AIG 2009 Annual Report Download - page 30

American International Group, Inc., and Subsidiaries
established under the AIG Credit Facility Trust Agreement dated as of January 16, 2009 (as it may be amended from
time to time, the Trust Agreement). The AIG Series C Preferred Stock is entitled to:
• participate in any dividends paid on AIG’s Common Stock, with the payments attributable to the AIG Series C
Preferred Stock being approximately 79.8 percent of the aggregate dividends paid on AIG’s Common Stock,
treating the AIG Series C Preferred Stock as converted; and
• to the extent permitted by law, vote with AIG’s Common Stock on all matters submitted to AIG’s shareholders
and hold approximately 79.8 percent of the aggregate voting power of AIG’s Common Stock, treating the AIG
Series C Preferred Stock as converted.
The AIG Series C Preferred Stock will remain outstanding even if the FRBNY Credit Facility is repaid in full or
otherwise terminates. In addition, upon shareholder approval and the filing with the Delaware Secretary of State of
certain amendments to AIG’s Amended and Restated Certificate of Incorporation, the Trust will be able to convert at
its option all or a portion of the AIG Series C Preferred Stock into shares of AIG’s Common Stock.
As a result of its ownership of the AIG Series C Preferred Stock, the Trust is able, subject to the terms of the Trust
Agreement and the AIG Series C Preferred Stock, to elect all of AIG’s directors and will be able, to the extent
permitted by law, to control the vote on substantially all matters, including:
• approval of mergers or other business combinations;
• a sale of all or substantially all of AIG’s assets;
• issuance of any additional common stock or other equity securities; and
• other matters that might be favorable to the United States Treasury, but not to AIG’s other shareholders.
Moreover, the Trust’s ability to cause or prevent a change in control of AIG could also have an adverse effect on the
market price of AIG’s Common Stock.
The Trust may also, subject to the terms of the Trust Agreement and applicable securities laws, transfer all, or a
portion of, the AIG Series C Preferred Stock to another person or entity and, in the event of such a transfer, that
person or entity could become the controlling shareholder.
Possible future sales of AIG Series C Preferred Stock or common stock by the Trust could adversely affect the market for
AIG Common Stock. Pursuant to the AIG Series C Preferred Stock Purchase Agreement, dated as of March 1, 2009
(the AIG Series C Preferred Stock Purchase Agreement), between the Trust and AIG, AIG has agreed to file a shelf
registration statement that will allow the Trust to publicly sell AIG Series C Preferred Stock or any shares of AIG’s
Common Stock it receives upon conversion of the AIG Series C Preferred Stock. In addition, the Trust could sell AIG
Series C Preferred Stock or shares of AIG’s Common Stock without registration under certain circumstances, such as
in a private transaction. Although AIG can make no prediction as to the effect, if any, that such sales would have on
the market price of AIG’s Common Stock, sales of substantial amounts of AIG Series C Preferred Stock or AIG’s
Common Stock, or the perception that such sales could occur, could adversely affect the market price of AIG’s
Common Stock. If the Trust sells or transfers shares of AIG Series C Preferred Stock or AIG’s Common Stock as a
block, another person or entity could become AIG’s controlling shareholder.
Market Conditions
AIG’s businesses, consolidated results of operations and financial condition have been and may continue to be materially
and adversely affected by market conditions. AIG’s businesses are highly dependent on the business environment in
which they operate. In 2008 and through early 2009, the significant deterioration in worldwide economic conditions
materially and adversely affected AIG’s businesses. The global financial crisis resulted in a serious lack of liquidity,
highly volatile markets, a steep depreciation in asset values across all classes, an erosion of investor and public
confidence, a widening of credit spreads, a lack of price transparency in many markets and the collapse or merger of
several prominent financial institutions. Difficult economic conditions also resulted in increased unemployment and a
severe decline in business activity across a wide range of industries and regions. While the markets and the business
AIG 2009 Form 10-K 22