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EXHIBIT 4(l)
TERMS OF THE _______________________________ PREFERRED SECURITIES, SERIES A
DATED AS OF ______________, 1995
WRITTEN ACTION OF THE MANAGING MEMBER
PURSUANT TO SECTION 7.1 OF THE AMENDED
AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
OF AMERICAN GENERAL DELAWARE, L.L.C.
The undersigned Managing Member of American General Delaware, L.L.C.,
a Delaware limited liability company (the "Company"), pursuant to Section
7.1(b) of the Amended and Restated Limited Liability Company Agreement of the
Company (the "Agreement") dated as of ________________, 1995 by and among
American General Corporation ("American General"), the Managing Member and the
Persons who become Members of the Company in accordance with the provisions
thereof, does hereby authorize the issue of, and establish the relative rights,
powers, preferences, limitations and restrictions of, a series of Preferred
Securities as follows:
1. Definitions. All terms defined in the Agreement and not
otherwise defined herein shall have for purposes hereof the meanings provided
for therein. The following additional terms have the respective meanings
specified below:
"Additional Dividends" means the amount of dividends that is
payable by the Company on any dividend arrearages in respect of the Series A
Preferred Securities at the rate of ___% per annum compounded monthly.
"American General Common Stock" means the Common Stock, par
value $.50 per share, of American General. However, subject to the
anti-dilution provisions of the Series A Debentures, shares of American General
Common Stock issuable on conversion of Series A Debentures or upon exchange of
the American General Preferred Stock shall include only shares of the class
designated as Common Stock of American General on the date hereof or shares of
any class or classes resulting from any reclassification or reclassifications
thereof and which have no preference as to the payment of dividends or the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding-up of American General and which are not subject to
redemption by American General; provided, that if at any time there shall be
more than one such resulting class, the shares of each such class then so
issuable shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassification bears to the
total number of shares of all such classes resulting from all such
reclassification.
"American General Preferred Stock" means the Series A
Cumulative Convertible Preferred Stock, par value $1.50 per share, of American
General with such terms and provisions as set forth in the Restated Articles of
Incorporation, as amended, and in the applicable Statement of Resolution
Establishing a Series of Shares.
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"Book-Entry Interest" means a beneficial interest in the
global certificates representing Series A Preferred Securities, ownership and
transfers of which shall be made through the book-entry system of a Clearing
Agency as described in Section 12.
"Business Day" means any day other than a Saturday, Sunday or
other day on which banking institutions in The City of New York are authorized
or obligated by law or executive order to close.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended, that is acting as depositary for the Series A Preferred
Securities and in whose name (or nominee's name) shall be registered one or
more global certificates representing Series A Preferred Securities and which
shall undertake to effect book-entry transfers and pledges of interests in the
Series A Preferred Securities.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of interests in
securities deposited with the Clearing Agency.
"Conversion Agent" has the meaning set forth in Section 8(c)
hereof.
"Conversion Date" has the meaning set forth in Section 8(b)
hereof.
"Conversion Expiration Date" has the meaning set forth in
Section 8(d)(ii) hereof.
"Conversion Price" has the meaning set forth in Section 8(a)
hereof.
"Current Market Price" of shares of American General Common
Stock for any day means the last reported sale price, regular way, on such day,
or, if no sale takes place on such day, the average of the reported closing bid
and asked prices on such day, regular way, in either case as reported on the
NYSE Composite Tape, or, if the American General Common Stock is not listed or
admitted to trading on the NYSE, on the principal national securities exchange
on which the American General Common Stock is listed or admitted to trading, or
if the American General Common Stock is not listed or admitted to trading on a
national securities exchange, on the National Market System of the National
Association of Securities Dealers, Inc., or, if the American General Common
Stock is not quoted or admitted to trading on such quotation system, on the
principal quotation system on which the American General Common Stock is listed
or admitted to trading or quoted, or, if not listed or admitted to trading or
quoted on any national securities exchange or quotation system, the average of
the closing bid and asked prices of the American General Common Stock in the
over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similar generally accepted reporting
service, or, if not so available in such manner, as furnished by any NYSE
member firm selected from time to time by the Board of Directors of American
General for that purpose or, if
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not so available in such manner, as otherwise determined in good faith by such
Board of Directors.
"Dividend Payment Date" has the meaning set forth in Section
4(b) hereof.
"Exchange Election" has the meaning set forth in Section 9(c)
hereof.
"Exchange Event" has the meaning set forth in Section 9(b)
hereof.
"Exchange Price" means one share of American General Preferred
Stock for each $_____ principal amount of Series A Debentures.
"Guarantee" means the Guarantee Agreement dated as of
_____________, 1995, executed and delivered by American General for the benefit
of the holders from time to time of the Series A Preferred Securities and other
Preferred Securities of the Company, as amended from time to time.
"Holders" means the registered holders of the Series A
Preferred Securities as they appear on the books and records of the Company.
"Investment Company Event" means that a change in any
applicable United States law or regulation or in the interpretation thereof
(including but not limited to the enactment or imminent enactment of any
legislation, the publication of any judicial decisions, regulatory rulings,
regulatory procedures, or notices or announcements (including notices or
announcements of intent to adopt such procedures or regulations), or a change
in the official position or the interpretation of any law or regulation by any
legislative body, court, governmental authority or regulatory body,
irrespective of the manner in which such change is made known) shall have
occurred after ______________, 1995, and that the Company or American General
shall have received an opinion of nationally recognized independent legal
counsel experienced in practice under the Investment Company Act of 1940, as
amended (the "1940 Act"), that, as a result of such change, there exists more
than an insubstantial risk that the Company is or will be considered an
"investment company" which is required to be registered under the 1940 Act.
"Liquidation Distribution" has the meaning set forth in
Section 7 hereof.
"Notice of Conversion" has the meaning set forth in Section
8(b) hereof.
"Notice of Conversion Expiration" has the meaning set forth in
Section 8(d)(iii) hereof.
"Notice of Exchange" has the meaning set forth in Section 6(a)
hereof.
"Notice of Exchange Election" has the meaning set forth in
Section 9(a) hereof.
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"Notice of Redemption" has the meaning set forth in Section
6(a) hereof.
"NYSE" means the New York Stock Exchange, Inc.
"Press Release" has the meaning set forth in Section 8(d)(ii)
hereof.
"Redemption Price" has the meaning set forth in Section 5(a)
hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Debentures" means the $__________ aggregate
principal amount (or up to $__________ aggregate principal amount if and to the
extent the over-allotment option granted by the Company to the underwriters of
the Series A Preferred Securities is exercised) of American General's ___%
Series A Convertible Junior Subordinated Debentures due 2025 issued pursuant to
the Indenture and sold by American General to the Company in connection with
the issuance and sale by the Company of the Series A Preferred Securities.
"Series A Preferred Securities" has the meaning set forth in
Section 2 hereof.
"Tax Event" means that a change in any applicable United
States law or regulation or in the interpretation thereof (including but not
limited to the enactment or imminent enactment of any legislation, the
publication of any judicial decisions, regulatory rulings, regulatory
procedures, or notices or announcements (including notices or announcements of
intent to adopt such procedures or regulations), or a change in the official
position or the interpretation of any law or regulation by any legislative
body, court, governmental authority or regulatory body, irrespective of the
manner in which such change is made known) shall have occurred after
____________, 1995, and that the Company or American General shall have
received an opinion of nationally recognized independent legal counsel
experienced in such matters that, as a result of such change, there exists more
than an insubstantial risk that (i) the Company will be subject to federal
income tax with respect to the interest received on the Series A Debentures,
(ii) American General will be precluded from deducting the interest paid on the
Series A Debentures for federal income tax purposes or (iii) the Company will
be subject to more than a de minimis amount of other taxes, duties or other
governmental charges.
"Trading Day" means, with respect to any security listed or
admitted to trading on the NYSE, any day on which such securities are traded on
the NYSE, or, if such security is not listed or admitted to trading on the
NYSE, on the principal national securities exchange on which such security is
listed or admitted to trading, or, if such security is not listed or admitted
to trading on a national securities exchange, on the National Market System of
the National Association of Securities Dealers, Inc., or, if such security is
not quoted or admitted to trading on such quotation system, on the principal
quotation system on which such security is listed or admitted to trading or
quoted, or, if not listed or admitted to trading or quoted on any national
securities exchange or quotation system, in the over-the-counter market.
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2. Designation. A total of ______________ Preferred Securities,
Series A (or up to ________________________ of a series of
__________________________ Preferred Securities, Series A if and to the extent
the over-allotment option granted by the Company to the related underwriters is
exercised) with a liquidation preference of $________ per Preferred Security
are hereby authorized and designated as "___________________________________
Preferred Securities, Series A" (collectively, the "Series A Preferred
Securities").
3. Voting. Except as otherwise provided in the Delaware Limited
Liability Company Act, 6 Del. C. Section 18-101, et seq., as amended, the
Agreement (including, without limitation, Section 8.1 thereof) or this Written
Action, Preferred Members holding the Series A Preferred Securities shall have,
with respect to such Series A Preferred Securities, no right or power to vote
on any question or matter or in any proceeding or to be represented at, or to
receive notice of, any meeting of Members.
4. Dividends. (a) The Holders shall be entitled to receive,
when, as and if declared by the Company out of funds legally available
therefor, cumulative cash dividends at a rate per annum of ____% of the
liquidation preference of $______ per Series A Preferred Security. The amount
of dividends payable for a full monthly dividend period shall be computed on
the basis of a 360-day year consisting of 12 months of 30 days each, and for
any period shorter than a full monthly dividend period, shall be computed on
the basis of the actual number of days elapsed in such period. Dividends shall
accrue from _________________, 1995, and shall be payable in United States
dollars monthly in arrears on the last day of each calendar month of each year,
commencing _________________, 1995. Dividends shall accrue and be cumulative
whether or not they have been earned or declared and whether or not there are
funds of the Company legally available for the payment of dividends. Upon any
dividend arrearages in respect of the Series A Preferred Securities, the
Company shall declare and pay Additional Dividends in order to provide, in
effect, monthly compounding on such dividend arrearages at a rate of ____% per
annum compounded monthly and such Additional Dividends shall accumulate. In
the event that any date on which dividends are payable on the Series A
Preferred Securities is not a Business Day, then payment of the dividend
payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
(b) Dividends on the Series A Preferred Securities must
be declared monthly and be paid on the last day of each calendar month (each a
"Dividend Payment Date") to the extent that the Company has, on such date, (x)
funds legally available for the payment of such dividends and (y) cash on hand
sufficient to make such payments, it being understood that to the extent that
funds are not available to pay in full all accumulated and unpaid dividends,
the Company may pay partial dividends to the extent of funds legally available
therefor. For purposes of this Section 4(b), net interest and investment
income from Eligible Investments shall be considered funds available for the
payment of dividends; provided, however, that the principal amount of Eligible
Investments shall not be available as distributions as dividends or otherwise
except in connection with a Liquidation
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Distribution pursuant to Section 15.4 of the Agreement. Dividends will be
payable to the Holders as of the relevant record dates, which, if and so long
as the Series A Preferred Securities are represented by one or more global
certificates through the book-entry system of a Clearing Agency, will be one
Business Day prior to the related Dividend Payment Dates. In the event that
the Series A Preferred Securities shall not continue to be so represented, the
Managing Member shall have the right to select relevant record dates that are
more than one Business Day prior to the related Dividend Payment Dates. In
addition, if American General has extended an interest payment period with
respect to the Series A Debentures pursuant to the Indenture, thereby resulting
in the deferral of the payment of dividends on the Series A Preferred
Securities, the Managing Member shall notify the Holders in writing as to such
extended interest payment period no later than the last date on which notice
would be required to be given to the NYSE of the related record date or
Dividend Payment Date.
(c) In the event of an election by a Holder to convert
its Series A Preferred Securities through the Conversion Agent into American
General Common Stock pursuant to Section 8 hereof, neither American General nor
the Company shall make, or be required to make, any payment, allowance or
adjustment with respect to accumulated and unpaid dividends, whether or not in
arrears, on such converted Series A Preferred Securities, except that Holders
at the close of business on a record date for the payment of dividends on the
Series A Preferred Securities will be entitled to receive the dividend payable
on such Series A Preferred Securities on the related Dividend Payment Date
notwithstanding the conversion of such Series A Preferred Securities into
American General Common Stock following such record date but prior to such
Dividend Payment Date.
5. Redemption and Exchange. (a) If at any time following the
Conversion Expiration Date, less than ten percent (10%) of the aggregate number
of Series A Preferred Securities issued hereunder remains outstanding, such
Series A Preferred Securities shall be redeemable at the option of the Company
(subject to the prior consent of American General), in whole but not in part,
at a cash redemption price equal to the liquidation preference for such Series
A Preferred Securities plus accumulated and unpaid dividends (whether or not
earned or declared), including any Additional Dividends, to the date fixed for
redemption thereof (the "Redemption Price"). American General shall have the
right to cause the Company to exercise such redemption option.
(b) Upon repayment by American General of the principal
of the Series A Debentures at stated maturity, earlier redemption or otherwise,
including as a result of the acceleration of the Series A Debentures upon the
occurrence of an Event of Default under the Indenture with respect to the
Series A Debentures, the Series A Preferred Securities shall be subject to
mandatory redemption, in whole but not in part, by the Company, and the
proceeds from such repayment shall be applied to redeem the Series A Preferred
Securities at the Redemption Price (unless such proceeds are used to fund the
aggregate Liquidation Distributions on the Series A Preferred Securities in
connection with the liquidation, dissolution or winding-up of the Company). In
case of such repayment, the Series A Preferred Securities will only be redeemed
when repayment of the Series A Debentures has actually been received by the
Company.
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(c) The Series A Preferred Securities shall be redeemable
at the option of the Company (subject to the prior consent of American
General), in whole or in part from time to time, on or after _____________,
2003 at the Redemption Price. The Company may not redeem the Series A
Preferred Securities in part unless all accumulated and unpaid dividends
(whether or not earned or declared), including any Additional Dividends, have
been paid in full on all Series A Preferred Securities for all monthly dividend
periods terminating on or prior to the date of redemption. American General
shall have the right to cause the Company to exercise such redemption option.
(d) At any time after the occurrence of a Tax Event or an
Investment Company Event, the Company (subject to the prior consent of American
General) may exchange, in whole but not in part, the Series A Preferred
Securities for Series A Debentures having an aggregate principal amount and
accrued and unpaid interest equal to the Redemption Price. Upon any such
exchange, American General will use its best efforts to have the Series A
Debentures listed on the NYSE or, if the Series A Preferred Securities are not
then listed on the NYSE, such other exchange on which the Series A Preferred
Securities may then be listed. American General shall have the right to cause
the Company to exercise its right to effect any such exchange for Series A
Debentures.
(e) Subject to applicable law, American General or its
subsidiaries may at any time and from time to time purchase outstanding Series
A Preferred Securities by tender, in the open market or otherwise.
6. Redemption and Exchange Procedures. (a) Notice of any
redemption (optional or mandatory) of the Series A Preferred Securities (a
"Notice of Redemption") and notice of any exchange of the Series A Preferred
Securities for Series A Debentures (a "Notice of Exchange") shall be irrevocable
and shall be given by the Company by mail not fewer than 30 nor more than 60
calendar days prior to the date fixed for redemption or exchange thereof to
American General and (i) with respect to a Notice of Redemption, to each Holder
of Series A Preferred Securities that are being redeemed and (ii) with respect
to a Notice of Exchange, to each Holder of Series A Preferred Securities. For
purposes of the calculation of the date of redemption or exchange and the dates
on which notices are given pursuant to this Section 6(a), a Notice of Redemption
or Notice of Exchange shall be deemed to be given on the day such notice is
first mailed by first-class mail, postage prepaid, to each appropriate Holder of
Series A Preferred Securities. A Notice of Redemption or Notice of Exchange
shall be addressed to each appropriate Holder of Series A Preferred Securities
at the address of such Holder appearing in the books and records of the Company.
If all of the Series A Preferred Securities are represented by Book-Entry
Interests, Notices of Redemption or Notices of Exchange shall be sent to the
Clearing Agency. No defect in the Notice of Redemption or Notice of Exchange or
in the mailing thereof with respect to any Series A Preferred Security shall
affect the validity of the redemption or exchange proceedings with respect to
any other Series A Preferred Security.
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(b) If the Company issues a Notice of Redemption, then,
by 12:00 noon, New York time, on the date fixed for redemption, American
General will repay to the Company an aggregate principal amount of the Series A
Debentures, which, together with accrued and unpaid interest thereon, will be
an amount sufficient to pay the Redemption Price for the Series A Preferred
Securities to be redeemed. If the Series A Preferred Securities are
represented by Book-Entry Interests, the Company shall irrevocably deposit such
funds on the date fixed for redemption with the Clearing Agency and give the
Clearing Agency irrevocable instructions and authority to pay the Redemption
Price to the Holders of the Series A Preferred Securities to be redeemed, and
if the Series A Preferred Securities are not represented by Book-Entry
Interests, the Company shall irrevocably deposit such funds with the paying
agent for the Series A Preferred Securities and give such paying agent such
irrevocable instructions and authority to pay the Redemption Price to the
Holders of the Series A Preferred Securities to be redeemed. If a Notice of
Redemption shall have been given and funds irrevocably deposited as required,
then immediately prior to the close of business on the date of such deposit,
all rights of the Holders of such Series A Preferred Securities so called for
redemption will cease, except the right of such Holders to receive the
Redemption Price, but without additional interest from and after such
redemption date. In the event that any date fixed for redemption of Series A
Preferred Securities is not a Business Day, then payment of the Redemption
Price payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day. In the event
that payment of the Redemption Price is improperly withheld or refused and not
paid either by the Company or by American General (pursuant to the Guarantee),
dividends on the Series A Preferred Securities called for redemption (including
any Additional Dividends) will continue to accumulate at the then applicable
rate, from the original redemption date to the date that the Redemption Price
is actually paid and the Holders of such Series A Preferred Securities may
exercise all of their rights as Holders thereof.
(c) If the Company issues a Notice of Exchange, then
following the date fixed for the exchange of Series A Preferred Securities for
Series A Debentures (as set forth in the Notice of Exchange), (i) the Series A
Preferred Securities will no longer be deemed to be outstanding, (ii)
certificates representing Series A Debentures will be issued to holders of
certificates representing Series A Preferred Securities, upon surrender of such
certificates to the Company or its agent for exchange, (iii) any certificates
representing Series A Preferred Securities not so surrendered for exchange will
be deemed to represent Series A Debentures having a principal amount and
accrued and unpaid interest equal to the Redemption Price of such Series A
Preferred Securities until such certificates are so surrendered (and until such
certificates are so surrendered, no payments of interest or principal will be
made with respect to such Series A Debentures) and (iv) all rights of Holders
of Series A Preferred Securities will cease, except the right of such Holders
to receive Series A Debentures upon surrender of certificates representing
Series A Preferred Securities.
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7. Liquidation Rights. In the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company (other than
in connection with the exchange of the Series A Preferred Securities for the
Series A Debentures as set forth in Section 5(d) or for American General
Preferred Stock as set forth in Section 9), the Holders of Series A Preferred
Securities then outstanding will be entitled to receive out of the net assets
of the Company (including any Eligible Investments or amounts deposited in the
Eligible Investment Account) legally available for distribution to Members
after satisfaction of liabilities of creditors as required by the Delaware Act
but before any distribution of assets is made with respect to any Interest in
the Company ranking junior to the Series A Preferred Securities as to the
distribution of assets upon such liquidation, dissolution or winding-up, but
together with Preferred Members holding Preferred Securities or any other
Interests in the Company then outstanding ranking pari passu with the Series A
Preferred Securities as to the distribution of assets upon such liquidation,
dissolution or winding-up, an amount equal to the aggregate of the liquidation
preference of $______ per Series A Preferred Security plus all accumulated and
unpaid Dividends (whether or not earned or declared), including any Additional
Dividends, to the date of payment (the "Liquidation Distribution"). A merger,
consolidation, replacement, conveyance, transfer or lease in accordance with
the provisions of Section 2.8 of the Agreement shall not be deemed to be a
liquidation, dissolution or winding-up of the Company for purposes of this
Section 7.
8. Conversion Rights. The Holders of Series A Preferred
Securities shall have the right, at their option, at any time before the close
of business on the Conversion Expiration Date, to cause the Conversion Agent to
convert Series A Preferred Securities, on behalf of the converting Holders,
into shares of American General Common Stock in the manner described herein and
subject to the following terms and conditions:
(a) The Series A Preferred Securities will be convertible
at the office of the Conversion Agent into validly issued, fully paid and
nonassessable shares of American General Common Stock pursuant to the Holder's
direction to the Conversion Agent (i) to exchange such Series A Preferred
Securities for a portion of the Series A Debentures theretofore held by the
Company on the basis of one Series A Preferred Security per $______ principal
amount of the Series A Debentures, and (ii) to immediately convert such amount
of Series A Debentures into validly issued, fully paid and nonassessable shares
of American General Common Stock at an initial conversion rate of ___ shares of
American General Common Stock per $______ principal amount of Series A
Debentures (equivalent to a conversion price of $______ per share of American
General Common Stock), subject to those adjustments set forth in the terms of
the Series A Debentures (as so adjusted, "Conversion Price").
(b) In order to convert Series A Preferred Securities
into American General Common Stock as contemplated in Section 8(a) hereof, a
Holder shall surrender the Series A Preferred Securities to be converted to the
Conversion Agent, together with an irrevocable notice of conversion (i) setting
forth the number of Series A Preferred Securities to be converted and the name
or names, if other than the Holder, in which the shares of American General
Common Stock and of any Series A Preferred Securities not to be so converted
are to be issued (subject to compliance with applicable legal
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requirements if any of such certificates are to be issued in a name other than
the name of the Holder), (ii) directing the Conversion Agent (a) to exchange
such Series A Preferred Securities for a portion of the Series A Debentures
held by the Company (at the rate of exchange specified in Section 8(a) hereof)
and (b) to immediately convert such Series A Debentures, on behalf of such
Holder, into American General Common Stock (at the Conversion Price specified
in Section 8(a) hereof) and (iii) setting forth the address or addresses to
which such Holder wishes delivery to be made of such certificate or
certificates for American General Common Stock to be issued upon such
conversion (the "Notice of Conversion"). Holders may obtain copies of the
required form of the Notice of Conversion from the Conversion Agent. If the
Notice of Conversion is received by the Conversion Agent before the close of
business on the Conversion Expiration Date, the Conversion Agent shall notify
the Company of the Holder's election to exchange Series A Preferred Securities
for a portion of the Series A Debentures held by the Company and the Company
shall, upon receipt of such notice, deliver to the Conversion Agent the
specified principal amount of Series A Debentures for conversion in accordance
with this Section 8. The Conversion Agent shall thereupon notify American
General of the Holder's election to convert such Series A Debentures into the
specified number of shares of American General Common Stock. Series A
Preferred Securities shall be deemed to have been converted immediately prior
to the close of business on the day on which a Notice of Conversion relating to
such Series A Preferred Securities is received by the Conversion Agent in
accordance with the foregoing provision (the "Conversion Date"). The Person or
Persons entitled to receive the American General Common Stock issuable upon
conversion of the Series A Debentures shall be treated for all purposes as the
record holder or holders of such American General Common Stock at such time.
No fractional shares of American General Common Stock will be issued as a
result of conversion, but in lieu thereof such fractional interest will be paid
in cash by American General. As promptly as practicable on or after the
Conversion Date, American General shall issue and deliver at the office of the
Conversion Agent a certificate or certificates for the number of full shares of
American General Common Stock issuable upon such conversion, together with the
cash payment, if any, in lieu of any fractional share of American General
Common Stock, whereupon the Conversion Agent shall distribute such certificate
or certificates and cash payment, if any, to the Person or Persons entitled to
receive the same at the address or addresses specified in the Notice of
Conversion.
(c) Each Holder of a Series A Preferred Security by his
acceptance thereof appoints the transfer agent for the Series A Preferred
Securities as "Conversion Agent" for the purpose of effecting the conversion of
Series A Preferred Securities in accordance with this Section 8 and the
exchange of Series A Preferred Securities for American General Preferred Stock
in accordance with Section 9 hereof. In effecting the conversion and exchange
transactions described in this Section 8 and Section 9 hereof, the Conversion
Agent shall be acting as agent of the Holders of Series A Preferred Securities
directing it to effect such conversion or exchange transactions. The
Conversion Agent is hereby authorized (i) to exchange Series A Preferred
Securities from time to time for Series A Debentures held by the Company in
connection with the conversion or exchange of such Series A Preferred
Securities in accordance with this Section 8 and Section 9 hereof, (ii) to
convert all or a portion of the Series A Debentures into American General
Common Stock
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and thereupon to deliver such shares of American General Common Stock, all in
accordance with the provisions of this Section 8, and to deliver to the Company
a new Series A Debenture or Debentures for any resulting unconverted principal
amount and (iii) to exchange all of the Series A Debentures for shares of
American General Preferred Stock and thereupon to deliver such shares of
American General Preferred Stock, all in accordance with the provisions of
Section 9 hereof.
(d) (i) On and after ________________, 1999, the Company
shall have the right, at its option, to cause the conversion rights of
Holders of the Series A Preferred Securities set forth in this Section
8 to expire if (x) the Company shall have paid in full all accumulated
and unpaid dividends (whether or not earned or declared), including any
Additional Dividends, on all of the Series A Preferred Securities for
all dividend periods terminating on or prior to such date and (y) for
20 Trading Days within any period of 30 consecutive Trading Days,
including the last Trading Day of such period, the Current Market Price
of the American General Common Stock on each of such 20 Trading Days
shall have exceeded 120% of the Conversion Price in effect on such
Trading Day. American General shall have the right to cause the
Company to exercise such conversion expiration option.
(ii) In order to exercise its option to cause the
conversion rights of Holders to expire, the Company must issue a press
release for publication on the Dow Jones News Service (the "Press
Release") prior to the opening of business on the second Trading Day
after any period in which the conditions in Section 8(d)(i) have been
met, which shall state that the Company has elected to exercise its
right to extinguish the conversion rights of Holders of Series A
Preferred Securities, specify the Conversion Expiration Date and
provide the Conversion Price and the Current Market Price of the
American General Common Stock, in each case as of the close of
business on the Trading Day next preceding the date of the Press
Release. If the Company exercises the option described in this
Section 8(d), the "Conversion Expiration Date" shall be the close of
business on a date selected by the Company which shall be not less
than 30 or more than 60 calendar days after the date on which the
Company issues the Press Release; provided, however, that if the
Company does not exercise the option described in this Section 8(d),
the "Conversion Expiration Date" with respect to any Series A
Preferred Securities called for redemption shall be the close of
business on the third Business Day prior to the scheduled date for
redemption pursuant to Section 5 hereof.
(iii) In addition to the Press Release, notice of the
expiration of conversion rights of Holders of the Series A Preferred
Securities (a "Notice of Conversion Expiration") must be given by the
Company by first-class mail to each Holder of Series A Preferred
Securities not more than four Business Days after the Company issues
the Press Release. Each such mailed Notice of Conversion Expiration
shall state: (1) the Conversion Expiration Date; (2) the Conversion
Price of the Series A Preferred Securities and the Current Market
Price of the American General Common Stock, in each case as of the
close of business on the Trading Day next preceding the date of the
Press Release; (3) the place or places at which Series A
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Preferred Securities are to be surrendered prior to the Conversion
Expiration Date for certificates representing shares of American
General Common Stock; and (4) such other information or instructions
as the Company deems necessary or advisable to enable a Holder to
exercise its conversion right hereunder. For purposes of the
calculation of the Conversion Expiration Date and the dates on which
notices are given pursuant to this Section 8(d)(iii), a Notice of
Conversion Expiration shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage prepaid, to each
Holder of Series A Preferred Securities at the address of such Holder
appearing in the books and records of the Company (whether or not any
such Holder receives the Notice of Conversion Expiration). No defect
in the Notice of Conversion Expiration or in the mailing thereof with
respect to any Series A Preferred Security shall affect the validity
of such notice with respect to any other Series A Preferred Security.
As of the close of business on the Conversion Expiration Date, the
Series A Preferred Securities shall be deemed to be non-convertible
securities.
(e) No fractional shares of American General Common Stock
will be issued as a result of conversion, but in lieu thereof, such fractional
interest will be paid in cash by American General to the Conversion Agent,
which in turn will make such payment to the Holder or Holders of Series A
Preferred Securities so converted.
(f) American General shall at all times reserve and keep
available out of its authorized and unissued American General Common Stock,
solely for issuance upon the conversion of the Series A Debentures, free from
any preemptive or other similar rights, such number of shares of American
General Common Stock as shall from time to time be issuable upon the conversion
of all the Series A Debentures then outstanding. Notwithstanding the
foregoing, American General shall be entitled to deliver upon conversion of
Series A Debentures, shares of American General Common Stock reacquired and
held in the treasury of American General (in lieu of the issuance of authorized
and unissued shares of American General Common Stock), so long as any such
treasury shares are free and clear of all liens, charges, claims, equities,
security interests or encumbrances. Any shares of American General Common
Stock issued and delivered upon conversion of the Series A Debentures and
exchange of the Series A Preferred Securities shall be duly authorized, validly
issued, fully paid and nonassessable. The Conversion Agent shall deliver the
shares of American General Common Stock received upon conversion of the Series
A Debentures and exchange of the Series A Preferred Securities to the
converting Holder, free and clear of all liens, charges, claims, equities,
security interests and encumbrances, except for United States withholding
taxes. Each of American General and the Company shall use its best efforts to
obtain and keep in force such governmental or regulatory permits or other
authorizations as may be required by law, and shall comply with all applicable
requirements as to registration or qualification of the American General Common
Stock (and all listing requirements of any stock exchange on which the American
General Common Stock is then listed that are at the time applicable), in order
to enable American General to lawfully issue and deliver such number of shares
of American General Common Stock to the Conversion Agent as shall from time to
time be sufficient to effect the conversion of all of the Series A Debentures
and the Conversion Agent to lawfully deliver the American General Common
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Stock upon conversion of the Series A Preferred Securities to the Person or
Persons entitled thereto.
(g) American General will pay any and all taxes that may
be payable in respect of the issue or delivery of shares of American General
Common Stock upon conversion of Series A Debentures and exchange of the Series
A Preferred Securities. American General shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of shares of American General Common Stock in a name other
than the name of any Holder of Series A Preferred Securities so converted, and
no such issue or delivery shall be made unless and until the Holder requesting
such conversion has paid to the Conversion Agent the amount of any such tax or
has established to the satisfaction of the Conversion Agent that such tax has
been paid.
(h) Nothing in Section 8(g) shall limit the requirement
of the Company or the Conversion Agent to withhold taxes pursuant to applicable
law or otherwise require the Managing Member, the Company, American General or
the Conversion Agent to pay any amounts on account of such withholdings.
9. Optional Exchange For American General Preferred Stock. (a)
Upon the occurrence of an Exchange Event, the Holders of a Majority in
Liquidation Preference of the Series A Preferred Securities, voting at a
meeting of Holders called for such purpose or by written consents, may, at
their option, direct the Conversion Agent to (i) exchange all (but not less
than all) of the Series A Preferred Securities then outstanding for Series A
Debentures held by the Company at the rate of one Series A Preferred Security
for each $_____ principal amount of Series A Debentures, (ii) immediately
exchange such Series A Debentures, on behalf of the Holders, for shares of
American General Preferred Stock, at the Exchange Price and (iii) distribute
such shares of American General Preferred Stock to the Holders. Upon receipt
of such directions from such Holders (the "Notice of Exchange Election"), the
Conversion Agent shall promptly notify the Company, American General and the
trustee under the Indenture of an Exchange Election by delivering copies of the
Notice of Exchange Election to such Persons. The Company, upon receipt of such
Notice of Exchange Election, shall deliver the requisite principal amount of
Series A Debentures to the Conversion Agent in exchange for the Series A
Preferred Securities. American General, upon receipt of such Notice of
Exchange Election, shall, in exchange for the corresponding principal amount of
the Series A Debentures, issue certificates for the number of shares of
American General Preferred Stock issuable at the Exchange Price in the names of
the Holders of Series A Preferred Securities designated in such Notice of
Exchange Election.
(b) The failure of the Holders of Series A Preferred
Securities to receive, for 15 consecutive months, the full amount of dividends,
including arrearages and any Additional Dividends, on the Series A Preferred
Securities (including any such failure caused by an extension of an interest
payment period on the Series A Debentures), shall constitute an "Exchange
Event."
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(c) As soon as practicable, but in no event later than 30
calendar days after the occurrence of an Exchange Event, the Managing Member
shall, upon not less than 15 calendar days' written notice by first-class mail
to the Holders of Series A Preferred Securities, convene a meeting of the
Holders of the Series A Preferred Securities (an "Exchange Election Meeting")
to determine whether to cause the Conversion Agent to exchange all of the
Series A Preferred Securities then outstanding for Series A Debentures held by
the Company and immediately exchange such Series A Debentures, on behalf of the
Holders, for shares of American General Preferred Stock in the manner set forth
in Section 9(a) hereof. If the Managing Member fails to convene such Exchange
Election Meeting within such 30-day period, the Holders of at least 10% in
Liquidation Preference of the Series A Preferred Securities will be entitled to
convene such Exchange Election Meeting. Upon the affirmative vote of the
Holders of a Majority in Liquidation Preference of the Series A Preferred
Securities at such Exchange Election Meeting or, in the absence of such
meeting, upon receipt by the Company of written consents signed by the Holders
of a Majority in Liquidation Preference of the Series A Preferred Securities,
an election to exchange all outstanding Series A Preferred Securities on the
basis set forth above (an "Exchange Election") will be deemed to have been
made.
Holders, by becoming Members of the Company pursuant to
Section 2.7 of the Agreement, will be deemed to have agreed to be bound by
these optional exchange provisions in regard to the exchange of Series A
Preferred Securities for American General Preferred Stock pursuant to the terms
set forth above.
(d) American General shall at all times reserve and keep
available out of its authorized and unissued American General Preferred Stock,
solely for issuance upon the exchange of Series A Debentures, free from any
preemptive or other similar rights, such number of shares of American General
Preferred Stock as shall from time to time be issuable upon the exchange of
Series A Debentures pursuant to Section 9(a) hereof. Each of American General
and the Company shall use its best efforts to obtain and keep in force such
governmental or regulatory permits or other authorizations as may be required
by law, and shall comply with all applicable requirements as to registration or
qualification of the American General Preferred Stock in order to enable
American General to lawfully issue and deliver the American General Preferred
Stock to the Conversion Agent upon exchange of the Series A Debentures and the
Conversion Agent to lawfully deliver the American General Preferred Stock upon
exchange of the Series A Preferred Securities to the Person or Persons entitled
thereto. All shares of American General Preferred Stock issued upon exchange
of Series A Debentures and the Series A Preferred Securities shall be duly
authorized, validly issued and fully paid and non-assessable and the terms of
the American General Preferred Stock shall be valid and binding on American
General. American General will use its best efforts to have such shares of
American General Preferred Stock listed on the NYSE or, if the Series A
Preferred Securities are not then listed on the NYSE, such other exchange on
which the Series A Preferred Securities may then be listed. The Conversion
Agent shall deliver the certificates representing shares of American General
Preferred Stock received upon exchange of the Series A Debentures and the
Series A Preferred Securities to the exchanging Holder, free and clear of all
liens, charges, claims, equities, security interests and encumbrances.
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(e) American General will pay any and all taxes that may
be payable in respect of the issue or delivery of shares of American General
Preferred Stock upon exchange of the Series A Debentures and the Series A
Preferred Securities. American General shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved in the issue
and delivery of shares of American General Preferred Stock in a name other than
the name of any Holder of Series A Preferred Securities so exchanged, and no
such issue or delivery shall be made unless and until the Holder requesting
such exchange has paid to the Conversion Agent the amount of any such tax or
has established to the satisfaction of the Conversion Agent that such tax has
been paid.
(f) Series A Preferred Securities shall be deemed to have
been exchanged immediately prior to the close of business on the day on which
the Exchange Election is made. The Person or Persons entitled to receive the
certificates representing shares of American General Preferred Stock issuable
upon exchange of the Series A Debentures and the Series A Preferred Securities
shall be treated for all purposes as the record holder or holders of such
American General Preferred Stock at such time. As promptly as practicable on
or after the date on which the Exchange Election is made, American General
shall issue and deliver at the office of the Conversion Agent a certificate or
certificates for the number of full shares of American General Preferred Stock
issuable upon such exchange, whereupon the Conversion Agent shall promptly
distribute such certificate or certificates to the Person or Persons entitled
to receive the same.
(g) Nothing in Section 9(e) shall limit the requirement
of the Company or the Conversion Agent to withhold any taxes as may be required
by applicable law or otherwise require the Managing Member, the Company,
American General or the Conversion Agent to pay any amounts on account of such
withholdings.
10. Sinking Fund. The Series A Preferred Securities shall not be
subject to the operation of a retirement or sinking fund.
11. Guarantee of Liabilities. It shall be a condition precedent
to the issuance of the Series A Preferred Securities that American General
execute and deliver to the Company the Guarantee, the Indenture and the Series
A Debentures.
12. Book-Entry-Only Issuance. (a) The Depository Trust Company,
New York, New York ("DTC"), will initially act as the Clearing Agency. The
Series A Preferred Securities will be issued only as fully-registered
securities and will be initially registered in the name of Cede & Co. (DTC's
partnership nominee).
(b) Redemption notices shall be sent to Cede & Co. or any
successor thereof. If less than all of the Series A Preferred Securities are
being redeemed, such securities shall be redeemed in accordance with DTC's then
current practice.
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(c) DTC may discontinue providing its services as
Clearing Agency with respect to the Series A Preferred Securities by giving
reasonable notice to the Company as provided in the agreement between the
Company and DTC. Under such circumstances, if a successor Clearing Agency is
not obtained, the Company at its expense shall cause certificates for Series A
Preferred Securities to be printed and delivered as promptly as practicable.
If an Event of Default occurs under the Indenture with respect to the Series A
Debentures or if the Company (with the consent of American General) decides to
discontinue use of the system of book-entry transfers through DTC (or a
successor Clearing Agency), the Company at its expense shall cause certificates
for Series A Preferred Securities to be printed and delivered to the beneficial
owners of the Series A Preferred Securities as promptly as practicable.
(d) In the event that the Series A Preferred Securities
do not remain in book-entry-only form, the following provisions will apply:
(i) Registration of transfers of Series A Preferred
Securities will be effected without charge by or on behalf of the
Company, but upon payment (and/or the giving of such indemnity as the
Company or the Managing Member may require) in respect of any tax or
other governmental charges which may be imposed in connection
therewith.
(ii) Exchanges of Series A Preferred Securities for Series
A Debentures will be effected without charge by or on behalf of the
Company, but upon payment (and/or the giving of such indemnity as the
Company or the Managing Member may require) in respect of any tax or
other governmental charges which may be imposed in connection with the
issuance of any Series A Debenture in the name of any person other
than the Holder of the Series A Preferred Security for which the
Series A Debenture is being exchanged or for any reason other than
such exchange.
(iii) The Company will not be required to register or cause
to be registered the transfer of Series A Preferred Securities after
such Series A Preferred Securities have been called for redemption or
exchange.
13. Registrar and Transfer Agent. The Company hereby appoints
Chemical Mellon Shareholder Services, LLC as its initial registrar, transfer
agent, paying agent and Conversion Agent for the Series A Preferred Securities.
The Company may at any time designate an additional or substitute registrar,
transfer agent, paying agent and Conversion Agent for the Series A Preferred
Securities and shall promptly notify the Holders of the Series A Preferred
Securities of any such designation.
14. Governing Law. This Written Action shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflict of laws thereof.
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IN WITNESS WHEREOF, the undersigned Managing Member of the Company has
hereto set its hand as of the day and year first above written.
AMERICAN GENERAL DELAWARE
MANAGEMENT CORPORATION
By:
--------------------------------
Name:
Title:
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