1
EXHIBIT 4(p)
FORM OF GUARANTEE AGREEMENT
THIS GUARANTEE AGREEMENT (this "Guarantee"), dated as of May 24,
1995, is executed and delivered by American General Corporation, a corporation
organized under the laws of the State of Texas ("American General"), for the
benefit of the Holders (as hereinafter defined) from time to time of the
Preferred Securities (as hereinafter defined) of American General Delaware,
L.L.C., a Delaware limited liability company ("American General Delaware").
WHEREAS, American General Delaware intends to issue and sell from time
to time, in one or more series, preferred limited liability company interests
(the "Preferred Securities"), and American General desires to issue this
Guarantee for the benefit of the Holders of the Preferred Securities, as
provided herein;
WHEREAS, American General Delaware will purchase the Junior
Subordinated Debentures (as hereinafter defined) issued pursuant to the Junior
Subordinated Indenture (as hereinafter defined) with substantially all of the
proceeds from the issuance and sale of the Preferred Securities and its other
common limited liability company interests (the "Common Securities"); and
WHEREAS, American General desires hereby to unconditionally and
irrevocably guarantee, to the extent set forth herein, the payment in full to
the Holders of the Guarantee Payments (as hereinafter defined) and the
performance of the other obligations set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of the
Preferred Securities, which purchase American General hereby agrees shall
benefit American General, American General executes and delivers this Guarantee
for the benefit of the Holders.
ARTICLE I
DEFINITIONS
As used in this Guarantee, the terms set forth below shall, unless the
context otherwise requires, have the following meanings. Capitalized terms
used herein but not otherwise defined herein shall have the meanings ascribed
to such terms in the Amended and Restated Limited Liability Company Agreement
of American General Delaware, L.L.C., dated as of May 24, 1995 (the "LLC
Agreement").
1.1 "Additional Dividends" shall mean Dividends (as hereinafter
defined) that shall be declared and paid by American General Delaware on any
Dividend arrearages in respect of the Preferred Securities of any series at the
rate set forth in the Declaration (as hereinafter defined) with respect to such
series of Preferred Securities.
2
1.2 "American General Common Stock" shall mean the Common Stock,
par value $.50 per share, of American General. However, subject to the
anti-dilution provisions of the applicable series of Junior Subordinated
Debentures (as hereinafter defined), shares of American General Common Stock
issuable on conversion of such Junior Subordinated Debentures or upon exchange
of the American General Preferred Stock (as hereinafter defined) 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.
1.3 "American General Preferred Stock" shall mean the series, if
any, of Preferred Stock, par value $1.50 per share, of American General
exchangeable for the related series of Junior Subordinated Debentures.
1.4 "Conversion Agent" shall mean Chemical Mellon Shareholder
Services, LLC and its successors (or such substitute entity as may be
designated from time to time by the Manager (as hereinafter defined), acting as
agent of the Holders in effecting, as applicable, (a) the exchange of the
Preferred Securities of any series into the related series of Junior
Subordinated Debentures and the conversion of such Junior Subordinated
Debentures into shares of American General Common Stock or (b) the exchange of
Preferred Securities of any series for the related series of Junior
Subordinated Debentures and the conversion of such Junior Subordinated
Debentures for the related series of American General Preferred Stock, in each
case as and in such manner as may be set forth in the LLC Agreement and the
Declaration with respect to such series of Preferred Securities.
1.5 "Declaration" shall mean, with respect to any series of
Preferred Securities, the Written Action adopted by the Manager pursuant to
Section 7.1(b) of the LLC Agreement relating to such series of Preferred
Securities.
1.6 "Dividends" shall mean, with respect to any series of
Preferred Securities, the cumulative cash distributions from American General
Delaware with respect to such series of Preferred Securities, accruing and
payable in the manner set forth in the Declaration with respect to such series
of Preferred Securities.
1.7 "Guarantee Payments" shall mean, with respect to any series of
Preferred Securities, the following payments, without duplication, to the
extent not paid by American General Delaware: (a) any accumulated and unpaid
Dividends (whether or not earned), including any Additional Dividends, which
are required to be paid on such Preferred Securities, but only if and to the
extent that such Dividends have been declared on such Preferred Securities from
funds of American General Delaware legally available therefor; (b) the
Redemption Price (including all accumulated and unpaid Dividends (whether or
not
-2-
3
earned or declared), including any Additional Dividends) payable with respect
to any such Preferred Securities called for redemption by American General
Delaware, but only to the extent payable out of funds of American General
Delaware legally available therefor; and (c) upon the voluntary or involuntary
liquidation, dissolution or winding-up of American General Delaware other than
in connection with or after the exchange, if applicable, of such Preferred
Securities for the related series of Junior Subordinated Debentures, the lesser
of (i) the Liquidation Distribution and (ii) the amount of assets of American
General Delaware available for distribution to Holders of such Preferred
Securities in liquidation, dissolution or winding-up of American General
Delaware.
1.8 "Holder" shall mean the registered holder from time to time of
any Preferred Securities of American General Delaware; provided, however, that
in determining whether the Holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include American General or any majority-owned entity
thereof, either directly or indirectly.
1.9 "Junior Subordinated Debentures" shall mean the series of
Junior Subordinated Debentures issued by American General pursuant to the
Junior Subordinated Indenture and delivered to American General Delaware in
connection with the issuance and sale by American General Delaware of the
related series of Preferred Securities. The Junior Subordinated Debentures
will evidence the loan made by American General Delaware to American General of
substantially all of the proceeds received by American General Delaware from
the issuance and sale of the related series of Preferred Securities and the
Common Securities.
1.10 "Junior Subordinated Indenture" shall mean the Indenture,
dated as of May 15, 1995, between American General and Chemical Bank, as
Trustee.
1.11 "Manager" means American General Delaware Management
Corporation, in its capacity as the manager of American General Delaware, or
any permitted successor manager of American General Delaware admitted as such
pursuant to the applicable provisions of the LLC Agreement.
1.12 "Redemption Price" shall mean, with respect to any series of
Preferred Securities subject to redemption by American General Delaware, the
liquidation preference of such Preferred Securities plus accumulated and unpaid
dividends (whether or not earned or declared), including any Additional
Dividends, to the date fixed for redemption thereof.
1.13 "Special Trustee" shall mean, with respect to any series of
Preferred Securities, a special trustee appointed by the Holders of the
Preferred Securities of such series pursuant to Section 8.1 of the LLC
Agreement and authorized, among other things, to enforce American General
Delaware's rights under the related series of Junior Subordinated Debentures
against American General and to enforce the obligations undertaken with respect
to such series of Preferred Securities by American General under this
Guarantee.
-3-
4
ARTICLE II
GUARANTEE
2.1 GENERAL. American General irrevocably and unconditionally
agrees to pay in full to the Holders of each series of Preferred Securities the
Guarantee Payments with respect to such series of Preferred Securities, as and
when due (except to the extent previously paid by American General Delaware),
regardless of any defense, right of set-off or counterclaim which American
General Delaware may have or assert. American General's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
American General to the Holders of such series of Preferred Securities or by
causing American General Delaware to pay such amounts to such Holders.
2.2 WAIVER OF CERTAIN RIGHTS. American General hereby waives, to
the fullest extent permitted by applicable law, notice of acceptance of this
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, protest, notice of nonpayment, notice of dishonor, notice
of redemption and all other notices and demands.
2.3 OBLIGATIONS NOT AFFECTED. The obligations, covenants,
agreements and duties of American General under this Guarantee shall in no way
be affected or impaired by reason of the happening from time to time of any of
the following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by American General
Delaware of any express or implied agreement, covenant, term or
condition relating to the Preferred Securities of any series to be
performed or observed by American General Delaware;
(b) the extension of time for the payment by American
General Delaware of all or any portion of the Dividends, Additional
Dividends, Redemption Price, Liquidation Distribution or any other
sums payable under the terms of the Preferred Securities of any series
or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Preferred Securities
of such series;
(c) any failure, omission, delay or lack of diligence on
the part of the Holders of Preferred Securities of any series or the
Special Trustee to enforce, assert or exercise any right, privilege,
power or remedy conferred on such Holders or such Special Trustee
pursuant to the terms of the Preferred Securities of such series, or
any action on the part of American General Delaware granting
indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation,
dissolution, winding-up, sale of any collateral, receivership,
insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, American General Delaware or
any of the assets of American General Delaware;
-4-
5
(e) any invalidity of, or defect or deficiency in, any of
the Preferred Securities of any series;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) to the fullest extent permitted by applicable law,
any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the
intent of this Section 2.3 that the obligations of American General
hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of any Holders of Preferred Securities to give
notice to, or obtain any consent of, American General with respect to the
happening of any of the foregoing.
2.4 PROCEEDING DIRECTLY AGAINST AMERICAN GENERAL. This Guarantee
is a guarantee of payment and not of collection. A Holder of Preferred
Securities of any series or the Special Trustee may enforce this Guarantee with
respect to such series of Preferred Securities directly against American
General, and American General waives any right or remedy to require that any
action be brought against American General Delaware or any other person or
entity before proceeding against American General. Subject to Section 2.5
hereof, all waivers herein contained shall be without prejudice to the right of
a Holder or the Special Trustee, at its option, to proceed against American
General Delaware, whether by separate action or by joinder. American General
agrees that this Guarantee shall not be discharged except by payment of the
Guarantee Payments in full (to the extent not previously paid by American
General Delaware) and by complete performance of all obligations under this
Guarantee.
2.5 SUBROGATION. American General shall be subrogated to all (if
any) rights of the Holders of Preferred Securities against American General
Delaware in respect of any amounts paid to such Holders by American General
under this Guarantee and shall have the right to waive payment by American
General Delaware of any amount of Dividends in respect of which payment has
been made to the Holders by it pursuant to Section 2.1 hereof; provided,
however, that American General shall not (except to the extent required by
mandatory provisions of law) exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of a payment under this Guarantee, if, at the time of any such
payment, any amounts are due and unpaid under this Guarantee. If any amount
shall be paid to American General in violation of the preceding sentence,
American General agrees to hold such amount in trust for the Holders and to pay
over such amount promptly to the Holders.
2.6 INDEPENDENT OBLIGATIONS. American General acknowledges that
its obligations hereunder are independent of the obligations of American
General Delaware with respect to the Preferred Securities and that American
General shall be liable as principal and sole debtor under this Guarantee to
make Guarantee Payments in full pursuant to the terms of
-5-
6
this Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 2.3 hereof.
2.7 TERMINATION. This Guarantee shall terminate and be of no
further force and effect as to the Preferred Securities of any series upon (a)
full payment of the Redemption Price of all outstanding Preferred Securities of
such series, (b) if applicable, the exchange (in the manner provided in the LLC
Agreement and the applicable Declaration) of all of the Preferred Securities of
such series for the Junior Subordinated Debentures of the related series and
the conversion (in the manner provided in the Junior Subordinated Indenture) of
such Junior Subordinated Debentures for American General Common Stock or the
series of American General Preferred Stock related to such series of Preferred
Securities, as the case may be, or (c) if applicable, the exchange (in the
manner provided in the LLC Agreement or such Declaration) of all of the
Preferred Securities of such series for the Junior Subordinated Debentures of
the related series. In addition, this Guarantee will terminate completely upon
full payment of the aggregate Liquidation Distributions applicable to all
outstanding series of Preferred Securities. Notwithstanding the foregoing,
this Guarantee shall continue to be effective or, to the fullest extent
permitted by applicable law, shall be reinstated, as the case may be, with
respect to the Preferred Securities of any series if at any time any Holder of
such Preferred Securities must restore payment of any sums recovered on account
of, or must redeliver any securities received on account of, such Preferred
Securities or under this Guarantee for any reason whatsoever.
ARTICLE III
CERTAIN COVENANTS OF AMERICAN GENERAL
3.1 DIVIDENDS AND OTHER PAYMENTS. So long as the Preferred
Securities of any series remain outstanding, American General will not declare
or pay any dividend on, and American General will not, and American General
will not permit any of its majority-owned subsidiaries to, redeem, purchase,
acquire or make a liquidation payment with respect to, any of American
General's capital stock (other than (i) purchases or acquisitions of shares of
American General Common Stock in connection with the satisfaction by American
General or any of its majority-owned subsidiaries of its obligations under any
employee benefit plans or the satisfaction by American General of its
obligations pursuant to any put contract requiring American General to purchase
any American General Common Stock, (ii) as a result of a reclassification of
American General's capital stock or the exchange or conversion of one class or
series of American General's capital stock for another class or series of
American General's capital stock, (iii) redemptions or purchases of any share
purchase rights issued by American General pursuant to the Rights Agreement
dated as of July 27, 1989, as amended from time to time, or the declaration and
payment of a dividend or distribution of similar share purchase rights in the
future or (iv) the purchase of fractional interests in shares of American
General's capital stock pursuant to the conversion or exchange provisions of
such American General capital stock or the security being converted or
exchanged) or make any guarantee payments with respect to the foregoing, if at
such time American General has exercised its option to extend an interest
payment period on the series of Junior Subordinated Debentures related to such
series of Preferred
-6-
7
Securities and such extension is continuing, American General is in default
with respect to its payment or other obligations hereunder or there has
occurred and is continuing any Event of Default (as defined in the Junior
Subordinated Indenture) with respect to the series of Junior Subordinated
Debentures related to such series of Preferred Securities. American General
shall take all actions necessary to ensure the compliance of its majority-owned
subsidiaries with this Section 3.1.
3.2 CERTAIN OTHER COVENANTS. So long as the Preferred Securities
of any series remain outstanding, American General shall: (a) not cause or
permit any Common Securities to be transferred (other than, in the case of
American General, in connection with a merger or consolidation permitted under
the Junior Subordinated Indenture or, in the case of the Manager, in connection
with any merger or consolidation involving the Manager), (b) maintain direct or
indirect ownership of all outstanding Common Securities and any other limited
liability company interests in American General Delaware other than any series
of Preferred Securities (except as may be permitted in the LLC Agreement); (c)
cause at least 21% of all interests in the capital, income, gain, loss,
deduction and credit of American General Delaware to be represented by Common
Securities; (d) not voluntarily liquidate, dissolve or wind-up itself (other
than in connection with a merger or consolidation permitted under the Junior
Subordinated Indenture), or permit the Manager (other than in connection with
any merger or consolidation involving the Manager) or American General
Delaware (other than in connection with or after an exchange of all
outstanding series of Preferred Securities for the related series of Junior
Subordinated Debentures, if so provided in the Declaration relating to each
such series of Preferred Securities) to liquidate, dissolve or wind-up;
(e) cause American General Delaware Management Corporation or any successor
thereto by merger or consolidation to remain the Manager and to timely perform
all of its duties as Manager (including the duty to cause American General
Delaware to declare and pay dividends on all outstanding series of Preferred
Securities to the extent set forth in the LLC Agreement and the applicable
Declaration); and (f) subject to the terms of the Preferred Securities of any
series, use reasonable efforts to cause American General Delaware to remain a
Delaware limited liability company and otherwise continue to be treated as a
partnership for United States federal income tax purposes.
ARTICLE IV
STATUS
4.1 STATUS. American General covenants and agrees that this
Guarantee constitutes an unsecured obligation of American General ranking (i)
subordinate and junior in right of payment to all other liabilities of American
General other than the guarantees referred to in clauses (ii) and (iii) of this
Section 4.1, (ii) pari passu with the most senior preferred stock issued by
American General, with that Guarantee dated May 24, 1995 in respect of certain
securities issued by American General Capital, L.L.C. and with any other
guarantee executed by American General in respect of any preferred stock or
interest of any affiliate of American General that provides that such guarantee
is pari passu in right of
-7-
8
payment with this Guarantee and (iii) senior to American General Common Stock,
any other class or series of capital stock issued by American General which by
its express terms ranks junior to the most senior preferred stock issued by
American General as to the payment of dividends and the distribution of assets
upon the liquidation, dissolution or winding-up of American General and any
guarantee executed by American General that provides that such guarantee is
junior in right of payment to this Guarantee.
ARTICLE V
CONVERSION AND EXCHANGE OF PREFERRED SECURITIES
5.1 ISSUANCE OF AMERICAN GENERAL COMMON STOCK. If the Preferred
Securities of any series are convertible into shares of American General Common
Stock pursuant to the applicable Declaration, American General hereby agrees
that, upon the request of the Conversion Agent (on behalf of one or more
Holders of such Preferred Securities), to convert Junior Subordinated
Debentures of the series related to such series of Preferred Securities into
American General Common Stock pursuant to the request of such Holders to effect
such conversion in accordance with the terms of the LLC Agreement and such
Declaration, American General shall deliver to the Conversion Agent
certificates representing the number of full shares of American General Common
Stock issuable upon conversion of such Junior Subordinated Debentures in
accordance with the terms of the Junior Subordinated Indenture and such Junior
Subordinated Debentures. American General shall reserve and keep available out
of its authorized and unissued American General Common Stock (solely for
issuance upon the conversion of such Junior Subordinated Debentures), free of
any preemptive or other similar rights, the number of full shares of American
General Common Stock deliverable by the Conversion Agent to the Holders upon
the conversion of all outstanding convertible Preferred Securities not
theretofore converted by the Holders.
5.2 VALIDITY OF AMERICAN GENERAL COMMON STOCK. All shares of
American General Common Stock delivered by American General upon such
conversion will be duly authorized, validly issued and fully paid and
nonassessable.
5.3 ISSUANCE OF AMERICAN GENERAL PREFERRED STOCK. American
General hereby agrees, upon the making of an Exchange Election (as such term
may be defined in the applicable Declaration) by the Holders of a majority of
the aggregate liquidation preference of the outstanding Preferred Securities of
the related series in accordance with the terms of the LLC Agreement and such
Declaration, to issue one share of American General Preferred Stock of the
related series in respect of the applicable principal amount (as set forth in
such Declaration) of Junior Subordinated Debentures of the related series.
American General further agrees, upon receipt of a Notice of Exchange Election
(as defined in such Declaration), to deliver to the Conversion Agent the number
of shares of American General Preferred Stock of the related series issuable
upon conversion of such Junior Subordinated Debentures. American General shall
reserve and keep available out of its authorized and unissued American General
Preferred Stock (solely for issuance upon conversion of such Junior
Subordinated Debentures), free of any preemptive or other
-8-
9
similar rights, the number of shares of American General Preferred Stock of the
related series deliverable by the Conversion Agent to the Holders upon exchange
of all outstanding exchangeable Preferred Securities.
5.4 VALIDITY OF AMERICAN GENERAL PREFERRED STOCK. All such shares
of American General Preferred Stock issued by American General upon such
conversion will be duly authorized, validly issued and fully paid and
nonassessable.
5.5 TERMINATION OF OBLIGATION TO ISSUE AMERICAN GENERAL COMMON
STOCK. American General's obligations under this Article V to issue American
General Common Stock shall terminate upon the termination of the right of
Holders of Preferred Securities to request the Conversion Agent to effect such
conversion as may be set forth in the LLC Agreement and any applicable
Declaration.
ARTICLE VI
MISCELLANEOUS
6.1 THIRD PARTY BENEFICIARIES. All of American General's
obligations under this Guarantee shall be directly enforceable by the Holders
from time to time of the applicable series of Preferred Securities. Each
Holder of Preferred Securities of the applicable series is an intended
third-party beneficiary of this Guarantee.
6.2 SUCCESSORS AND ASSIGNS. All provisions contained in this
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of American General and shall inure to the benefit of the
Holders. Except as permitted by Section 6.4, American General shall not assign
its rights or delegate its obligations hereunder without the prior approval
(obtained in the manner set forth in the LLC Agreement) of the Holders of not
less than 66-2/3% of the aggregate liquidation preference of all Preferred
Securities of all series then outstanding voting as a single class.
6.3 AMENDMENTS. Except with respect to any changes which do not
adversely affect the rights of any Holders of Preferred Securities (in any of
which cases no vote will be required), this Guarantee may be amended with
respect to the Preferred Securities of any series affected by such amendment
only with the prior approval (obtained in the manner set forth in the LLC
Agreement and the applicable Declaration) of the Holders of not less than
66-2/3% of the aggregate liquidation preference of the outstanding Preferred
Securities of such series.
6.4 MERGER OR CONSOLIDATION. American General may consolidate
with or merge with or into any other person or entity, provided that such
consolidation or merger is permitted under Section 801 of the Junior
Subordinated Indenture.
6.5 NOTICES. Any notice, request or other communication required
or permitted to be given hereunder to American General shall be given in
writing by delivering the same against receipt therefor by registered mail,
hand delivery, facsimile transmission (confirmed
-9-
10
by registered mail) or telex, addressed to American General, as follows (and if
so given, shall be deemed given when mailed; upon receipt of facsimile
confirmation, if sent by facsimile transmission; or upon receipt of an
answer-back, if sent by telex):
American General Corporation
2929 Allen Parkway
Houston, Texas 77019
Attention: Treasury
Telecopy: (713) 522-3487
Any notice, request or other communication required or permitted to be
given hereunder to the Holders shall be given by American General in the same
manner as notices are sent by American General Delaware to the Holders.
6.6 GENDERS. The masculine and neuter genders used here shall
include the masculine, feminine and neuter genders.
6.7 GUARANTEE NOT SEPARATELY TRANSFERABLE. This Guarantee is
solely for the benefit of the Holders and is not separately transferable from
the Preferred Securities.
6.8 GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
6.9 SEVERABILITY. In case any provision of this Guarantee shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
6.10 HEADINGS. The Article and section headings herein are for
convenience only and shall not affect the construction hereof.
-10-
11
IN WITNESS WHEREOF, American General has caused this Guarantee to be
duly executed as of the day and year first above written.
AMERICAN GENERAL CORPORATION
By:
----------------------------------
Name:
Title:
ATTEST:
-----------------------------------
Secretary
-11-