New York — American International Group Inc. (AIG) has signed a definitive agreement with the Federal Reserve Bank of New York for a two-year, $85 billion revolving credit facility. Interest will accrue at a rate based on three-month London Interbank Offered Rate (LIBOR), plus 8.5%. The facility provides for an initial gross commitment fee of 2% of the total facility on the closing date. AIG also will pay a commitment fee on undrawn amounts at the rate of 8.5% per annum. Interest and the commitment fees are generally payable through an increase in the outstanding balance under the facility.

AIG is required to repay the facility from, among other things, the proceeds of certain asset sales and issuances of debt or equity securities. These mandatory repayments permanently reduce the amount available to be borrowed under the facility. Under the agreement, AIG will issue a new series of Convertible Participating Serial Preferred Stock to a trust that will hold the Preferred Stock for the benefit of the United States Treasury. The Preferred Stock will be entitled to participate in any dividends paid on the common stock, with the payments attributable to the Preferred Stock being approximately, but not in excess of, 79.9% of the aggregate dividends paid. The Preferred Stock will vote with the common stock on all matters, and will hold approximately, but not in excess of, 79.9% of the aggregate voting power. The Preferred Stock will be convertible into common stock following a special shareholders meeting to amend AIG's restated certificate of incorporation.

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