Document:

Exhibit 10.11

    

     

    

    NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
      FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
      FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN
      CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

    

    

    COMMON STOCK PURCHASE WARRANT

    

    

    GAIN THERAPEUTICS, INC.

    

    

    
      	
              Warrant Shares: 

              

            	
                Initial Exercise Date: July 20, 2020

            

    

    

    

    Issue Date: July 20, 2020

    

    

    THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, [●] or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on
      exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on July 20, 2025 (the “Termination Date”) but not
      thereafter, to subscribe for and purchase from Gain Therapeutics, Inc., a Delaware corporation (the “Company”), up to         shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one
      share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

    

    

    Section 1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:

    

    

    “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such
      terms are used in and construed under Rule 405 under the Securities Act.

    

    

    “Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading
      Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York
      City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock
      is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting
      prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in
      interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

    

    

    “Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the
      State of New York are authorized or required by law or other governmental action to close.

    

    

    “Commission” means the United States Securities and Exchange Commission.

    
      
        

    

    “Common Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such securities may hereafter be reclassified
      or changed.

    

    

    “Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including,
      without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

    

    

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

    

    

    “Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company,
      government (or an agency or subdivision thereof) or other entity of any kind.

    

    

    “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or
      regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

    

    

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

    

    

    “Trading Day” means a day on which the Common Stock is traded on a Trading Market.

    

    

    “Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the
      Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing.

    

    

    “Transfer Agent” means the then current transfer agent of the Company.

    

    

    “VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
      the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m.
      (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the
      Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of
      reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by the Board of Directors of the Company.

    

    

    Section 2. Exercise.

    

    

    a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise
      Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2)
      Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares
      specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original
      Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to
      physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for
      cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder
      shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant
      Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of
        this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be
        less than the amount stated on the face hereof.

    
      
        

    

    Without limiting the rights of a Holder to receive Warrant Shares on a “cashless exercise” and without limiting the liquidated damages provision in Section 2(d)(i) and the buy-in provision in Section
      2(d)(iv), in no event will the Company be required to net cash settle a Warrant exercise.

    

    

    b)          Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $4.46, subject to adjustment hereunder (the “Exercise Price”).

    

    

    c)          Cashless Exercise. If there is no effective registration statement registering, or the prospectus contained therein is not available for the issuance of
      the Warrant Shares to the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained
      by dividing [(A-B) (X)] by (A), where

    

    
      	

            	(A) =

            	
              
                as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a
                  Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities
                  laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading
                  Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2)
                  hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of
                  Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;

              

            

    

    

    

    	

          	(B) =

          	
            the Exercise Price of this Warrant, as adjusted hereunder; and

          

    

    

    
      	

            	(X) =

            	
               the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

            

    

    

    

    If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall
      take on the characteristics of the Warrants being exercised, and the holding period of the Warrant Shares being issued may be tacked on to the holding period of this Warrant. The Company agrees not to take any position contrary to this Section 2(c).

    

    

    Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

    
      
        

    

    d) Mechanics of Exercise.

    

    

    i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by
      crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there
      is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations
      pursuant to Rule 144 (assuming cashless exercise of the Warrants), and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which
      the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1)
      Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise; provided that no Warrant Shares
      shall be required to be delivered by the Company if the Exercise Price is not delivered to the Company (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate
      purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in
      the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any
      reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject
      to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading
      Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding
      and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of
      delivery of the Notice of Exercise.

    

    

    ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of
      this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all
      other respects be identical with this Warrant.

    

    

    iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share
      Delivery Date, then the Holder will have the right to rescind such exercise.

    
      
        

    

    iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if, at any time that
      the Warrant Shares are registered under the Exchange Act, the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with theprovisions of Section 2(d)(i) above pursuant to an exercise on or before the
      Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of
      a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price
      (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the
      exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which
      such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations
      hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase
      obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the
      Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific
      performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

    

    

    v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a
      share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price
      or round up to the next whole share.

    

    

    vi. Charges,  Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in
      respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided,
      however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and
      the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all
      fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

    

    

    vii. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the
      terms hereof.

    
      
        

    

    e) Holder’s Exercise Limitations. If, at any time that the Warrant Shares are registered under the Exchange Act, the Company shall not effect any exercise of this Warrant,
      and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder
      (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation
      (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of
      this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the
      Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a
      limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e),
      beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such
      calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the
      determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the
      Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and
      of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any
      group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of
      Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the
      Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and
      in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company,
      including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election
      by a Holder prior to the issuance of any Warrants, 9.99%) of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon
      notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding
      immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not
      be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise
      than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or
      supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

    
      
        

    

    Section 3. Certain Adjustments.

    

    

    a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or
      distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this
      Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by
      reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury
      shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be
      proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders
      entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

    

    

    b) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock
      Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms
      applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on
      exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which
      the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder
      exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and
      such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

    

    

    c) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or
      rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise, other than cash (including, without limitation, any distribution of stock or other securities, property or options by way of a dividend,
      spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate
      in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise
      hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock
      are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation,
      then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held
      in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

    
      
        

    

    d) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects
      any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one
      or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or
      exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any
      reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company,
      directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with
      another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or
      associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall
      have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on
      the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate  Consideration”)
      receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on
      the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of
      one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate
      Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any
      exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations
      of the Company under this Warrant in accordance with the provisions of this Section 3(d) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such
      Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which
      is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations
      on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock
      pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the
      consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that
      from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the
      obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein.

    

    

    e) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section
      3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

    
      
        

    

    f) Notice to Holder.

    

    

    i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the
      Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

    

    

    v. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company
      shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of
      any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock other than a stock dividend or stock split, any consolidation or merger to which the Company
      is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the
      voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall
      appear upon the Warrant Register of the Company, at least four (4) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend,
      distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y)
      the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to
      exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein
      or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. The Company may satisfy this notice requirement by filing such information in a Current Report on Form 8-K. If the Company is a
      reporting company under the Exchange Act, to the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such
      notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as
      may otherwise be expressly set forth herein.

    

    

    Section 4. Transfer of Warrant.

    

    

    a) Transferability. Pursuant to FINRA Rule 5110(g)(1), neither this Warrant nor any Warrant Shares issued upon exercise of this Warrant shall be sold, transferred,
      assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of the securities by any person for a period of 180 days immediately
      following the date of effectiveness or commencement of sales of the offering pursuant to which this Warrant is being issued, except the transfer of any security:

    

    

    (i)          by operation of law or by reason of reorganization of the Company;

    
      
        

    

    	

          	(ii)	
            to any FINRA member firm participating in the offering and the officers and partners thereof, if all securities so transferred remain subject to the lock-up restriction in this Section 4(a) for the remainder of the time period;

          

    

    

    	

          	(iii)	
            if the aggregate amount of securities of the Company held by the Holder or related person do not exceed 1% of the securities being offered;

          

    

    

    	

          	(iv)	
            that is beneficially owned on a pro-rata basis by all equity owners of an investment fund, provided that no participating member manages or otherwise directs investments by the fund, and participating members in the aggregate do not own
              more than 10% of the equity in the fund; or

          

    

    

    	

          	(v)	
            the exercise or conversion of any security, if all securities received remain subject to the lock-up restriction in this Section 4(a) for the remainder of the time period.

          

    

    

    Subject to the foregoing restriction, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together
      with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and,
      if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue
      to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant
      to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this
      Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

    

    

    b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written
      notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination,
      the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date
      of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

    

    

    c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the
      name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other
      purposes, absent actual notice to the contrary.

    

    

    d) Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be
      either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public
      information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, provides to the Company an opinion of counsel, the form and substance
      of which opinion shall be reasonably satisfactory to the Company, to the effect that the transfer of this Warrant does not require registration under the Securities Act.

    

    

    e) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will
      acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law,
      except pursuant to sales registered or exempted under the Securities Act.

    
      
        

    

    Section 5. Miscellaneous.

    

    

    a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company
      prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.

    

    

    b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss,
      theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not
      include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of
      such Warrant or stock certificate.

    

    

    c) 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 Business Day.

    

    

    d) Authorized Shares.

    

    

    The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for
      the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing
      the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of
      any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this
      Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges
      created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

    

    

    Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation 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 of this Warrant, but will at all
      times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality
      of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate
      in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any
      public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

    

    

    Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall
      obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

    
      
        

    

    e) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced
      in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions
      contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in
      the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or
      with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such
      suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy
      thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of
      process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this
      Warrant, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or
      proceeding.

    

    

    f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize
      cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

    

    

    g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right
      or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to
      the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in
      collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

    

    

    h) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Exercise,
      shall be in writing and delivered personally, by facsimile or e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company, at 4800 Hampden Lane, Suite 200, Bethesda, Maryland 20814, Attention: Eric Richman, Chief
      Executive Officer, email address: eirichman@gaintherapeutics.com, or such other facsimile number, email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other communications or
      deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile or e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number, e-mail address or
      address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered
      via facsimile at the facsimile number or via e-mail at the e-mail address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission, if such notice or communication is
      delivered via facsimile at the facsimile number or via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any

    
      
        

    

    Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice
      is required to be given. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any subsidiaries, the Company shall promptly file such notice with the Commission pursuant
      to a Current Report on Form 8-K.

    

    

    i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no
      enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by
      creditors of the Company.

    

    

    j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance
      of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense
      in any action for specific performance that a remedy at law would be adequate.

    

    

    k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be
      binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be
      enforceable by the Holder or holder of Warrant Shares.

    

    

    l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and the Holders of a
      majority in interest of the Warrants issued on this date then outstanding, on the other hand.

    

    

     ) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any
      provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions
      of this Warrant.

    

    

    m) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

    

    

    ********************

    

    

    (Signature Page Follows)

    
      
        

    

    IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

    

    

    	 	 	
            GAIN THERAPEUTICS, INC.

          
	 	 	 	 
	 	
            By:

          	 
	 	 	
            Name:

          	 
	 	 	
            Title:

          	 

    

    

    
      
        

    

    NOTICE OF EXERCISE

    

    

    TO:          GAIN THERAPEUTICS, INC.

    

    

    (1)          The undersigned hereby elects to purchase _____ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of
      the exercise price in full, together with all applicable transfer taxes, if any.

    

    

    	

          	(2)	
            Payment shall take the form of (check applicable box):

          

    

    

    [ ] in lawful money of the United States; or

    

    

    [ ] if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum
      number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

    

    

    (3)          Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

    

    

    
      	
               

            	
               

            	
               

            

    

    

    

    The Warrant Shares shall be delivered to the following DWAC Account Number:

    

    

    
      	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            

    

    

    

    (4)          Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

    

    

    [SIGNATURE OF HOLDER]

    

    

    	
            Name of Investing Entity: _________________ ____ ___________

            

          	 
	
            Signature of Authorized Signatory of Investing Entity:

          	 
	
            Name of Authorized Signatory: _____________________________

            

          	 
	
            Title of Authorized Signatory: ______________________________

            

          	 
	
            Date:

          	 

    
      
        

    

    ASSIGNMENT FORM

    

    

    (To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

    

    

    FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

    

    

    	
            Name:

          	 
	
            

            

          	 (Please Print)
	 	 
	
            Address:

          	 
	
            

            

          	 (Please Print)
	 	 
	
            Phone Number:

          	 
	 	 
	
            Email Address:

          	 
	 	 
	
            Dated: ____________________ __, ______

          	 
	 	 
	
            Holder’s Signature: ________________________

            

          	 
	 	 
	
            Holder’s Address:Exhibit 4.6

American
International Group, Inc.

Description of Registrant’s Securities

As of December 31, 2020, AIG had the following classes
of securities registered under Section 12 of the Securities Exchange Act of
1934 (the “Exchange Act”): (i) our common stock; (ii) warrants, which expired
on January 19, 2021; (iii) stock purchase rights; (iv) depositary shares (the
“Depositary Shares”), each representing a 1/1,000th interest in a share of
5.85% non-cumulative perpetual preferred stock, Series A (the “Series A
Preferred Stock”); (v) 5.75% Series A-2 Junior Subordinated Debentures and 4.875%
Series A-3 Junior Subordinated Debentures. All of our registered securities are
listed on the New York Stock Exchange.

I.                  
 Common Stock, Par Value $2.50 Per Share 

The following description of the Company’s common
stock and the relevant provisions of the Company’s amended and restated
certificate of incorporation and amended and restated bylaws are summaries and
are qualified in their entirety by reference to the Company’s amended and
restated certificate of incorporation and amended and restated bylaws.

General

Under our amended and restated certificate of
incorporation, we are authorized to issue 5,000,000,000 shares of common stock
a par value of $2.50 per share. All of the outstanding shares of our common
stock are fully paid and nonassessable. 

Dividends

Subject to the prior rights of the holders of shares
of preferred stock that may be issued and outstanding, the holders of common
stock are entitled to receive dividends when, as and if declared by our board
of directors out of funds legally available for the payment of dividends.

Ranking

Subject to the prior rights of the holders of shares
of preferred stock that may be issued and outstanding, in the event of
dissolution of AIG, the holders of common stock are entitled to share ratably
in all assets legally available for distribution to our stockholders. 

Voting
Rights

Each holder of common stock is entitled to one vote
for each share held of record on all matters presented to a vote at a
shareholders meeting, including the election of directors (except for preferred
stock directors, as defined below under “Description of Preferred Stock-Voting
Rights-Right to Elect Two Directors on Nonpayment of Dividends”). Holders of
common stock have no cumulative voting rights or preemptive rights to purchase
or subscribe for any additional shares of common stock or other securities, and
there are no conversion rights or redemption or sinking fund provisions with
respect to the common stock. Authorized but unissued shares of common stock may
be issued without shareholder approval, subject to NYSE listing rules.

 

 

Certification

AIG has adopted direct company registration of its
common stock. Holders of shares of common stock will not receive stock
certificates evidencing their share ownership. Instead, they are provided with
a statement reflecting the number of shares registered in their accounts.

The transfer agent for our common stock is Equiniti Trust
Company, as successor to Wells Fargo Shareowner Services, a former division of
Wells Fargo Bank, N.A.

II.               
 Warrants (expired January 19, 2021)

On January 19, 2011, we issued to the holders of record of our
common stock on January 13, 2011, by means of a dividend, 10-year warrants (the
“Dividend Warrants”) to purchase a total of up to 74,997,777.598 shares of our
common stock at an initial exercise price of $45.00 per share. The exercise
price and number of shares of common stock receivable upon warrant exercise were
subject to anti-dilution adjustment under the following circumstances: (i) the
issuance of our common stock as a dividend or distribution to all holders of
our common stock, or a subdivision or combination of our common stock, (ii) the
issuance to all holders of our common stock of certain rights, options or
warrants entitling them for a period expiring 60 days or less from the date of
issuance of such rights, options or warrants to purchase shares of our common
stock at less than the then-current market price of our common stock, (iii) the
dividend or other distribution to holders of our common stock of shares of
capital stock of the Company (other than our common stock), rights to acquire
capital stock of the Company or evidences of the Company’s indebtedness or the
Company’s assets issuance of capital stock as dividend, (iv) a distribution
consisting exclusively of cash to all holders of our common stock that exceeds
a certain annual threshold, or (v) we conduct a tender offer in which the
number of shares of our common stock purchased exceeds 30% of the number of
shares of our common stock outstanding on the tender offer expiration date and
the consideration for the tender offer exceeds the value weighted average price
per share of our common stock on the trading day next succeeding the tender
offer expiration date. For a complete description of the circumstances
triggering the anti-dilution adjustment and the applicable anti-dilution
adjustment formulas, see Section 4 of the Warrant Agreement, dated January 6,
2011, between Equiniti Trust Company, as successor to Wells Fargo Shareowner
Services, a former division of Wells Fargo Bank, N.A., as Warrant Agent, and
us. The exercise price and number of shares of common stock receivable upon
warrant exercise have previously been adjusted. As of December 31, 2020, there
were 55,940,355 Dividend Warrants outstanding. The Dividend Warrants expired on
January 19, 2021.

III.            
 Stock Purchase Rights

Our board of directors adopted our Tax Asset Protection Plan on
March 9, 2011 and amendments thereto on January 8, 2014, December 14, 2016 and
December 11, 2019, all of which were ratified by our shareholders at our annual
meetings of shareholders for 2011, 2014, 2017 and 2020, respectively (as so
amended, the “Tax Asset Protection Plan”). Subject to certain limited
exceptions, the Tax Asset Protection Plan is intended to act as a deterrent to
any person or group acquiring 4.99 percent or more of our outstanding common
stock (an “Acquiring Person”) without the approval of our board of directors.
Our board of directors may, in its sole discretion, exempt any person or group
from being deemed an Acquiring Person for purposes of the Tax Asset Protection
Plan with respect to which it receives, at its request, a report from our
advisors to the effect that such exemption would not create a significant risk
of material adverse tax consequences to us, or our board of directors otherwise
determines it is in our best interests. The following is a summary of the Tax
Asset Protection Plan and does not purport to be complete. It is
qualified in its entirety by reference to the Tax Asset Protection Plan, which
we encourage you to read for additional information.

 

 

The Rights

In connection with the initial adoption of the Tax Asset
Protection Plan, our board of directors previously issued a dividend of one
right per each outstanding share of our common stock payable to our
shareholders of record as of the close of business on March 18, 2011 and to
holders of AIG common stock issued after that date. Subject to the terms,
provisions and conditions of the Tax Asset Protection Plan, if these rights
become exercisable, each right would initially represent the right to purchase
from us one ten-thousandth of a share of our Participating Preferred Stock, par
value $5.00 per share (the “Participating Preferred Stock”), for a purchase
price of $185.00 per right (the “Exercise Price”). If issued, each one
ten-thousandth of a share of Participating Preferred Stock would generally give
a shareholder approximately the same dividend, voting and liquidation rights as
does one share of our common stock. However, prior to exercise, a right does
not give its holder any rights as a shareholder, including without limitation
any dividend, voting or liquidation rights.

Exercisability

The rights are not exercisable until the earlier of (i) a public
announcement by us that a person or group has become an Acquiring Person (the
date of such public announcement is referred to herein as the “Stock
Acquisition Date”) and (ii) 10 business days after the commencement of a tender
or exchange offer by a person or group if upon consummation of the offer the
person or group would Beneficially Own 4.99 percent or more of our outstanding
common stock. We refer to the date on which the rights become exercisable as
the “Separation Time”.

Until the Separation Time, our common stock certificates (or the
registration of uncertificated shares on our stock transfer books) will
evidence the rights and may contain a notation to that effect. Any transfer of
shares of our common stock prior to the Separation Time will constitute a
transfer of the associated rights. After the Separation Time, the rights may be
transferred other than in connection with the transfer of the underlying shares
of our common stock.

If there is an Acquiring Person on the Separation Time or a person
or group becomes an Acquiring Person after the Separation Time, each holder of
a right, other than rights that are or were Beneficially Owned by an Acquiring
Person (which will be void), will thereafter have the right to receive upon
exercise of a right and payment of the Exercise Price that number of shares of
our common stock (or, at AIG’s election, Participating Preferred Stock) having
a market value of two times the exercise price of the right.

Exchange

At any time after the Stock Acquisition Date, provided the
Acquiring Person does not hold 50 percent or more of the outstanding common
stock, our board of directors may exchange the rights, other than rights that
are or were Beneficially Owned by an Acquiring Person (which will be void), in
whole or in part, at an exchange ratio equal to one share of our common stock
(or one ten-thousandth of a share of Participating Preferred Stock) per right.

Redemption

At any time until the Stock Acquisition Date, the board of
directors may redeem all of the then-outstanding rights in whole, but not in
part, at a price of $0.001 per right, subject to adjustment (the “Redemption
Price”). Immediately upon action of the board of directors ordering redemption
of the rights, the right to exercise the rights will terminate, and the only
right of the holders of rights will be to receive the Redemption Price.

 

 

Anti-Dilution Provisions

The Exercise Price and the number of outstanding rights are
subject to anti-dilution adjustment under the following circumstances: (i) we
declare or pay a dividend on common stock payable in common stock, (ii) we
subdivide the outstanding common stock (iii) we combine the outstanding common
stock into a smaller number of shares of common stock, or (iv) we issue or
distribute any securities or assets in respect of, in lieu of or in exchange
for common stock (other than pursuant to any non-extraordinary periodic cash
dividend or a dividend paid solely in common stock) whether by dividend, in a
reclassification or recapitalization.

Amendments

Any of the provisions
of the Tax Asset Protection Plan may be amended by our board of directors at
any time and in any manner.

Expiration

The rights issued pursuant to the Tax Asset Protection Plan will
expire on the earliest of (i) the close of business on December 11, 2022,
provided that the board of directors may determine to extend the Tax Asset
Protection Plan prior to such date as long as the extension is submitted to our
stockholders for ratification at the next succeeding annual meeting, (ii) the
time at which the rights are redeemed, (iii) the time at which the rights are
exchanged and (iv) the time at which our board of directors receives, at its
request, a report from our advisors that the Tax Attributes (as defined in the
Tax Asset Protection Plan) are utilized in all material respects or no longer
available in any material aspect or that an ownership change under Section 382
or any applicable state law would not adversely impact in any material respect
the time period in which we could use the Tax Attributes, or materially impair
the amount of the Tax Attributes that could be used.

IV.             
 Depositary Shares (each representing a 1/1000th
interest in a share of Series A 5.85% Non-Cumulative Perpetual Preferred Stock)

The following description of our Series A 5.85%
Non-Cumulative Perpetual Preferred Stock (“Series A Preferred Stock”) and the
Depositary Shares (each representing a 1/1000th interest in a share
of Series A Preferred Stock, the “Depositary Shares”) is a summary and does not
purport to be complete. It is qualified in its entirety by reference to the
Company’s amended and restated certificate of incorporation and amended and
restated bylaws and the certificate of designations with respect to the Series
A Preferred Stock.

Description
of the Preferred Stock

General

Under our amended and restated certificate of
incorporation, we have authority to issue up to 100,000,000 shares of serial
preferred stock, par value $5.00 per share. Our board of directors (or a duly
authorized committee of the board) is authorized without further stockholder
action to cause the issuance of shares of preferred stock, including the Series
A Preferred Stock.

 

 

Any
additional preferred stock may be issued from time to time in one or more
series, each with such voting powers, such designations, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, as our board (or a duly authorized
committee of the board) may determine prior to the time of issuance. We have
the right to create and issue additional classes or series of stock ranking
equally with or junior to the Series A Preferred Stock as to dividends and
distribution of assets upon our liquidation, dissolution, or winding up without
the consent of the holders of the Series A Preferred Stock, or the holders of
the related Depositary Shares

The Series A Preferred Stock represents a single
series of our authorized preferred stock. Shares of Series A Preferred Stock
are fully paid and nonassessable.

The Series A Preferred Stock do not have any
preemptive rights and is not convertible into, or exchangeable for, property or
shares of our common stock or any other class or series of our other securities
and is not subject to any sinking fund or any other obligation of us for their
repurchase or retirement.

The number of authorized shares of the Series A
Preferred Stock initially was 20,000 and the “stated amount” per share is
$25,000. The number of authorized shares may from time to time be increased
(but not in excess of the total number of authorized shares of preferred stock,
excluding shares of any other series of preferred stock authorized at the time
of such increase) or decreased (but not below the number of shares of Series A
Preferred Stock then outstanding) by resolution of the board (or a duly
authorized committee of the board), without the vote or consent of the holders
of the Series A Preferred Stock. Shares of Series A Preferred Stock that are
redeemed, purchased or otherwise acquired by us will be cancelled and will
revert to authorized but unissued shares of preferred stock undesignated as to
series.

Ranking

With respect to the payment of dividends and
distributions of assets upon any liquidation, dissolution or winding up, the
Series A Preferred Stock ranks:

•         
 senior to our common stock and any class or series of our stock
that ranks junior to the Series A Preferred Stock in the payment of dividends
or in the distribution of assets upon our voluntary or involuntary liquidation,
dissolution or winding up (for purposes of this section, together with our
common stock, “junior stock”);

•         
 senior to or on a parity with each other series of our preferred
stock we may issue (except for any senior series that may be issued upon the
requisite vote or consent of the holders of at least two thirds of the shares
of the Series A Preferred Stock at the time outstanding and entitled to vote,
voting together with any other series of preferred stock that would be
adversely affected by such issuance substantially in the same manner and
entitled to vote as a single class in proportion to their respective stated
amounts) with respect to the payment of dividends and distributions of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of
AIG; and

•         
 junior to all existing and future indebtedness and other
non-equity claims on us.

Dividends

Holders of the Series A Preferred Stock are entitled
to receive, when, as and if declared by our board (or a duly authorized
committee of the board), but only out of funds legally available therefor,
noncumulative cash dividends at the annual rate of 5.85% of the stated amount
per share, and no more, payable quarterly in arrears on the fifteenth day of
March, June, September and December, respectively, 

 

 

in
each year (for purposes of this section, each, a “dividend payment date”), with
respect to the dividend period (or portion thereof) ending on the day preceding
such respective dividend payment date, to holders of record on the
15th calendar day before such dividend payment date or such other record
date not more than 30 nor less than 10 days preceding such dividend payment
date fixed for that purpose by our board (or a duly authorized committee of the
board) in advance of payment of each particular dividend. The amount of the
dividend per share of the Series A Preferred Stock for each dividend period (or
portion thereof) is calculated on the basis of a 360-day year consisting of
twelve 30-day months. If any dividend payment date is not a business day, the
applicable dividend will be paid on the first business day following that day
without adjustment. We will not pay interest or any sum of money instead of
interest on any dividend payment that may be in arrears on the Series A
Preferred Stock.

For purposes of this section, “dividend period” means
each period commencing on (and including) a dividend payment date and
continuing to (but not including) the next succeeding dividend payment date.

For purposes of this section, a “business day” means
each Monday, Tuesday, Wednesday, Thursday or Friday on which banking
institutions in The City of New York are not authorized or obligated by law,
regulation or executive order to close.

Dividends on shares of the Series A Preferred Stock
are not cumulative and are not mandatory. If our board (or a duly authorized
committee of the board) does not declare a dividend on the Series A Preferred
Stock in respect of a dividend period, then holders of the Series A Preferred
Stock will not be entitled to receive any dividends not declared by the board
(or a duly authorized committee of the board) and no interest, or sum of money
in lieu of interest, will be payable in respect of any dividend not so
declared, whether or not our board (or a duly authorized committee of the
board) declares a dividend on the Series A Preferred Stock or any other series
of our preferred stock or on our common stock for any future dividend period.

Restrictions on Dividends, Redemption and Repurchases

So long as any share of the Series A Preferred Stock
remains outstanding, unless dividends on all outstanding shares of the Series A
Preferred Stock for the most recently completed dividend period have been paid
in full or declared and a sum sufficient for the payment thereof has been set
aside for payment, no dividend may be declared or paid or set aside for
payment, and no distribution may be made, on any junior stock, including our
common stock, other than a dividend payable solely in stock that ranks junior
to the Series A Preferred Stock in the payment of dividends and in the
distribution of assets on any liquidation, dissolution or winding up of AIG.

If our board (or a duly authorized committee of the
board) elects to declare only partial instead of full dividends for a dividend
payment date and related dividend period on the shares of Series A Preferred
Stock or any class or series of our stock that ranks on a parity with the
Series A Preferred Stock in the payment of current dividends (“dividend parity
stock”), then to the extent permitted by the terms of the Series A Preferred
Stock and each outstanding series of dividend parity stock such partial
dividends will be declared on shares of the Series A Preferred Stock and
dividend parity stock, and dividends so declared will be paid, as to any such
dividend payment date and related dividend period in amounts such that the
ratio of the partial dividends declared and paid on each such series to full
dividends on each such series is the same. As used in this paragraph, “full
dividends” means, as to any dividend parity stock that bears dividends on a
cumulative basis, the amount of dividends that would need to be declared and
paid to bring such dividend parity stock current in dividends, including
undeclared dividends for past dividend periods. To the extent a dividend period
with respect to the Series A Preferred Stock or any series of dividend parity
stock (in either case, the “first series”) coincides with more than one
dividend period with respect to another series as applicable (in either case, a
“second series”), for purposes of the immediately 

 

 

preceding
sentence, our board (or a duly authorized committee of the board) may, to the
extent permitted by the terms of each affected series, treat such dividend
period for the first series as two or more consecutive dividend periods, none
of which coincides with more than one dividend period with respect to the
second series, or may treat such dividend period(s) with respect to any
dividend parity stock and dividend period(s) with respect to the Series A
Preferred Stock for purposes of the immediately preceding sentence in any other
manner that it deems to be fair and equitable in order to achieve ratable
payments of dividends on such dividend parity stock and the Series A Preferred
Stock.

Subject to the foregoing, and not otherwise, such
dividends (payable in cash, stock or otherwise) as may be determined by our
board (or a duly authorized committee of the board) may be declared and paid on
any common stock or junior stock from time to time out of any funds legally
available therefor, and the shares of Series A Preferred Stock will not be
entitled to participate in any such dividend.

So long as any share of the Series A Preferred Stock
remains outstanding, unless dividends on all outstanding shares of the Series A
Preferred Stock for the most recently completed dividend period have been paid
in full or declared and a sum sufficient for the payment thereof has been set
aside for payment, no monies may be paid or made available for a sinking fund
for the redemption or retirement of junior stock, nor will any shares of junior
stock be purchased, redeemed or otherwise acquired for consideration by us,
directly or indirectly, other than:

•         
 as a result of (x) a reclassification of junior stock, or (y) the
exchange or conversion of one share of junior stock for or into another share
of stock that ranks junior to the Series A Preferred Stock in the payment of
dividends and in the distribution of assets on any liquidation, dissolution or
winding up of AIG; or

•         
 through the use of the proceeds of a substantially contemporaneous
sale of other shares of stock that ranks junior to the Series A Preferred Stock
in the payment of dividends and in the distribution of assets on any
liquidation, dissolution or winding up of AIG.

Redemption

The Series A Preferred Stock is perpetual and has no
maturity date. We may redeem the Series A Preferred Stock at our option:

•         
 in whole, but not in part, at any time prior to March 15, 2024,
within 90 days after the occurrence of a “rating agency event,” at a redemption
price equal to $25,500 per share of the Series A Preferred Stock (equivalent to
$25.50 per Depositary Share), plus an amount equal to any dividends per share
that have been declared but not paid prior to the redemption date (with no
amount in respect of any dividends that have not been declared prior to such
date), or

•         
 (i) in whole, but not in part, at any time prior to March 15,
2024, within 90 days after the occurrence of a “regulatory capital event,” or
(ii) in whole or in part, from time to time, on or after March 15, 2024, in
each case, at a redemption price equal to $25,000 per share of the Series A
Preferred Stock (equivalent to $25.00 per Depositary Share), plus an amount
equal to any dividends per share that have been declared but not paid prior to
the redemption date (with no amount in respect of any dividends that have not
been declared prior to such date).

For purposes of this section, “rating agency event”
means that any nationally recognized statistical rating organization within the
meaning of Section 3(a)(62) of the Exchange Act that then publishes a rating
for us (a “rating agency”) amends, clarifies or changes the criteria it uses to
assign equity credit to securities such as the Series A Preferred Stock, which
amendment, clarification or change results in:

 

 

•         
 the shortening of the length of time the Series A Preferred Stock
is assigned a particular level of equity credit by that rating agency as
compared to the length of time it would have been assigned that level of equity
credit by that rating agency or its predecessor on the initial issuance of the
Series A Preferred Stock; or

•         
 the lowering of the equity credit (including up to a lesser
amount) assigned to the Series A Preferred Stock by that rating agency as
compared to the equity credit assigned by that rating agency or its predecessor
on the initial issuance of the Series A Preferred Stock.

For purposes of this section, “regulatory capital
event” means our good faith determination that, as a result of:

•         
 any amendment to, or change in, the laws, rules or regulations of
the United States or any political subdivision of or in the United States or
any other governmental agency or instrumentality as may then have group-wide
oversight of AIG’s regulatory capital that is enacted or becomes effective
after the initial issuance of the Series A Preferred Stock,

•         
 any proposed amendment to, or change in, those laws, rules or
regulations that is announced or becomes effective after the initial issuance
of the Series A Preferred Stock, or

•         
 any official administrative decision or judicial decision or
administrative action or other official pronouncement interpreting or applying
those laws, rules or regulations that is announced after the initial issuance
of the Series A Preferred Stock,

there is
more than an insubstantial risk that the full liquidation preference (as
defined below) per share of the Series A Preferred Stock outstanding from time
to time would not qualify as capital (or a substantially similar concept) for
purposes of any group capital standard to which we are or will be subject.

In case of any redemption of only part of the shares
of Series A Preferred Stock at the time outstanding, the shares to be redeemed
will be selected either pro rata from the holders of record of the Series A
Preferred Stock in proportion to the number of shares of the Series A Preferred
Stock held by such holders or by lot. Subject to the provisions of the
certificate of designations relating to the Series A Preferred Stock, our board
(or a duly authorized committee of the board) will have full power and
authority to prescribe the terms and conditions on which shares of the Series A
Preferred Stock will be redeemed from time to time. If we will have issued
certificates for the Series A Preferred Stock and fewer than all shares
represented by any certificates are redeemed, new certificates will be issued
representing the unredeemed shares without charge to the holders thereof.

The Series A Preferred Stock is not subject to any
mandatory redemption, sinking fund or other similar provisions. Holders of the
Series A Preferred Stock have no right to require redemption of any shares of
the Series A Preferred Stock.

Liquidation
Rights

In the event of any liquidation, dissolution or
winding up of the affairs of AIG, whether voluntary or involuntary, before any
distribution or payment out of our assets may be made to or set aside for the
holders of any junior stock, holders of the Series A Preferred Stock will be
entitled to receive out of our assets legally available for distribution to our
stockholders an amount equal to the stated amount per share, together with an
amount equal to all dividends (if any) that have been declared but not paid
prior to the date of payment (without any amount in respect of dividends that
have not been declared prior to such payment date) (for purposes of this
section, the “liquidation preference”).

 

 

If our assets are not sufficient to pay the
liquidation preference in full to all holders of the Series A Preferred Stock
and all holders of any class or series of our stock that ranks on a parity with
the Series A Preferred Stock in the distribution of assets on liquidation,
dissolution or winding up of AIG (for purposes of this section, the “liquidation
preference parity stock”), the amounts paid to the holders of the Series A
Preferred Stock and to the holders of all liquidation preference parity stock
will be pro rata in accordance with the respective aggregate liquidation
preferences of the Series A Preferred Stock and all such liquidation preference
parity stock. In any such distribution, the “liquidation preference” of any
holder of our stock other than the Series A Preferred Stock means the amount
otherwise payable to such holder in such distribution (assuming no limitation
on our assets available for such distribution), including an amount equal to
any declared but unpaid dividends in the case of any holder of stock on which
dividends accrue on a noncumulative basis and, in the case of any holder of
stock on which dividends accrue on a cumulative basis, an amount equal to any
unpaid, accrued, cumulative dividends, whether or not earned or declared, as
applicable. If the liquidation preference has been paid in full to all holders
of the Series A Preferred Stock and all holders of any liquidation preference
parity stock, the holders of junior stock will be entitled to receive all of
our remaining assets according to their respective rights and preferences.

For purposes of the liquidation rights, the merger,
consolidation or other business combination of us with or into any other
corporation, including a transaction in which the holders of the Series A
Preferred Stock receive cash or property for their shares, or the sale,
conveyance, lease, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all of our assets, will not
constitute a liquidation, dissolution or winding up of AIG.

Voting
Rights

Except as indicated below or otherwise required by
law, the holders of the Series A Preferred Stock do not have any voting rights.

Right to
Elect Two Directors on Nonpayment of Dividends

If and whenever dividends payable on the Series A
Preferred Stock or any class or series of dividend parity stock having voting
rights equivalent to those described in this paragraph (for purposes of this
section, “voting parity stock”) have not been declared and paid (or, in the
case of voting parity stock bearing dividends on a cumulative basis, will be in
arrears) in an aggregate amount equal to full dividends for at least six
quarterly dividend periods or their equivalent (whether or not consecutive) (for
purposes of this section, a “nonpayment event”), the number of directors then
constituting our board will be automatically increased by two and the holders
of the Series A Preferred Stock, together with the holders of any outstanding
voting parity stock then entitled to vote for additional directors, voting
together as a single class in proportion to their respective stated amounts,
will be entitled to elect the two additional directors (for purposes of this
section, the “preferred stock directors”); provided that our board will at no
time include more than two preferred stock directors (including, for purposes
of this limitation, all directors that the holders of any series of voting
preferred stock are entitled to elect pursuant to like voting rights).

In the event that the holders of the Series A
Preferred Stock and such other holders of voting parity stock will be entitled
to vote for the election of the preferred stock directors following a
nonpayment event, such directors will be initially elected following such
nonpayment event only at a special meeting called at the request of the holders
of record of at least 20% of the stated amount of the Series A Preferred Stock
and each other series of voting parity stock then outstanding (unless such
request for a special meeting is received less than 90 days before the date
fixed for the next annual or special meeting of our stockholders, in which
event such election will be held only at such next annual or special meeting of
stockholders), and at each subsequent annual meeting of our stockholders. Such
request to call a special 

 

 

meeting for the initial
election of the preferred stock directors after a nonpayment event will be made
by written notice, signed by the requisite holders of the Series A Preferred
Stock or voting parity stock, and delivered to our secretary, or as may
otherwise be required or permitted by applicable law. If our secretary fails to
call a special meeting for the election of the preferred stock directors within
20 days of receiving proper notice, any holder of the Series A Preferred Stock
may call such a meeting at our expense solely for the election of the preferred
stock directors, and for this purpose and no other (unless provided otherwise
by applicable law) such Series A Preferred Stock holder will have access to our
stock ledger.

When (i) dividends have been paid regularly on the
Series A Preferred Stock for at least one year after a nonpayment event, and
(ii) the rights of holders of any voting parity stock to participate in
electing the preferred stock directors will have ceased, the right of holders
of the Series A Preferred Stock to participate in the election of preferred
stock directors will cease (but subject always to the revesting of such voting
rights in the case of any future nonpayment event), the terms of office of all
the preferred stock directors will immediately terminate, and the number of
directors constituting our board will automatically be reduced accordingly.

Any preferred stock director may be removed at any
time without cause by the holders of record of a majority of the outstanding
shares of the Series A Preferred Stock and voting parity stock, when they have
the voting rights described above (voting together as a single class in
proportion to their respective stated amounts). The preferred stock directors
elected at any such special meeting will hold office until the next annual
meeting of the stockholders if such office will not have previously terminated
as above provided. In case any vacancy will occur among the preferred stock
directors, a successor will be elected by our board to serve until the next
annual meeting of the stockholders on the nomination of the then remaining
preferred stock director or, if no preferred stock director remains in office,
by the vote of the holders of record of a majority of the outstanding shares of
the Series A Preferred Stock and such voting parity stock for which dividends
have not been paid, voting as a single class in proportion to their respective
stated amounts. The preferred stock directors will each be entitled to one vote
per director on any matter that will come before our board for a vote.

Other
Voting Rights

So long as any shares of the Series A Preferred Stock
are outstanding, in addition to any other vote or consent of stockholders
required by law or by our amended and restated certificate of incorporation,
the vote or consent of the holders of at least two thirds of the shares of the
Series A Preferred Stock at the time outstanding, voting together with any
other series of preferred stock that would be adversely affected in
substantially the same manner and entitled to vote as a single class in
proportion to their respective stated amounts (to the exclusion of all other
series of preferred stock), given in person or by proxy, either in writing
without a meeting or by vote at any meeting called for the purpose, will be
necessary for effecting or validating:

•         
 Amendment of Certificate of Incorporation or By-laws. Any
amendment, alteration or repeal of any provision of our amended and restated
certificate of incorporation or by-laws that would alter or change the voting
powers, preferences or special rights of the Series A Preferred Stock so as to
affect them adversely; provided that the amendment of the amended and restated
certificate of incorporation so as to authorize or create, or to increase the
authorized amount of, any class or series of stock that does not rank senior to
the Series A Preferred Stock in either the payment of dividends or in the
distribution of assets on any liquidation, dissolution or winding up of AIG
will not be deemed to affect adversely the voting powers, preferences or
special rights of the Series A Preferred Stock;

 

 

•         
 Authorization of Senior Stock. Any
amendment or alteration of the amended and restated certificate of
incorporation to authorize or create, or increase the authorized amount of, any
shares of any class or series or any securities convertible into shares of any
class or series of our capital stock ranking senior to the Series A Preferred
Stock in the payment of dividends or in the distribution of assets on any
liquidation, dissolution or winding up of AIG; or

•         
 Share Exchanges, Reclassifications, Mergers and Consolidations and
Other Transactions. Any consummation of  (x) a binding share
exchange or reclassification involving the Series A Preferred Stock, (y) a
merger or consolidation of AIG with another entity (whether or not a
corporation), or (z) a conversion, transfer, domestication or continuance of
AIG into another entity or an entity organized under the laws of another
jurisdiction, unless in each case (A) the shares of the Series A Preferred
Stock remain outstanding or, in the case of any such merger or consolidation with
respect to which we are not the surviving or resulting entity, or any such
conversion, transfer, domestication or continuance, the shares of Series A
Preferred Stock are converted into or exchanged for preference securities of
the surviving or resulting entity or its ultimate parent, and (B) 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, and limitations and restrictions thereof, taken as a whole, as
are not materially less favorable to the holders thereof than the rights,
preferences, privileges and voting powers, and restrictions and limitations
thereof, of the Series A Preferred Stock immediately prior to such consummation,
taken as a whole.

The foregoing voting provisions will not apply if, at
or prior to the time when the act with respect to which the vote would
otherwise be required will be effected, all outstanding shares of the Series A
Preferred Stock have been redeemed or called for redemption on proper notice
and sufficient funds have been set aside by us for the benefit of the holders
of the Series A Preferred Stock to effect the redemption.

Under current provisions of the Delaware General
Corporation Law, the holders of issued and outstanding preferred stock are
entitled to vote as a class, with the consent of the majority of the class
being required to approve an amendment to our amended and restated certificate
of incorporation if the amendment would increase or decrease the aggregate
number of authorized shares of such class or increase or decrease the par value
of the shares of such class.

Transfer
Agent and Registrar

Equiniti Trust Company is the transfer agent and
registrar for the Series A Preferred Stock.

Description of the Depositary Shares

As described above under “Description of the Series A
Preferred Stock”, we issued fractional interests in shares of the Series A
Preferred Stock in the form of the Depositary Shares. Each Depositary Share
represents a 1/1,000th interest in a share of the Series A Preferred
Stock, and is evidenced by a depositary receipt. The shares of the Series A
Preferred Stock represented by the Depositary Shares are deposited under a
deposit agreement among us, Equiniti Trust Company, as the Depositary, and the
holders from time to time of the depositary receipts evidencing the Depositary
Shares. Subject to the terms of the deposit agreement, each holder of
Depositary Shares is entitled, through the Depositary, in proportion to the
applicable fraction of a share of the Series A Preferred Stock represented by
such Depositary Shares, to all the rights and preferences of the Series A
Preferred Stock represented thereby (including dividend, voting, redemption and
liquidation rights).

 

 

Dividends and Other
Distributions

The Depositary will distribute any cash dividends or
other cash distributions received in respect of the deposited Series A
Preferred Stock to the record holders of the Depositary Shares in proportion to
the number of the Depositary Shares held by each holder on the relevant record
date. The Depositary will distribute any property received by it other than
cash to the record holders of the Depositary Shares entitled to those
distributions, unless it determines that the distribution cannot be made
proportionally among those holders or that it is not feasible to make a
distribution. In that event, the Depositary may, with our approval, sell the
property and distribute the net proceeds from the sale to the holders of the
Depositary Shares in proportion to the number of the Depositary Shares they
hold.

Record dates for the payment of dividends and other
matters relating to the Depositary Shares are the same as the corresponding
record dates for the Series A Preferred Stock.

The amounts distributed to holders of the Depositary
Shares will be reduced by any amounts required to be withheld by the Depositary
or by us on account of taxes or other governmental charges.

Redemption
of the Depositary Shares

If we redeem the Series A Preferred Stock represented
by the Depositary Shares, in whole or in part, a corresponding number of
Depositary Shares will be redeemed from the proceeds received by the Depositary
resulting from the redemption of the Series A Preferred Stock held by the
Depositary. The redemption price per Depositary Share will be equal to
1/1,000th of the redemption price per share payable with respect to the
Series A Preferred Stock, plus any declared and unpaid dividends, without
accumulation of any undeclared dividends, on the shares of the Series A
Preferred Stock. Whenever we redeem shares of the Series A Preferred Stock held
by the Depositary, the Depositary will redeem, as of the same redemption date,
the number of the Depositary Shares representing shares of the Series A
Preferred Stock so redeemed.

In case of any redemption of less than all of the
outstanding Depositary Shares, the Depositary Shares to be redeemed will be
selected by the Depositary pro rata or by lot. In any such case, the Depositary
will redeem the Depositary Shares only in increments of 1,000 shares and any
integral multiple thereof.

Voting of
the Depositary Shares

When the Depositary receives notice of any meeting at
which the holders of the Series A Preferred Stock are entitled to vote, the
Depositary will mail (or otherwise transmit by an authorized method) the
information contained in the notice to the record holders of the Depositary Shares.
Each record holder of Depositary Shares on the record date, which is the same
date as the record date for the Series A Preferred Stock, may instruct the
Depositary to vote the amount of the Series A Preferred Stock represented by
the holder’s Depositary Shares. Although each Depositary Share is entitled to
1/1,000th of a vote, the Depositary can only vote whole shares of Series A
Preferred Stock. To the extent possible, the Depositary will vote the amount of
the Series A Preferred Stock represented by the Depositary Shares in accordance
with the instructions it receives. We will agree to take all reasonable actions
that the Depositary determines are necessary to enable the Depositary to vote
as instructed. If the Depositary does not receive specific instructions from
the holders of any Depositary Shares, it will not vote the amount of the Series
A Preferred Stock represented by such Depositary Shares.

 

 

Form of the Depositary
Shares

The Depositary Shares were issued in book-entry form
through DTC. The Series A Preferred Stock is issued in registered form to the
Depositary.

Depositary

Equiniti Trust Company is the Depositary for the
Depositary Shares.

V.                
 5.75% Series A-2 Junior Subordinated Debentures and 4.875% Series
A-3 Junior Subordinated Debentures

The following description of the
5.75% Series A-2 Junior Subordinated Debentures, which we refer
to in this section as the “Series A-2 Junior Subordinated Debentures”, and the
4.875% Series A-3 Junior Subordinated Debentures, which we refer to in this
section as the “Series A-3 Junior Subordinated Debentures” and, together with
the Series A-2 Junior Subordinated Debentures, the “Junior Subordinated
Debentures”, is a summary and does not purport to be complete. It is qualified
in its entirety by reference to the Junior Subordinated Indenture, dated as of
March 13, 2007 (as supplemented, the “Junior Subordinated Indenture”), between
American International Group, Inc. and The Bank of New York Mellon, as trustee,
which is supplemented in the case of the Series A-2 Junior Subordinated
Debentures by the Second Supplemental Indenture, dated as of March 15, 2007,
and which is supplemented in the case of the Series A-3 Junior Subordinated
Debentures by the Third Supplemental Indenture, dated as of March 15, 2007. We
encourage you to read the above referenced indenture, as supplemented, for
additional information.

General

The Series A-2 Junior Subordinated Debentures were
originally issued in an initial aggregate principal amount of £750,000,000.  The Series A-3 Junior Subordinated Debentures were originally
issued in an initial aggregate principal amount of €1,000,000,000. We may,
without the consent of the holders of the Junior Subordinated Debentures,
increase the principal amount of each series of the Junior Subordinated
Debentures by issuing additional debentures of each series on the same terms
and conditions (except that the initial public offering price, issue date and
initial interest payment date may vary) and with the same CUSIP number, ISIN
and common code as each series of the Junior Subordinated Debentures, provided
that the total principal amount of Series A-2 Junior Subordinated Debentures
outstanding may not exceed £1,500,000,000 and the total principal amount of
Series A-3 Junior Subordinated Debentures outstanding may not exceed €2,000,000,000
and any further issues must be fungible for United States federal income tax
purposes.

We will be required to repay the principal amount of
the Junior Subordinated Debentures on March 15, 2037, or, if that date is not a
business day, on the next business day (for purposes of this section, the
“scheduled maturity date”) only to the extent that we have sold “qualifying
capital securities” during a 180-day period ending on a notice date not more
than 30 or less than 10 business days prior to the scheduled maturity date. We
will use our commercially reasonable efforts, subject to “market disruption
events,” to sell enough qualifying capital securities to permit repayment of
the Junior Subordinated Debentures in full on the scheduled maturity date. If
any amount is not paid on the scheduled maturity date, it will remain
outstanding and continue to bear interest at a floating rate and we will
continue to use our commercially reasonable efforts to sell enough qualifying
capital securities to permit the repayment of any remaining principal amount of
the Junior Subordinated Debentures in full. On March 15, 2067, we must pay any
remaining principal and interest on the Junior Subordinated Debentures in full
whether or not we have sold qualifying capital securities. The Junior
Subordinated Debentures are our unsecured, 

 

 

subordinated
obligations and are junior in right of payment to all of our existing and
future senior and subordinated indebtedness. Each of the Series A-2 Junior
Subordinated Debentures and the Series A-3 Junior Subordinated Debentures rank
pari passu with each other and with our Series A-1 and A-6 through A-9 Junior
Subordinated Debentures (as used in this section, the “outstanding parity
securities”).

The Junior Subordinated Debentures were issued in
fully registered form and in denominations that are even multiples of €50,000. 

Interest

The Series A-2 Junior Subordinated
Debentures will bear interest from and including March 15, 2007 to but
excluding March 15, 2017, at the annual rate of 5.75%, payable
semi-annually in arrears on March 15 and September 15 of each year.
The Series A-3 Junior Subordinated Debentures will bear interest
from and including March 15, 2007 to but excluding March 15, 2017, at
the annual rate of 4.875%, payable annually in arrears on March 15 of each
year. Commencing on March 15, 2017, the Series A-2 Junior
Subordinated Debentures will bear interest from and including March 15,
2017 at a rate equal to three-month Sterling LIBOR plus 1.705% and the
Series A-3 Junior Subordinated Debentures will bear interest from and
including March 15, 2017 at a rate equal to three-month EURIBOR plus
1.73%, each payable quarterly in arrears on each March 15, June 15, September 15
and December 15. We refer to these dates as “interest payment dates” and
we refer to the period beginning on and including March 15, 2007 and
ending on but excluding the first interest payment date and each successive
period beginning on and including an interest payment date and ending on but
excluding the next interest payment date as an “interest period.” The amount of
interest payable for any interest period ending on or prior to March 15,
2017 will be computed on the basis of the number of days from and including the
date on which the interest begins to accrue during the relevant interest period
to but excluding the scheduled date on which the interest is payable, divided
by the number of days in the relevant interest period (including the first day
but excluding the last day of such interest period). The amount of interest
payable for any interest period commencing on or after March 15, 2017 will
be computed on the basis of, in the case of the Series A-2 Junior
Subordinated Debentures, a 365-day year, and in the case of the
Series A-3 Junior Subordinated Debentures, a 360-day year
and the actual number of days elapsed. In the event that any interest payment
date on or before March 15, 2017 would otherwise fall on a day that is not
a business day, the interest payment due on that date will be postponed to the
next day that is a business day and no interest will accrue as a result of that
postponement. In the event that any interest payment date after March 15,
2017 would otherwise fall on a day that is not a business day, that interest
payment date will be postponed to the next day that is a business day; however,
if the postponement would cause the day to fall in the next calendar month, the
interest payment date will instead be brought forward to the immediately preceding
business day.

Accrued interest that is not paid on the applicable
interest payment date will bear additional interest, to the extent permitted by
law, at the interest rate in effect from time to time, from the relevant
interest payment date, compounded on each subsequent interest payment date.

For the purposes of calculating interest due on
the Series A-2 Junior Subordinated Debentures after
March 15, 2017:

·        
 “Three-month Sterling LIBOR,” with respect to
any quarterly interest period, will be the rate (expressed as a percentage per
annum) for deposits in pounds Sterling for a three-month period that appears on
Reuters Screen LIBOR01 as of 11:00 a.m., London time, on the first day of such
interest period. If three-month Sterling LIBOR cannot be determined as
described above, the rate for such interest period will be determined on the
basis of the rates at which deposits in pounds Sterling are offered by four
leading banks 

 

 

selected by the calculation agent, at
approximately 11:00 a.m., London time, on the first day of such interest
period, to prime banks in the London interbank market for a period of three
months commencing on the first day of such interest period. These quotations
will be based upon a principal amount that is representative of a single
transaction in pounds Sterling in such market at the time. If two or more quotations
are provided, three-month Sterling LIBOR for the interest period will be the
arithmetic mean of the quotations. If fewer than two quotations are provided,
three-month Sterling LIBOR will be the arithmetic mean of the rates quoted by
major banks in London, selected by the calculation agent, at approximately
11:00 a.m., London time, on the first day of such interest period. The rates
quoted will be for loans in pounds Sterling for a three-month period to leading
European banks commencing on the first day of such interest period. Rates
quoted must be based on a principal amount that is representative of a single
transaction in pounds Sterling in such market at that time. If fewer than three
banks are quoting rates, three-month Sterling LIBOR for the applicable period
will be the same as for the immediately preceding interest period, or, in the
case of the quarterly interest period beginning on March 15, 2017, three-month
Sterling LIBOR will be 5.53%.

·        
 “Calculation agent” means AIG Financial Products Corp., or any
other firm appointed by us, acting as calculation agent.

·        
 A “London banking day” means any day on which dealings in pounds
Sterling are transacted in the London interbank market.

·        
 “Reuters Screen LIBOR01” means the display designated on Reuters
Screen LIBOR01 or any successor service or page for the purpose of displaying
LIBOR offered rates of major banks, as determined by the calculation agent.

For the purposes of calculating interest due on
the Series A-3 Junior Subordinated Debentures after
March 15, 2017:

·        
 “Three-month EURIBOR,”  with
respect to any quarterly interest period, will be the rate (expressed as a
percentage per annum) for deposits in euro for a three-month period that
appears on Reuters Screen EURIBOR01 as of 11:00 a.m., Brussels time, on
the second TARGET settlement day (as defined below for purposes of this
section) immediately preceding the first day of such interest period. If the
Reuters Screen EURIBOR01 does not include such a rate or is unavailable on such
date, the calculation agent (as defined below for purposes of this section)
will request the principal London office of each of four major banks in the
Euro-zone inter-bank market, as selected by the calculation agent (after
consultation with us), to provide such bank’s offered quotation (expressed as a
percentage per annum) as of approximately 11:00 am., Brussels time, on such
date, to prime banks in the Euro-zone inter-bank market for deposits in an
amount in euro that is representative for a single transaction in such market
and for a three-month period beginning on the day that is two TARGET settlement
days after such date. If at least two such offered quotations are so provided,
the rate for the interest period will be the arithmetic mean of such
quotations. If fewer than two such quotations are so provided, the calculation
agent will request each of three major banks in London, as selected by the
calculation agent, to provide such bank’s rate (expressed as a percentage per
annum), as of approximately 11:00 a.m., London time, on such date. Rates
quoted will be for loans in euro to leading European banks for a three-month
period beginning on the day that is two TARGET settlement days after such date
based on a principal amount that is representative of a single transaction in
that market at that time. If at least two such rates 

 

 

are
so provided, the rate for the interest period will be the arithmetic mean of
such rates. If fewer than two such rates are so provided then the rate for the
interest period will be the rate in effect with respect to the immediately
preceding interest period, or, in the case of the quarterly interest period
beginning on March 15, 2017, three-month EURIBOR will be 3.879%.

·        
 “Calculation agent” means AIG Financial Products Corp., or any
other firm appointed by us, acting as calculation agent.

·        
 A “TARGET settlement day” means a day on which the Trans-European
Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open.

·        
 “Reuters Screen EURIBOR01” means the display designated on Reuters
Screen EURIBOR01 or any successor service or page for the purpose of displaying
EURIBOR offered rates of major banks, as determined by the calculation agent.

All percentages resulting from any calculation of
three-month Sterling LIBOR or three-month EURIBOR will be rounded upward or downward,
as appropriate, to the next higher or lower one hundred-thousandth of a
percentage point (for example, 9.876541% (or .09876541) would be rounded down
to 9.87654% (or .0987654) and 9.876545% (or .09876545) would be rounded up to
9.87655% (or .0987655)). All amounts used in or resulting from any calculation
will be rounded upward or downward, as appropriate, to the nearest cent, with
one-half cent or more being rounded upward. The establishment of three-month
Sterling LIBOR or three-month EURIBOR for each interest period by the
calculation agent shall (in the absence of manifest error) be final and
binding.

In determining three-month Sterling LIBOR or
three-month EURIBOR during a particular interest period, the calculation agent
may obtain rate quotes from various banks or dealers active in the relevant
market. Those reference banks and dealers may include the calculation agent
itself and our other affiliates.

Option to
Defer Interest Payments

We may elect at one or more times to defer payment of
interest on the Junior Subordinated Debentures for one or more consecutive
interest periods that do not exceed 10 years. We may defer payment of
interest prior to, on or after the scheduled maturity date. We may not defer
interest beyond March 15, 2067 or the earlier redemption date of
any Junior Subordinated Debentures being redeemed. We currently do not
intend to exercise our option to defer interest on the Junior Subordinated
Debentures.

Deferred interest on the Junior Subordinated
Debentures will bear interest at the then applicable interest rate, compounded
on each interest payment date, subject to applicable law. As used in this
section, a “deferral period” refers to the period beginning on an interest
payment date with respect to which we elect to defer interest and ending on the
earlier of (i) the tenth anniversary of that interest payment date and
(ii) the next interest payment date on which we have paid all accrued and
previously unpaid interest on the Junior Subordinated Debentures.

We have agreed in the Junior Subordinated Indenture
that:

·        
 immediately following the first interest payment date during the
deferral period on which we elect to pay current interest or, if earlier, the
fifth anniversary of the beginning of the deferral period, we will be required
to use commercially reasonable efforts to sell “common stock,” “qualifying
warrants” and “qualifying non-cumulative preferred stock” 

 

 

pursuant
to the alternative payment mechanism, unless we have delivered notice of a
“market disruption event,” and apply the “eligible proceeds,” as these terms
are defined in the Third Supplemental Indenture to the Junior Subordinated
Indenture, to the payment of any deferred interest (and compounded interest) on
the next interest payment date, and this requirement will continue in effect
until the end of the deferral period; and

·        
 we will not pay deferred interest on the Junior Subordinated
Debentures (and compounded interest thereon) prior to the final maturity date
from any source other than eligible proceeds, unless otherwise required by an
applicable regulatory authority, the deferral period is terminated on the
interest payment date following certain business combinations described below
or an event of default has occurred and is continuing.

We may pay current interest at all times from any
available funds.

If we are involved in a merger, consolidation,
amalgamation, binding share exchange or conveyance, transfer or lease of assets
substantially as an entirety to any other person or a similar transaction (a “business
combination”) where immediately after the consummation of the business
combination more than 50% of the surviving or resulting entity’s voting stock
is owned by the shareholders of the other party to the business combination or
continuing directors cease for any reason to constitute a majority of the
directors of the surviving or resulting entity, then the foregoing rules will
not apply to any deferral period that is terminated on the next interest
payment date following the date of consummation of the business combination.
For purposes of this section, “continuing director” means a director who was a
director of AIG at the time the definitive agreement relating to the
transaction was approved by the AIG board of directors.

Although our failure to comply with the foregoing
rules with respect to the alternative payment mechanism and payment of interest
during a deferral period will be a breach of the Junior Subordinated Indenture,
it will not constitute an event of default under the Junior Subordinated
Indenture or give rise to a right of acceleration or similar remedy.

We will give the holders of the Junior Subordinated
Debentures and the indenture trustee written notice of our election to begin a
deferral period at least one business day before the record date for the next
interest payment date. However, our failure to pay interest on any interest
payment date will itself constitute the commencement of a deferral period unless
we pay such interest within five business days after the interest payment date,
whether or not we provide a notice of deferral. A failure to pay interest will
not give rise to an event of default unless we fail to pay interest, including
compounded interest, in full for a period of 30 days after the conclusion
of a 10-year period following the commencement of any deferral
period.

If we have paid all deferred interest on
the Junior Subordinated Debentures, we can again defer interest payments
on the Junior Subordinated Debentures as described above. The Junior
Subordinated Indenture does not limit the number or frequency of interest
deferral periods.

 

Dividend and Other Payment Stoppages during Interest
Deferral and under Certain Other Circumstances

We have agreed that, so long as any Junior
Subordinated Debentures remain outstanding, if an event of default has occurred
and is continuing or we have given notice of our election to defer interest 

 

 

payments but the related deferral period has not yet
commenced or a deferral period is continuing, then we will not, and will not
permit any of our subsidiaries to:

·        
 declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any shares of
our capital stock;

·        
 make any payment of principal of, or interest or premium, if any,
on, or repay, purchase or redeem any of our debt securities that upon our
liquidation rank pari passu with, or junior to, the Junior
Subordinated Debentures; or

·        
 make any guarantee payments regarding any guarantee by us of the
junior subordinated debt securities of any of our subsidiaries if the guarantee
ranks pari passu with, or junior in interest to,
the Junior Subordinated Debentures.

The
restrictions listed above do not apply to:

·        
 purchases, redemptions or other acquisitions of shares of our
capital stock in connection with:

•         
 any employment benefit plan or other compensatory contract or
arrangement; or the Assurance Agreement, dated as of June 27, 2005, by AIG
in favor of eligible employees and relating to specified obligations of Starr
International Company, Inc. (as such agreement may be amended, supplemented,
extended, modified or replaced from time to time); or

•         
 a dividend reinvestment, stock purchase plan or other similar
plan;

·        
 any exchange or conversion of any class or series of our capital
stock (or any capital stock of a subsidiary of AIG) for any class or series of
our capital stock or of any class or series of our indebtedness for any class
or series of our capital stock; or

·        
 the purchase of fractional interests in shares of our capital
stock in accordance with the conversion or exchange provisions of such capital
stock or the security being converted or exchanged; or

·        
 any declaration of a dividend in connection with any stockholders’
rights plan, or the issuance of rights, equity securities or other property
under any stockholders’ rights plan, or the redemption or repurchase of rights
in accordance with any stockholders’ rights plan; or

·        
 any dividend in the form of equity securities, warrants, options
or other rights where the dividend stock or the stock issuable upon exercise of
the warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks on a parity with or junior to such equity
securities; or

·        
 any payment during a deferral period of current interest in
respect of our debt securities that upon our liquidation rank pari
passu with the Junior Subordinated Debentures that is made pro
rata to the amounts due on such pari passu securities
and on the Junior Subordinated Debentures and any payments of deferred interest
on pari passu securities that, if not made, would cause us to
breach the terms of the instrument governing such pari passu securities; or 

 

 

·        
 any payment of principal in respect of pari passu securities
having an earlier scheduled maturity date than the Junior Subordinated
Debentures, as required under a provision of such pari passu securities
that is substantially the same as the repayment provisions for the Junior
Subordinated Debentures or any such payment in respect of pari
passu securities having the same scheduled maturity date as the Junior
Subordinated Debentures that is made on a pro rata basis among
one or more series of such securities and the Junior Subordinated Debentures;
or

·        
 any repayment or redemption of a security necessary to avoid a
breach of the instrument governing the same.

In addition, if any deferral period lasts longer than
one year, neither we nor any of our subsidiaries will be permitted to purchase,
redeem or otherwise acquire any securities ranking junior to or pari
passu with any APM qualifying securities (for purposes of this
section, as defined below under “Alternative Payment Mechanism”) the proceeds
of which were used to settle deferred interest during the relevant deferral
period until the first anniversary of the date on which all deferred interest
has been paid, subject to the exceptions listed above. However, if we are
involved in a business combination where immediately after its consummation
more than 50% of the surviving or resulting entity’s voting stock is owned by
the shareholders of the other party to the business combination or continuing
directors cease for any reason to constitute a majority of the surviving or
resulting entity’s board of directors, then the one-year restriction on
repurchases described in the previous sentence will not apply to any deferral
period that is terminated on the next interest payment date following the date
of consummation of the business combination.

Alternative Payment Mechanism

Obligations
and Limitations Applicable to All Deferral Periods

Subject to the conditions described under “Option to
Defer Interest Payments” above and to the exclusions described in “Market
Disruption Events” below, if we defer interest on the Junior Subordinated
Debentures, we will be required, commencing not later than (i) the first
interest payment date on which we elect to pay current interest or (ii) if
earlier, the business day following the fifth anniversary of the commencement
of the deferral period, to issue “APM qualifying securities,” as defined below
for purposes of this section, subject to the limits described below, until we
have raised an amount of “eligible proceeds,” as defined below for purposes of
this section, at least equal to the aggregate amount of accrued and unpaid
deferred interest on the Junior Subordinated Debentures. We refer to this
period as the “APM period” and to this method of funding the payment of accrued
and unpaid interest as the “alternative payment mechanism.”

We have agreed to apply eligible proceeds raised
during any deferral period pursuant to the alternative payment mechanism to pay
deferred interest on the Junior Subordinated Debentures.

“Eligible proceeds,” for each relevant interest
payment date, means the net proceeds (after underwriters’ or placement agents’
fees, commissions or discounts and other expenses relating to the issuance or
sale) that AIG has received during the 180 days prior to the related distribution
date from the issuance of APM qualifying securities to persons that are not
subsidiaries of AIG.

“APM qualifying securities” means common stock,
qualifying warrants and qualifying non-cumulative preferred stock.

 

 

“Common
stock,” under the alternative payment mechanism, means shares of AIG common
stock, including treasury stock and shares of common stock sold pursuant to
AIG’s dividend reinvestment plan and employee benefit plans up to the “maximum
share number,” as defined below.

“Qualifying warrants” means net share settled warrants
to purchase shares of common stock that:

·        
 have an exercise price greater than the “current stock market
price” of our common stock as of their date of pricing;

·        
 we are not entitled to redeem for cash and the holders are not
entitled to require us to repurchase for cash in any circumstances; and

·        
 do not entitle the holders thereof to purchase a number of shares
of our common stock in excess of the then applicable “maximum warrant number,”
as defined below.

We intend to issue qualifying warrants with exercise
prices at least 10% above the current stock market price of our common stock on
the date of pricing of the warrants. The “current stock market price” of our
common stock on any date is the closing sale price per share (or if no closing
sale price is reported, the average of the bid and ask prices or, if more than
one in either case, the average of the average bid and the average ask prices)
on that date as reported in composite transactions by the New York Stock
Exchange or, if our common stock is not then listed on the New York Stock
Exchange, as reported by the principal U.S. securities exchange on which
our common stock is traded. If our common stock is not listed on any
U.S. securities exchange on the relevant date, the “current stock market
price” will be the average of the mid-point of the bid and ask prices for our
common stock on the relevant date from each of at least three nationally
recognized independent investment banking firms selected by us for this
purpose.

“Qualifying non-cumulative preferred stock” means our
non-cumulative perpetual preferred stock that (i) contains no remedies
other than “permitted remedies” and (ii)(a) is redeemable, but is subject to
“intent-based replacement disclosure,” as such terms are defined in the
Replacement Capital Covenant with respect to each series of Junior Subordinated
Debentures, and has a provision that prohibits AIG from making any
distributions thereon upon its failure to satisfy one or more financial tests
set forth therein or (b) is subject to a replacement capital covenant
substantially similar to the replacement capital covenant applicable to the
Junior Subordinated Debentures. We are not permitted to issue qualifying
non-cumulative preferred stock for the purpose of paying deferred interest to
the extent the net proceeds of such issuance applied to pay interest on the
Junior Subordinated Debentures pursuant to the alternative payment mechanism,
together with the net proceeds of all prior issuances of qualifying
non-cumulative preferred stock applied during the current and all prior
deferral periods, would exceed 25% of the aggregate principal amount of the
Junior Subordinated Debentures initially issued under the junior debt indenture
(the “preferred stock issuance cap”).

The “maximum share number” will initially equal
100 million and the “maximum warrant number” will initially equal
100 million. If the number of issued and outstanding shares of our common
stock is changed into a different number of shares or a different class by
reason of any stock split, reverse stock split, stock dividend,
reclassification, recapitalization, split-up, combination, exchange
of shares or other similar transaction, then the maximum share number and the
maximum warrant number will be correspondingly adjusted. We may, at our
discretion and without the consent of the holders of the Junior Subordinated
Debentures, increase the maximum share number or the maximum warrant number or
both (including through the increase of our authorized share capital, if
necessary) if we determine that such increase is necessary to allow us to issue
sufficient common stock and/or qualifying warrants to pay deferred
interest on the Junior Subordinated Debentures.

 

 

Additional Limitations Applicable to the First Five
Years of Any Deferral Period

We may become subject to the alternative payment
mechanism prior to the fifth anniversary of the commencement of a deferral
period if we elect to pay current interest prior to such date. In such event,
we are not required to issue shares of common stock or qualifying warrants
under the alternative payment mechanism for the purpose of paying deferred interest
during the first five years of that deferral period to the extent the number of
shares of common stock issued and the number of shares of common stock subject
to such qualifying warrants, together with the number of shares of common stock
previously issued and the number of shares of common stock subject to
qualifying warrants previously issued during such deferral period to pay
interest on the Junior Subordinated Debentures pursuant to the alternative
payment mechanism would, in the aggregate, exceed 2% of the total number of
issued and outstanding shares of our common stock as of the date of our then
most recent publicly available consolidated financial statements (the “stock
and warrant issuance cap”).

Once we reach the stock and warrant issuance cap for a
deferral period, we will not be required to issue more shares of common stock
or qualifying warrants under the alternative payment mechanism during the first
five years of such deferral period even if the stock and warrant issuance cap
subsequently increases because of a subsequent increase in the number of
outstanding shares of our common stock. The stock and warrant issuance cap will
cease to apply after the fifth anniversary of the commencement of any deferral
period, at which point we must pay any deferred interest regardless of the time
at which it was deferred, using the alternative payment mechanism, subject to
the limitations described under “Obligations and Limitations Applicable to All
Deferral Periods” above and any market disruption event. In addition, if the
stock and warrant issuance cap is reached during a deferral period and we
subsequently pay all deferred interest, the stock and warrant issuance cap will
cease to apply at the termination of such deferral period, reset to zero and
will not apply again unless and until we start a new deferral period. The
preferred stock issuance cap, however, does not reset to zero even if we pay
all deferred interest and the net proceeds from sales of qualifying
non-cumulative preferred stock applied pursuant to the alternative payment mechanism
during such deferral period and all prior deferral periods cumulate as
qualifying non-cumulative preferred stock is issued to pay deferred interest.

Remedies and Market Disruptions

Although our failure to comply with our obligations
with respect to the alternative payment mechanism will breach a covenant under
the Junior Subordinated Indenture, it will not constitute an event of default
thereunder or give rise to a right of acceleration or similar remedy.

If, due to a market disruption event or otherwise, we
were able to raise some, but not all, eligible proceeds necessary to pay all
deferred interest on any interest payment date, we will apply any available
eligible proceeds to pay accrued and unpaid interest on the applicable interest
payment date in chronological order based on the date each payment was first
deferred, and you will be entitled to receive your pro rata share
of any amounts so paid. If, in addition to the Junior Subordinated Debentures,
other pari passu securities are outstanding under which we are
obligated to sell common stock, qualifying warrants or qualifying
non-cumulative preferred stock and apply the net proceeds to the payment of
deferred interest or distributions, then on any date and for any period the
amount of net proceeds received by us from those sales and available for
payment of the deferred interest and distributions shall be applied to the
Junior Subordinated Debentures and those other pari passu securities
on a pro rata basis up to, in the case of common stock, the
stock and warrant issuance cap and the maximum share number, in the case of
qualifying warrants, the stock and warrant issuance cap and the maximum warrant
number and, in the case of qualifying non-cumulative preferred stock, the
preferred stock issuance cap (or comparable provisions in the instruments
governing those pari passu securities) in proportion to the
total amounts that are due on the Junior Subordinated Debentures and such pari
passu securities. The Junior Subordinated 

 

 

Debentures
permit pro rata payments to be made on any other series so
long as we deposit with our paying agent or segregate and hold in trust for
payment the pro rata proceeds applicable to such series that
we have not paid.

Market Disruption Events

A “market disruption event” means, for purposes of
sales of APM qualifying securities pursuant to the alternative payment
mechanism or sales of qualifying capital securities, as applicable
(collectively, the “permitted securities”), the occurrence or existence of any
of the following events or sets of circumstances:

·        
 trading in securities generally (or in our shares specifically) on
the New York Stock Exchange or any other national securities exchange, or in
the over-the-counter market, on which our capital stock is then
listed or traded shall have been suspended or its settlement generally shall
have been materially disrupted or minimum prices shall have been established on
any such exchange or market by the relevant regulatory body or governmental
agency having jurisdiction that materially disrupts or otherwise has a material
adverse effect on trading in, or the issuance and sale of, permitted securities;

·        
 we would be required to obtain the consent or approval of our
stockholders or a regulatory body (including, without limitation, any
securities exchange) or governmental authority to issue permitted securities
and we fail to obtain that consent or approval notwithstanding our commercially
reasonable efforts to obtain that consent or approval;

·        
 an event occurs and is continuing as a result of which the
offering document for the offer and sale of permitted securities would, in our
reasonable judgment, contain an untrue statement of a material fact or omit to
state a material fact required to be stated in that offering document or
necessary to make the statements in that offering document not
misleading, provided that one or more events described under
this bullet point shall not constitute a market disruption event with respect
to a period of more than 90 days in any 180-day period;

·        
 we reasonably believe that the offering document for the offer and
the sale of permitted securities would not be in compliance with a rule or
regulation of the Securities and Exchange Commission (for reasons other than
those referred to in the immediately preceding bullet point) and we are unable
to comply with such rule or regulation or such compliance is unduly burdensome,
provided that one or more events described under this bullet point shall not
constitute a market disruption event with respect to a period of more than
90 days in any 180-day period;

·        
 a banking moratorium shall have been declared by the federal or
state authorities of the United States that results in a disruption of any of
the markets on which our securities are trading;

·        
 a material disruption shall have occurred in commercial banking or
securities settlement or clearance services in the United States;

·        
 the United States shall have become engaged in hostilities, there
shall have been an escalation in hostilities involving the United States, there
shall have been a declaration of a national emergency or war by the United
States or there shall have occurred any other 

 

 

national
or international calamity or crisis such that market trading in our capital
stock has been materially disrupted; or

·        
 there shall have occurred such a material adverse change in
general domestic or international economic, political or financial conditions,
including without limitation as a result of terrorist activities, or the effect
of international conditions on the financial markets in the United States, that
materially disrupts the capital markets such as to make it, in our judgment,
impracticable or inadvisable to proceed with the offer and sale of the
permitted securities.

We will be excused from our obligations under the
alternative payment mechanism in respect of any interest payment date if we
provide written certification to the indenture trustee (which the indenture
trustee will promptly forward upon receipt to each holder of record of Junior
Subordinated Debentures) no more than 30 and no less than 10 business days in
advance of that interest payment date certifying that:

·        
 a market disruption event occurred after the immediately preceding
interest payment date; and

·        
 either (a) the market disruption event continued for the
entire period from the business day immediately following the preceding
interest payment date to the business day immediately preceding the date on
which that certification is provided or (b) the market disruption event
continued for only part of this period, but we were unable after commercially
reasonable efforts to raise sufficient eligible proceeds during the rest of
that period to pay all accrued and unpaid interest.

We will not be excused from our obligations under the
alternative payment mechanism or our obligations in connection with the
repayment of principal if we determine not to pursue or complete the sale of
permitted securities due to pricing, dividend rate or dilution considerations.

Limitation on Claims in the Event of Our Bankruptcy,
Insolvency or Receivership

The Junior Subordinated Indenture provides that a
holder of Junior Subordinated Debentures, by that holder’s acceptance of the
Junior Subordinated Debentures, agrees that in the event of our bankruptcy,
insolvency or receivership prior to the redemption or repayment of such
holder’s Junior Subordinated Debentures, that holder of Junior
Subordinated Debentures will only have a claim for deferred and unpaid interest
(including compounded interest thereon) to the extent such interest (including
compounded interest thereon) relates to the earliest two years of the portion
of the deferral period for which interest has not so been paid.

Early Redemption

The Junior Subordinated Debentures:

·        
 are redeemable, in whole, but not in part, at our option at any
time prior to March 15, 2017, and, in whole or in part, on any interest
payment date on or after March 15, 2017, as described below;

·        
 are redeemable at any time, in whole but not in part, upon the
occurrence of a “rating agency event” or a “tax event”, as described below;

 

 

·        
 are redeemable at any time, in whole but not in part, if we become
obligated to pay additional amounts, as described below under “Additional
Amounts”; and

·        
 are not subject to any sinking fund, a holder’s right to require
us to purchase such holder’s Junior Subordinated Debentures or similar
provisions;

provided that any redemption of
Junior Subordinated Debentures will be subject to the restrictions described in
the Replacement Capital Covenant with respect to each series of Junior
Subordinated Debentures.

In the case of a redemption on or after March 15,
2017, or if we become obligated to pay “additional amounts” other than as a
result of an event that would, upon receipt of the opinion required under “tax
event,” constitute a tax event, the redemption price will be equal to 100% of
the principal amount of the applicable series of Junior Subordinated
Debentures, plus accrued interest thereon to the date of redemption.

In the case of a redemption prior to March 15,
2017, the redemption price will be equal to:

·        
 100% of the principal amount of the applicable series of Junior
Subordinated Debentures; or

·        
 as determined by the calculation agent, if greater, the sum of the
present values of the remaining scheduled payments of principal (assuming for
this purpose that the Junior Subordinated Debentures are to be redeemed at
their principal amount on March 15, 2017) discounted from
March 15, 2017, and interest thereon that would have been payable to and
including March 15, 2017 (not including any portion of any payment of
interest accrued to the redemption date) discounted from the relevant interest
payment date to the redemption date on, in the case of the Series A-2 Junior
Subordinated Debentures, a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Sterling gross redemption yield (as
determined by reference to the middle market price) at 11:00 a.m., London time,
on the reference date of the Sterling reference bond, and in the case of the
Series A-3 Junior Subordinated Debentures, an annual basis at the then current
yield on the comparable Bundesobligationen issue plus (i) 0.50% in the
case of any redemption in whole upon the occurrence of a “rating agency event”
or a “tax event” or (ii) 0.15% or 0.25% for the Series A-2 Junior
Subordinated Debentures and Series A-3 Junior Subordinated Debentures,
respectively, in all other cases;

plus, in either case, accrued interest on the Junior
Subordinated Debentures to the date of redemption.

If we
redeem or repay the Junior Subordinated Debentures when any deferred interest
remains unpaid, the unpaid deferred interest (including compounded interest
thereon) may only be paid pursuant to the alternative payment mechanism, as
described under “Alternative Payment Mechanism” above.

The definitions of certain terms used in the paragraph
above are listed below.

“Comparable Bundesobligationen issue” means the 3.750%
German Bundesobligationen due January 4, 2017 or, if such security is no
longer in issue, the German Bundesobligationen security selected by an
independent investment bank selected by the calculation agent as having a
maturity comparable to the term remaining from the redemption date to
March 15, 2017 that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity.

 

 

“Reference
date” means the date which is three business days prior to the date fixed for
redemption. 

“Sterling gross redemption yield” means, the gross
redemption yield on such security (as calculated by the calculation agent on
the basis set out in the United Kingdom Debt Management Office in the paper
“Formulae for Calculating Gilt Prices from Yields” page 4,
Section One: Price/Yield Formulae “Conventional Gilts; Double-dated and
Undated Gilts with Assumed (or Actual) Redemption on a Quasi-Coupon Date”
(published on June 8, 1998 and updated on March 15, 2002 and as
further updated or amended) on a semi-annual compounding basis (converted on an
annualized yield and rounded up (if necessary) to four decimal places)). 

“Sterling reference bond” means the 4.00% Treasury
Stock due September 7, 2016, or if such stock is no longer in issue such
other United Kingdom government stock with a maturity date as near as possible
to March 15, 2017, as the calculation agent may, with the advice of the
Sterling reference market makers, determine to be appropriate by way of
substitution for the 4.00% Treasury Stock due September 7, 2016. 

“Sterling reference market makers” means three brokers
or market makers of gilts selected by the calculation agent. 

For
purposes of the above, a “tax event” means that we have requested and received
an opinion of counsel experienced in such matters to the effect that, as a
result of any:

·        
 amendment to or change in the laws or regulations of the United
States or any political subdivision or taxing authority of or in the United
States that is enacted or becomes effective after the date of the prospectus
supplement relating to the Junior Subordinated Debentures;

·        
 proposed change in those laws or regulations that is announced
after the date of the prospectus supplement relating to the Junior Subordinated
Debentures;

·        
 official administrative decision or judicial decision or
administrative action or other official pronouncement interpreting or applying
those laws or regulations that is announced after the date of the prospectus
supplement relating to the Junior Subordinated Debentures; or

·        
 threatened challenge asserted in connection with an audit of us,
or a threatened challenge asserted in writing against any other taxpayer that
has raised capital through the issuance of securities that are substantially
similar to the Junior Subordinated Debentures;

there is more than an insubstantial risk that interest
payable by us on the Junior Subordinated Debentures is not, or will not be,
deductible by us, in whole or in part, for United States federal income tax
purposes.

For purposes of the above, a “rating agency event”
means a change by any nationally recognized statistical rating organization
within the meaning of Rule 15c3-1 under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), that currently
publishes a rating for us (a “rating agency”) to its equity credit criteria for
securities such as the Junior Subordinated Debentures, as such criteria was in
effect on the date of the prospectus supplement relating to the Junior
Subordinated Debentures (the “current criteria”), which change results in a
lower equity credit being given to the Junior Subordinated Debentures as of the
date of such change than the equity credit that would have been assigned to the

 

 

Junior Subordinated Debentures as of the date of such
change by such rating agency pursuant to its current criteria.

If less than all of the applicable series of the
Junior Subordinated Debentures are to be redeemed at any time, selection of
Junior Subordinated Debentures of the applicable series for redemption will be
made by the indenture trustee under the Junior Subordinated Indenture in
compliance with the rules and requirements of the New York Stock Exchange or
the principal securities exchange, if any, on which such series of the Junior
Subordinated Debentures is listed at the time of redemption or, if the such
series of the Junior Subordinated Debentures is not so listed or that exchange
prescribes no method of selection, on a pro rata basis, by lot
or by such other method as the indenture trustee may deem fair and appropriate
and which may provide for the selection for redemption of a portion of the
principal amount of such series of the Junior Subordinated Debenture; provided
that Junior Subordinated Debentures with a principal amount of €50,000 or less
will not be redeemed in part.

We will issue a notice of redemption at least 10 but
not more than 60 days before the redemption date. If any Junior
Subordinated Debentures are to be redeemed in part only, the notice of
redemption will state the portion of the principal amount thereof to be
redeemed. A new Junior Subordinated Debenture in principal amount equal to the
unredeemed portion thereof will be issued and delivered to the indenture
trustee, or its nominee, or, in the case of Junior Subordinated Debentures in
definitive form, issued in the name of the holder thereof, in each case upon
cancellation of the original Junior Subordinated Debenture.

Additional Amounts

Subject to the exemptions and limitations set forth
below, we will pay additional amounts (“additional amounts”) on the Junior
Subordinated Debentures with respect to any beneficial owner of the Junior
Subordinated Debentures that is a non U.S. person to ensure that each net
payment to that non U.S. person on the Junior Subordinated Debentures that
it beneficially owns will not be less, due to the payment of
U.S. withholding tax, than the amount then otherwise due and payable. For
this purpose, a “net payment” on a Junior Subordinated Debenture means a
payment by us or any paying agent, including payment of principal and interest,
after deduction for any present or future tax, assessment, or other
governmental charge on the additional amounts. As used in this section, “U.S.”
means the United States of America, including each state of the United
States and the District of Columbia, its territories, its possessions, and
other areas within its jurisdiction. Additional amounts are included in the
interest on the Junior Subordinated Debentures.

We will not be required to make any payment of any
tax, assessment or other governmental charge imposed by any government,
political subdivision, or taxing authority of that government, except as
provided in the prior paragraph. In addition, if we become obligated to pay
additional amounts, other than as a result of an event that would, upon receipt
of the opinion required under “tax event,” constitute a tax event, we may
redeem the Junior Subordinated Debentures at any time in whole but not in part
at 100% of their principal amount plus accrued and unpaid interest through the
date of redemption as described above under “Early Redemption.”

We will not be required to pay additional amounts, however,
in any of the circumstances described in items (1) through
(13) below.

(1) Additional amounts will not be payable if a
payment on the Junior Subordinated Debentures is reduced as a result of any
tax, assessment or other governmental charge that is imposed or withheld solely
by reason of the beneficial owner:

·        
 having a relationship with the U.S. as a citizen, resident,
or otherwise;

 

 

·        
 having had such a relationship in the past; or

·        
 being considered as having had such a relationship.

(2) Additional amounts will not be payable if a
payment on the Junior Subordinated Debentures is reduced as a result of any
tax, assessment or other governmental charge that is imposed or withheld solely
by reason of the beneficial owner:

·        
 being treated as present in or engaged in a trade or business in
the U.S.;

·        
 being treated as having been present in or engaged in a trade or
business in the U.S. in the past; or

·        
 having or having had a permanent establishment in the U.S.

(3) Additional amounts will not be payable if a
payment on the Junior Subordinated Debentures is reduced as a result of any
tax, assessment or other governmental charge that is imposed or withheld solely
by reason of the beneficial owner being or having been a:

·        
 personal holding company;

·        
 foreign private foundation or other foreign tax-exempt
organization;

·        
 passive foreign investment company;

·        
 controlled foreign corporation; or

·        
 corporation that has accumulated earnings to avoid
U.S. federal income tax.

(4) Additional amounts will not be payable if a
payment on the Junior Subordinated Debentures is reduced as a result of any
tax, assessment or other governmental charge that is imposed or withheld solely
by reason of the beneficial owner owning or having owned, actually or
constructively, 10% or more of the total combined voting power of all classes
of our stock entitled to vote.

(5) Additional amounts will not be payable if a
payment on the Junior Subordinated Debentures is reduced as a result of any
tax, assessment or other governmental charge that is imposed or withheld solely
by reason of the beneficial owner being a bank (i) purchasing Junior
Subordinated Debentures in the ordinary course of its lending business or
(ii) that is neither (A) buying the Junior Subordinated Debentures
for investment purposes only nor (B) buying the Junior Subordinated Debentures
for resale to a third-party that either is not a bank or holding the Junior
Subordinated Debentures for investment purposes only.

For purposes of items (1) through (5) above,
“beneficial owner” includes a fiduciary, settlor, partner, member, shareholder
or beneficiary of the holder if the holder is an estate, trust, partnership,
limited liability company, corporation or other entity, or a person holding a
power over an estate or trust administered by a fiduciary holder.

(6) Additional amounts will not be payable to any
beneficial owner of a Junior Subordinated Debenture that is:

·        
 a fiduciary;

 

 

·        
 a partnership;

·        
 a limited liability company;

·        
 another fiscally transparent entity; or

·        
 not the sole beneficial owner of the Junior Subordinated
Debenture, or any portion of the Junior Subordinate Debenture.

However, this exception to the obligation to pay
additional amounts will apply only to the extent that a beneficiary or settlor
in relation to the fiduciary, or a beneficial owner, partner, or member of the
partnership, limited liability company or other fiscally transparent entity,
would not have been entitled to the payment of an additional amount had the
beneficiary, settlor, beneficial owner, partner, or member received directly
its beneficial or distributive share of the payment.

(7) Additional amounts will not be payable if a
payment on the Junior Subordinated Debentures is reduced as a result of any
tax, assessment or other governmental charge that is imposed or withheld by
reason of the failure of the beneficial owner or any other person to comply
with applicable certification, identification, documentation or other
information reporting requirements. This exception to the obligation to pay
additional amounts will apply only if compliance with these reporting
requirements is required as a precondition to exemption from such tax,
assessment or other governmental charge by statute or regulation of the
U.S. or by an applicable income tax treaty to which the U.S. is a party.

(8) Additional amounts will not be payable if a
payment on the Junior Subordinated Debentures is reduced as a result of any
tax, assessment or other governmental charge that is collected or imposed by
any method other than by withholding from a payment on the applicable Junior
Subordinated Debentures by us or any withholding agent (within the meaning of
the applicable rules).

(9) Additional amounts will not be payable if a
payment on the Junior Subordinated Debentures is reduced as a result of any
tax, assessment or other governmental charge that is imposed or withheld by
reason of the presentation by the beneficial owner for payment more than
30 days after the date on which such payment becomes due or is duly
provided for, whichever occurs later.

(10) Additional amounts will not be payable if a
payment on the Junior Subordinated Debentures is reduced as a result of any:

·        
 estate tax;

·        
 inheritance tax;

·        
 gift tax;

·        
 sales tax;

·        
 excise tax;

·        
 transfer tax;

·        
 wealth tax;

·        
 personal property tax; or

 

 

·        
 similar tax, assessment, withholding, deduction or other
governmental charge.

(11) Additional amounts will not be payable if a
payment on the Junior Subordinated Debentures is reduced as a result of any
tax, assessment or other governmental charge required to be withheld by any
withholding agent (within the meaning of the applicable rules) from a payment
of principal or interest on the Junior Subordinated Debentures if that payment
can be made without such withholding by any other withholding agent.

(12) Additional amounts will not be payable if a
payment on the Junior Subordinated Debentures is reduced as a result of any
tax, assessment or other governmental charge that is required to be made
pursuant to any EU Directive on the taxation of savings income or any law implementing
or complying with, or introduced to conform to, any such Directive.

(13) Additional amounts will not be payable if a
payment on the Junior Subordinated Debentures is reduced as a result of any
combination of items (1) through (12) above.

As used in this section the term “non U.S. person”
means any person who, for U.S. federal income tax purposes is:

·        
 a nonresident alien individual;

·        
 a foreign corporation;

·        
 a foreign partnership, one or more of the members of which, for
U.S. federal income tax purposes, is a foreign corporation, a nonresident
alien individual or a nonresident alien fiduciary of a foreign estate or
trust; or

·        
 a nonresident alien fiduciary of an estate or trust that is not
subject to U.S. federal income tax on a net income basis on income or gain
from a Junior Subordinated Debenture.

Events of Default

The following events are “events of default” with
respect to each series of Junior Subordinated Debentures:

·        
 default in the payment of interest, including compounded interest,
in full on such series of Junior Subordinated Debenture for a period of 30 days
after the conclusion of a 10-year period following the commencement
of any deferral period; or

·        
 default in the payment of the principal on such series of Junior
Subordinated Debenture at the final maturity date or upon a call for
redemption; or

·        
 certain events of bankruptcy, insolvency and reorganization
involving AIG.

Remedies If an Event of Default Occurs

All remedies available upon the occurrence of an event
of default under the junior debt indenture will be subject to the restrictions
described below under “Subordination.” If an event of default occurs, the
indenture trustee will have special duties. In that situation, the indenture
trustee will be obligated to use its rights and powers under the junior debt indenture,
and to use the same degree of care and skill in doing so, that a prudent person
would use in that situation in conducting his or her own affairs. If an event 

 

 

of default of the type described in the first bullet
point in the definition of that term has occurred and has not been cured, the
indenture trustee or the holders of at least 25% in principal amount of
the applicable series of Junior Subordinated Debentures may declare the
entire principal amount of all the then outstanding Junior Subordinated
Debentures of such series to be due and immediately payable. This is called a
declaration of acceleration of maturity. If an event of default described in
the third bullet point in the definition has occurred, the principal amount of
all then outstanding Junior Subordinated Debentures will immediately become due
and payable. In the case of any other default or breach of the Junior
Subordinated Indenture by AIG, including an event of default under the second
bullet point in the definition of that term, there is no right to declare the
principal amount of the applicable series of Junior Subordinated Debentures
immediately due and payable.

The holders of a majority in aggregate outstanding
principal amount of each series of Junior Subordinated Debentures may, on
behalf of the holders of such series of Junior Subordinated Debentures,
waive any default or event of default, except an event of default under the
second or third bullet point above or a default with respect to a covenant or
provision which under the Junior Subordinated Indenture cannot be modified or
amended without the consent of the holder of the applicable outstanding Junior
Subordinated Debenture.

Except in cases of an event of default, where the
indenture trustee has the special duties described above, the indenture trustee
is not required to take any action under the junior debt indenture at the
request of any holders unless the holders offer the indenture trustee
reasonable protection from expenses and liability called an indemnity. If
indemnity reasonably satisfactory to the indenture trustee is provided, the
holders of a majority in principal amount of the applicable series of
outstanding Junior Subordinated Debentures may direct the time, method and
place of conducting any lawsuit or other formal legal action seeking any remedy
available to the indenture trustee. These majority holders may also direct the
indenture trustee in performing any other action under the Junior Subordinated
Indenture with respect to the applicable series of Junior Subordinated
Debentures.

Before holders bypass the indenture trustee and bring
their own lawsuit or other formal legal action or take other steps to enforce
their rights or protect their interests under the Junior Subordinated
Indenture, the following must occur:

·        
 a holder of the applicable series of Junior Subordinated
Debentures must give the indenture trustee written notice that an event of
default has occurred and remains uncured;

·        
 the holders of 25% in principal amount of the applicable series of
Junior Subordinated Debentures must make a written request that the indenture
trustee take action because of the default, and they must offer reasonable
indemnity to the indenture trustee against the cost, expenses and liabilities
of taking that action; and

·        
 the indenture trustee must have not taken action for 60 days
after receipt of the above notice and offer of indemnity.

We will give to the indenture trustee every year a
written statement of certain of our officers certifying that to their knowledge
we are in compliance with the Junior Subordinated Indenture, or else specifying
any default.

 

 

Subordination

Holders of the Junior Subordinated Debentures should
recognize that contractual provisions in the junior debt indenture may prohibit
us from making payments on the Junior Subordinated Debentures. The Junior
Subordinated Debentures are subordinate and junior in right of payment, to the
extent and in the manner stated in the junior debt indenture, to all of our
senior debt, as defined in the Junior Subordinated Indenture.

The Junior Subordinated Indenture defines “senior debt”
as all indebtedness and obligations of, or guaranteed or assumed by, us:

·        
 for borrowed money;

·        
 evidenced by bonds, debentures, notes or other similar
instruments; and

·        
 that represent obligations to policyholders of insurance or
investment contracts

in each case, whether existing now or in the future,
and all amendments, renewals, extensions, modifications and refundings of any
indebtedness or obligations of that kind. Senior debt will also include: any
subordinated or junior subordinated debt that by its terms is not
expressly pari passu or subordinated to the Junior
Subordinated Debentures; all guarantees of securities issued by any trust,
partnership or other entity affiliated with us that is, directly or indirectly,
our financing vehicle; and intercompany debt. The Junior Subordinated
Debentures will rank pari passu with the outstanding parity
securities. The junior debt indenture does not restrict or limit in any way our
ability to incur senior debt. 

Senior debt excludes:

·        
 trade accounts payable and accrued liabilities arising in the
ordinary course of business; and

·        
 the outstanding parity securities and any other indebtedness,
guarantee or other obligation that is specifically designated as being subordinate,
or not superior, in right of payment to the Junior Subordinated Debentures.

As a result, except upon the occurrence of an event
described in the next paragraph, the Junior Subordinated Debentures will rank
equally with trade accounts payable and accrued liabilities.

The Junior Subordinated Indenture provides that,
unless all principal of and any premium or interest on the senior debt has been
paid in full, no payment or other distribution may be made with respect to any
Junior Subordinated Debentures in the following circumstances:

·        
 in the event of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization, assignment for creditors or other
similar proceedings or events involving us or our assets; or

·        
 any event of default with respect to any senior debt for borrowed
money having at the relevant time an aggregate outstanding principal amount of
at least $100 million has occurred and is continuing and has been
accelerated (unless the event of default has been cured or waived or ceased to
exist and such acceleration has been rescinded); or

 

 

·        
 in the event the Junior Subordinated Debentures have been declared
due and payable prior to March 15, 2067.

If the indenture trustee under the Junior Subordinated
Indenture or any holders of the Junior Subordinated Debentures receive any
payment or distribution that is prohibited under the subordination provisions,
then the indenture trustee or the holders will have to repay that money to the
holders of the senior debt.

The subordination provisions do not prevent the
occurrence of an event of default. This means that the indenture trustee under
the Junior Subordinated Indenture and the holders of the Junior Subordinated
Debentures can take action against us, but they will not receive any money
until the claims of the holders of senior debt have been fully satisfied.

Concerning the Trustee

The Bank of New York Mellon is the trustee under the
Junior Subordinated Indenture and also the paying agent and the transfer agent
and registrar for the Series A-9 Junior Subordinated Debentures. We have
entered, and from time to time may continue to enter, into banking or other relationships
with The Bank of New York Mellon or its affiliates. 

Payment and Paying Agents

The paying agent for the Junior Subordinated
Debentures will initially be the indenture trustee.

Notices 

We and the indenture trustee will send notices
regarding the Junior Subordinated Debentures only to holders, using their
addresses as listed in the indenture trustee’s records.

Governing Law

The Junior Subordinated Indenture and the Junior
Subordinated Debentures are be governed by, and construed in accordance with,
the laws of the State of New York.

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