied in any material respect and (ii) except as set forth or incorporated
by reference in the Company’s Annual Report on Form 10-K for the most recently
completed fiscal year of the Company filed with the SEC or in the Company’s
other publicly available reports and forms filed with or furnished to the SEC
under Sections 13(a), 14(a) or 15(d) of the Securities Exchange Act of 1934, as
amended from time to time (the “Exchange Act”), on or after December 31, 2008
and prior to the Signing Date, any fact, circumstance, event, change,

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occurrence, condition or development of which the Company is aware and which,
individually or in the aggregate, has had or would reasonably be expected to
have a Company Material Adverse Effect; provided, however, that delivery of any
notice pursuant to this Section 3.4 shall not limit or affect any rights of or
remedies available to the Investor; provided, further, that a failure to comply
with this Section 3.4 shall not constitute a breach of this Agreement or the
failure of any condition set forth in Section 1.2 to be satisfied unless the
underlying Company Material Adverse Effect or material breach would
independently result in the failure of a condition set forth in Section 1.2 to
be satisfied.
     3.5 Information and Confidentiality.
     (a) Until such time as the Investor ceases to own any Series E Preferred
Stock, or except as otherwise agreed, the Company shall provide the Investor
(i) the information required to be provided by the Company to the Federal
Reserve Bank of New York (“FRBNY”) pursuant to Section 5.04 of the Credit
Agreement dated as of September 22, 2008 between the Company and the FRBNY, as
amended from time to time (the “Credit Agreement”) and within the time periods
for delivery thereof specified in the Credit Agreement and (ii) the notices
required by Section 5.05 of the Credit Agreement and within the time periods for
delivery thereof specified in the Credit Agreement. After the termination of the
Credit Agreement, such informational and notice requirements as are provided in
Section 5.04 and Section 5.05 of the Credit Agreement shall remain in full force
and effect until such time as the Investor no longer owns any Series E Preferred
Stock. In addition, during the Relevant Period, except as otherwise agreed, the
Company shall provide the Investor a bi-annual report on the steps taken by the
Company to comply in all respects with Section 111 of the EESA, including the
provisions for Systemically Significant Failing Institutions, as implemented by
any guidance or regulation issued thereunder as of the date of such report,
including Notice 2008-PSSFI, any amendments to Notice 2008-PSSFI, or any other
guidance or regulation applicable to the Company, and with Section 4.9 of this
Agreement. In addition, the Company shall promptly provide the Investor such
other information and notices as the Investor may reasonably request from time
to time.
     (b) The Investor will use reasonable best efforts to hold, and will use
reasonable best efforts to cause its agents, consultants, contractors and
advisors to hold, in confidence all non-public records, books, contracts,
instruments, computer data and other data and information (collectively,
“Information”) concerning the Company furnished or made available to it by the
Company or its representatives pursuant to this Agreement (including pursuant to
Sections 3.5 and 3.6) (except to the extent that such information can be shown
to have been (i) previously known by such party on a non-confidential basis,
(ii) in the public domain through no fault of such party or (iii) later lawfully
acquired from other sources by the party to which it was furnished (and without
violation of any other confidentiality obligation)); provided that nothing
herein shall prevent the Investor from disclosing any Information to the extent
required by applicable laws or regulations or by any subpoena or similar legal
process.
     3.6 Additional Inspection Rights. During the Relevant Period, the Company
shall permit (i) the Investor and its agents, consultants, contractors and
advisors, (ii) the Special Inspector General of the Troubled Asset Relief
Program, and (iii) the Comptroller General of the

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United States access to personnel and any books, papers, records or other data
delivered to it pursuant to this Agreement or otherwise in its possession,
custody or control, in each case to the extent relevant to ascertaining
compliance with the terms and conditions set forth in this Agreement, during
normal business hours and upon reasonable notice to the Company; provided that
prior to disclosing any information pursuant to clause (i), (ii) or (iii), the
Investor, the Special Inspector General of the Troubled Asset Relief Program and
the Comptroller General of the United States shall have agreed, with respect to
documents obtained under this Agreement in furtherance of their respective
functions, to follow applicable laws and regulations (and the applicable
customary policies and procedures, including those for inspectors general)
regarding the dissemination of confidential materials, including redacting
confidential information from the public version of its reports, as appropriate,
and soliciting input from the Company as to information that should be afforded
confidentiality. The Investor represents that it has been informed by the
Special Inspector General of the Troubled Asset Relief Program and the
Comptroller General of the United States that they, before making any request
for access or information pursuant to their oversight and audit functions, will
establish a protocol to avoid, to the extent reasonably possible, duplicative
requests. Nothing in this Section 3.6 shall be construed to limit the authority
that the Special Inspector General of the Troubled Asset Relief Program or the
Comptroller General of the United States have under law.
     3.7 Exchange of Warrant. (a) If, at the meeting of the Company’s
shareholders referred to in Section 6.2(a) of the Series C Perpetual,
Convertible, Participating Preferred Stock Purchase Agreement, dated as of
March 1, 2009 (the “Series C Preferred Stock Purchase Agreement”), between the
Company and the AIG Credit Facility Trust, a trust established for the sole
benefit of the United States Treasury (the “Trust”), the Common Stock Amendment
Proposal (as defined in the Series C Preferred Stock Purchase Agreement) is not
approved by the holders of Company’s capital stock but the Series C Preferred
Stock Amendment Proposal and the Serial Preferred Stock Amendment Proposal (each
as defined in the Series C Preferred Stock Purchase Agreement) are so approved,
the Investor shall have the right, at any time and in its sole discretion, by
giving a notice in accordance with Section 5.6 to exchange the warrant issued to
the Investor on November 25, 2008 (the “Warrant”) for 53,798,766 shares of the
Company’s Series C Preferred Stock (after giving effect to the Series C
Preferred Stock Amendment Proposal and the Serial Preferred Stock Amendment
Proposal referred to above and subject to adjustment for any stock splits and
reverse stock splits effected between the Closing Date and the date on which
such exchange is effected) (the “Warrant Exchange” and the shares of Series C
Preferred Stock received in such exchange, the “Exchange Shares”). In order to
effect the Warrant Exchange, the Company shall comply with the relevant
provisions of Sections 6.1 and 6.2 of the Series C Preferred Stock Purchase
Agreement as if such sections were set forth in full in this Agreement, except
that the Series C Preferred Stock Amendment Proposal (as defined in the Series C
Preferred Stock Purchase Agreement) shall be deemed to include an amendment to
the Certificate of Designations for the Company’s Series C Preferred Stock to
authorize the issuance of the Exchange Shares.
     (b) The Company acknowledges that the Investor has provided consideration
for the Warrant Exchange in the form of its agreement to consummate the Exchange
and that the value of such agreement is at least equal to the par value of the
Exchange Shares.

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     3.8 Exchange of Series E Preferred Stock. As soon as practicable following
the filing of the Certificate of Elimination with the Secretary of State of
Delaware, the Company shall reserve for issuance 4,160,458 authorized and
unissued shares of Serial Preferred Stock and at any time prior to the date the
Investor ceases to own any shares of Series E Preferred Stock, the Investor
shall have the right, in its sole discretion, by giving a notice in accordance
with Section 5.6 to cause the Company to take all action necessary under all
applicable laws and regulations and the Charter to exchange any of the shares of
Series E Preferred Stock owned by the Investor for a new series of Serial
Preferred Stock with the same terms as the Series E Preferred Stock (except that
the liquidation preference of such new series shall be $10,000 per share, or
such liquidation preference per share as shall be reasonably specified by the
Investor and the aggregate liquidation preference following such exchange shall
be equal to the aggregate liquidation preference of the Series E Preferred Stock
prior to such exchange), in accordance with an exchange agreement substantially
in the form of this Agreement.
     3.9 Compliance with the Employ American Workers Act. The Company shall, and
the Company shall take all necessary action to ensure that the Company
Subsidiaries, as applicable, shall, comply in all respects with the provisions
of the Employ American Workers Act (Section 1611 of Division A, Title XVI of the
American Recovery and Reinvestment Act of 2009 (P.L. 111-5)), as in effect from
time to time.
     3.10 Compliance with Guidelines of the Home Affordable Modification
Program. The Company shall take all necessary action to ensure that all Company
Subsidiaries that are eligible for the Home Affordable Modification Program
shall execute a Commitment to Purchase Financial Instrument and Servicer
Participation Agreement with the Federal National Mortgage Association within
90 days of the Commencement Date and otherwise comply with (i) the Home
Affordable Modification Program Guidelines issued by the Investor on March 4,
2009, (ii) Supplemental Directive 09-01 issued by the Investor dated April 6,
2009 and (iii) any other guidelines or regulations to be issued by the Investor
as part of the Home Affordable Modification Program.
     3.11 Internal Controls. The Company shall (i) promptly establish
appropriate internal controls with respect to compliance with each of the
Company’s covenants and agreements set forth in Sections 4.7 through 4.12;
(ii) prepare a report on a quarterly basis regarding the implementation of such
internal controls and the Company’s compliance (including any instances of
non-compliance) with such covenants and agreements; (iii) deliver such quarterly
report to the Investor in accordance with Section 5.6 and no later than the date
by which its Quarterly Report on Form 10-Q or Annual Report on Form 10-K is
filed with the SEC; and (iv) provide a signed certification from a senior
executive officer of the Company to the Investor that such quarterly report is
accurate to the best of his or her knowledge, which certification shall be made
subject to the requirements and penalties set forth in Title 18, United States
Code, Section 1001.

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Article 4
Additional Agreements
     4.1 Purchase of Restricted Securities. The Investor acknowledges that the
Series E Preferred Stock and the Exchange Shares have not been registered under
the Securities Act or under any state securities laws. The Investor (a) is
acquiring the Series E Preferred Stock and, if delivered, the Exchange Shares
pursuant to an exemption from registration under the Securities Act with no
present intention to distribute them to any person in violation of the
Securities Act or any applicable U.S. state securities laws, (b) will not sell
or otherwise dispose of any of the Series E Preferred Stock and, if delivered,
the Exchange Shares, except in compliance with the registration requirements or
exemption provisions of the Securities Act and any applicable U.S. state
securities laws, and (c) has such knowledge and experience in financial and
business matters and in investments of this type that it is capable of
evaluating the merits and risks of the Exchange and of making an informed
investment decision.
     4.2 Legends.
     (a) The Investor agrees that all certificates or other instruments
representing the Exchange Shares will bear a legend substantially to the
following effect:
“THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY OR
THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.”
     (b) The Investor agrees that all certificates or other instruments
representing the Series E Preferred Stock will bear a legend substantially to
the following effect:
“THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF
EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OR SUCH LAWS. EACH PURCHASER OF THE
SECURITIES REPRESENTED BY THIS INSTRUMENT IS NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER. ANY TRANSFEREE OF THE SECURITIES REPRESENTED BY THIS INSTRUMENT
BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL
BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (2) AGREES THAT

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IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THE SECURITIES REPRESENTED BY THIS
INSTRUMENT EXCEPT (A) PURSUANT TO A REGISTRATION STATEMENT WHICH IS THEN
EFFECTIVE UNDER THE SECURITIES ACT, (B) FOR SO LONG AS THE SECURITIES
REPRESENTED BY THIS INSTRUMENT ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO
A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO THE ISSUER OR
(D) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM
THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.”
     (c) In the event that any shares of the Series E Preferred Stock or the
Exchange Shares (i) become registered under the Securities Act or (ii) are
eligible to be transferred without restriction in accordance with Rule 144 or
another exemption from registration under the Securities Act (other than
Rule 144A), the Company shall issue new certificates or other instruments
representing such Series E Preferred Stock or the Exchange Shares, which shall
not contain the applicable legends in Section 4.2(a) and (b) above; provided
that the Investor surrenders to the Company the previously issued certificates
or other instruments.
     4.3 Certain Transactions. The Company will not merge or consolidate with,
or sell, transfer or lease all or substantially all of its property or assets
to, any other party unless (i) the successor, transferee or lessee party (or its
ultimate parent entity), as the case may be (if not the Company), expressly
assumes the due and punctual performance and observance of each and every
covenant, agreement and condition of this Agreement to be performed and observed
by the Company or (ii) the Investor agrees otherwise in writing.
     4.4 Transfer of Series E Preferred Stock and Exchange Shares. Subject to
compliance with applicable securities laws, the Investor shall be permitted to
transfer, sell, assign or otherwise dispose of (“Transfer”) all or a portion of
the Series E Preferred Stock or the Exchange Shares at any time, and the Company
shall take all steps as may be reasonably requested by the Investor to
facilitate the Transfer of the Series E Preferred Stock or the Exchange Shares.
     4.5 Registration Rights.
     (a) Registration.
     (i) Subject to the terms and conditions of this Agreement, the Company
covenants and agrees that as promptly as practicable after notification from the
Investor, and in any event no later than 15 days after such notification, the
Company shall prepare

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and file with the SEC a Shelf Registration Statement covering all Registrable
Securities (or otherwise designate an existing Shelf Registration Statement
filed with the SEC to cover the Registrable Securities), and, to the extent the
Shelf Registration Statement has not theretofore been declared effective or is
not automatically effective upon such filing, the Company shall use reasonable
best efforts to cause such Shelf Registration Statement to be declared or become
effective and to keep such Shelf Registration Statement continuously effective
and in compliance with the Securities Act and usable for resale of such
Registrable Securities for a period from the date of its initial effectiveness
until such time as there are no Registrable Securities remaining (including by
refiling such Shelf Registration Statement (or a new Shelf Registration
Statement) if the initial Shelf Registration Statement expires). So long as the
Company is a well-known seasoned issuer (as defined in Rule 405 under the
Securities Act) at the time of filing of the Shelf Registration Statement with
the SEC, such Shelf Registration Statement shall be designated by the Company as
an automatic Shelf Registration Statement.
     (ii) Any registration pursuant to Section 4.5(a)(i) shall be effected by
means of a shelf registration on an appropriate form under Rule 415 under the
Securities Act (a “Shelf Registration Statement”). If the Investor or any other
Holder intends to distribute any Registrable Securities by means of an
underwritten offering it shall promptly so advise the Company and the Company
shall take all reasonable steps to facilitate such distribution, including the
actions required pursuant to Section 4.5(c); provided that the Company shall not
be required to facilitate an underwritten offering of Registrable Securities
unless the expected gross proceeds from such offering exceed $200 million. The
lead underwriters in any such distribution shall be selected by the Holders of a
majority of the Registrable Securities to be distributed.
     (iii) The Company shall not be required to effect a registration (including
a resale of Registrable Securities from an effective Shelf Registration
Statement) or an underwritten offering pursuant to Section 4.5(a): (A) with
respect to securities that are not Registrable Securities; or (B) if the Company
has notified the Investor and all other Holders that in the good faith judgment
of the Board of Directors, it would be materially detrimental to the Company or
its securityholders for such registration or underwritten offering to be
effected at such time, in which event the Company shall have the right to defer
such registration for a period of not more than 45 days after receipt of the
request of the Investor or any other Holder; provided that such right to delay a
registration or underwritten offering shall be exercised by the Company (1) only
if the Company has generally exercised (or is concurrently exercising) similar
black-out rights against holders of similar securities that have registration
rights and (2) not more than three times in any 12-month period and not more
than 90 days in the aggregate in any 12-month period.
     (iv) If during any period when an effective Shelf Registration Statement is
not available, the Company proposes to register any of its equity securities,
other than a registration pursuant to Section 4.5(a)(i) or a Special
Registration, and the registration form to be filed may be used for the
registration or qualification for distribution of Registrable Securities, the
Company will give prompt written notice to the Investor and

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all other Holders of its intention to effect such a registration (but in no
event less than ten days prior to the anticipated filing date) and will include
in such registration all Registrable Securities with respect to which the
Company has received written requests for inclusion therein within ten business
days after the date of the Company’s notice (a “Piggyback Registration”). Any
such person that has made such a written request may withdraw its Registrable
Securities from such Piggyback Registration by giving written notice to the
Company and the managing underwriter, if any, on or before the fifth business
day prior to the planned effective date of such Piggyback Registration. The
Company may terminate or withdraw any registration under this Section 4.5(a)(iv)
prior to the effectiveness of such registration, whether or not the Investor or
any other Holders have elected to include Registrable Securities in such
registration.
     (v) If the registration referred to in Section 4.5(a)(iv) is proposed to be
underwritten, the Company will so advise the Investor and all other Holders as a
part of the written notice given pursuant to Section 4.5(a)(iv). In such event,
the right of the Investor and all other Holders to registration pursuant to
Section 4.5(a) will be conditioned upon such persons’ participation in such
underwriting and the inclusion of such person’s Registrable Securities in the
underwriting if such securities are of the same class of securities as the
securities to be offered in the underwritten offering, and each such person will
(together with the Company and the other persons distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by the
Company; provided that the Investor (as opposed to other Holders) shall not be
required to indemnify any person in connection with any registration. If any
participating person disapproves of the terms of the underwriting, such person
may elect to withdraw therefrom by written notice to the Company, the managing
underwriters and the Investor (if the Investor is participating in the
underwriting).
     (vi) If either (x) the Company grants “piggyback” registration rights to
one or more third parties to include their securities in an underwritten
offering under a Shelf Registration Statement pursuant to Section 4.5(a)(ii) or
(y) a Piggyback Registration under Section 4.5(a)(iv) relates to an underwritten
offering on behalf of the Company, and in either case the managing underwriters
advise the Company that in their reasonable opinion the number of securities
requested to be included in such offering exceeds the number which can be sold
without adversely affecting the marketability of such offering (including an
adverse effect on the per share offering price), the Company will include in
such offering only such number of securities that in the reasonable opinion of
such managing underwriters can be sold without adversely affecting the
marketability of the offering (including an adverse effect on the per share
offering price), which securities will be so included in the following order of
priority: (A) first, in the case of a Piggyback Registration under
Section 4.5(a)(iv), the securities the Company proposes to sell, (B) then the
Registrable Securities of the Investor and all other Holders who have requested
inclusion of Registrable Securities pursuant to Section 4.5(a)(ii) or
Section 4.5(a)(iv), as applicable, pro rata on the basis of the aggregate number
of such securities or shares owned by each such person, (C) then the Registrable
Securities (as defined in

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the Series C Preferred Stock Purchase Agreement) of the Trust and all other
Holders who have received Registrable Securities (as defined in the Series C
Preferred Stock Purchase Agreement) from the Trust and who have requested
inclusion of Registrable Securities (as defined in the Series C Preferred Stock
Purchase Agreement) in accordance with the terms of the Series C Preferred Stock
Purchase Agreement, pro rata on the basis of the aggregate number of such
securities or shares owned by each such person and (D) lastly, any other
securities of the Company that have been requested to be so included, subject to
the terms of this Agreement.
     (b) Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance hereunder shall be
borne by the Company. All Selling Expenses incurred in connection with any
registrations hereunder shall be borne by the holders of the securities so
registered pro rata on the basis of the aggregate offering or sale price of the
securities so registered.
     (c) Obligations of the Company. The Company shall use its reasonable best
efforts, for so long as there are Registrable Securities outstanding, to take
such actions as are in its control to become a well-known seasoned issuer (as
defined in Rule 405 under the Securities Act) and once the Company becomes a
well-known seasoned issuer to take such actions as are in its control to remain
a well-known seasoned issuer. In addition, whenever required to effect the
registration of any Registrable Securities or facilitate the distribution of
Registrable Securities pursuant to an effective Shelf Registration Statement,
the Company shall, as expeditiously as reasonably practicable:
     (i) Prepare and file with the SEC, not later than fifteen (15) days after
the request, a registration statement with respect to such Registrable
Securities and use all commercially reasonable efforts to cause such
registration statement to become effective, or prepare and file with the SEC not
later than ten (10) days after the request a prospectus supplement with respect
to a proposed offering of such Registrable Securities pursuant to an effective
registration statement, subject to Section 4.5(d), and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, use
all commercially reasonable efforts to keep such registration statement
effective and keep such prospectus supplement current until the securities
described therein are no longer Registrable Securities.
     (ii) Prepare and file with the SEC such amendments and supplements to the
applicable registration statement and the prospectus or prospectus supplement
used in connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement.
     (iii) Furnish to the Holders and any underwriters such number of copies of
the applicable registration statement and each such amendment and supplement
thereto (including in each case all exhibits) and of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other

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documents as they may reasonably request in order to facilitate the disposition
of Registrable Securities owned or to be distributed by them.
     (iv) Use its reasonable best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders or
any managing underwriter(s), to keep such registration or qualification in
effect for so long as such registration statement remains in effect, and to take
any other action which may be reasonably necessary to enable such seller to
consummate the disposition in such jurisdictions of the securities owned by such
Holder; provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
     (v) Notify each Holder of Registrable Securities at any time when a
prospectus relating thereto is required to be delivered under the Securities Act
of the happening of any event as a result of which the applicable prospectus, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing.
     (vi) Give written notice to the Holders:
     (A) when any registration statement filed pursuant to Section 4.5(a) or any
amendment thereto has been filed with the SEC (except for any amendment effected
by the filing of a document with the SEC pursuant to the Exchange Act and when
such registration statement or any post-effective amendment thereto has become
effective;
     (B) of any request by the SEC for amendments or supplements to any
registration statement or the prospectus included therein or for additional
information;
     (C) of the issuance by the SEC of any stop order suspending the
effectiveness of any registration statement or the initiation of any proceedings
for that purpose;
     (D) of the receipt by the Company or its legal counsel of any notification
with respect to the suspension of the qualification of the Common Stock for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose;
     (E) of the happening of any event that requires the Company to make changes
in any effective registration statement or the prospectus related to the
registration statement in order to make the statements therein not misleading
(which notice shall be accompanied by an instruction to suspend the use of the
prospectus until the requisite changes have been made); and

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     (F) if at any time the representations and warranties of the Company
contained in any underwriting agreement contemplated by Section 4.5(c)(x) cease
to be true and correct.
     (vii) Use its reasonable best efforts to prevent the issuance or obtain the
withdrawal of any order suspending the effectiveness of any registration
statement referred to in Section 4.5(c)(vi)(C) at the earliest practicable time.
     (viii) Upon the occurrence of any event contemplated by Section 4.5(c)(v)
or 4.5(c)(vi)(E), promptly prepare a post-effective amendment to such
registration statement or a supplement to the related prospectus or file any
other required document so that, as thereafter delivered to the Holders and any
underwriters, the prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If the Company notifies the Holders in accordance with
Section 4.5(c)(vi)(E) to suspend the use of the prospectus until the requisite
changes to the prospectus have been made, then the Holders and any underwriters
shall suspend use of such prospectus and use their reasonable best efforts to
return to the Company all copies of such prospectus (at the Company’s expense)
other than permanent file copies then in such Holders’ or underwriters’
possession. The total number of days that any such suspension may be in effect
in any 12-month period shall not exceed 90 days.
     (ix) Use reasonable best efforts to procure the cooperation of the
Company’s transfer agent in settling any offering or sale of Registrable
Securities, including with respect to the transfer of physical stock
certificates into book-entry form in accordance with any procedures reasonably
requested by the Holders or any managing underwriter(s).
     (x) If an underwritten offering is requested pursuant to
Section 4.5(a)(ii), enter into an underwriting agreement in customary form,
scope and substance and take all such other actions reasonably requested by the
Holders of a majority of the Registrable Securities being sold in connection
therewith or by the managing underwriter(s), if any, to expedite or facilitate
the underwritten disposition of such Registrable Securities, and in connection
therewith in any underwritten offering (including making members of management
and executives of the Company available to participate in “road shows”, similar
sales events and other marketing activities), (A) make such representations and
warranties to the Holders that are selling stockholders and the managing
underwriter(s), if any, with respect to the business of the Company and its
subsidiaries, and the Shelf Registration Statement, prospectus and documents, if
any, incorporated or deemed to be incorporated by reference therein, in each
case, in customary form, substance and scope, and, if true, confirm the same if
and when requested, (B) use its reasonable best efforts to furnish the
underwriters with opinions of counsel to the Company, addressed to the managing
underwriter(s), if any, covering the matters customarily covered in such
opinions requested in underwritten offerings, (C) use its reasonable best
efforts to obtain “cold comfort” letters from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any business

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acquired by the Company for which financial statements and financial data are
included in the Shelf Registration Statement) who have certified the financial
statements included in such Shelf Registration Statement, addressed to each of
the managing underwriter(s), if any, such letters to be in customary form and
covering matters of the type customarily covered in “cold comfort” letters,
(D) if an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures customary in underwritten offerings
(provided that the Investor shall not be obligated to provide any indemnity),
and (E) deliver such documents and certificates as may be reasonably requested
by the Holders of a majority of the Registrable Securities being sold in
connection therewith, their counsel and the managing underwriter(s), if any, to
evidence the continued validity of the representations and warranties made
pursuant to clause (A) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company.
     (xi) Make available for inspection by a representative of Holders that are
selling stockholders, the managing underwriter(s), if any, and any attorneys or
accountants retained by such Holders or managing underwriter(s), at the offices
where normally kept, during reasonable business hours, financial and other
records, pertinent corporate documents and properties of the Company, and cause
the officers, directors and employees of the Company to supply all information
in each case reasonably requested (and of the type customarily provided in
connection with due diligence conducted in connection with a registered public
offering of securities) by any such representative, managing underwriter(s),
attorney or accountant in connection with such Shelf Registration Statement.
     (xii) Use reasonable best efforts to cause all such Registrable Securities
to be listed on each national securities exchange on which similar securities
issued by the Company are then listed or, if no similar securities issued by the
Company are then listed on any national securities exchange, use its reasonable
best efforts to cause all such Registrable Securities to be listed on such
securities exchange as the Investor may designate.
     (xiii) If requested by Holders of a majority of the Registrable Securities
being registered and/or sold in connection therewith, or the managing
underwriter(s), if any, promptly include in a prospectus supplement or amendment
such information as the Holders of a majority of the Registrable Securities
being registered and/or sold in connection therewith or managing underwriter(s),
if any, may reasonably request in order to permit the intended method of
distribution of such securities and make all required filings of such prospectus
supplement or such amendment as soon as practicable after the Company has
received such request.
     (xiv) Timely provide to its security holders earning statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.

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     (d) Suspension of Sales. Upon receipt of written notice from the Company
that a registration statement, prospectus or prospectus supplement contains or
may contain an untrue statement of a material fact or omits or may omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that circumstances exist that make
inadvisable use of such registration statement, prospectus or prospectus
supplement, the Investor and each Holder of Registrable Securities shall
forthwith discontinue disposition of Registrable Securities until the Investor
and/or Holder has received copies of a supplemented or amended prospectus or
prospectus supplement, or until the Investor and/or such Holder is advised in
writing by the Company that the use of the prospectus and, if applicable,
prospectus supplement may be resumed, and, if so directed by the Company, the
Investor and/or such Holder shall deliver to the Company (at the Company’s
expense) all copies, other than permanent file copies then in the Investor
and/or such Holder’s possession, of the prospectus and, if applicable,
prospectus supplement covering such Registrable Securities current at the time
of receipt of such notice. The total number of days that any such suspension may
be in effect in any 12-month period shall not exceed 90 days.
     (e) Termination of Registration Rights. A Holder’s registration rights as
to any securities held by such Holder (and its Affiliates, partners, members and
former members) shall not be available unless such securities are Registrable
Securities.
     (f) Furnishing Information.
     (i) Neither the Investor nor any Holder shall use any free writing
prospectus (as defined in Rule 405) in connection with the sale of Registrable
Securities without the prior written consent of the Company.
     (ii) It shall be a condition precedent to the obligations of the Company to
take any action pursuant to Section 4.5(c) that the Investor and/or the selling
Holders and the underwriters, if any, shall furnish to the Company such
information regarding themselves, the Registrable Securities held by them and
the intended method of disposition of such securities as shall be required to
effect the registered offering of their Registrable Securities.
     (g) Indemnification.
     (i) The Company agrees to indemnify each Holder and, if a Holder is a
person other than an individual, such Holder’s officers, directors, employees,
agents, representatives and Affiliates, and each Person, if any, that controls a
Holder within the meaning of the Securities Act (each, an “Indemnitee”), against
any and all losses, claims, damages, actions, liabilities, costs and expenses
(including reasonable fees, expenses and disbursements of attorneys and other
professionals incurred in connection with investigating, defending, settling,
compromising or paying any such losses, claims, damages, actions, liabilities,
costs and expenses), joint or several, arising out of or based upon any untrue
statement or alleged untrue statement of material fact contained in any
registration statement, including any preliminary prospectus or final prospectus
contained

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therein or any amendments or supplements thereto or any documents incorporated
therein by reference or contained in any free writing prospectus (as such term
is defined in Rule 405) prepared by the Company or authorized by it in writing
for use by such Holder (or any amendment or supplement thereto); or any omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; provided that the Company shall not be liable to such
Indemnitee in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon (A) an untrue statement or omission made in such registration
statement, including any such preliminary prospectus or final prospectus
contained therein or any such amendments or supplements thereto or contained in
any free writing prospectus (as such term is defined in Rule 405) prepared by
the Company or authorized by it in writing for use by such Holder (or any
amendment or supplement thereto), in reliance upon and in conformity with
information regarding such Indemnitee or its plan of distribution or ownership
interests which was furnished in writing to the Company by such Indemnitee for
use in connection with such registration statement, including any such
preliminary prospectus or final prospectus contained therein or any such
amendments or supplements thereto, or (B) offers or sales effected by or on
behalf of such Indemnitee “by means of” (as defined in Rule 159A) a “free
writing prospectus” (as defined in Rule 405) that was not authorized in writing
by the Company.
     (ii) If the indemnification provided for in Section 4.5(g)(i) is
unavailable to an Indemnitee with respect to any losses, claims, damages,
actions, liabilities, costs or expenses referred to therein or is insufficient
to hold the Indemnitee harmless as contemplated therein, then the Company, in
lieu of indemnifying such Indemnitee, shall contribute to the amount paid or
payable by such Indemnitee as a result of such losses, claims, damages, actions,
liabilities, costs or expenses in such proportion as is appropriate to reflect
the relative fault of the Indemnitee, on the one hand, and the Company, on the
other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, actions, liabilities, costs or expenses as well as
any other relevant equitable considerations. The relative fault of the Company,
on the one hand, and of the Indemnitee, on the other hand, shall be determined
by reference to, among other factors, whether the untrue statement of a material
fact or omission to state a material fact relates to information supplied by the
Company or by the Indemnitee and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and each Holder agree that it would not be just and equitable if
contribution pursuant to this Section 4.5(g)(ii) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in Section 4.5(g)(i). No Indemnitee
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from the Company if the
Company was not also guilty of such fraudulent misrepresentation.
     (h) Assignment of Registration Rights. The rights of the Investor to
registration of Registrable Securities pursuant to Section 4.5(a) may be
assigned by the Investor to a transferee

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or assignee of Registrable Securities with a liquidation preference or, in the
case of Registrable Securities other than Series E Preferred Stock, a market
value, no less than an amount equal to $200 million; provided, however, the
transferor shall, within ten days after such transfer, furnish to the Company
written notice of the name and address of such transferee or assignee and the
number and type of Registrable Securities that are being assigned. For purposes
of this Section 4.5(h), “market value” per share of Common Stock shall be the
last reported sale price of the Common Stock on the national securities exchange
on which the Common Stock is listed or admitted to trading on the last trading
day prior to the proposed transfer and “market value” of the Exchange Shares
shall be the market value of a number of shares of Common Stock issuable upon
conversion of such Exchange Shares (whether or not such Exchange Shares are then
convertible).
     (i) Clear Market. With respect to any underwritten offering of Registrable
Securities by the Investor or other Holders pursuant to this Section 4.5, the
Company agrees not to effect (other than pursuant to such registration or
pursuant to a Special Registration) any public sale or distribution, or to file
any Shelf Registration Statement (other than such registration or a Special
Registration) covering, in the case of an underwritten offering of Common Stock,
any of its equity securities or, in the case of an underwritten offering of
Series E Preferred Stock, any preferred stock of the Company, or, in each case,
any securities convertible into or exchangeable or exercisable for such
securities, during the period not to exceed 10 days prior and 60 days following
the effective date of such offering or such longer period up to 90 days as may
be requested by the managing underwriter for such underwritten offering. The
Company also agrees to cause such of its directors and senior executive officers
to execute and deliver customary lock-up agreements in such form and for such
time period up to 90 days as may be requested by the managing underwriter.
“Special Registration” means the registration of (A) equity securities and/or
options or other rights in respect thereof solely registered on Form S-4 or Form
S-8 (or successor form) or (B) shares of equity securities and/or options or
other rights in respect thereof to be offered to directors, members of
management, employees, consultants, customers, lenders or vendors of the Company
or Company Subsidiaries or in connection with dividend reinvestment plans.
     (j) Rule 144; Rule 144A. With a view to making available to the Investor
and Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its reasonable best efforts to:
     (i) make and keep public information available, as those terms are
understood and defined in Rule 144(c)(1) or any similar or analogous rule
promulgated under the Securities Act, at all times after the Signing Date;
     (ii) (A) file with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act, and (B) if at any time
the Company is not required to file such reports, make available, upon the
request of any Holder, such information necessary to permit sales pursuant to
Rule 144A (including the information required by Rule 144A(d)(4) under the
Securities Act);

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     (iii) so long as the Investor or a Holder owns any Registrable Securities,
furnish to the Investor or such Holder forthwith upon request: a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144 under the Securities Act, and of the Exchange Act; a copy of the most
recent annual or quarterly report of the Company; and such other reports and
documents as the Investor or Holder may reasonably request in availing itself of
any rule or regulation of the SEC allowing it to sell any such securities to the
public without registration; and
     (iv) take such further action as any Holder may reasonably request, all to
the extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act.
     (k) As used in this Section 4.5, the following terms shall have the
following respective meanings:
     (i) “Holder” means the Investor and any other holder of Registrable
Securities to whom the registration rights conferred by this Agreement have been
transferred in compliance with Section 4.5(h).
     (ii) “Holders’ Counsel” means one counsel for the selling Holders chosen by
Holders holding a majority interest in the Registrable Securities being
registered.
     (iii) “Register,” “registered,” and “registration” shall refer to a
registration effected by preparing and (A) filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of effectiveness of such
registration statement or (B) filing a prospectus and/or prospectus supplement
in respect of an appropriate effective registration statement on Form S-3.
     (iv) “Registrable Securities” means (A) all Series E Preferred Stock and
all Exchange Shares and (B) any equity securities issued or issuable directly or
indirectly with respect to the securities referred to in the foregoing clause
(A) by way of conversion, exercise or exchange thereof dividend or share split
or in connection with a combination of shares, recapitalization,
reclassification, merger, amalgamation, arrangement, consolidation or other
reorganization; provided that, once issued, such securities will not be
Registrable Securities when (1) they are sold pursuant to an effective
registration statement under the Securities Act, (2) except as provided below in
Section 4.5(o), they may be sold pursuant to Rule 144 without limitation
thereunder on volume or manner of sale, (3) they shall have ceased to be
outstanding or (4) they have been sold in a private transaction in which the
transferor’s rights under this Agreement are not assigned to the transferee of
the securities. No Registrable Securities may be registered under more than one
registration statement at any one time.
     (v) “Registration Expenses” mean all expenses incurred by the Company in
effecting any registration pursuant to this Agreement (whether or not any
registration or prospectus becomes effective or final) or otherwise complying
with its obligations under

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this Section 4.5, including all registration, filing and listing fees, printing
expenses, fees and disbursements of counsel for the Company, blue sky fees and
expenses, expenses incurred in connection with any “road show”, the reasonable
fees and disbursements of Holders’ Counsel, and expenses of the Company’s
independent accountants in connection with any regular or special reviews or
audits incident to or required by any such registration, but shall not include
Selling Expenses.
     (vi) “Rule 144”, “Rule 144A”, “Rule 159A”, “Rule 405” and “Rule 415” mean,
in each case, such rule promulgated under the Securities Act (or any successor
provision), as the same shall be amended from time to time.
     (vii) “Selling Expenses” mean all discounts, selling commissions and stock
transfer taxes applicable to the sale of Registrable Securities and fees and
disbursements of counsel for any Holder (other than the fees and disbursements
of Holders’ Counsel included in Registration Expenses).
     (l) At any time, any holder of Securities (including any Holder) may elect
to forfeit its rights set forth in this Section 4.5 from that date forward;
provided that a Holder forfeiting such rights shall nonetheless be entitled to
participate under Section 4.5(a)(iv) – (vi) in any Pending Underwritten Offering
to the same extent that such Holder would have been entitled to if the holder
had not withdrawn; and provided, further, that no such forfeiture shall
terminate a Holder’s rights or obligations under Section 4.5(f) with respect to
any prior registration or Pending Underwritten Offering. “Pending Underwritten
Offering” means, with respect to any Holder forfeiting its rights pursuant to
this Section 4.5(l), any underwritten offering of Registrable Securities in
which such Holder has advised the Company of its intent to register its
Registrable Securities either pursuant to Section 4.5(a)(ii) or 4.5(a)(iv) prior
to the date of such Holder’s forfeiture.
     (m) Specific Performance. The parties hereto acknowledge that there would
be no adequate remedy at law if the Company fails to perform any of its
obligations under this Section 4.5 and that the Investor and the Holders from
time to time may be irreparably harmed by any such failure, and accordingly
agree that the Investor and such Holders, in addition to any other remedy to
which they may be entitled at law or in equity, to the fullest extent permitted
and enforceable under applicable law, shall be entitled to compel specific
performance of the obligations of the Company under this Section 4.5 in
accordance with the terms and conditions of this Section 4.5.
     (n) No Inconsistent Agreements. The Company shall not, on or after the
Signing Date, enter into any agreement with respect to its securities that may
impair the rights granted to the Investor and the Holders under this Section 4.5
or that otherwise conflicts with the provisions hereof in any manner that may
impair the rights granted to the Investor and the Holders under this
Section 4.5. In the event the Company has, prior to the Signing Date, entered
into any agreement with respect to its securities that is inconsistent with the
rights granted to the Investor and the Holders under this Section 4.5 (including
agreements that are inconsistent with the order of priority contemplated by
Section 4.5(a)(vi)) or that may otherwise conflict with the provisions

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hereof, the Company shall use its reasonable best efforts to amend such
agreements to ensure they are consistent with the provisions of this
Section 4.5.
     (o) Certain Offerings by the Investor. In the case of any securities held
by the Investor that cease to be Registrable Securities solely by reason of
clause (2) in the definition of “Registrable Securities,” the provisions of
Sections 4.5(a)(ii), clauses (iv), (ix) and (x)-(xii) of Section 4.5(c),
Section 4.5(g) and Section 4.5(i) shall continue to apply until such securities
otherwise cease to be Registrable Securities. In any such case, an
“underwritten” offering or other disposition shall include any distribution of
such securities on behalf of the Investor by one or more broker-dealers, an
“underwriting agreement” shall include any purchase agreement entered into by
such broker-dealers, and any “registration statement” or “prospectus” shall
include any offering document approved by the Company and used in connection
with such distribution.
     4.6 Depositary Shares. Upon request by the Investor in connection with a
proposed transfer of the Series E Preferred Stock, the Company shall promptly
enter into a depositary arrangement, pursuant to customary agreements reasonably
satisfactory to the Investor and with a depositary reasonably acceptable to the
Investor, pursuant to which the Series E Preferred Stock may be deposited and
depositary shares, each representing a fraction of a Series E Preferred Stock as
specified by the Investor, may be issued. From and after the execution of any
such depositary arrangement, and the deposit of any Series E Preferred Stock
pursuant thereto, the depositary shares issued pursuant thereto shall be deemed
“Series E Preferred Stock” and, as applicable, “Registrable Securities” for
purposes of this Agreement.
     4.7 Restriction on Dividends and Repurchases.
     (a) Notwithstanding any contrary provision of Section 4.8 of the Securities
Purchase Agreement dated as of November 25, 2008 between the Company and the
Investor, as amended (the “Series D Preferred Stock Purchase Agreement”), prior
to the earlier of (x) the fifth anniversary of the Closing Date and (y) the date
on which the Series E Preferred Stock has been redeemed in whole or the Investor
has transferred all of the Series E Preferred Stock to third parties which are
not Affiliates of the Investor, neither the Company nor any Company Subsidiary
shall, without the consent of the Investor:
     (i) declare or pay any dividend or make any distribution on the Common
Stock (other than (A) dividends payable solely in shares of Common Stock and
(B) dividends or distributions of rights or Junior Stock in connection with a
stockholders’ rights plan); or
     (ii) redeem, purchase or acquire any shares of Common Stock or other
capital stock or other equity securities of any kind of the Company, or any
trust preferred securities issued by the Company or any Affiliate of the
Company, other than (A) redemptions, purchases or other acquisitions of any such
securities held by the Investor, (B) redemptions, purchases or other
acquisitions of the Series E Preferred Stock, (C) purchases or other
acquisitions of Series C Preferred Stock from the Trust,

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(D) redemptions, purchases or other acquisitions of shares of Common Stock or
other Junior Stock, in each case in this clause (D) in connection with the
administration of any employee benefit plan in the ordinary course of business
(including purchases to offset the Share Dilution Amount (as defined below)
pursuant to a publicly announced repurchase plan) and consistent with past
practice; provided that any purchases to offset the Share Dilution Amount shall
in no event exceed the Share Dilution Amount, (E) any redemption or repurchase
of rights pursuant to any stockholders’ rights plan, (F) the acquisition by the
Company or any of the Company Subsidiaries of record ownership in Junior Stock
or Parity Stock for the beneficial ownership of any other persons (other than
the Company or any other Company Subsidiary), including as trustees or
custodians (the “Permitted Repurchases”), (G) the conversion of the Series C
Preferred Stock into Common Stock and (H) the exchange or conversion of Junior
Stock (other than the Series C Preferred Stock) for or into other Junior Stock
or of Parity Stock or trust preferred securities for or into other Parity Stock
(with the same or lesser aggregate liquidation amount) or Junior Stock, in each
case set forth in this clause (H), solely to the extent required pursuant to
binding contractual agreements entered into prior to the Signing Date or any
subsequent agreement for the accelerated exercise, settlement or exchange
thereof for Common Stock. “Share Dilution Amount” means the increase in the
number of diluted shares outstanding (determined in accordance with GAAP, and as
measured from the date of the Company’s most recently filed financial statements
of the Company and its consolidated subsidiaries prior to the Closing Date)
resulting from the grant, vesting or exercise of equity-based compensation to
employees and equitably adjusted for any stock split, stock dividend, reverse
stock split, reclassification or similar transaction.
     (b) Until such time as the Investor ceases to own any Series E Preferred
Stock, the Company shall not repurchase any Series E Preferred Stock from any
holder thereof, whether by means of open market purchase, negotiated
transaction, or otherwise, other than Permitted Repurchases, unless it offers to
repurchase a ratable portion of the Series E Preferred Stock then held by the
Investor on the same terms and conditions.
     (c) “Junior Stock” means Common Stock, the Series C Preferred Stock (after
the Company’s stockholders approve the amendment described in Section 3.1(b) to
the Charter to have the Series E Preferred Stock rank senior to the Series C
Preferred Stock) and any other class or series of stock of the Company
(i) initially issued to any person other than the Investor or (ii) initially
issued to the Investor and the terms of which expressly provide that it ranks
junior to the Series E Preferred Stock as to dividend rights and/or as to rights
on liquidation, dissolution or winding up of the Company. “Parity Stock” means
the Series C Preferred Stock (before the Company’s stockholders approve the
Charter amendment referred to in Section 3.1(b)) and any class or series of
stock of the Company the terms of which do not expressly provide that such class
or series will rank senior or junior to the Series E Preferred Stock as to
dividend rights and/or as to rights on liquidation, dissolution or winding up of
the Company (in each case without regard to whether dividends accrue
cumulatively or non-cumulatively).

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     4.8 Repurchase of Investor Securities.
     (a) Following the redemption in whole of the Series E Preferred Stock held
by the Investor or the Transfer by the Investor of all of the Series E Preferred
Stock to one or more third parties not affiliated with the Investor and so long
as the Investor does not Control the Company, the Company may repurchase, in
whole or in part, at any time any other equity or debt securities of the Company
owned by the Investor and then held by the Investor, upon notice given as
provided in clause (b) below, at the Fair Market Value of the equity or debt
security. For the avoidance of doubt, while there is Board of Directors control
(or the potential to gain Board of Directors control as a result of existing
contractual rights) by the Investor (or any affiliate of the Investor), the
Company may not exercise its rights under this Section 4.8.
     (b) Notice of every repurchase of equity securities of the Company held by
the Investor shall be given at the address and in the manner set forth for such
party in Section 5.6. Each notice of repurchase given to the Investor shall
state: (i) the number and type of securities to be repurchased, (ii) the Board
of Directors’ determination of Fair Market Value of such securities and
(iii) the place or places where certificates representing such securities are to
be surrendered for payment of the repurchase price. The repurchase of the
securities specified in the notice shall occur as soon as practicable following
the determination of the Fair Market Value of the securities.
     (c) As used in this Section 4.8, the following terms shall have the
following respective meanings:
     (i) “Appraisal Procedure” means a procedure whereby two independent
appraisers, one chosen by the Company and one by the Investor, shall mutually
agree upon the Fair Market Value. Each party shall deliver a notice to the other
appointing its appraiser within 10 days after the Appraisal Procedure is
invoked. If within 30 days after appointment of the two appraisers they are
unable to agree upon the Fair Market Value, a third independent appraiser shall
be chosen within 10 days thereafter by the mutual consent of such first two
appraisers. The decision of the third appraiser so appointed and chosen shall be
given within 30 days after the selection of such third appraiser. If three
appraisers shall be appointed and the determination of one appraiser is
disparate from the middle determination by more than twice the amount by which
the other determination is disparate from the middle determination, then the
determination of such appraiser shall be excluded, the remaining two
determinations shall be averaged and such average shall be binding and
conclusive upon the Company and the Investor; otherwise, the average of all
three determinations shall be binding upon the Company and the Investor. The
costs of conducting any Appraisal Procedure shall be borne by the Company.
     (ii) “Fair Market Value” means, with respect to any security, the fair
market value of such security as determined by the Board of Directors, acting in
good faith in reliance on an opinion of a nationally recognized independent
investment banking firm retained by the Company for this purpose and certified
in a resolution to the Investor. If the Investor does not agree with the Board
of Directors’ determination, it may object in

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writing within 10 days of receipt of the Board of Directors’ determination. In
the event of such an objection, an authorized representative of the Investor and
the chief executive officer of the Company shall promptly meet to resolve the
objection and to agree upon the Fair Market Value. If the chief executive
officer and the authorized representative are unable to agree on the Fair Market
Value during the 10-day period following the delivery of the Investor’s
objection, the Appraisal Procedure may be invoked by either party to determine
the Fair Market Value by delivery of a written notification thereof not later
than the 30th day after delivery of the Investor’s objection.
     (iii) “Control” means the power to direct the management and policies of
the Company, directly or indirectly, whether through the ownership of voting
securities, by contract, by the power to control the Board of Directors or
otherwise.
     4.9 Executive Compensation.
     (a) During the Relevant Period, the Company shall take all necessary action
to ensure that its Benefit Plans comply in all respects with Section 111 of the
EESA, including the provisions for Systemically Significant Failing
Institutions, as implemented by any guidance or regulation thereunder, including
Notice 2008-PSSFI, any amendments to Notice 2008-PSSFI, or any other guidance or
regulations under Section 111 of the EESA, as the same shall be in effect from
time to time (“Compensation Regulations”), and shall not adopt any new Benefit
Plan (i) that does not comply therewith or (ii) that does not expressly state
and require that such Benefit Plan and any compensation thereunder shall be
subject to any relevant Compensation Regulations adopted, issued or released on
or after the date any such Benefit Plan is adopted. To the extent that the
Compensation Regulations change during the Relevant Period in a manner that
requires changes to then-existing Benefit Plans, the Company shall effect such
changes to its Benefit Plans as promptly as practicable after it has actual
knowledge of such changes in order to be in compliance with this Section 4.9(a)
(and shall be deemed to be in compliance for a reasonable period to effect such
changes).
     (b) (1) In addition to the requirements set forth in Section 4.9(a) above,
the Company shall, during the Relevant Period, take all necessary action to
limit any “golden parachute payments” to the employees of the Company and the
Company Subsidiaries who participate in the Company’s Senior Partners Plan (the
“Senior Partners”) to the amounts permitted by the regulations relating to
participants in the EESA Capital Purchase Program and the guidelines and rules
relating thereto, including the rules set forth in 31 CFR Part 30, that have
been issued and are in effect as of the Closing Date, as if such Senior Partners
were Senior Executive Officers for purposes of the EESA (except that equity
denominated awards settled solely in equity shall not be included in such limit
on “golden parachute payments” to Senior Partners). “Senior Executive Officers”
means the Company’s “senior executive officers” as defined in Section 111 of the
EESA and regulations issued or to be issued thereunder, including the rules set
forth in 31 CFR Part 30 or any rules that replace 31 CFR Part 30; provided that,
solely for purposes of the foregoing sentence, “Senior Executive Officers” shall
mean the Company’s “senior executive officers” as defined in Section 111 of the
EESA and regulations issued thereunder, including the rules set forth in 31 CFR
Part 30 that have been issued and are effective as of the Closing Date.

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     (2) In addition to the requirements set forth in Section 4.9(a) above, in
furtherance of the Company’s commitment to limit golden parachute payments to
certain Senior Partners as set forth in Section 4.9(b)(1), and to ensure
compliance with the provisions of the EESA Capital Purchase Program and the
guidelines and regulations relating thereto applicable to certain Senior
Partners pursuant to Section 4.9(b)(1), it is further agreed that the Company
shall take all necessary action to ensure that the sum of (A) a Senior Partner’s
annual bonus for 2009, (B) all retention payments paid or payable to such Senior
Partner under any retention arrangement between the Senior Partner and the
Company for any period ending on or prior to March 31, 2010 and (C) any and all
amounts paid or payable to such Senior Partner in connection with the
termination of such Senior Partner’s employment prior to March 31, 2010 which
would be taken into account in applying the compensation limitation under
Section 4.9(b)(1) above, other than any payments pursuant to outstanding awards
under the Company’s Senior Partners Plan, shall not exceed 3.5 times the sum of
such Senior Partner’s base salary and target annual bonus for 2008. For this
purpose, actual annual bonus for 2009 and target annual bonus for 2008 will
include supplemental bonus and quarterly cash payments under the Company’s
historic quarterly bonus program consistent with, and in amounts not exceeding,
past practice.
     (3) For the avoidance of doubt, (i) the limits of Sections 4.9(b)(1) and
(2) are in addition to any applicable requirements under provisions of the EESA
prohibiting golden parachute payments to the Senior Executive Officers and the
relevant Compensation Regulations, and (ii) to the extent that any Benefit Plan
or any payment permissible under Section 4.9(c) is inconsistent with any
relevant Compensation Regulations, such Compensation Regulations shall control.
          Notwithstanding the other provisions of this Section 4.9(b), the
Company’s obligations under this Section 4.9(b) shall be on a best efforts basis
with respect to the Senior Partners who are not U.S.-based to the extent of its
existing Benefit Plans. In addition, after the Closing Date in connection with
the hiring or promotion of a Covered Employee and/or the promulgation of
applicable Compensation Regulations, to the extent any Covered Employee shall
not have executed a waiver with respect to the application to such Covered
Employee of the Compensation Regulations, the Company shall use its best efforts
to (i) obtain from such Covered Employee a waiver in a form satisfactory to the
Investor and (ii) deliver such waiver to the Investor as promptly as possible.
“Covered Employee” means each (i) Senior Executive Officer, (ii) Senior Partner
and (iii) other employee of the Company or its subsidiaries determined at any
time to be subject to Section 111 of the EESA.
     (c) During the Relevant Period, the Company shall take all necessary action
to ensure that the annual bonus pools payable to the Senior Executive Officers
and the Senior Partners in respect of each of 2008 and 2009 shall not exceed the
average of the annual bonus pools paid to the Senior Executive Officers and the
Senior Partners for 2006 and 2007 (in each case exclusive of the Company’s
historic quarterly bonus program including but not limited to supplemental

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bonus and quarterly cash payments, the amount of which will not increase for any
participant) and subject to appropriate adjustment for new hires and departures.
     (d) [RESERVED].
     (e) The Company confirms that none of (i) the proceeds of the Purchase
Price (as such term is used and defined in the Series D Preferred Stock Purchase
Agreement) or (ii) the funds provided to the Company under the Credit Agreement
(collectively, the “Funds”) were used nor shall they be used to pay annual
bonuses, or other future cash performance awards to executives of the Company or
Senior Partners. The parties desire that this confirmation be auditable and
agree that there are a number of appropriate methods for verifying this
confirmation (particularly in light of expected business changes at the
Company). Until the date that any annual bonuses in respect of 2009 are paid, it
is agreed that the test for the foregoing will be that, at the time when any
annual bonuses or cash performance awards granted after the date of this
Agreement are paid to executive officers or Senior Partners, the Company will
have received aggregate dividends, distributions and other payments from its
subsidiaries subsequent to September 16, 2008 greater than the aggregate amount
of such annual bonuses, such cash performance awards and amounts paid pursuant
to the Company’s historic quarterly bonus program (including but not limited to
supplemental bonus and quarterly cash payments, the amount of which will not
increase for any participant) paid to executive officers and Senior Partners
subsequent to that date. At and after the date that any annual bonuses in
respect of 2009 are paid, the test for the foregoing confirmation will be that,
at the time when any annual bonuses or cash performance awards granted after the
date of this Agreement are vested or otherwise earned by executive officers or
Senior Partners, the aggregate adjusted net income for the relevant year (being
the year in which or in respect of which such bonuses or awards are vested or so
earned) of the insurance company subsidiaries of the Company included for such
year in the consolidated financial statements of the Company, excluding any such
adjusted net income that was dividended or otherwise distributed to the Company
and taken into account in satisfying the test under the prior sentence, shall
exceed the aggregate amount of such annual bonuses, such cash performance awards
and amounts pursuant to the Company’s historic quarterly bonus program
(including but not limited to supplemental bonus and quarterly cash payments,
the amount of which will not increase for any participant), in each case vested
or otherwise earned in or in respect of such year. Each party agrees to
negotiate in good faith and promptly at the request of the other to develop
additional or alternative appropriate formulations to test for this
confirmation.
     (f) The Company confirms that none of the Funds have been nor shall be used
to pay any electively deferred compensation in respect of or otherwise resulting
from the termination of the deferred compensation plans by the Company or the
Company subsidiaries as described in Item 5.02 of the Company’s Current Report
on Form 8-K dated November 18, 2008.
     (g) The parties agree that Sections 4.10(b) and (c) of the Series D
Preferred Stock Purchase Agreement shall remain in full force and effect in
accordance with their terms during the period that only the Warrant is
outstanding and the Investor no longer owns any Series E Preferred Stock.

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     4.10 Restrictions on Lobbying. Until such time as the Investor ceases to
own any Series E Preferred Stock, the Company shall continue to maintain and
implement its comprehensive written policy on lobbying, governmental ethics and
political activity and distribute such policy to all Company employees and
lobbying firms involved in any such activity. Any material amendments to such
policy shall require the prior written consent of the Investor until the
Investor no longer owns any Series E Preferred Stock, and any material
deviations from such policy, whether in contravention thereof or pursuant to
waivers provided for thereunder, shall promptly be reported to the Investor.
Such policy shall, at a minimum, (i) require compliance with all applicable law;
(ii) apply to the Company, the Company Subsidiaries and affiliated foundations;
(iii) govern (a) the provision of items of value to any government officials,
(b) lobbying and (c) political activities and contributions; and (iv) provide
for (a) internal reporting and oversight and (b) mechanisms for addressing
non-compliance with the policy.
     4.11 Restrictions on Expenses. Until such time as the Investor ceases to
own any Series E Preferred Stock, the Company shall continue to maintain and
implement its comprehensive written policy on corporate expenses and distribute
such policy to all Company employees by posting such policy on the Company’s
intranet and directing all Company employees via electronic mail to review such
policy as posted. Any material amendments to such policy shall require the prior
written consent of the Investor until such time as the Investor no longer owns
any Series E Preferred Stock, and any material deviations from such policy,
whether in contravention thereof or pursuant to waivers provided for thereunder,
shall promptly be reported to the Investor. Such policy shall, at a minimum:
(i) require compliance with all applicable law; (ii) apply to the Company and
the Company Subsidiaries; (iii) govern (a) the hosting, sponsorship or other
payment for conferences and events, (b) the use of corporate aircraft,
(c) travel accommodations and expenditures, (d) consulting arrangements with
outside service providers, (e) any new lease or acquisition of real estate,
(f) expenses relating to office or facility renovations or relocations and (g)
expenses relating to entertainment or holiday parties; and (iv) provide for
(a) internal reporting and oversight and (b) mechanisms for addressing
non-compliance with the policy.
     4.12 Risk Management Committee. The Company has established and, during the
Relevant Period, will maintain a risk management committee of the Board of
Directors that will oversee the major risks involved in the Company’s business
operations and review the Company’s actions to mitigate and manage those risks.
     4.13 Dividend Rate Adjustment. The dividend rate on the Series E Preferred
Stock beneficially owned at the time by the Investor is subject to adjustment in
the sole discretion of the Secretary of the Department of the Treasury in light
of, inter alia, then-prevailing economic conditions and the financial condition
of the Company, with the objective of protecting the U.S. taxpayer.

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Article 5
Miscellaneous
     5.1 Termination. This Agreement may be terminated at any time prior to the
Closing:
     (a) by either the Investor or the Company if the Closing shall not have
occurred by the 30th calendar day following the Signing Date; provided, however,
that in the event the Closing has not occurred by such 30th calendar day, the
parties will consult in good faith to determine whether to extend the term of
this Agreement, it being understood that the parties shall be required to
consult only until the fifth day after such 30th calendar day and not be under
any obligation to extend the term of this Agreement thereafter; provided,
further, that the right to terminate this Agreement under this Section 5.1(a)
shall not be available to any party whose breach of any representation or
warranty or failure to perform any obligation under this Agreement shall have
caused or resulted in the failure of the Closing to occur on or prior to such
date; or
     (b) by either the Investor or the Company in the event that any
Governmental Entity shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other action
shall have become final and nonappealable; or
     (c) by the mutual written consent of the Investor and the Company.
     In the event of termination of this Agreement as provided in this
Section 5.1, this Agreement shall forthwith become void and there shall be no
liability on the part of either party hereto except that nothing herein shall
relieve either party from liability for any breach of this Agreement.
     5.2 Survival of Representations and Warranties. All covenants and
agreements, other than those which by their terms apply in whole or in part
after the Closing, shall terminate as of the Closing. The representations and
warranties of the Company made herein or in any certificates delivered in
connection with the Closing shall survive the Closing without limitation.
     5.3 Amendment. No amendment of any provision of this Agreement will be
effective unless made in writing and signed by an officer or a duly authorized
representative of each party; provided that the Investor may unilaterally amend
any provision of this Agreement to the extent required to comply with any
changes after the Signing Date in applicable federal statutes. No failure or
delay by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative of any rights or
remedies provided by law.
     5.4 Waiver of Conditions. The conditions to each party’s obligation to
consummate the Exchange are for the sole benefit of such party and may be waived
by such party in whole or in part to the extent permitted by applicable law. No
waiver will be effective unless it is in a

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writing signed by a duly authorized officer of the waiving party that makes
express reference to the provision or provisions subject to such waiver.
     5.5 Governing Law: Submission to Jurisdiction, Etc. This Agreement, and the
rights and obligations of the parties hereunder, shall be governed by, and
construed and interpreted in accordance with, United States federal law and not
the law of any State. To the extent that a court looks to the laws of any State
to determine or define the United States federal law, it is the intention of the
parties hereto that such court shall look only to the laws of the State of New
York without regard to the rules of conflicts of laws. Each of the parties
hereto agrees (a) to submit to the exclusive jurisdiction and venue of the
United States District Court for the District of Columbia and the United States
Court of Federal Claims for any and all actions, suits or proceedings arising
out of or relating to this Agreement or the transactions contemplated hereby,
and (b) that notice may be served upon (i) the Company at the address and in the
manner set forth for notices to the Company in Section 5.6 and (ii) the Investor
in accordance with federal law. To the extent permitted by applicable law, each
of the parties hereto hereby unconditionally waives trial by jury in any legal
action or proceeding relating to this Agreement or the transactions contemplated
hereby.
     5.6 Notices. Any notice, request, instruction or other document to be given
hereunder by any party to the other will be in writing and will be deemed to
have been duly given (a) on the date of delivery if delivered personally, or by
facsimile, upon confirmation of receipt, or (b) on the second business day
following the date of dispatch if delivered by a recognized next day courier
service. All notices to the Company shall be delivered to the address set forth
below, or pursuant to such other instruction as may be designated in writing by
the Company to the Investor. All notices to the Investor shall be delivered as
set forth below, or pursuant to such other instructions as may be designated in
writing by the Investor to the Company.
     If to the Investor:
United States Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220
Attention: Chief Counsel, Office of Financial Stability
Telecopy: (202) 927-9225
Email: ofschiefcounselnotices@do.treas.gov
          TARP.Compliance@do.treas.gov
     If to the Company:
American International Group, Inc.
70 Pine Street, New York, New York 10270
Attention: General Counsel
Facsimile: (212) 785-2175
Telephone: (212) 770-7000

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with a copy to:
Sullivan & Cromwell LLP
125 Broad Street, New York, New York 10004
Attention: Robert W. Reeder III, Michael M. Wiseman
Telephone: (212) 558-4000
     5.7 Definitions.
     (a) When a reference is made in this Agreement to a subsidiary of a person,
the term “subsidiary” means any corporation, partnership, joint venture, limited
liability company or other entity (x) of which such person or a subsidiary of
such person is a general partner or (y) of which a majority of the voting
securities or other voting interests, or a majority of the securities or other
interests of which having by their terms ordinary voting power to elect a
majority of the board of directors or persons performing similar functions with
respect to such entity, is directly or indirectly owned by such person and/or
one or more subsidiaries thereof; provided that no Fund shall be a subsidiary
for purposes of this Agreement.
     (b) The term “Fund” means any investment vehicle managed by the Company or
an Affiliate of the Company and created in the ordinary course of the Company’s
asset management business for the purpose of selling Equity Interests in such
investment vehicle to third parties. “Equity Interests” means shares of capital
stock, partnership interests, membership interests in a limited liability
company, beneficial interests in a trust or other equity interests in any
entity, and any option, warrant or other right entitling the holder thereof to
purchase or otherwise acquire any such equity interest.
     (c) The term “Affiliate” means, with respect to any person, any person
directly or indirectly controlling, controlled by or under common control with,
such other person. For purposes of this definition, “control” (including, with
correlative meanings, the terms “controlled by” and “under common control with”)
when used with respect to any person, means the possession, directly or
indirectly, of the power to cause the direction of management and/or policies of
such person, whether through the ownership of voting securities by contract or
otherwise.
     5.8 Assignment. Neither this Agreement nor any right, remedy, obligation
nor liability arising hereunder or by reason hereof shall be assignable by any
party hereto without the prior written consent of the other party, and any
attempt to assign any right, remedy, obligation or liability hereunder without
such consent shall be void, except (a) an assignment, in the case of a Business
Combination, as defined below, where such party is not the surviving entity, or
a sale of substantially all of its assets, to the entity which is the survivor
of such Business Combination or the purchaser in such sale and (b) as provided
in Section 4.5. “Business Combination” means merger, consolidation, statutory
share exchange or similar transaction that requires the approval of the
Company’s stockholders.
     5.9 Severability. If any provision of this Agreement, or the application
thereof to any person or circumstance, is determined by a court of competent
jurisdiction to be invalid, void or

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unenforceable, the remaining provisions hereof, or the application of such
provision to persons or circumstances other than those as to which it has been
held invalid or unenforceable, will remain in full force and effect and shall in
no way be affected, impaired or invalidated thereby, so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination, the parties
shall negotiate in good faith in an effort to agree upon a suitable and
equitable substitute provision to effect the original intent of the parties.
     5.10 Entire Agreement. This Agreement (including the Annexes and Schedules
hereto) constitutes the entire agreement, and supersedes all other prior
agreements, understandings, representations and warranties, both written and
oral, between the parties, with respect to the subject matter hereof.
     5.11 No Third Party Beneficiaries. Nothing contained in this Agreement,
expressed or implied, is intended to confer upon any person or entity other than
the Company and the Investor any benefit, right or remedies, except that the
provisions of Section 4.5 shall inure to the benefit of the persons referred to
in that Section.
     5.12 Survival of Series D Preferred Stock Purchase Agreement. Except for
Sections 4.8, 4.10 (except to the extent provided in Section 4.9(g) herein) and
4.13 of the Series D Preferred Stock Purchase Agreement, which sections shall no
longer be applicable following the Exchange, the remaining provisions of the
Series D Preferred Stock Purchase Agreement shall remain in full force and
effect in accordance with their terms following the Exchange.
[Signature Page Follows]

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     In witness whereof, this Agreement has been duly executed and delivered by
the duly authorized representatives of the parties hereto as of the date written
below.

            AMERICAN INTERNATIONAL GROUP, INC.
      By:   /s/  Anastasia D. Kelly       Name:   Anastasia D. Kelly      
Title:   Vice Chairman       UNITED STATES DEPARTMENT OF THE TREASURY
      By:   /s/  Neel Kashkari       Name:   Neel Kashkari       Title:  
Interim Assistant Secretary
For Financial Stability    

     Date: April 17, 2009

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SCHEDULE A
ADDITIONAL TERMS AND CONDITIONS
Company Information:
     Name of the Company: American International Group, Inc.
     Corporate or other organizational form: Corporation
     Jurisdiction of Organization: Delaware
Terms of the Exchange:
     Series of Serial Preferred Stock Exchanged: Series D Fixed Rate Cumulative
Perpetual Preferred Stock for Series E Fixed Rate Non-Cumulative Perpetual
Preferred Stock (the “Series E Preferred Stock”)
     Per Share Liquidation Preference of Series E Preferred Stock: $104,011.44
     Number of Shares of Series E Preferred Stock Received upon Exchange:
400,000

     Dividend Payment Dates on the Series E Preferred Stock: February 1, May 1,
August 1 and November 1

     
Closing:
   
 
   
Location of Closing:
  Sullivan & Cromwell LLP
 
  125 Broad Street
 
  New York, NY 10004
 
   
Time of Closing:
  2:00 p.m., New York time
 
   
Date of Closing:
  April 17, 2009

 

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SCHEDULE B
CAPITALIZATION
Capitalization Date: April 15, 2009
Common Stock
Par value: $2.50 per share
Total Authorized: 5,000,000,000
Outstanding: 2,690,805,447
Subject to warrants, options, convertible securities, etc.: Up to 154,738,080
shares are reserved for issuance pursuant to the Purchase Contract Agreement
between the Company and The Bank of New York, as Purchase Contract Agent, dated
as of May 16, 2008
Reserved for benefit plans and other issuances: 166,516,638 (as of April 15,
2009)
Remaining authorized but unissued: 2,309,194,553
Shares issued after Capitalization Date (other than pursuant to warrants,
options, convertible securities, etc. as set forth above): 0
Serial Preferred Stock
Par value: $5.00 per share
Total Authorized: 6,000,000
Outstanding (by series):
- 100,000 shares of Series C Perpetual, Convertible, Participating Preferred
Stock, par value $5.00 per share that is convertible into Common Stock1; and
 

1   In accordance with Section 6.1 and Section 6.2 of the Securities Purchase
Agreement for the Series C Perpetual, Convertible, Participating Preferred Stock
the Company has agreed to amend, among other things, (i) the Charter to reduce
the par value of the Common Stock to $0.000001 per share, and increase the
number of authorized shares of Common Stock to 19 billion, (ii) the Charter to
reduce the par value of the Company’s Serial Preferred Stock (as defined in the
Charter) to $0.00004 per share and increase the number of authorized shares of
the Company’s Serial Preferred Stock to 13 billion (the “Serial Preferred Stock
Amendment Proposal”) and (iii) the

(...continued)

 

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  -  4,000,000 shares of the Series D Fixed Rate Cumulative Perpetual Preferred
Stock par value $5.00 and liquidation preference $10,000 per share.

Issued: 4,100,000
Reserved for Issuance: 0
Remaining authorized but unissued: 1,900,000
 

    (continued...)     Certificate of Designations such that (1) the number of
shares of Series C Preferred Stock authorized and outstanding upon the
effectiveness of the Serial Preferred Stock Amendment Proposal shall be the
Number of Underlying Shares (as defined in the Certificate of Designations) as
of the effective date of the Serial Preferred Stock Amendment Proposal, (2) the
Conversion Ratio (as defined in the Certificate of Designations) as of any date
shall equal the quotient obtained by dividing (x) the Number of Outstanding
Shares (as defined in the Certificate of Designations) as of such date by
(y) the Number of Outstanding Shares as of the effective date of such amendment
and (3) the liquidation preference per share of the Series C Preferred Stock
shall be $500,000 divided by the Number of Underlying Shares as of the effective
date of such amendment.

 

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ANNEX A
FORM OF CERTIFICATE OF DESIGNATIONS
(SEE ATTACHED)

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CERTIFICATE OF DESIGNATIONS
OF
SERIES E FIXED RATE NON-CUMULATIVE PERPETUAL PREFERRED STOCK
OF
AMERICAN INTERNATIONAL GROUP, INC.
     American International Group, Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the “Company”),
hereby certifies that the following resolution was adopted by the Board of
Directors of the Company (the “Board of Directors”) as required by Section 151
of the General Corporation Law of the State of Delaware at a meeting duly held
on April 17, 2009.
     RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors in accordance with the provisions of the Restated Certificate of
Incorporation, as amended, the Board of Directors hereby creates a series of
serial preferred stock, par value $5.00 per share, of the Company, and hereby
states the designation and number of shares, and fixes the voting and other
powers, and the relative rights and preferences, and the qualifications,
limitations and restrictions thereof, as follows:
Series E Fixed Rate Non-Cumulative Perpetual Preferred Stock:
     Part 1. Designation and Number of Shares. There is hereby created out of
the authorized and unissued shares of serial preferred stock of the Company a
series of preferred stock designated as the “Series E Fixed Rate Non-Cumulative
Perpetual Preferred Stock” (the “Series E Preferred Stock”). The authorized
number of shares of the Series E Preferred Stock shall be 400,000. Such number
of shares may be decreased by resolution of the Board of Directors, subject to
the terms and conditions hereof; provided that no decrease shall reduce the
number of shares of the Series E Preferred Stock to a number less than the
number of shares then outstanding.
     Part 2. Standard Provisions. The Standard Provisions contained in Annex A
attached hereto are incorporated herein by reference in their entirety and shall
be deemed to be a part of this Certificate of Designations to the same extent as
if such provisions had been set forth in full herein.
     Part 3. Definitions. The following terms are used in this Certificate of
Designations (including the Standard Provisions in Annex A hereto) as defined
below:
     (a) “Common Stock” means the common stock, par value $2.50 per share, of
the Company.
     (b) “Convertible Preferred Stock” means the Series C Perpetual,
Convertible, Participating Preferred Stock of the Company. The Convertible
Preferred Stock shall be

 

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Parity Stock; provided that the Convertible Preferred Stock shall be Junior
Stock following the effectiveness of an amendment to the Charter to allow the
Series E Preferred Stock and any other series of preferred stock of the Company
subsequently issued to the United States Department of the Treasury to rank
senior to the Convertible Preferred Stock as to dividend rights and/or rights
upon the liquidation, dissolution and winding up of the Company (the
“Amendment”).
     (c) “Dividend Payment Date” means February 1, May 1, August 1 and November
1 of each year.
     (d) “Junior Stock” means the Common Stock, the Convertible Preferred Stock
(following the Amendment) and any class or series of stock of the Company
(i) initially issued to any person other than the United States Department of
the Treasury or (ii) initially issued to the United States Department of the
Treasury and the terms of which expressly provide that it ranks junior to the
Series E Preferred Stock as to dividend rights and/or as to rights on
liquidation, dissolution or winding up of the Company.
     (e) “Liquidation Amount” means $104,011.44 per share of the Series E
Preferred Stock.
     (f) “Parity Stock” means the Convertible Preferred Stock (before the
Amendment) and any class or series of stock of the Company (other than the
Series E Preferred Stock) the terms of which do not expressly provide that such
class or series will rank senior or junior to the Series E Preferred Stock as to
dividend rights and/or as to rights on liquidation, dissolution or winding up of
the Company (in each case without regard to whether dividends accrue
cumulatively or non-cumulatively).
     (g) “Signing Date” means April 17, 2009.
     Part 4. Certain Voting Matters. Whether the vote or consent of the holders
of a plurality, majority or other portion of the shares of the Series E
Preferred Stock and any Voting Parity Stock has been cast or given on any matter
on which the holders of shares of the Series E Preferred Stock and any Voting
Parity Stock are entitled to vote or consent together as a class shall be
determined by the Company by reference to the specified liquidation amount of
the shares of the Series E Preferred Stock voted or with respect to which a
consent has been received as if the Company were liquidated on the record date
for such vote or consent, if any, or, in the absence of a record date, on the
date for such vote or consent. For purposes of determining the voting rights of
the holders of the Series E Preferred Stock under Section 7 of the Standard
Provisions forming part of this Certificate of Designations, each holder will be
entitled to one vote for each $10,000 of liquidation preference to which such
holder’s shares are entitled.
[Remainder of Page Intentionally Left Blank]

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     IN WITNESS WHEREOF, the Company has caused this Certificate of Designations
to be signed on its behalf by its                                          and
attested by its Secretary this 17th day of April, 2009.

            AMERICAN INTERNATIONAL GROUP, INC.
      By:           Name:           Title:        

     
ATTEST:
   
 
   
 
Name:
   
Title: Secretary
   

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ANNEX A
STANDARD PROVISIONS
     Section 1. General Matters. Each share of the Series E Preferred Stock
shall be identical in all respects to every other share of the Series E
Preferred Stock. The Series E Preferred Stock shall be perpetual, subject to the
provisions of Section 5 of these Standard Provisions that form a part of the
Certificate of Designations. The Series E Preferred Stock (a) shall rank senior
to the Junior Stock in respect of the right to receive dividends and the right
to receive payments out of the assets of the Company upon voluntary or
involuntary liquidation, dissolution or winding up of the Company and (b) shall
be of equal rank with Parity Stock as to the right to receive dividends and the
right to receive payments out of the assets of the Company upon voluntary or
involuntary liquidation, dissolution or winding up of the Company.
     Section 2. Standard Definitions. As used herein with respect to the
Series E Preferred Stock:
     (a) “Applicable Dividend Rate” means 10% per annum.
     (b) “Business Combination” means a merger, consolidation, statutory share
exchange or similar transaction that requires the approval of the Company’s
stockholders.
     (c) “Business Day” means any day except Saturday, Sunday and any day on
which banking institutions in the State of New York generally are authorized or
required by law or other governmental actions to close.
     (d) “Bylaws” means the bylaws of the Company, as they may be amended from
time to time.
     (e) “Certificate of Designations” means the Certificate of Designations or
comparable instrument relating to the Series E Preferred Stock, of which these
Standard Provisions form a part, as it may be amended from time to time.
     (f) “Charter” means the Company’s Restated Certificate of Incorporation, as
amended.
     (g) “Dividend Period” has the meaning set forth in Section 3(a).
     (h) “Dividend Record Date” has the meaning set forth in Section 3(a).
     (i) “Original Issue Date” means the date on which shares of the Series E
Preferred Stock are first issued.
     (j) “Preferred Director” has the meaning set forth in Section 7(b).
     (k) “Preferred Stock” means any and all series of serial preferred stock of
the Company, including the Series E Preferred Stock.

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     (l) “Series D Preferred Stock” means the Series D Fixed Rate Cumulative
Perpetual Preferred Stock of the Company.
     (m) “Share Dilution Amount” has the meaning set forth in Section 3(b).
     (n) “Standard Provisions” mean these Standard Provisions that form a part
of the Certificate of Designations relating to the Series E Preferred Stock.
     (o) “Transfer Agent” has the meaning set forth in Section 13.
     (p) “Trust” means the AIG Credit Facility Trust.
     (q) “UST” means the United States Department of the Treasury.
     (r) “Voting Parity Stock” means, with regard to any matter as to which the
holders of the Series E Preferred Stock are entitled to vote as specified in
Sections 7(a) and 7(b) of these Standard Provisions that form a part of the
Certificate of Designations, any and all series of Parity Stock upon which like
voting rights have been conferred and are exercisable with respect to such
matter.
     Section 3. Dividends.
     (a) Rate. Holders of the Series E Preferred Stock shall be entitled to
receive, on each share of the Series E Preferred Stock if, as and when declared
by the Board of Directors or any duly authorized committee of the Board of
Directors, but only out of assets legally available therefor, non-cumulative
cash dividends with respect to each Dividend Period (as defined below) at a rate
per annum equal to the Applicable Dividend Rate on the Liquidation Amount per
share of the Series E Preferred Stock. Such dividends shall be payable quarterly
in arrears, but only if, as and when declared by the Board of Directors or any
duly authorized committee of the Board of Directors, on each Dividend Payment
Date, commencing with the first such Dividend Payment Date to occur at least 20
calendar days after the Original Issue Date. In the event that any Dividend
Payment Date would otherwise fall on a day that is not a Business Day, the
dividend payment due on that date will be postponed to the next day that is a
Business Day and no additional dividends shall be payable nor shall interest
accrue on the amount payable as a result of that postponement. The period from
and including any Dividend Payment Date to, but excluding, the next Dividend
Payment Date is a “Dividend Period”; provided that the initial Dividend Period
shall be the period from and including the Original Issue Date to, but
excluding, the next Dividend Payment Date.
     Dividends that are payable on Series E Preferred Stock in respect of any
Dividend Period shall be computed on the basis of a 360-day year consisting of
twelve 30-day months. The amount of dividends payable on Series E Preferred
Stock on any date prior to the end of a Dividend Period, and for the initial
Dividend Period, shall be computed on the basis of a 360-day year consisting of
twelve 30-day months, and actual days elapsed over a 30-day month.
     Dividends that are payable on Series E Preferred Stock on any Dividend
Payment Date will be payable to holders of record of the Series E Preferred
Stock as they appear on the stock

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register of the Company on the applicable record date, which shall be the 15th
calendar day immediately preceding such Dividend Payment Date or such other
record date fixed by the Board of Directors or any duly authorized committee of
the Board of Directors that is not more than 60 nor less than 10 days prior to
such Dividend Payment Date (each, a “Dividend Record Date”). Any such day that
is a Dividend Record Date shall be a Dividend Record Date whether or not such
day is a Business Day.
     Dividends on the Series E Preferred Stock shall not be cumulative. Holders
of Series E Preferred Stock shall not be entitled to receive any dividends not
declared by the Board of Directors or any duly authorized committee of the Board
of Directors, and no interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend not so declared. If the Board of Directors
does not declare a dividend on the Series E Preferred Stock to be payable in
respect of any Dividend Period before the related Dividend Payment Date, such
dividend will not accrue and the Company will have no obligation to pay a
dividend for that Dividend Period on the Dividend Payment Date or at any future
time, whether or not dividends on the Series E Preferred Stock are declared for
any future Dividend Period. Holders of the Series E Preferred Stock shall not be
entitled to any dividends, whether payable in cash, securities or other
property, other than dividends (if any) declared and payable on the Series E
Preferred Stock as specified in this Section 3 (subject to the other provisions
of the Certificate of Designations).
     (b) Priority of Dividends. So long as any share of the Series E Preferred
Stock remains outstanding, no dividend or distribution shall be declared or paid
on the Common Stock or any other shares of Junior Stock (other than dividends
payable solely in shares of Common Stock) or Parity Stock, subject to the
immediately following paragraph in the case of Parity Stock, and no Common
Stock, Junior Stock or Parity Stock shall be, directly or indirectly, purchased,
redeemed or otherwise acquired for consideration by the Company or any of its
subsidiaries unless dividends for the latest completed Dividend Period on all
outstanding shares of the Series E Preferred Stock have been or are
contemporaneously declared and paid in full (or have been declared and a sum
sufficient for the payment thereof has been set aside for the benefit of the
holders of shares of the Series E Preferred Stock on the applicable record
date). The foregoing limitation shall not apply to (i) a dividend payable on any
Junior Stock in shares of any other Junior Stock, or to the acquisition of
shares of any Junior Stock in exchange for, or through application of the
proceeds of the sale of, shares of any other Junior Stock; (ii) redemptions,
purchases or other acquisitions of shares of Common Stock or other Junior Stock
in connection with the administration of any employee benefit plan in the
ordinary course of business (including purchases to offset the Share Dilution
Amount (as defined below) pursuant to a publicly announced repurchase plan) and
consistent with past practice; provided that any purchases to offset the Share
Dilution Amount shall in no event exceed the Share Dilution Amount; (iii) any
dividends or distributions of rights or Junior Stock in connection with a
stockholders’ rights plan or any redemption or repurchase of rights pursuant to
any stockholders’ rights plan; (iv) the acquisition by the Company or any of its
subsidiaries of record ownership in Junior Stock or Parity Stock for the
beneficial ownership of any other persons (other than the Company or any of its
subsidiaries), including as trustees or custodians; (v) the conversion of the
Convertible Preferred Stock into Common Stock; (vi) the exchange or conversion
of Junior Stock (other than the Convertible Preferred Stock) for or into other
Junior Stock or of Parity Stock for or into other Parity Stock (with the same or
lesser aggregate liquidation amount) or

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Junior Stock, in each case, solely to the extent required pursuant to binding
contractual agreements entered into prior to the Signing Date or any subsequent
agreement for the accelerated exercise, settlement or exchange thereof for
Common Stock; and (vii) any purchase, redemption or other acquisition with the
written consent of the UST. “Share Dilution Amount” means the increase in the
number of diluted shares outstanding (determined in accordance with generally
accepted accounting principles in the United States, and as measured from the
date of the Company’s consolidated financial statements most recently filed with
the Securities and Exchange Commission prior to the Original Issue Date)
resulting from the grant, vesting or exercise of equity-based compensation to
employees and equitably adjusted for any stock split, stock dividend, reverse
stock split, reclassification or similar transaction.
     When dividends are not paid (or declared and a sum sufficient for payment
thereof set aside for the benefit of the holders thereof on the applicable
record date) on any Dividend Payment Date (or, in the case of Parity Stock
having dividend payment dates different from the Dividend Payment Dates, on a
dividend payment date falling within a Dividend Period related to such Dividend
Payment Date) in full on shares of the Series E Preferred Stock and any shares
of Parity Stock, all dividends declared on the Series E Preferred Stock and all
such Parity Stock and payable on such Dividend Payment Date (or, in the case of
Parity Stock having dividend payment dates different from the Dividend Payment
Dates, on a dividend payment date falling within the Dividend Period related to
such Dividend Payment Date) shall be declared pro rata so that the respective
amounts of such dividends declared shall bear the same ratio to each other as
all declared but unpaid dividends per share on the shares of the Series E
Preferred Stock and all Parity Stock payable on such Dividend Payment Date (or,
in the case of Parity Stock having dividend payment dates different from the
Dividend Payment Dates, on a dividend payment date falling within the Dividend
Period related to such Dividend Payment Date) (subject to their having been
declared by the Board of Directors or a duly authorized committee of the Board
of Directors out of legally available funds and including, in the case of Parity
Stock that bears cumulative dividends, all accrued but unpaid dividends) bear to
each other. If the Board of Directors or a duly authorized committee of the
Board of Directors determines not to pay any dividend or a full dividend on a
Dividend Payment Date, the Company will provide written notice to the holders of
the Series E Preferred Stock prior to such Dividend Payment Date.
     Subject to the foregoing, and not otherwise, such dividends (payable in
cash, securities or other property) as may be determined by the Board of
Directors or any duly authorized committee of the Board of Directors may be
declared and paid on any securities, including Common Stock and other Junior
Stock, from time to time out of any funds legally available for such payment,
and holders of the Series E Preferred Stock shall not be entitled to participate
in any such dividends.
     Section 4. Liquidation, Dissolution or Winding Up. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Company, then, before any distribution or payment shall be made to the
holders of Junior Stock, the holders of the Series E Preferred Stock and any
shares of Preferred Stock ranking on a parity therewith as to liquidation shall
be entitled to be paid in full the respective amounts of the liquidation
preferences thereof, which in the case of the Series E Preferred Stock shall be
$104,011.44 per share, plus an amount equal to all dividends, if any, that have
been declared but not paid prior to such distribution or payment date (but
without any accumulation in respect of dividends that have not been declared

A-4

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prior to such distribution or payment date). If such payment shall have been
made in full to the holders of the Series E Preferred Stock and any series of
Preferred Stock ranking on a parity therewith as to liquidation, the remaining
assets and funds of the Company shall be distributed among the holders of Junior
Stock, according to their respective rights and preferences and in each case
according to their respective shares. If, upon any liquidation, dissolution or
winding up of the affairs of the Company, the amounts so payable are not paid in
full to the holders of all outstanding shares of the Series E Preferred Stock
and any series of Preferred Stock ranking on a parity therewith as to
liquidation, the holders of the Series E Preferred Stock and any series of
Preferred Stock ranking on a parity therewith as to liquidation shall share
ratably in any distribution of assets in proportion to the full amounts to which
they would otherwise be respectively entitled. Neither the consolidation or
merger of the Company, nor the sale, lease or conveyance of all or a part of its
assets, shall be deemed a liquidation, dissolution or winding up of the affairs
of the Company within the meaning of the foregoing provisions of this Section 4.
     Section 5. Redemption.
     (a) Optional Redemption. Except as provided in this Section 5(a), the
Series E Preferred Stock shall not be redeemable. At any time that (i) the Trust
(or any successor entity established for the sole benefit of the United States
Treasury) “beneficially owns” less than 30% of the aggregate voting power of the
Company’s voting securities and (ii) no holder of the Series E Preferred Stock
controls the Company, the Company may redeem, in whole or in part, at any time
and from time to time, out of funds legally available therefor, the shares of
the Series E Preferred Stock at the time outstanding, upon notice given as
provided in Section 5(c) below, the Series E Preferred Stock in whole or in part
at a redemption price per share equal to 100% of its Liquidation Amount, plus,
for purposes of the redemption price only and except as set forth in the last
sentence of the next paragraph, an amount equal to all declared but unpaid
dividends for the then current Dividend Period to such redemption date
(regardless of whether any dividends are actually declared for that Dividend
Period). “Control” for purposes of this Section 5(a) means the power to direct
the management and policies of the Company, directly or indirectly, whether
through the ownership of voting securities, by contract, by the power to control
the Board of Directors or otherwise. “Beneficially owns” for purposes of this
Section 5(a) is defined in Rule 13d-3 under the Securities Exchange Act of 1934,
as amended to the Signing Date. For the avoidance of doubt, while there is Board
of Directors control (or the potential to gain Board of Directors control as a
result of existing contractual rights) by any holder of the Series E Preferred
Stock, the Company may not redeem any of the Series E Preferred Stock.
     The redemption price for any shares of the Series E Preferred Stock shall
be payable on the redemption date to the holder of such shares against surrender
of the certificate(s) evidencing such shares to the Company or its agent. Any
declared but unpaid dividends payable on a redemption date that occurs
subsequent to the Dividend Record Date for a Dividend Period shall not be paid
to the holder entitled to receive the redemption price on the redemption date,
but rather shall be paid to the holder of record of the redeemed shares on such
Dividend Record Date relating to the Dividend Payment Date as provided in
Section 3 above.
     (b) No Sinking Fund. The Series E Preferred Stock will not be subject to
any mandatory redemption, sinking fund or other similar provisions. Holders of
the Series E

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Preferred Stock will have no right to require redemption or repurchase of any
shares of the Series E Preferred Stock.
     (c) Notice of Redemption. Notice of every redemption of shares of the
Series E Preferred Stock shall be given by first class mail, postage prepaid,
addressed to the holders of record of the shares to be redeemed at their
respective last addresses appearing on the books of the Company. Such mailing
shall be at least 30 days and not more than 60 days before the date fixed for
redemption. Any notice mailed as provided in this subsection (c) shall be
conclusively presumed to have been duly given, whether or not the holder
receives such notice, but failure duly to give such notice by mail, or any
defect in such notice or in the mailing thereof, to any holder of shares of the
Series E Preferred Stock designated for redemption shall not affect the validity
of the proceedings for the redemption of any other shares of the Series E
Preferred Stock. Notwithstanding the foregoing, if shares of the Series E
Preferred Stock are issued in book-entry form through The Depository Trust
Company or any other similar facility, notice of redemption may be given to the
holders of the Series E Preferred Stock at such time and in any manner permitted
by such facility. Each notice of redemption given to a holder shall state:
(1) the redemption date; (2) the number of shares of the Series E Preferred
Stock to be redeemed and, if less than all the shares held by such holder are to
be redeemed, the number of such shares to be redeemed from such holder; (3) the
redemption price; and (4) the place or places where certificates for such shares
are to be surrendered for payment of the redemption price, but failure duly to
give such notice to any holder of shares of the Series E Preferred Stock
designated for redemption or any defect in such notice shall not affect the
validity of the proceedings for the redemption of any other shares of the
Series E Preferred Stock.
     (d) Partial Redemption. In case of any redemption of part of the shares of
the Series E Preferred Stock at the time outstanding, the shares to be redeemed
shall be selected either pro rata or in such other manner as the Board of
Directors or a duly authorized committee thereof may determine to be fair and
equitable. Subject to the provisions hereof, the Board of Directors or a duly
authorized committee thereof shall have full power and authority to prescribe
the terms and conditions upon which shares of the Series E Preferred Stock shall
be redeemed from time to time. If fewer than all the shares represented by any
certificate are redeemed, at the election of each holder, either (i) a new
certificate shall be issued representing the unredeemed shares without charge to
such holder thereof or (ii) upon surrender of a certificate representing any
unredeemed shares of Series E Preferred Stock, the Company shall deliver or
cause to be delivered to such holder a notice that shares of Series E Preferred
Stock equal in number to the unredeemed shares of Series E Preferred Stock
represented by the certificate so surrendered have been registered on the books
and records of the Company.
     (e) Effectiveness of Redemption. If notice of redemption has been duly
given and if on or before the redemption date specified in the notice all funds
necessary for the redemption have been deposited by the Company, in trust for
the pro rata benefit of the holders of the shares called for redemption, with a
bank or trust company doing business in the Borough of Manhattan, The City of
New York, and having a capital and surplus of at least $500 million and selected
by the Board of Directors, so as to be and continue to be available solely
therefor, then, notwithstanding that any certificate (if the shares of Series E
Preferred Stock are not in book-entry form) for any share so called for
redemption has not been surrendered for cancellation, on and after the
redemption date dividends shall cease to accrue on all shares so called for

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redemption, all shares so called for redemption shall no longer be deemed
outstanding and all rights with respect to such shares shall forthwith on such
redemption date cease and terminate, except only the right of the holders
thereof to receive the amount payable on such redemption from such bank or trust
company, without interest. Any funds unclaimed at the end of three years from
the redemption date shall, to the extent permitted by law, be released to the
Company, after which time the holders of the shares so called for redemption
shall look only to the Company for payment of the redemption price of such
shares.
     (f) Status of Redeemed Shares. Shares of the Series E Preferred Stock that
are redeemed, repurchased or otherwise acquired by the Company shall revert to
authorized but unissued shares of the Series E Preferred Stock (provided that
any such cancelled shares of the Series E Preferred Stock may be reissued only
as shares of any series of the Preferred Stock other than the Series E Preferred
Stock).
     Section 6. Conversion. Holders of the Series E Preferred Stock shares shall
have no right to exchange or convert such shares into any other securities.
     Section 7. Voting Rights.
     (a) General. The holders of the Series E Preferred Stock shall not have any
voting rights except as set forth below or as otherwise from time to time
required by law.
     (b) Series E Preferred Stock Directors. Whenever, at any time or times,
dividends payable on the shares of the Series E Preferred Stock have not been
paid for an aggregate of four quarterly Dividend Periods or more, whether or not
consecutive (including for this purpose the period during which the Series D
Preferred Stock was outstanding), the authorized number of directors of the
Company shall automatically be increased to accommodate the number of the
Preferred Directors specified below and the holders of the Series E Preferred
Stock shall have the right, with holders of shares of any one or more other
classes or series of Voting Parity Stock outstanding at the time, voting
together as a class, to elect the greater of two directors and a number of
directors (rounded upward) equal to 20% of the total number of directors of the
Company after giving effect to such election (hereinafter the “Preferred
Directors” and each a “Preferred Director”) to fill such newly created
directorships at the Company’s next annual meeting of stockholders (or at a
special meeting called for that purpose prior to such next annual meeting) and
at each subsequent annual meeting of stockholders until dividends payable on all
outstanding shares of the Series E Preferred Stock have been declared and paid
in full for four consecutive quarterly Dividend Periods, at which time such
right shall terminate with respect to the Series E Preferred Stock, except as
herein or by law expressly provided, subject to revesting in the event of each
and every subsequent payment failure of the character above mentioned; provided
that it shall be a qualification for election for any Preferred Director that
the election of such Preferred Director shall not cause the Company to violate
any corporate governance requirements of any securities exchange or other
trading facility on which securities of the Company may then be listed or traded
that listed or traded companies must have a majority of independent directors.
Upon any termination of the right of the holders of shares of the Series E
Preferred Stock and Voting Parity Stock as a class to vote for directors as
provided above, the Preferred Directors shall cease to be qualified as
directors, the term of office of all Preferred Directors then in office shall
terminate immediately and the authorized number of directors shall

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be reduced by the number of the Preferred Directors elected pursuant hereto. Any
Preferred Director may be removed at any time, with or without cause, and any
vacancy created thereby may be filled, only by the affirmative vote of the
holders of a majority of the shares of the Series E Preferred Stock at the time
outstanding voting separately as a class together with the holders of shares of
Voting Parity Stock, to the extent the voting rights of such holders described
above are then exercisable. If the office of any Preferred Director becomes
vacant for any reason other than removal from office as aforesaid, the remaining
Preferred Director may choose a successor who shall hold office for the
unexpired term in respect of which such vacancy occurred.
     (c) Class Voting Rights as to Particular Matters. So long as any shares of
the Series E Preferred Stock are outstanding, in addition to any other vote or
consent of stockholders required by law or by the Charter, the vote or consent
of the holders of at least 66 2/3% of the shares of the Series E Preferred Stock
at the time outstanding, voting as a separate class, given in person or by
proxy, either in writing without a meeting or by vote at any meeting called for
the purpose, shall be necessary for effecting or validating:
     (i) Authorization of Senior or Pari Passu Stock. Any amendment or
alteration of the Certificate of Designations for the Series E Preferred Stock
or the Charter (including any amendment to the Charter effectuated by a
Certificate of Designations) to authorize or create or increase the authorized
amount of, or any issuance of, any shares of, or any securities convertible into
or exchangeable or exercisable for shares of, any class or series of capital
stock of the Company ranking senior to or pari passu with the Series E Preferred
Stock with respect to either or both the payment of dividends and/or the
distribution of assets on any liquidation, dissolution or winding up of the
Company (the “Senior or Pari Passu Securities”); provided, however, that the
voting rights provided in this Section 7(c)(i) shall not apply to any amendment
or alteration of the Charter (including any amendment to the Charter effectuated
by a Certificate of Designations) to authorize or create or increase the
authorized amount of, or any issuance of, any Senior or Pari Passu Securities
initially issued to the UST;
     (ii) Amendment of the Series E Preferred Stock. Any amendment, alteration
or repeal of any provision of the Certificate of Designations for the Series E
Preferred Stock or the Charter (including, unless no vote on such merger or
consolidation is required by Section 7(c)(iii) below, any amendment, alteration
or repeal by means of a merger, consolidation or otherwise) so as to adversely
affect the rights, preferences, privileges or voting powers of the Series E
Preferred Stock; or
     (iii) Share Exchanges, Reclassifications, Mergers and Consolidations. Any
consummation of a binding share exchange or reclassification involving the
Series E Preferred Stock, or of a merger or consolidation of the Company with or
into another corporation or other entity, unless in each case (x) the shares of
the Series E Preferred Stock remain outstanding and are not amended in any
respect or, in the case of any such merger or consolidation with respect to
which the Company is not the surviving or resulting entity, are converted into
or exchanged for preference securities of the surviving or resulting entity or
its ultimate parent, and (y) such shares remaining outstanding or such
preference securities, as the case may be, have such rights, preferences,
privileges and voting powers, and limitations and restrictions thereof, taken as
a whole, as are not

A-8

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materially less favorable to the holders thereof than the rights, preferences,
privileges and voting powers, and limitations and restrictions thereof, of the
Series E Preferred Stock immediately prior to such consummation, taken as a
whole;
provided, however, that for all purposes of this Section 7(c), any increase in
the amount of the authorized Preferred Stock, including any increase in the
authorized amount of the Series E Preferred Stock necessary to satisfy
preemptive or similar rights granted by the Company to other persons prior to
the Signing Date, or the creation and issuance, or an increase in the authorized
or issued amount, whether pursuant to preemptive or similar rights or otherwise,
of any other series of the Preferred Stock, or any securities convertible into
or exchangeable or exercisable for any other series of the Preferred Stock,
ranking pari passu with (if such securities are issued to the UST) or junior to
the Series E Preferred Stock with respect to the payment of dividends (whether
such dividends are cumulative or non-cumulative) and the distribution of assets
upon liquidation, dissolution or winding up of the Company will not be deemed to
adversely affect the rights, preferences, privileges or voting powers, and shall
not require the affirmative vote or consent of, the holders of outstanding
shares of the Series E Preferred Stock.
     (d) Changes after Provision for Redemption. No vote or consent of the
holders of the Series E Preferred Stock shall be required pursuant to Section
7(c) above if, at or prior to the time when any such vote or consent would
otherwise be required pursuant to such Section, all outstanding shares of the
Series E Preferred Stock shall have been redeemed, or shall have been called for
redemption upon proper notice and sufficient funds shall have been deposited in
trust for such redemption, in each case pursuant to Section 5 above.
     (e) Procedures for Voting and Consents. The rules and procedures for
calling and conducting any meeting of the holders of the Series E Preferred
Stock (including, without limitation, the fixing of a record date in connection
therewith), the solicitation and use of proxies at such a meeting, the obtaining
of written consents and any other aspect or matter with regard to such a meeting
or such consents shall be governed by any rules that the Board of Directors or
any duly authorized committee of the Board of Directors, in its discretion, may
adopt from time to time, which rules and procedures shall conform to the
requirements of the Charter, the Bylaws, and applicable law and the rules of any
national securities exchange or other trading facility on which Series E
Preferred Stock is listed or traded at the time.
     Section 8. Record Holders. To the fullest extent permitted by applicable
law, the Company and the Transfer Agent may deem and treat the record holder of
any share of the Series E Preferred Stock as the true and lawful owner thereof
for all purposes, and neither the Company nor the Transfer Agent shall be
affected by any notice to the contrary.
     Section 9. Notices. All notices or communications in respect of the
Series E Preferred Stock shall be sufficiently given if given in writing and
delivered in person or by first class mail, postage prepaid, or if given in such
other manner as may be permitted in this Certificate of Designations, in the
Charter or Bylaws or by applicable law. Notwithstanding the foregoing, if shares
of the Series E Preferred Stock are issued in book-entry form through The
Depository Trust Company or any similar facility, such notices may be given to
the holders of the Series E Preferred Stock in any manner permitted by such
facility.

A-9

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     Section 10. No Preemptive Rights. No holder of the Series E Preferred Stock
shall be entitled as a matter of right to subscribe for or purchase, or have any
preemptive right with respect to, any part of any new or additional issue of
stock of any class whatsoever, or of securities convertible into any stock of
any class whatsoever, whether now or hereafter authorized and whether issued for
cash or other consideration or by way of dividend.
     Section 11. Replacement Certificates. The Company shall replace any
mutilated certificate at the holder’s expense upon surrender of that certificate
to the Company. The Company shall replace certificates that become destroyed,
stolen or lost at the holder’s expense upon delivery to the Company of
reasonably satisfactory evidence that the certificate has been destroyed, stolen
or lost, together with any indemnity that may be reasonably required by the
Company.
     Section 12. Form.
     (a) The Series E Preferred Stock shall be initially issued in the form of
one or more certificates in definitive, fully registered form with, until such
time as otherwise determined by the Company, the restricted shares legend (the
“Restricted Shares Legend”), as set forth on the form of the Series E Preferred
Stock attached hereto as Exhibit A (each, a “Series E Preferred Share
Certificate”), which is hereby incorporated in and expressly made a part of this
Certificate of Designations. The Series E Preferred Share Certificate may have
notations, legends or endorsements required by law, stock exchange rules,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company).
     (b) An Officer shall sign the Series E Preferred Share Certificate for the
Company, in accordance with the Company’s Bylaws and applicable law, by manual
or facsimile signature. “Officer” means the Chairman, any Vice President, the
Treasurer or the Secretary of the Company.
     (c) If an Officer whose signature is on a Series E Preferred Share
Certificate no longer holds that office at the time of the issuance of such
Series E Preferred Share Certificate, such Series E Preferred Share Certificate
shall be valid nevertheless.
     (d) A Series E Preferred Share Certificate shall not be valid or obligatory
until an authorized signatory of the Transfer Agent manually countersigns the
Series E Preferred Share Certificate. The signature shall be conclusive evidence
that such Series E Preferred Share Certificate has been authenticated under this
Certificate of Designations. Each Series E Preferred Share Certificate shall be
dated the date of its authentication.
     Other than upon original issuance, all transfers and exchanges of the
Series E Preferred Stock shall be made by direct registration on the books and
records of the Company.
     Section 13. Transfer Agent And Registrar. The duly appointed Transfer Agent
and Registrar for the Series E Preferred Stock shall be Wells Fargo Bank, N.A.
(the “Transfer Agent”). The Company may, in its sole discretion, remove the
Transfer Agent in accordance with the agreement between the Company and the
Transfer Agent; provided that the Company

A-10

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shall appoint a successor transfer agent who shall accept such appointment prior
to the effectiveness of such removal; provided further that such successor
transfer agent shall be the Transfer Agent for purposes of this Certificate of
Designations.
     Section 14. Other Rights. The shares of the Series E Preferred Stock shall
not have any rights, preferences, privileges or voting powers or relative,
participating, optional or other special rights, or qualifications, limitations
or restrictions thereof, other than as set forth herein or in the Charter or as
provided by applicable law.

A-11

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EXHIBIT A
FORM OF SERIES E FIXED RATE NON-CUMULATIVE
PERPETUAL PREFERRED STOCK
($[•] LIQUIDATION PREFERENCE)

         NUMBER   SHARES    [                    ]   [                    ]

CUSIP [                    ]
AMERICAN INTERNATIONAL GROUP, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFICATE IS TRANSFERABLE
IN THE CITY OF SOUTH ST. PAUL, MINNESOTA
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF
EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OR SUCH LAWS. EACH PURCHASER OF THE
SECURITIES REPRESENTED BY THIS INSTRUMENT IS NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER. ANY TRANSFEREE OF THE SECURITIES REPRESENTED BY THIS INSTRUMENT
BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL
BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (2) AGREES THAT IT
WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THE SECURITIES REPRESENTED BY THIS
INSTRUMENT EXCEPT (A) PURSUANT TO A REGISTRATION STATEMENT WHICH IS THEN
EFFECTIVE UNDER THE SECURITIES ACT, (B) FOR SO LONG AS THE SECURITIES
REPRESENTED BY THIS INSTRUMENT ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO
A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO THE ISSUER OR
(D) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM
THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
Exh A-1

 

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     This is to certify that the UNITED STATES DEPARTMENT OF THE TREASURY is the
owner of FOUR HUNDRED THOUSAND (400,000) fully paid and non-assessable shares of
Series E Fixed Rate Non-Cumulative Perpetual Preferred Stock, $5.00 par value,
liquidation preference $104,011.44 per share (the “Stock”), of the American
International Group, Inc. (the “Company”), transferable on the books of the
Company by the holder hereof in person or by duly authorized attorney upon
surrender of this certificate properly endorsed.
     This certificate is not valid or obligatory for any purpose unless
countersigned and registered by the Transfer Agent and Registrar.
     Witness the facsimile seal of the Company and the facsimile signatures of
its duly authorized officers.
Dated: April 17, 2009

         
 
       
 
       
Name:
  Name:    
Title:
  Title:    

             
 
                Countersigned and Registered           ,        as Transfer
Agent and Registrar       

             
 
  By:        
 
           
 
      Authorized Signature    

Exh A-2

 

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AMERICAN INTERNATIONAL GROUP, INC.
     AMERICAN INTERNATIONAL GROUP, INC. (the “Company”) will furnish, without
charge to each stockholder who so requests, a copy of the certificate of
designations establishing the powers, preferences and relative, participating,
optional or other special rights of each class of stock of the Company or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights applicable to each class of stock of the Company or series
thereof. Such information may be obtained by a request in writing to the
Secretary of the Company at its principal place of business.
     This certificate and the share or shares represented hereby are issued and
shall be held subject to all of the provisions of the Company’s Restated
Certificate of Incorporation, as amended, and the Certificate of Designations of
the Series E Fixed Rate Non-Cumulative Perpetual Preferred Stock (Liquidation
Preference $104,011.44 per share) (copies of which are on file with the Transfer
Agent), to all of which the holder, by acceptance hereof, assents.
     The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full to
applicable laws or regulations:

             
TEN COM
  -   as tenants in common   UNIF GIFT MIN ACT-                      Custodian
                    
TEN ENT
  -   as tenants by the entireties                                       
(Minor)                          (Cust)
JT TEN
  -   as joint tenants with   under Uniform Gifts to Minors Act
 
      right of survivorship and not as  
                                        
 
      tenants in common   (State)

Additional abbreviations may also be used though not in the above list.
 
     For value received,                      hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
      IDENTIFYING NUMBER OF ASSIGNEE
 
 
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE
 
 
 
shares of the capital stock represented by the within certificate, and do(es)
hereby irrevocably constitute and appoint
                                                            , Attorney to
transfer the said stock on the books of the within named Company with full power
of substitution in the premises.
Exh A-3

 

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Dated                                         

             
 
           
 
           
 
      Signature    
 
           
 
  NOTICE:   The signature to this assignment must correspond with the name as
written upon the face of this certificate in every particular, without
alteration or enlargement or any change whatever.    

SIGNATURE GUARANTEED

     
 
   
 
   
NOTICE: The signature(s) should be guaranteed by an eligible guarantor
institution (banks, stockbrokers, savings and loan associations, and credit
unions with membership in an approved signature guarantee medallion program),
pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934.
   

Exh A-4

 

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ANNEX B
FORM OF OPINION
     (a) The Company has been duly incorporated and is an existing corporation
in good standing under the laws of the state of its incorporation.
     (b) The Series E Preferred Stock has been duly authorized and, when issued
and delivered in accordance with the Agreement, the Series E Preferred Stock
will be validly issued and fully paid and nonassessable, and will not be issued
in violation of any preemptive rights.
     (c) The Company has the corporate power and authority to execute and
deliver the Agreement and to perform its obligations thereunder (including the
issuance of the Series E Preferred Stock and the Exchange Shares).
     (d) The execution, delivery and performance by the Company of the Agreement
and the consummation of the transactions contemplated thereby have been duly
authorized by all necessary corporate action on the part of the Company and its
stockholders (other than (i) the vote of the stockholders described in
Section 3.1(b) of the Agreement and (ii) the corporate actions required to
consummate the transactions contemplated by Sections 3.7 and 3.8), and no
further approval or authorization is required on the part of the Company, other
than (i) the vote of the stockholders described in Section 3.1(b) of the
Agreement and (ii) the corporate actions required to consummate the transactions
contemplated by Sections 3.7 and 3.8.
     (e) The Agreement is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the creditors’ rights and general equitable
principles, regardless of whether such enforceability is considered in a
proceeding at law or in equity; provided, however, such counsel need express no
opinion with respect to Section 3.1(b), Section 3.7, Section 3.8 or
Section 4.5(g) or the severability provisions of the Agreement insofar as
Section 3.1(b), Section 3.7, Section 3.8 or Section 4.5(g) is concerned.