EX-10.2






Exhibit 10.2




WARRANT TO PURCHASE COMMON STOCK



THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, 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 SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR
SUCH LAWS. THIS INSTRUMENT IS ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS
OF A SECURITIES PURCHASE AGREEMENT BETWEEN THE ISSUER OF THESE SECURITIES AND THE INVESTOR REFERRED
TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE ISSUER. THE SECURITIES REPRESENTED BY THIS
INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT. ANY
SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE VOID.




WARRANT

to purchase

53,798,766

Shares of Common Stock

of AMERICAN INTERNATIONAL GROUP, INC.




Issue Date: November 25, 2008




     1. Definitions. Unless the context otherwise requires, when used herein the following
terms shall have the meanings indicated.



     “Affiliate” has the meaning ascribed to it in the Purchase Agreement.



     “Appraisal Procedure” means a procedure whereby two independent appraisers, one chosen by the
Company and one by the Original Warrantholder, shall mutually agree upon the determinations then
the subject of appraisal. Each party shall deliver a notice to the other appointing its appraiser
within 15 days after the Appraisal Procedure is invoked. If within 30 days after appointment of the
two appraisers they are unable to agree upon the amount in question, 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 Original Warrantholder; otherwise, the average of all three
determinations shall be binding upon the Company and the Original Warrantholder. The costs of
conducting any Appraisal Procedure shall be borne by the Company.



     “Board of Directors” means the board of directors of the Company, including any duly
authorized committee thereof.



     “Business Combination” means a merger, consolidation, statutory share exchange or similar
transaction that requires the approval of the Company’s stockholders.



     “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.



     “Capital Stock” means (A) with respect to any Person that is a corporation or company, any and
all shares, interests, participations or other equivalents (however designated) of capital or
capital stock of such Person and (B) with respect to any Person that is not a corporation or
company, any and all partnership or other equity interests of such Person.



     “Charter” means, with respect to any Person, its certificate or articles of incorporation,
articles of association, or similar organizational document.



     “Charter Amendment” means the amendments to the Company’s Restated Certificate of
Incorporation 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.



     “Common Stock” has the meaning ascribed to it in the Purchase Agreement.



     “Company” means the American International Group, Inc.



     “conversion” has the meaning set forth in Section 13(C).



     “convertible securities” has the meaning set forth in Section 13(C).



     “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.



     “Exercise Price” means, with respect to this Warrant, initially, $2.50, and upon the
effectiveness of the Charter Amendment, the amended par value per share of Common Stock.



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     “Expiration Time” has the meaning set forth in Section 3.



     “Fair Market Value” means, with respect to any security or other property, the fair market
value of such security or other property as determined by the Board of Directors, acting in good
faith or, with respect to Section 14, as determined by the Original Warrantholder acting in good
faith. For so long as the Original Warrantholder holds this Warrant or any portion thereof, it may
object in writing to the Board of Director’s calculation of fair market value within 10 days of
receipt of written notice thereof. If the Original Warrantholder and the Company are unable to
agree on fair market value during the 10-day period following the delivery of the Original
Warrantholder’s objection, the Appraisal Procedure may be invoked by either party to determine Fair
Market Value by delivering written notification thereof not later than the 30th day
after delivery of the Original Warrantholder’s objection.



     “Governmental Entities” has the meaning ascribed to it in the Purchase Agreement.



     “Initial Number” has the meaning set forth in Section 13(C).



     “Issue Date” means November 25, 2008.



     “Market Price” means, with respect to a particular security, on any given day, the last
reported sale price regular way or, in case no such reported sale takes place on such day, the
average of the last closing bid and ask prices regular way, in either case on the principal
national securities exchange on which the applicable securities are listed or admitted to trading,
or if not listed or admitted to trading on any national securities exchange, the average of the
closing bid and ask prices as furnished by two members of the Financial Industry Regulatory
Authority, Inc. selected from time to time by the Company for that purpose. “Market Price” shall be
determined without reference to after hours or extended hours trading. If such security is not
listed and traded in a manner that the quotations referred to above are available for the period
required hereunder, the Market Price per share of Common Stock shall be deemed to be (i) in the
event that any portion of the Warrant is held by the Original Warrantholder, the fair market value
per share of such security as determined in good faith by the Original Warrantholder or (ii) in all
other circumstances, the fair market value per share of such security as determined in good faith
by the Board of Directors in reliance on an opinion of a nationally recognized independent
investment banking corporation retained by the Company for this purpose and certified in a
resolution to the Warrantholder. For the purposes of determining the Market Price of the Common
Stock on the “trading day” preceding, on or following the occurrence of an event, (i) that trading
day shall be deemed to commence immediately after the regular scheduled closing time of trading on
the New York Stock Exchange or, if trading is closed at an earlier time, such earlier time and (ii)
that trading day shall



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end at the next regular scheduled closing time, or if trading is closed at
an earlier time, such earlier time (for the avoidance of doubt, and as an example, if the Market
Price is to be determined as of the last trading day preceding a specified event and the closing
time of trading on a particular day is 4:00 p.m. and the
specified event occurs at 5:00 p.m. on that day, the Market Price would be determined by
reference to such 4:00 p.m. closing price).



     “Original Warrantholder” means the United States Department of the Treasury. Any actions
specified to be taken by the Original Warrantholder hereunder may only be taken by such Person and
not by any other Warrantholder.



     “Permitted Transactions” has the meaning set forth in Section 13(C).



     “Person” has the meaning given to it in Section 3(a)(9) of the Exchange Act and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act.



     “Per Share Fair Market Value” has the meaning set forth in Section 13(D).



     “Preferred Shares” means the perpetual preferred stock issued to the Original Warrantholder on
the Issue Date pursuant to the Purchase Agreement.



     “Pro Rata Repurchases” means any purchase of shares of Common Stock by the Company or any
subsidiary thereof pursuant to (A) any tender offer or exchange offer subject to Section 13(e) or
14(e) of the Exchange Act or Regulation 14E promulgated thereunder or (B) any other offer available
to substantially all holders of Common Stock, in the case of both (A) or (B), whether for cash,
shares of Capital Stock of the Company, other securities of the Company, evidences of indebtedness
of the Company or any other Person or any other property (including, without limitation, shares of
Capital Stock, other securities or evidences of indebtedness of a subsidiary), or any combination
thereof, effected while this Warrant is outstanding. The “Effective Date” of a Pro Rata Repurchase
shall mean the date of acceptance of shares for purchase or exchange by the Company under any
tender or exchange offer which is a Pro Rata Repurchase or the date of purchase with respect to any
Pro Rata Repurchase that is not a tender or exchange offer.



     “Purchase Agreement” means the Securities Purchase Agreement, dated as of November 25, 2008,
as amended from time to time, between the Company and the United States Department of the Treasury,
including all annexes and schedules thereto.



     “Regulatory Approvals” with respect to the Warrantholder, means, to the extent applicable and
required to permit the Warrantholder to exercise this Warrant for shares of Common Stock and to own
such Common Stock without the Warrantholder being in violation of applicable law, rule or
regulation, the



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receipt of any necessary approvals and authorizations of, filings and registrations
with, notifications to, or expiration or termination of any applicable waiting period under, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations
thereunder.



     “SEC” means the U.S. Securities and Exchange Commission.



     “Securities Act” means the Securities Act of 1933, as amended, or any successor statute, and
the rules and regulations promulgated thereunder.



     “Shares” has the meaning set forth in Section 2.



     “trading day” means (A) if the shares of Common Stock are not traded on any national or
regional securities exchange or association or over-the-counter market, a business day or (B) if
the shares of Common Stock are traded on any national or regional securities exchange or
association or over-the-counter market, a business day on which such relevant exchange or quotation
system is scheduled to be open for business and on which the shares of Common Stock (i) are not
suspended from trading on any national or regional securities exchange or association or
over-the-counter market for any period or periods aggregating one half hour or longer; and (ii)
have traded at least once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of the shares of Common Stock.



     “U.S. GAAP” means United States generally accepted accounting principles.



     “Warrantholder” has the meaning set forth in Section 2.



     “Warrant” means this Warrant, issued pursuant to the Purchase Agreement.



     2. Number of Shares; Exercise Price. This certifies that, for value received, the
United States Department of the Treasury or its permitted assigns (the “Warrantholder”) is
entitled, upon the terms and subject to the conditions hereinafter set forth, to acquire from the
Company, in whole or in part, after the receipt of all applicable Regulatory Approvals, if any, up
to an aggregate of 53,798,766 fully paid and nonassessable shares of Common Stock, at a purchase
price per share of Common Stock equal to the Exercise Price. The number of shares of Common Stock
(the “Shares”) and the Exercise Price are subject to adjustment as provided herein, and all
references to “Common Stock,” “Shares” and “Exercise Price” herein shall be deemed to include any
such adjustment or series of adjustments.



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     3. Exercise of Warrant; Term. Subject to Section 2, to the extent permitted by
applicable laws and regulations, the right to purchase the Shares represented by this Warrant is
exercisable, in whole or in part by the Warrantholder, at any time or from time to time after the
execution and delivery of this Warrant by the Company on the date hereof, but in no event later
than 5:00 p.m., New York City time on the tenth anniversary of the Issue Date (the “Expiration
Time”), by (A) the surrender of this Warrant and Notice of Exercise annexed hereto, duly completed
and executed on behalf of the Warrantholder, at the principal executive office of the Company
located at 70 Pine Street, New York, New York 10270 Attention: Chief Financial Officer (or such
other office or agency of the Company in the United States as it may designate by notice in writing to the
Warrantholder at the address of the Warrantholder appearing on the books of the Company), and (B)
payment of the Exercise Price for the Shares thereby purchased:



     (i) by having the Company withhold, from the shares of Common Stock that would otherwise be
delivered to the Warrantholder upon such exercise, shares of Common Stock issuable upon exercise of
the Warrant equal in value to the aggregate Exercise Price as to which this Warrant is so exercised
based on the Market Price of the Common Stock on the trading day on which this Warrant is exercised
and the Notice of Exercise is delivered to the Company pursuant to this Section 3, or



     (ii) with the consent of both the Company and the Warrantholder, by tendering in cash, by
certified or cashier’s check payable to the order of the Company, or by wire transfer of
immediately available funds to an account designated by the Company.



     If the Warrantholder does not exercise this Warrant in its entirety, the Warrantholder will be
entitled to receive from the Company within a reasonable time, and in any event not exceeding three
business days, a new warrant in substantially identical form for the purchase of that number of
Shares equal to the difference between the number of Shares subject to this Warrant and the number
of Shares as to which this Warrant is so exercised. Notwithstanding anything in this Warrant to the
contrary, the Warrantholder hereby acknowledges and agrees that its exercise of this Warrant for
Shares is subject to the condition that the Warrantholder will have first received any applicable
Regulatory Approvals.



     4. Issuance of Shares; Authorization; Listing. Book-entries representing Shares issued
upon exercise of this Warrant will be promptly recorded in such name or names as the Warrantholder
may designate. The Company hereby represents and warrants that any Shares issued upon the exercise
of this Warrant in accordance with the provisions of Section 3 will be duly and validly authorized
and issued, fully paid and nonassessable and free from all taxes, liens and charges (other than
liens or charges created by the Warrantholder,



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income and franchise taxes incurred in connection
with the exercise of the Warrant or taxes in respect of any transfer occurring contemporaneously
therewith). The Company agrees that the Shares so issued will be deemed to have been issued to the
Warrantholder as of the close of business on the date on which this Warrant and payment of the
Exercise Price are delivered to the Company in accordance with the terms of this Warrant,
notwithstanding that the stock transfer books of the Company may then be closed. The Company will
at all times reserve and keep available, out of its authorized but unissued Common Stock, solely
for the purpose of providing for the exercise of this Warrant, the aggregate number of shares of
Common Stock then issuable upon exercise of this Warrant at any time. The Company will (A) procure,
at its sole expense, the listing of the Shares issuable upon exercise of this Warrant at any time,
subject to issuance or notice of
issuance, on all principal stock exchanges on which the Common Stock is then listed or traded
and (B) maintain such listings of such Shares at all times after issuance. The Company will use
reasonable best efforts to ensure that the Shares may be issued without violation of any applicable
law or regulation or of any requirement of any securities exchange on which the Shares are listed
or traded.



     5. No Fractional Shares or Scrip. No fractional Shares or scrip representing
fractional Shares shall be issued upon any exercise of this Warrant. In lieu of any fractional
Share to which the Warrantholder would otherwise be entitled, the Warrantholder shall be entitled
to receive a cash payment equal to the Market Price of the Common Stock on the last trading day
preceding the date of exercise less the pro-rated Exercise Price for such fractional share.



     6. No Rights as Stockholders; Transfer Books. This Warrant does not entitle the
Warrantholder to any voting rights or other rights as a stockholder of the Company prior to the
date of exercise hereof. The Company will at no time close its transfer books against transfer of
this Warrant in any manner which interferes with the timely exercise of this Warrant.



     7. Charges, Taxes and Expenses. Issuance of Shares to the Warrantholder upon the
exercise of this Warrant shall be made without charge to the Warrantholder for any issue or
transfer tax or other incidental expense in respect of the issuance of such Shares, all of which
taxes and expenses shall be paid by the Company.



     8. Transfer/Assignment.



     (A) Subject to compliance with clause (B) of this Section 8, this Warrant and all rights
hereunder are transferable, in whole or in part, upon the books of the Company by the registered
holder hereof in person or by duly authorized attorney, and a new warrant shall be made and
delivered by the Company, of the same tenor and date as this Warrant but registered in the name of
one or more transferees, upon surrender of this Warrant, duly endorsed, to the



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office or agency of
the Company described in Section 3. All expenses (other than stock transfer taxes) and other
charges payable in connection with the preparation, execution and delivery of the new warrants
pursuant to this Section 8 shall be paid by the Company.



     (B) The transfer of the Warrant and the Shares issued upon exercise of the Warrant are subject
to the restrictions set forth in Section 4.4 of the Purchase Agreement. If and for so long as
required by the Purchase Agreement, this Warrant shall contain the legends as set forth in Section
4.2(a) of the Purchase Agreement.



     9. Exchange and Registry of Warrant. This Warrant is exchangeable, upon the surrender
hereof by the Warrantholder to the Company, for a new warrant or warrants of like tenor and
representing the right to purchase the same
aggregate number of Shares. The Company shall maintain a registry showing the name and address
of the Warrantholder as the registered holder of this Warrant. This Warrant may be surrendered for
exchange or exercise in accordance with its terms, at the office of the Company, and the Company
shall be entitled to rely in all respects, prior to written notice to the contrary, upon such
registry.



     10. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and in the case of any such loss, theft or destruction, upon receipt of a bond, indemnity
or security reasonably satisfactory to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company shall make and deliver, in lieu of such
lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same aggregate number of Shares as provided for in such lost, stolen,
destroyed or mutilated Warrant.



     11. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not be a business day,
then such action may be taken or such right may be exercised on the next succeeding day that is a
business day.



     12. Rule 144 Information. The Company covenants that it will use its reasonable best
efforts to timely file all reports and other documents required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations promulgated by the SEC thereunder
(or, if the Company is not required to file such reports, it will, upon the request of any
Warrantholder, make publicly available such information as necessary to permit sales pursuant to
Rule 144 under the Securities Act), and it will use reasonable best efforts to take such further
action as any Warrantholder may reasonably request, in each case to the extent required from time
to time to enable such holder to, if permitted by the terms of this Warrant and the Purchase
Agreement, sell this Warrant without



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registration under the Securities Act within the limitation of
the exemptions provided by (A) Rule 144 under the Securities Act, as such rule may be amended from
time to time, or (B) any successor rule or regulation hereafter adopted by the SEC. Upon the
written request of any Warrantholder, the Company will deliver to such Warrantholder a written
statement that it has complied with such requirements.



     13. Adjustments and Other Rights. The Exercise Price and the number of Shares issuable
upon exercise of this Warrant shall be subject to adjustment from time to time as follows;
provided, that if more than one subsection of this Section 13 is applicable to a single event, the
subsection shall be applied that produces the largest adjustment and no single event shall cause an
adjustment under more than one subsection of this Section 13 so as to result in duplication:



     (A) Charter Amendment. Upon the effectiveness of the Charter Amendment, the Exercise
Price shall be adjusted from its initial value of $2.50 to the amended par value per share of
Common Stock.



     (B) Stock Splits, Subdivisions, Reclassifications or Combinations. If the Company
shall (i) declare and pay a dividend or make a distribution on its Common Stock in shares of Common
Stock, (ii) subdivide or reclassify the outstanding shares of Common Stock into a greater number of
shares, or (iii) combine or reclassify the outstanding shares of Common Stock into a smaller number
of shares, the number of Shares issuable upon exercise of this Warrant at the time of the record
date for such dividend or distribution or the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that the Warrantholder after such date shall
be entitled to purchase the number of shares of Common Stock which such holder would have owned or
been entitled to receive in respect of the shares of Common Stock subject to this Warrant after
such date had this Warrant been exercised immediately prior to such date. In such event, the
Exercise Price in effect at the time of the record date for such dividend or distribution or the
effective date of such subdivision, combination or reclassification shall be adjusted to the number
obtained by dividing (x) the product of (1) the number of Shares issuable upon the exercise of this
Warrant before such adjustment and (2) the Exercise Price in effect immediately prior to the record
or effective date, as the case may be, for the dividend, distribution, subdivision, combination or
reclassification giving rise to this adjustment by (y) the new number of Shares issuable upon
exercise of the Warrant determined pursuant to the immediately preceding sentence.



     (C) Certain Issuances of Common Shares or Convertible Securities. Until the earlier of
(i) the date on which the Original Warrantholder no longer holds this Warrant or any portion
thereof and (ii) the third anniversary of the Issue Date, if the Company shall issue shares of
Common Stock (or rights or warrants or other securities exercisable or convertible into or
exchangeable (collectively, a



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“conversion”) for shares of Common Stock) (collectively, “convertible
securities”) (other than in Permitted Transactions (as defined below) or a transaction to which
subsection (B) of this Section 13 is applicable) without consideration or at a consideration per
share (or having a conversion price per share) that is less than 90% of the Market Price on the
last trading day preceding the date of the agreement on pricing such shares (or such convertible
securities) then, in such event:




(A) the number of Shares issuable upon the exercise of this Warrant immediately prior to
the date of the agreement on pricing of such shares (or of such convertible securities)
(the “Initial Number”) shall be increased to the number obtained by multiplying the
Initial Number by a fraction (A) the numerator of which shall be the sum of (x) the number
of shares of Common Stock of the Company outstanding on such date and (y) the number of
additional shares of Common Stock issued (or into which convertible securities may be
exercised or convert) and (B) the
denominator of which shall be the sum of (I) the number of shares of Common Stock
outstanding on such date and (II) the number of shares of Common Stock which the aggregate
consideration receivable by the Company for the total number of shares of Common Stock so
issued (or into which convertible securities may be exercised or convert) would purchase
at the Market Price on the last trading day preceding the date of the agreement on pricing
such shares (or such convertible securities); and




(B) the Exercise Price payable upon exercise of the Warrant shall be adjusted by
multiplying such Exercise Price in effect immediately prior to the date of the agreement
on pricing of such shares (or of such convertible securities) by a fraction, the numerator
of which shall be the number of shares of Common Stock issuable upon exercise of this
Warrant prior to such date and the denominator of which shall be the number of shares of
Common Stock issuable upon exercise of this Warrant immediately after the adjustment
described in clause (A) above.



     For purposes of the foregoing, the aggregate consideration receivable by the Company in
connection with the issuance of such shares of Common Stock or convertible securities shall be
deemed to be equal to the sum of the net offering price (including the Fair Market Value of any
non-cash consideration and after deduction of any related expenses payable to third parties) of all
such securities plus the minimum aggregate amount, if any, payable upon exercise or conversion of
any such convertible securities into shares of Common Stock; and “Permitted Transactions” shall
mean issuances (i) as consideration for or to fund the acquisition of businesses and/or related
assets, (ii) in connection with employee benefit plans and compensation related arrangements in the
ordinary course and consistent with past practice approved by the Board of Directors, (iii) in
connection with a public or broadly marketed offering and sale of Common Stock



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or convertible
securities for cash conducted by the Company or its affiliates pursuant to registration under the
Securities Act or Rule 144A thereunder on a basis consistent with capital raising transactions by
comparable financial institutions and (iv) in connection with the exercise of preemptive rights on
terms existing as of the Issue Date. Any adjustment made pursuant to this Section 13(C) shall
become effective immediately upon the date of such issuance.



     (D) Other Distributions. In case the Company shall fix a record date for the making of
a distribution to all holders of shares of its Common Stock of securities, evidences of
indebtedness, assets, cash, rights or warrants (excluding dividends of its Common Stock and other
dividends or distributions referred to in Section 13(B)), in each such case, the Exercise Price in
effect prior to such record date shall be reduced immediately thereafter to the price determined by
multiplying the Exercise Price in effect immediately prior to the reduction by the quotient of (x)
the Market Price of the Common Stock on the last trading day preceding the first date on which the
Common Stock trades regular way on the principal national securities exchange on which the Common
Stock is listed or admitted to trading without the right to receive such distribution, minus the
amount of cash and/or the Fair Market Value of the securities, evidences of indebtedness,
assets, rights or warrants to be so distributed in respect of one share of Common Stock (such
amount and/or Fair Market Value, the “Per Share Fair Market Value”) divided by (y) such Market
Price on such date specified in clause (x); such adjustment shall be made successively whenever
such a record date is fixed. In such event, the number of Shares issuable upon the exercise of this
Warrant shall be increased to the number obtained by dividing (x) the product of (1) the number of
Shares issuable upon the exercise of this Warrant before such adjustment, and (2) the Exercise
Price in effect immediately prior to the distribution giving rise to this adjustment by (y) the new
Exercise Price determined in accordance with the immediately preceding sentence. In the event that
such distribution is not so made, the Exercise Price and the number of Shares issuable upon
exercise of this Warrant then in effect shall be readjusted, effective as of the date when the
Board of Directors determines not to distribute such shares, evidences of indebtedness, assets,
rights, cash or warrants, as the case may be, to the Exercise Price that would then be in effect
and the number of Shares that would then be issuable upon exercise of this Warrant if such record
date had not been fixed.



     (E) Certain Repurchases of Common Stock. In case the Company effects a Pro Rata
Repurchase of Common Stock, then the Exercise Price shall be reduced to the price determined by
multiplying the Exercise Price in effect immediately prior to the Effective Date of such Pro Rata
Repurchase by a fraction of which the numerator shall be (i) the product of (x) the number of
shares of Common Stock outstanding immediately before such Pro Rata Repurchase and (y) the Market
Price of a share of Common Stock on the trading day immediately preceding the first public
announcement by the Company or any of its Affiliates



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of the intent to effect such Pro Rata
Repurchase, minus (ii) the aggregate purchase price of the Pro Rata Repurchase, and of which the
denominator shall be the product of (i) the number of shares of Common Stock outstanding
immediately prior to such Pro Rata Repurchase minus the number of shares of Common Stock so
repurchased and (ii) the Market Price per share of Common Stock on the trading day immediately
preceding the first public announcement by the Company or any of its Affiliates of the intent to
effect such Pro Rata Repurchase. In such event, the number of shares of Common Stock issuable upon
the exercise of this Warrant shall be increased to the number obtained by dividing (x) the product
of (1) the number of Shares issuable upon the exercise of this Warrant before such adjustment, and
(2) the Exercise Price in effect immediately prior to the Pro Rata Repurchase giving rise to this
adjustment by (y) the new Exercise Price determined in accordance with the immediately preceding
sentence. For the avoidance of doubt, no increase to the Exercise Price or decrease in the number
of Shares issuable upon exercise of this Warrant shall be made pursuant to this Section 13(E).



     (F) Business Combinations. In case of any Business Combination or reclassification of
Common Stock (other than a reclassification of Common Stock
referred to in Section 13(B)), the Warrantholder’s right to receive Shares upon exercise of
this Warrant shall be converted into the right to exercise this Warrant to acquire the number of
shares of stock or other securities or property (including cash) which the Common Stock issuable
(at the time of such Business Combination or reclassification) upon exercise of this Warrant
immediately prior to such Business Combination or reclassification would have been entitled to
receive upon consummation of such Business Combination or reclassification; and in any such case,
if necessary, the provisions set forth herein with respect to the rights and interests thereafter
of the Warrantholder shall be appropriately adjusted so as to be applicable, as nearly as may
reasonably be, to the Warrantholder’s right to exercise this Warrant in exchange for any shares of
stock or other securities or property pursuant to this paragraph. In determining the kind and
amount of stock, securities or the property receivable upon exercise of this Warrant following the
consummation of such Business Combination, if the holders of Common Stock have the right to elect
the kind or amount of consideration receivable upon consummation of such Business Combination, then
the consideration that the Warrantholder shall be entitled to receive upon exercise shall be deemed
to be the types and amounts of consideration received by the majority of all holders of the shares
of Common Stock that affirmatively make an election (or of all such holders if none make an
election).



     (G) Rounding of Calculations; Minimum Adjustments. All calculations under this Section
13 shall be made to the nearest one-tenth (1/10th) of a cent or to the nearest one-hundredth
(1/100th) of a share, as the case may be. Any provision of this Section 13 to the contrary
notwithstanding, no adjustment in the Exercise Price or the number of Shares into which this
Warrant is exercisable



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shall be made if the amount of such adjustment would be less than $0.01 or
one-tenth (1/10th) of a share of Common Stock, but any such amount shall be carried forward and an
adjustment with respect thereto shall be made at the time of and together with any subsequent
adjustment which, together with such amount and any other amount or amounts so carried forward,
shall aggregate $0.01 or 1/10th of a share of Common Stock, or more.



     (H) Timing of Issuance of Additional Common Stock Upon Certain Adjustments. In any
case in which the provisions of this Section 13 shall require that an adjustment shall become
effective immediately after a record date for an event, the Company may defer until the occurrence
of such event (i) issuing to the Warrantholder of this Warrant exercised after such record date and
before the occurrence of such event the additional shares of Common Stock issuable upon such
exercise by reason of the adjustment required by such event over and above the shares of Common
Stock issuable upon such exercise before giving effect to such adjustment and (ii) paying to such
Warrantholder any amount of cash in lieu of a fractional share of Common Stock; provided, however,
that the Company upon request shall deliver to such Warrantholder a due bill or other appropriate
instrument evidencing such Warrantholder’s right to receive such additional shares, and such cash,
upon the occurrence of the event requiring such adjustment.



     (I) Other Events. For so long as the Original Warrantholder holds this Warrant or any
portion thereof, if any event occurs as to which the provisions of this Section 13 are not strictly
applicable or, if strictly applicable, would not, in the good faith judgment of the Board of
Directors of the Company, fairly and adequately protect the purchase rights of the Warrants in
accordance with the essential intent and principles of such provisions, then the Board of Directors
shall make such adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in the good faith opinion of the
Board of Directors, to protect such purchase rights as aforesaid. The Exercise Price and the number
of Shares into which this Warrant is exercisable shall not be adjusted in the event of a change in
the par value of the Common Stock (other than pursuant to the Charter Amendment) or a change in the
jurisdiction of incorporation of the Company.



     (J) Statement Regarding Adjustments. Whenever the Exercise Price or the number of
Shares into which this Warrant is exercisable shall be adjusted as provided in Section 13, the
Company shall forthwith file at the principal office of the Company a statement showing in
reasonable detail the facts requiring such adjustment and the Exercise Price that shall be in
effect and the number of Shares into which this Warrant shall be exercisable after such adjustment,
and the Company shall also cause a copy of such statement to be sent by mail, first class postage
prepaid, to each Warrantholder at the address appearing in the Company’s records.



13









 





     (K) Notice of Adjustment Event. In the event that the Company shall propose to take
any action of the type described in this Section 13 (but only if the action of the type described
in this Section 13 would result in an adjustment in the Exercise Price or the number of Shares into
which this Warrant is exercisable or a change in the type of securities or property to be delivered
upon exercise of this Warrant), the Company shall give notice to the Warrantholder, in the manner
set forth in Section 13(J), which notice shall specify the record date, if any, with respect to any
such action and the approximate date on which such action is to take place. Such notice shall also
set forth the facts with respect thereto as shall be reasonably necessary to indicate the effect on
the Exercise Price and the number, kind or class of shares or other securities or property which
shall be deliverable upon exercise of this Warrant. In the case of any action which would require
the fixing of a record date, such notice shall be given at least 10 days prior to the date so
fixed, and in case of all other action, such notice shall be given at least 15 days prior to the
taking of such proposed action. Failure to give such notice, or any defect therein, shall not
affect the legality or validity of any such action.



     (L) Proceedings Prior to Any Action Requiring Adjustment. As a condition precedent to
the taking of any action which would require an adjustment pursuant to this Section 13, the Company
shall take any action which may be necessary, including obtaining regulatory, New York Stock
Exchange or stockholder approvals or exemptions, in order that the Company may thereafter validly
and legally issue as fully paid and nonassessable all shares of Common
Stock that the Warrantholder is entitled to receive upon exercise of this Warrant pursuant to
this Section 13.



     (M) Adjustment Rules. Any adjustments pursuant to this Section 13 shall be made
successively whenever an event referred to herein shall occur. If an adjustment in Exercise Price
made hereunder would reduce the Exercise Price to an amount below par value of the Common Stock,
then such adjustment in Exercise Price made hereunder shall reduce the Exercise Price to the par
value of the Common Stock.



     14. Exchange. At any time following the date on which the shares of Common Stock of
the Company are no longer listed or admitted to trading on a national securities exchange (other
than in connection with any Business Combination), the Original Warrantholder may cause the Company
to exchange all or a portion of this Warrant for an economic interest (to be determined by the
Original Warrantholder after consultation with the Company) of the Company classified as permanent
equity under U.S. GAAP having a value equal to the Fair Market Value of the portion of the Warrant
so exchanged. The Original Warrantholder shall calculate any Fair Market Value required to be
calculated pursuant to this Section 14, which shall not be subject to the Appraisal Procedure.



14









 





     15. No Impairment. The Company will not, by amendment of its Charter or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in taking of all such action
as may be necessary or appropriate in order to protect the rights of the Warrantholder.



     16. Governing Law. This Warrant, 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 Company and the Warrantholder agrees (a) to submit to the exclusive
jurisdiction and venue of the United States District Court for the District of Columbia for any
action, suit or proceeding arising out of or relating to this Warrant or the transactions
contemplated hereby, and (b) that notice may be served upon the Company at the address in Section
20 below and upon the Warrantholder at the address for the Warrantholder set forth in the registry
maintained by the Company pursuant to Section 9 hereof. To the extent permitted by applicable law,
each of the Company and the Warrantholder hereby unconditionally waives trial by jury in any legal
action or proceeding relating to the Warrant or the transactions contemplated hereby or thereby.



     17. Binding Effect. This Warrant shall be binding upon any successors or assigns of
the Company.



     18. Amendments. This Warrant may be amended and the observance of any term of this
Warrant may be waived only with the written consent of the Company and the Warrantholder.



     19. Prohibited Actions. The Company agrees that it will not take any action which
would entitle the Warrantholder to an adjustment of the Exercise Price if the total number of
shares of Common Stock issuable after such action upon exercise of this Warrant, together with all
shares of Common Stock then outstanding and all shares of Common Stock then issuable upon the
exercise of all outstanding options, warrants, conversion and other rights, would exceed the total
number of shares of Common Stock then authorized by its Charter.



     20. 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



15









 







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 hereunder shall be delivered as set forth below, or pursuant to such
other instructions as may be designated in writing by the party to receive such notice.



If to the Company:




American International Group, Inc.




70 Pine Street




New York, New York 10270




Attention:   Chief Financial Officer:




Secretary:




Treasurer:




with a copy to:




Sullivan & Cromwell LLP




125 Broad Street




New York, NY 10004




Attention   
Robert W. Reeder, III

                     Michael M. Wiseman




If to the Warrantholder:




United States Department of the Treasury




1500 Pennsylvania Avenue, NW, Room 2312




Washington, D.C. 20220




Attention: Assistant General Counsel (Banking and Finance)

Facsimile: (202) 622-1974




with a copy to:




Davis Polk & Wardwell




450 Lexington Avenue




New York, NY 10017




Attention:   John Brandow




     21. Entire Agreement. This Warrant contains the entire agreement between the parties
with respect to the subject matter hereof and supersede all prior and contemporaneous arrangements
or undertakings with respect thereto.



[Remainder of page intentionally left blank]




16









 








[Form of Notice of Exercise]




Date: ________________





			
	TO:	 	American International Group, Inc.






			
	RE:	 	Election to Purchase Common Stock





     The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby agrees
to subscribe for and purchase the number of shares of the Common Stock set forth below covered by
such Warrant. The undersigned, in accordance with Section 3 of the Warrant, hereby agrees to pay
the aggregate Exercise Price for such shares of Common Stock in the manner set forth below. A new
warrant evidencing the remaining shares of Common Stock covered by such Warrant, but not yet
subscribed for and purchased, if any, should be issued in the name set forth below.



Number of Shares of Common Stock __________________



Method of Payment of Exercise Price (note if cashless exercise pursuant to Section 3(i) of the
Warrant or cash exercise pursuant to Section 3(ii) of the Warrant, with consent of the Company and
the Warrantholder) _______________




Aggregate Exercise Price: __________________




	 	 	 	 	 
	 

	 	Holder:
	 	________________________
	 

	 	By:
	 	________________________
	 

	 	Name:
	 	________________________
	 

	 	Title:
	 	________________________






 









 






     IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by a duly
authorized officer.



Dated: November 25, 2008




	 	 	 	 	 
	 	AMERICAN INTERNATIONAL GROUP, INC.

 	 
	 	By:  	/s/
David L. Herzog	 
	 	 	Name:  	David L. Herzog	 
	 	 	Title:  	Executive Vice President and 
Chief Financial
Officer	 
	 
	 	Attest:

 	 
	 	By:  	/s/
Kathleen E. Shannon	 
	 	 	Name:  	Kathleen E. Shannon	 
	 	 	Title:  	Senior Vice President and Secretary	 
	 



[Signature Page to Warrant]