Term Sheet 

March 2, 2009 

Exchange of Series D Fixed Rate Cumulative Perpetual Preferred Stock for Series E Fixed Rate 

Non-Cumulative Perpetual Preferred Stock

The Series D Fixed Rate Cumulative Perpetual Preferred Stock (the “Series D Preferred Stock”) of 

American International Group, Inc. (“AIG”) issued to the United States Department of the Treasury 

(“UST”) on November 25, 2008 shall be exchanged for Series E Fixed Rate Non-Cumulative Perpetual 

Preferred Stock (the “Series E Preferred Stock”) of AIG, with the following changes to the terms of the 

Series D Preferred Stock: 

Dividends: Holders of Series E Preferred Stock will be entitled to receive, only when, as 

and if declared by the Board of Directors of AIG or a duly authorized 

committee thereof, non-cumulative cash dividends on the liquidation 

preference at a rate of 10% per annum. Declared dividends will be payable 

quarterly in arrears on February 1, May 1, August 1 and November 1 of each 

year. Dividends will be payable when, as and if declared by the Board of 

Directors of AIG. 

Dividends on the Series E Preferred Stock will not be cumulative and holders 

of Series E Preferred Stock will not be entitled to receive any dividends not 

declared by the Board of Directors of AIG or a duly authorized committee 

thereof and no interest, or sum of money in lieu of interest, will be payable in 

respect of any dividend not so declared. 

Exchange Ratio: The aggregate liquidation preference of the Series E Preferred Stock will be 

equal to the sum of the aggregate liquidation preference of the Series D 

Preferred Stock and the amount of the accrued and unpaid dividends under 

the Series D Preferred Stock. 

Voting: If dividends on the Series E Preferred Stock are not paid in full for four 

dividend periods, whether or not consecutive, the Series E Preferred Stock 

will have the right to elect the greater of two directors and a number of 

directors (rounded upward) equal to 20% of the total number of directors 

after giving effect to such election. The right to elect directors will end, and 

such two directors shall resign, if such directors were elected, when full 

dividends have been paid for four consecutive dividend periods following 

commencement of such right. 

Replacement Capital 

Covenant: AIG will enter into a Replacement Capital Covenant in favor of the holders 

of covered debt pursuant to which AIG will agree that prior to the third 

anniversary of the issuance of the Series E Preferred Stock it will not repay, 

redeem or purchase, and no subsidiary of AIG will purchase, all or any part 

of the Series E Preferred Stock except with the proceeds obtained from the 

issuance by AIG or any such subsidiary of certain replacement capital 

securities. 

Replacement Capital 

Intention: AIG intends that commencing on the third anniversary of the issuance of the 

Series E Preferred Stock it will not repay, redeem or purchase, nor will any 

subsidiary of AIG purchase, all or any part of the Series E Preferred Stock 
except with the proceeds from the issuance by AIG or any such subsidiary of 

securities for which AIG will receive equity credit, at the time of sale or 

issuance, that is, in the aggregate, equal to or greater than the equity credit 

attributed to the Series E Preferred Stock redeemed at the time of such early 

redemption. 

Executive 

Compensation: Until such time as no obligation of AIG 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 of AIG), AIG shall comply in all 

respects with Section 111 of the Emergency Economic Stabilization Act of 

2008, as amended, as implemented by any guidance or regulations issued 

and/or to be issued thereunder including any amendments to the guidelines 

implementing the Programs of Systemically Significant Failing Institutions. 

Issuance of Additional Preferred Stock

Issuer: AIG 

Initial Holder: UST 

Security: Shares of Series F Preferred Stock to be issued from time to time at the 

request of AIG.1

Issue Price: Upon each drawdown the aggregate liquidation preference of the shares of 

the Series F Preferred Stock will increase by either an amount equal to the 

amount of such drawdown or by the aggregate liquidation preference of the 

shares of the Series F Preferred Stock issued on the closing date of such 

drawdown. 

Capacity: Up to $30 billion aggregate liquidation preference. 

Duration of Facility: 5 years beginning on commencement date of the facility. 

Warrants: The UST will receive a warrant (“Warrant”) to purchase a number of shares 

of common stock of AIG (“Common Stock”) equal to 1% of the issued and 

outstanding shares of Common Stock on the commencement date of the 

facility. The initial exercise price for the Warrant shall be $2.50 per share of 

Common Stock (representing the par value of the Common Stock on the 

commencement date of the facility), subject to customary anti-dilution 

adjustments; provided that the initial exercise price per share of Common 

 1

 The terms of the Series F Preferred Stock will be same as the terms of the Series E Preferred Stock except 

that the Series F Preferred Stock will not be subject to the Replacement Capital Covenant or the Replacement 

Capital Intention. 

2 
3 

Stock shall be adjusted to the par value per share of the Common Stock 

following the amendments to AIG’s Restated Certificate of Incorporation 

contemplated by the terms of the Series C Perpetual, Convertible, 

Participating Preferred Stock of AIG. The Warrant shall be net share settled 

or, if consented to by AIG and the UST, settled on a full physical basis. 

Conditions to 

Commencement: On the commencement date of the facility AIG shall: 

- make representations and warranties essentially in the form as set forth in 

the following sections of the Series D Preferred Stock Securities Purchase 

Agreement: Section 2.2(a) (With respect to the incorporation and good 

standing of AIG), 2.2(b) (Capitalization), 2.2(c) (Preferred Stock), 2.2(d) 

(The Warrant and Warrant Shares) and 2.2(e)(i) (Authorization, 

Enforceability); and 

- deliver written opinions from counsel to AIG (which may be internal 

counsel) comparable to those delivered at the closing of the Series D 

Preferred Stock offering. 

Executive 

Compensation: Until such time as no obligation of AIG 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 of AIG), AIG shall comply in all 

respects with Section 111 of the Emergency Economic Stabilization Act of 

2008, as amended, as implemented by any guidance or regulations issued 

and/or to be issued thereunder including any amendments to the guidelines 

implementing the Programs of Systemically Significant Failing Institutions.

Conditions to Closing of 

Each Drawdown: As a condition to the closing of each drawdown: 

- AIG shall not be the debtor in a pending case under Title 11, United States 

Code; 

- the AIG Credit Facility Trust (or any successor entity established for the 

benefit of the United States Treasury) shall “beneficially own” more than 

50% of the voting power of the aggregate voting power of AIG’s voting 

securities at the time of such drawdown. “Beneficially owns” is as defined in 

Rule 13d-3 under the Securities Exchange Act of 1934; 

- AIG shall deliver a certificate signed on behalf of AIG by a senior 

executive officer certifying to the effect that the representations and 

warranties made on the commencement date are true and correct in all 

material respects on and as of such closing date; and 

- AIG shall deliver certificates in proper form or, with the prior consent of 

UST, evidence of shares in book-entry form, evidencing the shares of the 

Series F Preferred Stock to be issued on such closing date to UST or its 

designee(s).