Document:

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                                                                   EXHIBIT 10.14

                                  AERCO LIMITED

                                       and

                              BANKERS TRUST COMPANY

                                DEPOSIT AGREEMENT

                            Dated as of July 17, 2000

      $565,000,000 Initial Aggregate Principal Amount of Subclass A-3 Notes
      $235,000,000 Initial Aggregate Principal Amount of Subclass A-4 Notes
      $80,000,000 Initial Aggregate Principal Amount of Subclass B-2 Notes
      $80,000,000 Initial Aggregate Principal Amount of Subclass C-2 Notes

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                                DEPOSIT AGREEMENT

         THIS AGREEMENT is made as of July 17, 2000 by and between AerCo
Limited, a Jersey limited liability company (the "COMPANY"), which is a party
for the limited purposes referred to herein, and Bankers Trust Company, as
depositary (as more fully defined below, the "BOOK-ENTRY DEPOSITARY").

                                   ARTICLE ONE

                    DEFINITIONS AND OTHER GENERAL PROVISIONS

         SECTION 1.01. Definitions. The following terms, as used herein, have
the following meanings:

         "ADDITIONAL Notes" shall have the meaning ascribed to it in the
Indenture.

         "AFFILIATE" means, as applied to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common control
with such Person or is a director or officer of such Person. For the purposes of
this definition, "control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), when used with
respect to any specified Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise.

         "BASIC TERMS MODIFICATION" shall have the meaning ascribed to it in the
Indenture.

         "BOARD" shall have the meaning ascribed to it in the Indenture.

         "BOARD Resolution" shall have the meaning ascribed to it in the
Indenture.

         "BOOK-ENTRY DEPOSITARY" means the party named as such in this Agreement
or its nominee or the custodian of either until a successor shall have been
appointed pursuant to Section 3.08 hereof, and thereafter "BOOK-ENTRY
Depositary" shall mean such successor or its nominee or the custodian of either.

         "BOOK-ENTRY INTERESTS" means interests, as reflected in the records
maintained by the Depository, in the CDIs which are eligible for trading through
the Depository's book-entry system.

         "CDI" means a certificateless depositary interest, as reflected in the
records maintained by the Book-Entry Depositary, in one of the Global Notes held
by the Book-Entry Depositary which (a) is issued by the Book-Entry Depositary to
the Depository or its nominee and (b) shall at all times represent the right to
receive up to 100% of the principal of, interest and premium, if any, on such
Global Note in accordance with the terms thereof, and the right to require the
Book-Entry Depositary to procure the issue of one or more Definitive Registered
Notes representing in the aggregate up to 100% of the principal amount at
maturity represented by such Global Note.

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         "COMPANY" means the party named as such in this Agreement until a
successor replaces it pursuant to the applicable provisions of the Indenture
and, thereafter, means such successor.

         "CORPORATE TRUST OFFICE" means the office of the Book-Entry Depositary
in the Borough of Manhattan, the City of New York, at which at any particular
time its corporate trust business shall be principally administered, which at
the date hereof is located at Four Albany Street, Mail Stop 5101, New York, New
York 10006.

         "DEFAULT" shall have the meaning ascribed to it in the Indenture.

         "DEFINITIVE REGISTERED NOTES" means Notes issued in definitive
registered form pursuant to Section 2.01 of the Indenture, substantially in the
form set forth in the Indenture.

         "DEPOSITORY" means DTC, or any successor thereto, that is indicated in
the records of the Book-Entry Depositary as the owner of the CDIs.

         "DTC" means The Depository Trust Company or its nominee.

         "EVENT OF Default" shall have the meaning ascribed to it in the
Indenture.

         "EXCHANGE ACT" means the United States Securities Exchange Act of 1934,
as amended.

         "GLOBAL NOTES" means the Rule 144A Global Notes and the Regulation S
Global Notes.

         "HOLDER" shall have the meaning ascribed to it in the Indenture.

         "INDENTURE" means the Indenture dated as of July 15, 1998, between the
Company and Bankers Trust Company, as Trustee, as originally executed or as may
from time to time be supplemented or amended by one or more supplemental
indentures entered into pursuant to the applicable provisions thereof,
including, for all purposes, the provisions of the TIA that are deemed to be a
part of and govern such instruments.

         "LETTER OF REPRESENTATIONS" means the Letter of Representations to DTC
dated July 17, 2000 from the Company and the Book-Entry Depositary.

         "NOTES" means $960,000,000 initial aggregate principal amount of
floating rate notes due 2025 of the Company, issued as $565,000,000 initial
aggregate principal amount of Subclass A-3 Notes due July 15, 2025, $235,000,000
initial aggregate principal amount of Subclass A-4 Notes due July 15, 2025,
$80,000,000 initial aggregate principal amount of Subclass B-2 Notes due July
15, 2025 and $80,000,000 initial aggregate principal amount of Subclass C-2
Notes due July 15, 2025, and any Additional Notes, each issued, authenticated
and delivered under the Indenture, as amended or supplemented from time to time
pursuant to the terms of the Indenture.

         "OFFICERS' CERTIFICATE" shall have the meaning ascribed to it in the
Indenture.

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         "OPINION OF COUNSEL" means a written opinion from legal counsel, who
may be counsel of the Company and who shall otherwise be reasonably satisfactory
to the Book-Entry Depositary.

         "PARTICIPANT" shall have the meaning ascribed to it in Section 2.02(a)
of this Agreement.

         "PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

         "PRIVATE PLACEMENT LEGEND" shall have the meaning ascribed to it in the
Indenture.

         "REFINANCING NOTES" shall have the meaning ascribed to it in the
Indenture.

         "RESPONSIBLE OFFICER" means (a) with respect to the Book-Entry
Depositary, any officer within the Corporate Trust Office, including any
managing director, principal, vice president, assistant vice president,
treasurer, assistant treasurer, assistant secretary, or any other officer of the
Book-Entry Depositary customarily performing functions similar to those
performed by any of the above-designated officers and also means, with respect
to a particular matter, any other officer to whom such matter is referred
because of such officer's knowledge and familiarity with the particular subject
and (b) with respect to the Company, any director of the Company.

         "SECURITIES ACT" means the United States Securities Act of 1933, as
amended.

         "TIA" means the United States Trust Indenture Act of 1939 (15 U.S.C.
ss.ss. 77aaa-77bbbb) as in effect ON the date of this Agreement.

         "TRUSTEE" means the Person acting as Trustee under the Indenture until
a successor Trustee shall have been appointed pursuant to the applicable
provisions of the Indenture, and thereafter means such successor.

         SECTION 1.02. Rules of Construction. Unless the content otherwise
requires: (a) a term has the meaning ascribed to it; (b) any capitalized term
not otherwise defined herein shall have the meaning ascribed to it in the
Indenture; (c) "or" is not exclusive; (d) "including" means including without
limitation; (e) words in the singular include the plural and words in the plural
include the singular; and (f) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.

                                   ARTICLE TWO

                              BOOK-ENTRY INTERESTS

         SECTION 2.01. Deposit of the Global Notes; Issuance of CDIs. The
Book-Entry Depositary hereby accepts custody of the Global Notes and shall act
as Book-Entry Depositary in accordance with the terms of this Agreement. The
Book-Entry Depositary shall hold the Global Notes at its Corporate Trust Office
in the Borough of Manhattan, the City of New York or at such place or places as
it shall determine with the

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consent of the Company for the purposes of Section 2.03 below, and shall issue
the CDIs to the Depository in accordance with the Letter of Representations and
the terms hereof.

         SECTION 2.02. Book-Entry System. (a) Upon acceptance by the Depository
of the CDIs for entry into its book-entry settlement system in accordance with
the terms of the Letter of Representations, Book-Entry Interests will be
reflected on and traded through the Depository's book-entry system, and
ownership of such Book-Entry Interests shall be shown in, and the transfer of
such ownership shall be effected only through, records maintained by (i) the
Depository or its successors or (ii) institutions that have accounts with the
Depository or its successors ("PARTICIPANTS"). Book-Entry Interests shall be
transferable only as units in the same authorized denominations as the Notes.

         (b) The CDIs shall be issuable only to the Depository, or successors of
the Depository, or their respective nominees. Except as provided in Section 2.04
hereof, no owner or beneficial owner of Book-Entry Interests shall be entitled
to receive a Definitive Registered Note on account of such ownership, and such
owner's or beneficial owner's interest therein shall be shown only in accordance
with the terms of this Agreement and the procedures of the Depository as set
forth in the Letter of Representations.

         SECTION 2.03. Transfers of the CDIs and Book-Entry Interests. (a) The
Book-Entry Depositary shall, as agent of the Company, maintain at the Book-Entry
Depositary's Corporate Trust Office records in which the Book-Entry Depositary
shall (i) record the Depository or any of its nominees as the initial owner of
the CDIs and (ii) record each transfer, to the extent permitted hereunder, of
any CDI. The CDIs cannot be transferred unless such transfer is noted in the
records of the Book-Entry Depositary. The Book-Entry Depositary shall treat the
Persons in whose name the CDIs are recorded in the records of the Book-Entry
Depositary as the owners thereof for all purposes whatsoever and shall not be
bound or affected by any notice to the contrary, other than an order of a court
having jurisdiction over the Book-Entry Depositary. The provisions of this
Section 2.03(a) shall not impose an obligation on the Book-Entry Depositary to
record the interests in or transfers of Book-Entry Interests owned by
Participants, or Persons that may own Book-Entry Interests through Participants
or restrict transfers of such Book-Entry Interests held by Participants or such
Persons.

         (b) The transfer and exchange of Book-Entry Interests shall be effected
through the Depository, in accordance with the Indenture, this Agreement and the
applicable rules and procedures of the Depository therefor.

         Each of the parties hereto acknowledges that none of the Notes, the
CDIs or the Book-Entry Interests have been registered under the Securities Act
or with any securities regulatory authority in any jurisdiction and,
accordingly, may not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons, as such term is defined under
Regulation S of the Securities Act. Unless and until a Global Note is exchanged
for an Exchange Note in connection with an effective registration under the
Securities Act pursuant to the Registration Rights Agreement, each Book-Entry
Interest shall be subject to the transfer restrictions set forth in the Private
Placement Legend to the extent required by the Securities Act.

         The transfer restrictions set forth in the Private Placement Legend and
in Section 2.13 of the Indenture are hereby incorporated by reference in this
Agreement and shall have effect as if such restrictions were set out in full
herein. By its acceptance of a

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Book-Entry Interest corresponding to any Global Note, each owner thereof
acknowledges the restrictions on transfer of such Book-Entry Interest set forth
in the Indenture and this Agreement and agrees that it will transfer such
Book-Entry Interest only in accordance with the terms of the Indenture, this
Agreement, the Securities Act and other applicable law. In connection with any
transfer of Book-Entry Interests each owner thereof agrees by its acceptance of
such Book-Entry Interests to furnish to the Trustee the certifications and legal
opinions described in the Indenture to confirm that such transfer is being made
pursuant to an exemption from, or a transaction not subject to, the registration
requirements of the Securities Act.

         Any Book-Entry Interest corresponding to one of the Global Notes of any
subclass that is transferred to a Person who will own such Book-Entry Interest
in the form of an interest in the other Global Note of such subclass will, upon
transfer, cease to be an interest in such first Global Note and become an
interest in such other Global Note and, accordingly, will thereafter be subject
to all transfer restrictions, if any, and other procedures applicable to
Book-Entry Interests in such other Global Note for as long as it remains such an
interest. The Book-Entry Depositary shall endorse these schedules of the Global
Notes to reflect deductions in increases in the principle amounts thereof as
instructed from time to time by the Trustee.

         SECTION 2.04. Transfer of the Global Notes. The Book-Entry Depositary
shall hold the Global Notes in custody for the benefit of the Depository or any
transferee permitted hereunder. The Book-Entry Depositary shall not transfer,
lend or dispose of any Global Note or any interest therein for any reason,
except that the Book-Entry Depositary may transfer a Global Note to a successor
Book-Entry Depositary in accordance with Section 3.08 hereof and may exchange or
cancel a Global Note as provided in this Section 2.04 and Section 2.05 hereof.
Notwithstanding the foregoing, the Book-Entry Depositary shall not under any
circumstances surrender or deliver any Global Note to the Depository or any of
its custodians or nominees. In the event that:

              (a) the Book-Entry Depositary notifies the Company and the Trustee
     under Section 3.08 hereof that it is unwilling or unable to continue as
     Book-Entry Depositary with respect to the Global Notes, and no successor
     Book-Entry Depositary has been appointed in accordance with the provisions
     of Article III thereof by the Company within 90 days of such notification;

              (b) the Depository notifies the Book-Entry Depositary that it is
     unwilling or unable to continue as Depositary with respect to the CDIs or
     if at time it is unable to or ceases to be a clearing agency registered
     under the Act and a successor Depositary registered as a clearing agency
     under the Exchange Act is not appointed by the Book-Entry Depositary with
     respect to CDIs at the written request of the Company within 90 days of
     such notification; or

              (c) after the occurrence of an Event of Default with respect
     to any class of Notes, owners of Book-Entry Interests of a subclass within
     such class representing an aggregate of not less than 51% of the aggregate
     outstanding principal balance of Notes of such subclass advise the
     Company, the  Trustee, the Book-Entry Depositary and the Depository
     through the Participants in writing that the continuation of a book-entry
     system through the Depository (or a successor thereto) is no longer in the
     best interests of such owners of such subclass;

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then the Book-Entry Depositary shall promptly notify the Depository that the
Global Notes, or those of the relevant subclass, as the case may be, will be
exchanged in whole for Definitive Registered Notes pursuant to Section 2.07 of
the Indenture and Definitive Registered Notes shall be issued in such names and
denominations as the Depository shall specify in writing to the Book-Entry
Depositary upon cancellation of the corresponding CDIs and Book-Entry Interests
(it being understood that such specifications will be based upon directions
received by the Depository from its Participants reflecting the beneficial
ownership of the Book-Entry Interests).

         The Book-Entry Depositary agrees that in any such event it will
promptly surrender the Global Notes held by it to the Trustee in connection with
such exchange for cancellation pursuant to Section 2.07 of the Indenture and
shall cancel the corresponding CDIs. None of the Depository, any of the
Participants or any owners or beneficial owners of Book-Entry Interests will be
obligated to pay or otherwise bear the costs of any tax or governmental charge
or any cost or expense of the Company or the Book-Entry Depositary relating to
insurance, postage, transportation or any similar charge, in connection with any
issuance of Definitive Registered Notes pursuant to this Section 2.04; all such
costs and expenses shall be paid by the Company subject to the exception set
forth in Section 3.06(b) hereof.

         SECTION 2.05. Cancellation. If any Global Note is surrendered for
payment, or for redemption of the entire outstanding principal amount at
maturity of the Notes evidenced thereby or for exchange in its entirety for
Definitive Registered Notes to any Person other than the Trustee, such Global
Note shall, subject to Sections 2.07, 2.08 and 2.09 hereof, be delivered to the
Trustee for cancellation.

         SECTION 2.06. Payments in Respect of the Global Notes and CDIs. (a)
Whenever the Book-Entry Depositary shall receive from a Paying Agent appointed
under the Indenture any payment on a Global Note, the amount so received shall
be distributed, with appropriate designation, promptly to the Depository or its
nominee on the relevant payment date. So long as DTC is the Depository, such
payments shall be made in accordance with the Letter of Representations.

         (b) The Book-Entry Depositary shall forward to the Company or its
agents such information from its records as the Company may reasonably request
to enable the Company or its agents to file necessary reports with governmental
agencies, and the Book-Entry Depositary, the Company or its agents may (but
shall not be required to) file any such reports necessary to obtain benefits
under any applicable tax treaties for the Depository or beneficial owners of
Book-Entry Interests.

         (c) None of the Company, the Trustee, the Book-Entry Depositary or any
agent of the Company, the Trustee or the Book-Entry Depositary will have any
responsibility or liability for any aspect of the records relating to payments
made by the Depository (or its Participants) on account of Book-Entry Interests
or for maintaining, supervising or reviewing any records relating to such
Book-Entry Interests.

         (d) Notwithstanding any other provision of this Agreement, the
Book-Entry Depositary shall be required to pay to the Depository only amounts
received by the Book-Entry Depositary in respect of the Global Notes.

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         SECTION 2.07. Redemption of Notes and Book-Entry Interests. In the
event that the Company redeems all or any part of a Global Note or Global Notes
pursuant to the terms of the Indenture and the Notes (including in connection
with the issuance of any Refinancing Notes), the Book-Entry Depositary shall,
promptly upon receipt of the redemption price and as instructed by the Trustee,
make the appropriate entry into its books and records to reflect the reduction
as a result of such redemption in the principal amount at maturity of the Global
Note or Global Notes. In addition, the Book-Entry Depositary shall reflect such
reduction in its records relating to the CDIs and notify the Depository of the
principal amount at maturity redeemed and of the corresponding reduction of the
principal amount at maturity of the CDI. The Book-Entry Depositary shall
immediately pay all such amounts received by it in connection with such
redemption to the Depository or its nominee as specified in the DTC Letter of
Representations.

         SECTION 2.08. Record Date. Whenever (a) the Book-Entry Depositary shall
receive notice of any action to be taken by the Holder of any Global Note, or
(b) the Book-Entry Depositary otherwise deems it appropriate in respect of any
other matter, including any payment to be made in respect of any Global Note,
the Book-Entry Depositary shall fix a record date for the determination of the
principal amount at maturity represented by the respective CDIs at such record
date, with respect to which the Depository shall be entitled to take any such
action or to act in respect of any such matter, which record date shall be the
same date as that fixed with respect to the Holder of such Global Note or
Holders of the Definitive Registered Notes under the Indenture. Subject to the
provisions of this Agreement, only the Depository shall be entitled to receive
any such payment, to give instructions as to such action or to act in respect of
any such matter, as the case may be.

         SECTION 2.09. Action in Respect of the CDIs. As soon as practicable
after receipt by the Book-Entry Depositary of written notice of any solicitation
of consents or request for a waiver or other action by a Holder under the
Indenture or by the Book-Entry Depositary under this Agreement, the Book-Entry
Depositary shall (a) set a record date (which shall, to the extent possible, be
at least 15 days subsequent to the date of the mailing required under clause (b)
of this sentence) for the determination of the owners of Book-Entry Interests
which shall have the right to vote on any such consent, waiver or other action,
and (b) mail or otherwise send in accordance with the Letter of Representations
to the Depository a notice containing (i) such information as is contained in
the notice received, (ii) a statement that the Depository at the close of
business on a specified record date (established in accordance with Section 2.08
hereto) will be entitled to instruct the Book-Entry Depositary in writing as to
the consent, waiver or other action, if any, pertaining to this Agreement or the
Indenture, (iii) a statement as to the manner in which such instruction may be
given, and (iv) the record date set pursuant to clause (a) of this sentence.
Upon the written request of the Depository received on or before the date
established by the Book-Entry Depositary for such purpose, the Book-Entry
Depositary shall endeavor insofar as practicable and permitted under the
provisions of this Agreement or the Indenture, as the case may be, to take such
action regarding the requested consent, waiver or other action in respect of all
or only a portion of the principal amount at maturity of the CDIs or Global
Notes, as the case may be, with respect to which instructions given in
accordance with any instructions set forth in such request have been received.
In addition, the Book-Entry Depositary will forward to the Depository, or, based
upon written instructions received from the Depository, to owners of the
Book-Entry Interests, all materials received by the Book-Entry Depositary
pertaining to any such solicitation, requests, offer or other action. The
Depository may grant proxies or otherwise authorize the Participants (or persons
owning Book-Entry Interests through such

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Participants) to provide such instructions directly to the Book-Entry Depositary
so that it may exercise any rights of a Holder or take any other actions which a
Holder is entitled to take under the Indenture. The Book-Entry Depositary shall
not itself exercise any discretion in the granting of consents or waivers or the
taking of any other action in respect of the Global Notes but shall only grant
such a consent or waiver or take any such action pursuant to instructions from
the Depository or the owners of the Book-Entry Interests, as the case may be,
pursuant to the provisions of this Section 2.09 and the Letter of
Representations. Without prejudice to Section 2.06(c) hereof, the records of the
Depository shall, absent manifest error, be conclusive evidence of the owners of
Book-Entry Interests and the principal amount at maturity represented by the
Book-Entry Interests, for the purposes of this Section 2.09.

         SECTION 2.10. Changes Affecting the Global Notes. Upon any
recapitalization, reorganization, merger or consolidation or sale of assets
affecting the Company or to which the Company is a party, any securities that
shall be received by the Book-Entry Depositary in exchange for or in respect of
any Global Note or Global Notes, as the case may be, shall be treated as new
global securities or as part of such Global Note or Global Notes under this
Agreement and the corresponding CDI or CDIs shall thenceforth represent such
Global Note or Global Notes, including such securities so received.

         SECTION 2.11. Reports. The Book-Entry Depositary shall immediately send
in the manner specified in Section 4.02 hereof to the Depository copies of any
notices, reports and other communications received from the Company or the
Trustee that are received by the Book-Entry Depositary as Holder of the Global
Notes.

                                  ARTICLE THREE

                            THE BOOK-ENTRY DEPOSITARY

         SECTION 3.01. Certain Duties and Responsibilities. (a) The Book-Entry
Depositary shall act only as a custodian and bailee for hire under this
Agreement and not in any other fiduciary capacity. Accordingly, the Book-Entry
Depositary undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. No implied duties, covenants or
liabilities shall be read against the Book-Entry Depositary.

         (b) No provision of this Agreement shall be construed to relieve the
Book-Entry Depositary from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:

         (i) the duties and obligations of the Book-Entry Depositary with
     respect to the CDIs and the Global Notes shall be determined solely by the
     express provisions of this Agreement. The Book-Entry Depositary shall not
     be liable except for the performance of such duties and obligations as are
     specifically set forth in this Agreement, and no implied covenants or
     obligations shall be read into this Agreement against the Book-Entry
     Depositary;

         (ii) in the absence of bad faith on its part, the Book-Entry
     Depositary may conclusively rely, as to the truth of the statements and the
     correctness of the opinions expressed therein, upon any statements,
     certificates or opinions furnished to the Book-Entry Depositary, but in the
     case of any such statements, certificates or opinions that by any
     provision hereof are required to be furnished to the Book-Entry

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     Depositary, the Book- Entry Depositary shall be under a duty to examine the
     same to determine whether or not they conform to the requirements of this
     Agreement;

             (iii) the Book-Entry Depositary shall not be liable for any error
     of judgment made in good faith by a Responsible Officer of the Book-Entry
     Depositary, unless it shall be proved that the Book-Entry Depositary was
     negligent in ascertaining the pertinent facts;

             (iv) the Book-Entry Depositary shall not be liable with respect to
     any action taken or omitted to be taken by it in good faith in accordance
     with the direction of the Depository relating to the time, method and
     place of conducting any proceeding for any remedy available to the Book-
     Entry Depositary, or exercising any power conferred upon the Book-Entry
     Depositary, under this Agreement; and

             (v) no provision of this Agreement shall require the Book-Entry
     Depositary to expend or risk its own funds or otherwise incur any
     financial liability in the performance of any of its duties hereunder or
     in the exercise of any of its rights or powers hereunder, if it shall have
     reasonable grounds for believing that repayment of such funds or adequate
     indemnity against such risk or liability is not reasonably assured to it.

         (c) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct of, or affecting the liability of, or
affording protection to the Book-Entry Depositary shall be subject to the
provisions of this Section 3.01.

         SECTION 3.02. Notice of Default. Within 30 days after the occurrence of
any Default of which a Responsible Officer of the Book-Entry Depositary has
actual knowledge, or promptly upon receipt from the Trustee of notice of any
Default as provided in the Indenture, the Book-Entry Depositary shall transmit
to the Depository in the manner provided in Section 4.02 hereof, notice of such
Default, provided that such Default shall be continuing. Upon the occurrence of
an Event of Default, or in connection with the exercise of any right of the
Holders under the Indenture, the Book-Entry Depositary shall, if requested by
the Depository, take any action so requested, subject to Section 3.03(f) hereof;
provided that such action is permitted to be taken by the Holders of the Notes
under the Indenture.

         SECTION 3.03. Certain Rights of the Book-Entry Depositary. Subject to
the provisions of Section 3.01 hereof:

         (a) the Book-Entry Depositary may conclusively rely and shall be fully
     protected in acting or refraining from acting upon any resolution,
     certificate (including any Officers' Certificate delivered to the Trustee),
     statement, instrument, opinion, report, notice, request, direction,
     consent, order, bond, debenture, note, coupon, security, or other paper or
     document believed by it to be genuine and to have been signed or presented
     by the proper party or parties;

         (b) any request or direction of the Company shall be sufficiently
     evidenced by an Officers' Certificate and any resolution of the Board of
     Directors of the Company may be sufficiently evidenced by a Board
     Resolution;

         (c) the Book-Entry Depositary may consult with counsel and the written
     advice of such counsel or any Opinion of Counsel shall be full and complete

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     authorization and protection with respect to any action taken, suffered or
     omitted by it hereunder in good faith and in reliance thereon in
     accordance with such advice or Opinion of Counsel;

         (d) the Book-Entry Depositary shall not be bound to make any
     investigation into the facts or matters stated in any resolution,
     certificate, statement, instrument, opinion, report, notice, request,
     consent, order, bond, debenture, note, other evidence of indebtedness or
     other paper or document, but the Book-Entry Depositary may, but shall not
     be obligated to, make reasonable further inquiry or investigation into
     such facts or matters relating to the Global Notes and, if the Book-Entry
     Depositary shall determine to make such further inquiry or investigation,
     it shall be entitled to examine the books, records and premises of the
     Company, at reasonable times during normal business hours, personally or
     by agent or attorney;

         (e) the Book-Entry Depositary may execute any of the powers hereunder
     or perform any duties hereunder either directly or by or through agents or
     attorneys, and the Book-Entry Depositary shall not be responsible for any
     misconduct or negligence on the part of any such agent or attorney
     appointed with due care by it hereunder;

         (f) the Book-Entry Depositary shall be under no obligation to exercise
     any of the rights or powers vested in it by this Agreement at the request,
     order or direction of the Depository pursuant to this Agreement, unless
     (i) the Depository shall have offered to the Book-Entry Depositary
     reasonable security or indemnity against the costs, expenses and
     liabilities that might be incurred by it in compliance with such request,
     order or direction and (ii) such request, order or direction shall not
     expose the Book-Entry Depositary to personal liability;

         (g) the Book-Entry Depositary shall not be liable for any action taken
     or omitted by it in good faith and reasonably believed by it to be
     authorized or within the discretion, rights or powers conferred upon it by
     this Agreement; and

         (h) whenever in the administration of its duties under this Agreement
     the Book-Entry Depositary shall deem it necessary or desirable that a
     matter be proved or established prior to taking or suffering or omitting
     action hereunder, such matter (unless other evidence in respect thereof be
     herein specifically prescribed) may, in the absence of negligence, wilful
     misconduct or bad faith on the part of the Book-Entry Depositary, be
     deemed to be conclusively proved and established by an Officers'
     Certificate delivered to the Book-Entry Depositary.

         SECTION 3.04. Not Responsible for Recitals or Issuance of Notes. The
recitals contained in the Indenture and in the Notes shall be taken as the
statements of the Company, and the Book-Entry Depositary assumes no
responsibility for their correctness. The Book-Entry Depositary makes no
representations as to the validity or sufficiency of this Agreement or the Notes
or of any offering materials. The Book-Entry Depositary shall not be accountable
for the use or application by the Company of the proceeds of the Notes.

         SECTION 3.05. Money Held By Book-Entry Depositary. Money held by the
Book-Entry Depositary hereunder need not be segregated from other funds held by
the Book-Entry Depositary, except to the extent required by law. The Book-Entry
Depositary

                                       10
<PAGE>   12

shall be under no obligation to invest or pay interest on any money
received by it hereunder, except as otherwise agreed with the Depository.

         SECTION 3.06. Compensation and Reimbursement; Limitation of Liability.
The Company agrees:

         (a) to pay the Book-Entry Depositary from to time such compensation as
is agreed between them in writing for all services rendered by it hereunder;

         (b) to reimburse the Book-Entry Depositary upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Book-
Entry Depositary in accordance with any provisions of this Agreement (including
the reasonable  compensation and the expenses and disbursements of its agents
and counsel), except any such  expense, disbursement or advance as may be
attributable to its negligence, bad faith or willful misconduct;

         (c) to indemnify the Book-Entry Depositary and its officers,
directors, employees and agents for, and to hold it and them harmless against,
any loss, liability or expense incurred without negligence, wilful misconduct or
bad faith on its or their part, arising out of or in connection with the
acceptance or administration of this Agreement and its duties hereunder,
including the costs and expenses of defending itself against or investigating
any claim of liability in connection with the exercise or performance of any of
its powers or duties hereunder; and

         (d) that the Book-Entry Depositary's liability shall be limited to
direct money damages, and that in no event shall the Book-Entry Depositary be
liable for special, consequential or indirect money damages, regardless of the
form of action and whether or not such damages were foreseeable.

         Without limiting the generality of the foregoing, the Book-Entry
Depositary shall have no duty or responsibility for, and shall not be deemed to
have been negligent with respect to, and the Company shall indemnify and hold
harmless the Book-Entry Depositary against, any claim that such disclosure with
respect to the Global Notes or the CDIs, or such registration, if any, of the
same or of the arrangement created hereby, as is required by applicable federal
and state securities laws, was not made. The obligations of the Company under
this Section 3.06 to compensate and indemnify the Book-Entry Depositary and to
pay or reimburse the Book-Entry Depositary for expenses, disbursements and
advances shall survive the payment of the Notes, the resignation or removal of
the Book-Entry Depositary and the satisfaction, discharge or other termination
of this Agreement.

         SECTION 3.07. Book-Entry Depositary Required; Eligibility. At all times
when there is a Book-Entry Depositary hereunder, such Book-Entry Depositary
shall be an Authorized Agent. Such Authorized Agent shall have its principal
place of business in the Borough of Manhattan, the City of New York, if there be
such an Authorized Agent in such location willing to act upon reasonable and
customary terms and conditions. If such Authorized Agent or its parent,
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforementioned supervising or examining authority, then for
the purposes of this Section 3.07, the combined capital and surplus of such
Authorized Agent shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. The Book-Entry
Depositary shall at all times be the financial institution that acts as the
Trustee under the Indenture, unless the Company and the Trustee

                                       11
<PAGE>   13

shall have received an Opinion of Counsel that the same Person is precluded by
law from acting in both such capacities. Any Book-Entry Depositary appointed
hereunder which is not the Trustee shall be acceptable to the Trustee. If at any
time the Book-Entry Depositary shall cease to be eligible in accordance with the
provisions of this Section 3.07 or resigns or is removed as Trustee under the
Indenture, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article Three.

         SECTION 3.08. Resignation and Removal; Appointment of Successor. (a) No
resignation or removal of the Book-Entry Depositary and no appointment of a
successor Book-Entry Depositary pursuant to this Article Three shall become
effective until (i) the acceptance of appointment by the successor Book-Entry
Depositary in accordance with the applicable requirements of Section 3.09 hereof
or (ii) the issuance of Definitive Registered Notes in accordance with Section
2.04 hereof.

         (b) The Book-Entry Depositary may resign by giving written notice
thereof to the Company, the Trustee and the Depository, in accordance with
Section 4.01 and Section 4.02, 60 days prior to the effective date of such
resignation. The Book-Entry Depositary may be removed at any time upon 90 days'
notice by filing with it of an instrument in writing signed on behalf of the
Company and specifying such removal and the date when it is intended to become
effective.

         (c) If the Book-Entry Depositary shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Book-Entry
Depositary for any cause, the Company, by Board Resolution, shall promptly
appoint a successor Book-Entry Depositary (other than the Company) acceptable to
the Trustee and shall comply with the applicable requirements of Section 3.09
hereof.

         (d) The Company shall give, or shall cause such successor Book-Entry
Depositary to give, notice of each resignation and each removal of a Book-Entry
Depositary and each appointment of a successor Book-Entry Depositary to the
Depository in accordance with Section 4.02 hereof. Each notice shall include the
name of the successor Book-Entry Depositary and the address of its Corporate
Trust Office. If the Company fails to give notice within ten days after
acceptance of appointment by the successor Book-Entry Depositary, the successor
Book-Entry Depositary shall cause such notice to be given at the expense of the
Company.

                                       12
<PAGE>   14

         SECTION 3.09. Acceptance of Appointment by Successor. (a) In case of
the appointment hereunder of a successor Book-Entry Depositary, such successor
Book-Entry Depositary so appointed shall execute, acknowledge and deliver to the
Company and to the retiring Book-Entry Depositary an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Book-Entry
Depositary shall become effective and such successor Book-Entry Depositary,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, agencies and duties of the retiring Book-Entry Depositary, with
like effect as if originally named as Book-Entry Depositary hereunder; but, on
the request of the Company or the successor Book-Entry Depositary, such retiring
Book-Entry Depositary shall, upon payment of all amounts due and payable to it
pursuant to Section 3.06 hereof, execute and deliver an instrument transferring
to such successor Book-Entry Depositary all the rights and powers of the
retiring Book-Entry Depositary and shall duly assign, transfer and deliver to
such successor Book-Entry Depositary all property and money held by such
retiring Book-Entry Depositary hereunder and shall deliver the Global Notes to
the successor.

         (b) Upon request of any successor Book-Entry Depositary, the Company
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Book-Entry Depositary all such rights, powers
and agencies referred to in Section 3.09(a).

         (c) No successor Book-Entry Depositary shall accept its appointment
unless at the time of such acceptance such successor Book-Entry Depositary shall
be eligible under this Article Three.

         SECTION 3.10. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Book-Entry Depositary may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Book-Entry Depositary
shall be a party, or any corporation succeeding to or purchasing or otherwise
acquiring all or substantially all the agency business of the Book-Entry
Depositary, shall be the successor of the Book-Entry Depositary hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such corporation shall be otherwise
eligible under this Article Three.

                                  ARTICLE FOUR

                            MISCELLANEOUS PROVISIONS

         SECTION 4.01. Notices to Book-Entry Depositary or Company. Any request,
demand, authorization, direction, notice, consent, or waiver, or other document
provided or permitted by this Agreement to be made upon, given or furnished to,
or filed with:

         (a) the Book-Entry Depositary shall be sufficient for every purpose
     hereunder (unless otherwise herein expressly provided) if made, given,
     furnished or filed in writing and delivered, telecopied and received, or
     mailed and received by first-class postage prepaid, to the Book-Entry
     Depositary at telecopier number (+1-212) 250-6439 or at its Corporate
     Trust Office, Attention: Corporate Trust Administration Department,
     Structured Finance Group, or at any other telecopier

                                       13
<PAGE>   15

     number or address previously furnished in writing by the Book-Entry
     Depositary to the Depository, the Trustee and the Company; or

         (b) the Company shall be sufficient for every purpose hereunder (unless
     otherwise herein expressly provided) if made, given, furnished or filed in
     writing and delivered, telecopied and received, or mailed and received by
     first-class postage prepaid, to AerCo Limited, Attention: Chief Financial
     Officer at telecopier number (+353-61) 36-0113, or at its address c/o AerFi
     Administrative Services Limited, Aviation House, Shannon, Ireland, or at
     any other telecopier number or address previously furnished in writing to
     the Book-Entry Depositary by the Company.

         SECTION 4.02. Notice to Depository and Owners; Waiver. Where this
Agreement provides for notice to the Depository or owners of Book-Entry
Interests of any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided or as provided in the Letter of
Representations) if in writing and mailed, first-class postage prepaid, to the
Depository at the address notified to the Book-Entry Depositary, in each case
not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. Where this Agreement provides for
notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by the
Depository shall be filed with the Book-Entry Depositary, but such filing shall
not be a condition precedent to the validity of any such action taken in
reliance upon such waiver.

         In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give notice by mail, then
such notification as shall be made with the approval of the Book-Entry
Depositary shall constitute a sufficient notification for every purpose
hereunder.

                                       14
<PAGE>   16

         SECTION 4.03. Effect of Headings. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.

         SECTION 4.04. Successors and Assigns. All covenants and agreements in
this Agreement by the Company shall bind its successors and assigns, whether so
expressed or not.

         SECTION 4.05. Separability Clause. In case any provision in this
Agreement or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions hereof and
thereof shall not in any way be affected or impaired thereby.

         SECTION 4.06. Benefits of Agreement. Nothing in this Agreement, the
Notes, or the Indenture, express or implied, shall give to any Person, other
than the parties hereto and their successors hereunder and the Depository and
the owners from time to time of the Book-Entry Interests as, intended third
party beneficiaries hereof, any benefits or any legal or equitable right, remedy
or claim under this Agreement.

         SECTION 4.07. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York.

         SECTION 4.08. Jurisdiction. By the execution and delivery of this
Agreement, the Company (a) acknowledges that it has, by separate written
instrument, irrevocably designated and appointed Corporation Service Company,
375 Hudson Street, New York, NY 10014-3660 as its authorized agent upon which
process may be serviced in any suit or proceeding by the Book-Entry Depositary
arising out of this Agreement that may be instituted in any Federal or State
court in the Borough of Manhattan, the City of New York, and acknowledges that
Corporation Service Company has accepted such designation, (b) submits to the
jurisdiction of any such court in any such suit or proceeding, and waives any
objection which it may now or hereafter have to the laying of venue of any such
proceeding or any claim of inconvenient forum and (c) agrees that service of
process upon Corporation Service Company and written notice of such service to
it (mailed or delivered to its Chief Financial Officer at its principal office
c/o GPA Administrative Services Limited, GPA House, Shannon, Ireland) shall be
deemed in every respect effective service of process upon it in any such suit or
proceeding. The Company further agrees to take any and all action, including the
execution and filing of any and all such documents and instruments, as may be
necessary to continue such designation and appointment of Corporation Service
Company in full force and effect so long as this Agreement shall be in full
force and effect and so long as any of the Global Notes shall be outstanding.

         If for the purposes of obtaining judgment in any court it is necessary
to convert a sum due hereunder into any currency other than United States
dollars, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be the rate at which in
accordance with normal banking procedures one could purchase United States
dollars with such other currency in The City of New York on the business day
preceding that on which final judgment is given. The obligations of the Company
in respect of any sum due from it shall, notwithstanding any judgment in a
currency other than United States dollars, not be discharged until the first
business day, following receipt of any sum adjudged to be so due in such other
currency, on which (and only to the extent that) the recipient may in accordance
with normal banking procedures purchase United States dollars with such other
currency; if the United States dollars so

                                       15
<PAGE>   17

purchased are less than the sum originally due to such person hereunder, the
Company agrees, as a separate obligation and notwithstanding any such judgment,
to indemnify such person against such loss. If the United States dollars so
purchased are greater than the sum originally due to such person hereunder, such
person agrees to pay to the Company (but without duplication) an amount equal to
the excess of the dollars so purchased over the sum originally due to such
person hereunder.

         To the extent that the Company has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution or otherwise) with respect to itself or its property, hereby
irrevocably waives such immunity in respect of its respective obligations under
this Agreement to the fullest extent permitted by law.

         SECTION 4.09. Counterparts. This Agreement may be executed in any
number of counterparts by the parties hereto on separate counterparts, each of
which, when so executed and delivered, shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.

         SECTION 4.10. Inspection of Agreement. A copy of this Agreement shall
be available at all reasonable times during normal business hours at the
Corporate Trust Office of the Book-Entry Depositary for inspection by any owner
of Book-Entry Interests.

         SECTION 4.11. Termination. This Agreement shall terminate and cease to
be of further effect when (a) the Indenture shall have been satisfied and
discharged pursuant to the provisions thereof or Definitive Registered Notes
have been issued and all Global Notes shall have been canceled in accordance
with the provisions of Section 2.04 or 2.05 hereof, (b) the Company has paid or
caused to be paid all sums payable hereunder by the Company and (c) the Company
has delivered to the Book-Entry Depositary an Officers' Certificate and an
Opinion of Counsel, stating that all conditions precedent herein provided
relating to the termination of this Agreement have been complied with.

         SECTION 4.12. Amendments. The Company and the Book-Entry Depositary may
amend this Agreement without the consent of the Depository or the owners of
Book-Entry Interests:

         (a) to cure any ambiguity, omissions, defect or inconsistency;

         (b) to evidence the succession of another person to the Company (when a
     similar amendment with respect to the Indenture is being executed) and the
     assumption by any such successor of the covenants of the Company herein;

         (c) to add to the covenants and agreements of the Book-Entry Depositary
     or the Company;

         (d) to evidence or effectuate the assignment of the Book-Entry
     Depositary's rights and duties to a qualified successor, as provided
herein; or

         (e) to comply with any requirements of the Securities and Exchange
     Commission or the TIA.

         No amendment that materially adversely affects the Depository may be
made to this Agreement without the consent of the Depository. No amendment other
than those

                                       16
<PAGE>   18

amendments specified above may be made to this Agreement unless the Book-Entry
Depositary shall first have received the consent of the owners of a majority in
outstanding principal amount of Book-Entry Interests on any date of any vote of
such owners (voting as a single class), to such amendment in accordance with the
procedures set out in Section 2.09 hereof. Notwithstanding the immediately
preceding sentence, any amendment which constitutes a Basic Terms Modification
shall only be made upon the consent of every owner of Book-Entry Interests whose
rights are so affected.

         SECTION 4.13. Book-Entry Depositary To Sign Amendments. The Book-Entry
Depositary shall sign any amendment authorized pursuant to Section 4.12 if the
amendment does not adversely affect the rights, duties, liabilities or
immunities of the Book-Entry Depositary. If it does, the Book-Entry Depositary
may but need not sign it. In signing such amendment the Book-Entry Depositary
shall be entitled to receive indemnity, in addition to the indemnity provided
under Section 3.06(c) hereof, reasonably satisfactory to it and to receive, and
shall be fully protected in relying upon, an Officers' Certificate (which need
only cover the matters set forth in clause (a) below) and an Opinion of Counsel
stating that:

         (a) such amendment is authorized or permitted by this Agreement;

         (b) the Company has all necessary corporate power and authority to
     execute and deliver the amendment and that the execution, delivery and
     performance of such amendment have been duly authorized by all necessary
     corporate action;

         (c) the execution, delivery and performance of the amendment do not
     conflict with, or result in the breach of or constitute a default under
     any of the terms, conditions or provisions of (i) this Agreement, (ii) the
     Memorandum and Articles of Association of the Company, or (iii) any law or
     regulation applicable to the Company; and

         (d) such amendment has been duly and validly executed and delivered by
     the Company, and this Agreement together with such amendment constitutes a
     legal, valid and binding obligation of the Company enforceable against the
     Company in accordance with its terms, except as such enforceability may be
     limited by applicable bankruptcy, insolvency or similar laws affecting the
     enforcement of creditors' rights generally and general equitable
     principles.

                                       17
<PAGE>   19

         IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.

                                               AERCO LIMITED

                                               By
                                                  ------------------------------
                                                  Name:
                                                  Title:

                                               BANKERS TRUST COMPANY as
                                                 Book-Entry Depositary

                                               By
                                                  ------------------------------
                                                  Name:
                                                  Title:

                                       18
<PAGE>   20<PAGE>   1
                                                                     EXHIBIT 4.1

AMERICAN GENERAL CORPORATION:  Terms Committee

DATE:         November 30, 2000

SUBJECT:      8.05% Trust Preferred Securities of American General Capital III

PURPOSE:      The purpose of these resolutions is to authorize certain matters
              relating to the issuance and sale of 8.05% Trust Preferred
              Securities of American General Capital III

               RESOLUTIONS AUTHORIZING CERTAIN MATTERS RELATING TO
                           TRUST PREFERRED SECURITIES

         WHEREAS, at a meeting on October 23, 1997, the Board of Directors of
American General Corporation (the "Company") authorized the creation, issuance
and sale of up to $1,500,000,000 aggregate offering price of securities;

         WHEREAS, American General Capital III, a Delaware statutory business
trust (the "Trust"), proposes to issue its 8.05% Trust Preferred Securities (the
"Preferred Securities") and its 8.05% Common Securities (the "Common Securities"
and, together with the Preferred Securities, the "Trust Securities") and use the
proceeds from the sale of the Trust Securities to purchase junior subordinated
debentures of the Company; and

         WHEREAS, this Committee desires to establish the terms of such junior
subordinated debentures pursuant to Section 3.1 of the Junior Subordinated
Indenture, dated as of November 15, 1997 (the "Indenture"), between the Company
and Bankers Trust Company, as trustee (the "Trustee"); and

         WHEREAS, in connection with the issuance of the Preferred Securities,
the Company and the Trust propose to file with the Commission a final prospectus
supplement to the Registration Statement on Form S-3 (Registration Nos.
333-40583, et. seq.), as amended, previously filed by the Company, the Trust and
certain other trusts with the Securities and Exchange Commission (the
"Commission"), which prospectus supplement sets forth, among other things,
information with respect to the terms of such Trust Securities and junior
subordinated debentures;

         Now, therefore, be it:

8.05% JUNIOR SUBORDINATED DEBENTURES DUE 2049

         RESOLVED, that, upon receipt of the purchase price therefor, the
Company shall issue, sell and deliver a series of its junior subordinated
debentures to the Trust pursuant to the Indenture having an aggregate principal
amount of $103,092,800 and, upon such issuance, such junior subordinated
debentures shall be valid and binding obligations of the Company; and be it

<PAGE>   2

         FURTHER RESOLVED, that the title, principal amount, interest rate,
redemption provisions, and other terms of such junior subordinated debentures to
be fixed pursuant to Section 3.1 of the Indenture shall be as follows
(capitalized terms appearing below that are defined in the Indenture, but not
defined herein, having the meanings ascribed to them in the Indenture):

         1. TITLE. The junior subordinated debentures shall be designated as the
8.05% Junior Subordinated Debentures due 2049 (the "Debentures").

         2. PRINCIPAL AMOUNT. The aggregate principal amount of the Debentures
which may be authenticated and delivered pursuant to these resolutions shall be
limited to $103,092,800 (except for Debentures authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Debentures
of the same series pursuant to Sections 3.4, 3.5, 3.6, 9.6 or 11.6 of the
Indenture).

         3. MATURITY DATE. The principal of the Debentures shall be payable
(together with any accrued and unpaid interest thereon) on December 31, 2049
(the "Maturity Date"), subject to earlier redemption as set forth below in
paragraphs 7 and 8. The Debentures will not be entitled to the benefit of any
sinking fund prior to maturity.

         4. INTEREST RATE; INTEREST PAYMENT DATES.

         (a) The Debentures will bear interest on the principal amount thereof
at the fixed rate of 8.05% per annum (the "Coupon Rate") from and including
December 7, 2000 or from and including the most recent Interest Payment Date to
which interest has been paid or duly provided for to but excluding the related
Interest Payment Date (as defined below) until the principal thereof becomes due
and payable, and on any overdue principal and (to the extent that payment of
such interest is enforceable under applicable law) on any overdue installment of
interest at the Coupon Rate, compounded quarterly, payable (subject to the
provisions of paragraph 5 below) quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year (each, an "Interest Payment Date"),
commencing on December 31, 2000. The amount of interest payable on any Interest
Payment Date shall be computed on the basis of a 360-day year of twelve 30-day
months, and for any period shorter than a full quarter on the basis of the
actual number of days elapsed in such 90-day quarter.

         (b) Interest on the Debentures (except defaulted interest) shall be
paid to the Persons in whose name the Debentures are registered at the close of
business on the Regular Record Date for such interest installment (including
Debentures that are canceled after the Regular Record Date and before the
Interest Payment Date), which, with respect to any Debentures of which the
Property Trustee of the Trust (the "Property Trustee") is the Holder or with
respect to a Debenture in Global Security form, shall be the close of business
on the Business Day next preceding that Interest Payment Date. If the Debentures
are no longer held by the Property Trustee and the Debentures are not
represented by a Debenture in Global Security form, the Regular Record Date for
such interest installment shall be the 15th day of the last month of the
quarterly interest period (even if not a Business Day). Notwithstanding the
foregoing, any interest that is payable at maturity shall be payable to the
Person to whom principal payable at maturity shall be payable.

                                      -2-
<PAGE>   3

         (c) If the Holder of a Debenture is the Property Trustee, the payment
of the principal of and interest on such Debenture will be made by wire transfer
in immediately available funds at such place and to such account as may be
designated by the Property Trustee.

         (d) If, at any time while the Property Trustee is the Holder of any
Debentures, the Trust is required to pay any taxes, duties, assessment or
governmental charges of whatever nature (other than withholding taxes) imposed
by the United States, or any other taxing authority, then, in any case, the
Company will pay as additional interest on the Debentures held by the Property
Trustee, such additional amounts as shall be required so that the net amounts
received and retained by the Trust after paying such taxes, duties, assessments
or other governmental charges will be equal to the amounts the Trust would have
received had no such taxes, duties, assessments or other government charges been
imposed.

         5. EXTENSION OF AN INTEREST PAYMENT PERIOD. So long as no Event of
Default under the Indenture has occurred and is continuing, the Company may
defer the payment of interest on the Debentures at any time and from time to
time for a period not exceeding 20 consecutive quarterly periods, including the
first such quarterly period during such period (each, an "Extension Period"),
provided that no Extension Period shall extend beyond the Maturity Date or the
earlier date of redemption. No interest shall be due and payable on the
Debentures until the end of the Extension Period unless the Debentures are
redeemed prior to that date, in which event interest on the Debentures so
redeemed shall be due and payable on the redemption date. At the end of the
Extension Period, the Company shall pay all interest accrued and unpaid on the
Debentures, which shall be payable to the Holders of the Debentures in whose
names the Debentures are registered in the Securities Register as of the Regular
Record Date relating to the Interest Payment Date that corresponds to the end of
such Extension Period. Notwithstanding such deferral, interest shall accrue on
the interest deferred (to the extent permitted by applicable law) at the Coupon
Rate, compounded quarterly, from the relevant Interest Payment Dates during any
Extension Period. Prior to the expiration of any Extension Period, the Company
may further defer payments of interest by further extending such Extension
Period; provided that such Extension Period, together with all previous and
further extensions, if any, within such Extension Period, may not exceed 20
consecutive quarterly periods, including the first quarterly period during such
Extension Period, or extend beyond the Maturity Date of the Debentures or the
date of earlier redemption. Before the termination of any Extension Period, the
Company may pay all or any portion of the interest accrued on the Debentures to
the date of payment. Upon the expiration of any Extension Period and the payment
of all amounts then due, the Company may commence a new Extension Period,
subject to the above requirements. There is no limitation on the number of times
that the Company may elect to begin an Extension Period. The Company will give
notice of its commencement of an Extension Period as set forth in Section 3.11
of the Indenture.

         6. PLACE OF PAYMENT. The Trustee is hereby appointed as the initial
sole Paying Agent for the Debentures. The principal of and interest on the
Debentures shall be payable at the Corporate Trust Office of the Trustee in the
Borough of Manhattan, The City of New York; provided, however, that, at the
option of the Company, payment of interest may be made (a) except in the case of
Debentures in Global Security form, by check mailed to the address of the Person
entitled thereto as such address shall appear in the Securities Register or (b)
if proper transfer instructions have been

                                      -3-
<PAGE>   4

received by the Securities Registrar by the applicable Regular Record Date, by
wire transfer to such account as may be designated by the Person entitled
thereto as specified in the Securities Register. Notwithstanding the foregoing,
so long as the Holder of any Debentures is the Property Trustee, the payment of
the principal of and interest on such Debentures held by the Property Trustee
will be made by wire transfer of immediately available funds at such place and
to such account as may be designated by the Property Trustee. Payment of
principal of the Debentures will only be made upon surrender of the Debentures
to the Trustee.

         7. SPECIAL EVENT REDEMPTION.

         (a) If a Tax Event or Investment Company Event (each as defined below,
and each a "Special Event") has occurred and is continuing, then the Company
shall have the right, upon no less than 30 days' nor more than 60 days' notice
to the Holders of the Debentures, to redeem the Debentures, in whole but not in
part, before December 7, 2005, for cash within 90 days following the occurrence
of such Special Event at a redemption price equal to 100% of the principal
amount to be redeemed plus any accrued and unpaid interest thereon to the date
of such redemption. The Redemption Price shall be paid prior to 12:00 noon, New
York time, on the date of such redemption or at such earlier time as the Company
determines and specifies in the notice of redemption.

         (b) "Tax Event" means that the Administrative Trustees of the Trust
(the "Administrative Trustees") shall have received an opinion of an independent
tax counsel experienced in such matters to the effect that, as a result of (i)
any amendment to, or change (including any announced proposed change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority affecting taxation, or (ii) any official or
administrative pronouncement or action or judicial decision, interpreting or
applying such laws or regulations, which amendment or change becomes effective
or such pronouncement, action or decision is announced or occurs on or after
November 30, 2000, there is more than an insubstantial risk that (A) the Trust
is or, within 90 days of the date of such opinion, would be subject to United
States federal income tax with respect to interest accrued or received on the
Debentures, (B) interest payable by the Company on the Debentures is not or,
within 90 days of the date of such opinion, would not be deductible, in whole or
in part, by the Company for United States federal income tax purposes, or (C)
the Trust is or, within 90 days of the date of such opinion, would be, subject
to more than a de minimis amount of other taxes, duties, assessments or other
governmental charges.

         (c) "Investment Company Event" means that the Administrative Trustees
shall have received an opinion of an independent counsel experienced in practice
under the Investment Company Act to the effect that, as a result of the
occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), there is more than
an insubstantial risk that the Trust is or will be considered an "Investment
Company" that is required to be registered under the Investment Company Act,
which Change in 1940 Act Law becomes effective on or after November 30, 2000.
For the purpose of the preceding sentence, "Investment Company Act" means the
Investment Company Act of 1940, as amended from time to time, or any successor
legislation.

                                      -4-
<PAGE>   5

         8. OPTIONAL REDEMPTION. The Company shall have the right to redeem the
Debentures, in whole or in part, at any time or from time to time, on or after
December 7, 2005, at a redemption price equal to 100% of the principal amount to
be redeemed plus any accrued and unpaid interest thereon to the date of such
redemption. Any redemption pursuant to this paragraph 8 shall be made upon no
less than 30 days nor more than 60 days notice to the Holders of the Debentures.
The Redemption Price shall be paid prior to 12:00 noon, New York time, on the
date of such redemption or at such earlier time as the Company determines and
specifies in the notice of redemption.

         9. LISTING. If the Preferred Securities are listed on the New York
Stock Exchange or another securities exchange at the time, if any, of the
distribution of the Debentures to the holders of Preferred Securities in
accordance with the Amended and Restated Declaration of Trust of the Trust among
the Company, as sponsor, the Delaware Trustee, the Property Trustee and the
Administrative Trustees referred to therein (the "Declaration"), then, prior to
such distribution, the Company shall use its best efforts to cause the
Debentures to be listed on the New York Stock Exchange or such other exchange on
which the Preferred Securities were listed immediately prior to such
distribution.

         10. REGISTRAR. The Debentures may be surrendered for registration of
transfer or exchange at the Corporate Trust Office of the Trustee and any
notices or demands at or upon the Company in respect of the Debentures and the
Indenture may be presented at that office.

         11. FORM.

         (a) The certificate or certificates evidencing the Debentures shall be
substantially in the form attached hereto as Annex A, with such changes as the
officer executing the same shall approve, such approval to be evidenced by such
officer's manual or facsimile signature. The terms of the Debentures are
specified therein as well as in these resolutions.

         (b) Except as provided in (c) below, the Debentures shall be issued in
fully registered certificated form, without interest coupons.

         (c) In connection with a distribution of the Debentures to the holders
of the Preferred Securities pursuant to the Declaration:

                  (i) the Debentures in certificated form to be distributed to
         the holders of Preferred Securities may be presented to the Trustee by
         the Property Trustee in exchange for a Debenture or Debentures in
         Global Security form in an aggregate principal amount equal to the
         aggregate principal amount of all Outstanding Debentures, to be
         registered in the name of The Depository Trust Company as initial
         Depository (the "Depository"), or its nominee, and delivered by the
         Trustee to the Depository for crediting to the accounts of its
         participants pursuant to the instructions of the Property Trustee. The
         Company upon any such presentation shall execute one or more Debentures
         in Global Security form in such aggregate principal amount and deliver
         the same to the Trustee for authentication and delivery in accordance
         with the Indenture and this resolution. Payments on the Debentures
         issued as a Global Security will be made to the Depository; and

                                      -5-
<PAGE>   6

                  (ii) if any Preferred Securities are held in non book-entry
         certificated form, the Debentures in certificated form may be presented
         to the Trustee by the Property Trustee and any certificate which
         represents Preferred Securities ("Preferred Securities Certificate")
         other than Preferred Securities held by the Depository or its nominee
         ("Non Book-Entry Preferred Securities) will be deemed to represent a
         beneficial interest in Debentures presented to the Trustee by the
         Property Trustee having an aggregate principal amount equal to the
         aggregate liquidation amount of the Non Book-Entry Preferred Securities
         until such Preferred Security Certificates are presented to the
         Securities Registrar for transfer or reissuance, at which time such
         Preferred Security Certificates will be canceled and a Debenture,
         registered in the name of the holder of the Preferred Security
         Certificate or the transferee of the holder of such Preferred Security
         Certificate, as the case may be, with an aggregate principal amount
         equal to the aggregate liquidation amount of the Preferred Security
         Certificate canceled, will be executed by the Company and delivered to
         the Trustee for authentication and delivery in accordance with the
         Indenture and this resolution. On issuance of such Debentures,
         Debentures with an equivalent aggregate principal amount that were
         presented by the Property Trustee to the Trustee will be deemed to have
         been canceled.

         12. TRANSFERABILITY. Prior to a distribution of the Debentures to the
holders of Trust Securities pursuant to the Declaration, the Debentures may not
be transferred by the Trust without the Company's prior consent.

         13. DENOMINATION. The Debentures shall be issuable in denominations of
$25 and any integral multiple thereof.

         14. RANKING; SUBORDINATION. The Debentures will be unsecured and will
be issued subject to the provisions of Article XIII of the Indenture. The
Debentures will rank pari passu with all other series of Securities issued
pursuant to the Indenture.

         15. FORM OF AMENDED AND RESTATED DECLARATION OF TRUST AND GUARANTEE
AGREEMENT. Pursuant to Section 3.1(18) of the Indenture, the form of Declaration
and Preferred Securities Guarantee Agreement relating to the Debentures and the
Trust Securities shall be in the forms attached hereto as Annexes B and C,
respectively; and be it

                                      -6-
<PAGE>   7

                                                                         ANNEX A

                           [FORM OF FACE OF DEBENTURE]

                          AMERICAN GENERAL CORPORATION
                       8.05% JUNIOR SUBORDINATED DEBENTURE
                                    DUE 2049
NO. 1- REGISTERED                                           $___________________

         American General Corporation, a Texas corporation (the "Company", which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to ____________________________,
or registered assigns, the principal sum of ___________________________ Dollars
($_____________) on December 31, 2049 unless redeemed prior thereto in
accordance with the provisions hereof, and to pay interest on such principal sum
from and including December 7, 2000, or from and including the most recent
interest payment date (each such date, an "Interest Payment Date") to which
interest has been paid or duly provided for, quarterly (subject to deferral as
set forth herein) in arrears on March 31, June 30, September 30 and December 31
of each year commencing December 31, 2000, at the rate of 8.05% per annum until
the principal hereof shall have become due and payable, and on any overdue
principal and (without duplication and to the extent that payment of such
interest is enforceable under applicable law) on any overdue installment of
interest at the same rate per annum. The amount of interest payable on any
Interest Payment Date shall be computed on the basis of a 360-day year of twelve
30-day months, and for any period shorter than a full quarter on the basis of
the actual number of days elapsed in such 90-day quarter. In the event that any
date on which interest is payable on this Debenture is not a Business Day, then
payment of interest payable on such date will be made on the next succeeding day
that 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. The
interest installment so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in the Indenture, be paid to the
person in whose name this Debenture is registered at the close of business on
the regular record date for such interest installment, which shall be the close
of business on the Business Day next preceding such Interest Payment Date.
Notwithstanding the foregoing, any interest that is payable on the Maturity
shall be payable to the Person to whom principal payable at the Maturity shall
be payable. Any such interest installment not punctually paid or duly provided
for shall forthwith cease to be payable to the registered Holders on such
regular record date and may be paid to the Person in whose name this Debenture
(or one or more Predecessor Security) is registered at the close of business on
a special record date to be fixed in accordance with the provisions of Section
3.7 of the Indenture or may be paid in any other manner lawfully permitted by
the Indenture. The principal of and the interest on this Debenture shall be
payable at the office or agency of the Trustee maintained for that purpose in
any coin or currency of the United States of America that at the time of payment
is legal tender for payment of public and private debts; provided, however, that
payment of interest may be made at the option of the Company by check mailed to
the registered Holder at such address as shall appear in the Securities Register
or, subject to the provisions of the Indenture, by a transfer of funds to an
account designated in the Securities Register. Notwithstanding the foregoing, so
long as the

                                      -7-
<PAGE>   8

Holder of this Debenture is the Property Trustee, the payment of the principal
of and interest on this Debenture will be made by wire transfer in immediately
available funds at such place and to such account as may be designated by the
Property Trustee. Payment of principal of the Debentures will only be made upon
surrender of the Debentures to the Trustee or Paying Agent.

         The indebtedness evidenced by this Debenture is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness, and this Debenture is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each Holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.

         This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been manually signed by or on
behalf of the Trustee.

         The provisions of this Debenture are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.

                                       -8-

<PAGE>   9

         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.

Dated:                                       AMERICAN GENERAL CORPORATION
      -------------------

                                             By:
                                                -------------------------------

Attest:

By:
   ---------------------------------

                          CERTIFICATE OF AUTHENTICATION

         This is one of the Debentures referred to in the within-mentioned
Indenture.

                                             BANKERS TRUST COMPANY

                                             By:
                                                -------------------------------
                                                     Authorized Signatory

                                       -9-

<PAGE>   10

                         [Form of Reverse of Debenture]

                                  REVERSE SIDE

         This Debenture is one of a duly authorized series of Debentures of the
Company (herein sometimes referred to as the "Debentures"), specified in and all
issued or to be issued in one or more series under and pursuant to an Indenture,
dated as of November 15, 1997, executed and delivered between the Company and
Bankers Trust Company (as supplemented or amended from time to time, the
"Indenture" which, for the purposes hereof, shall be deemed to include the Board
Resolution dated November 30, 2000 establishing the terms of the Debentures in
accordance with the Indenture), to which Indenture reference is hereby made for
a description of the rights, limitations or rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the Holders of the
Debentures, and to all of which provisions the Holder of this Debenture by
acceptance hereof, assents and agrees. By the terms of the Indenture, the
Debentures are issuable in series that may vary as to amount, date of maturity,
rate of interest and in other respects as provided in the Indenture. This series
of Debentures is limited in aggregate principal amount to $103,092,800 except as
specified in the Indenture.

         Except as provided in the next paragraph with respect to the occurrence
of a Special Event, the Debentures may not be redeemed by the Company prior to
December 7, 2005. The Company shall have the right to redeem the Debentures in
whole or in part at any time and from time to time on or after December 7, 2005
(an "Optional Redemption"), at a redemption price equal to 100% of the principal
amount plus any accrued and unpaid interest, if any, to the date of such
redemption (the "Redemption Price"). Any redemption pursuant to this paragraph
will be made upon not less than 30 nor more than 60 days' notice.

         If, at any time, a Tax Event or an Investment Company Event (each, as
defined below, a "Special Event") shall occur and be continuing, the Company
shall have the right, upon not less than 30 nor more than 60 days' notice, to
redeem the Debentures in whole (but not in part) before December 7, 2005 for
cash at the Redemption Price, within 90 days following the occurrence of such
Special Event.

         "Tax Event" means that the Administrative Trustees of American General
Capital III, a Delaware business trust (the "Trust"), shall have received an
opinion of an independent tax counsel experienced in such matters to the effect
that, as a result of (i) any amendment to, or change (including any announced
proposed change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority affecting taxation, or
(ii) any official or administrative pronouncement or action or judicial
decision, interpreting or applying such laws or regulations, which amendment or
change becomes effective or such pronouncement, action or decision is announced
or occurs on or after November 30, 2000, there is more than an insubstantial
risk that (A) the Trust is or, within 90 days of the date of such opinion, would
be subject to United States federal income tax with respect to interest accrued
or received on the Debentures, (B) interest payable by the Company on the
Debentures is not or, within 90 days of the date of such opinion,

                                       -1-

<PAGE>   11

would not be deductible, in whole or in part, by the Company for United States
federal income tax purposes, or (C) the Trust is or, within 90 days of the date
of such opinion, would be, subject to more than a de minimis amount of other
taxes, duties, assessments or other governmental charges.

         "Investment Company Event" means that such Administrative Trustees of
the Trust shall have receive an opinion of an independent counsel experienced in
practice under the Investment Company Act of 1940, as amended, to the effect
that, as a result of the occurrence of a change in law or regulation or a change
in interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that the Trust is or will be considered
an "Investment Company" that is required to be registered under the Investment
Company Act of 1940, as amended, which Change in 1940 Act Law becomes effective
on or after November 30, 2000.

         Unless the Company defaults in the payment of the Redemption Price, on
and after the date of redemption, interest shall cease to accrue on the
Debentures or portions thereof called for redemption. If the Debentures are only
partially redeemed by the Company pursuant to an Optional Redemption, the
Debentures will be redeemed by such method as the Trustee shall deem fair and
appropriate. In the event of redemption of this Debenture in part only, a new
Debenture or Debentures of this series (for the unredeemed portion hereof) will
be issued in the name of the Holder hereof upon the cancellation hereof.

         The Indenture contains provisions that, if no Event of Default with
respect to the Debentures shall have occurred and be continuing, permit the
Company at any time, and from time to time, during the term of the Debentures,
to extend the interest payment period of the Debentures for up to 20 consecutive
quarters not to extend beyond the Maturity of the Debentures (an "Extension
Period"), at the end of which period the Company shall pay all interest then
accrued and unpaid (together with interest thereon at the rate specified for the
Debentures to the extent that payment of such interest is enforceable under
applicable law). At the termination of any such Extension Period and upon the
payment of all accrued and unpaid interest and any additional amounts then due,
and if no Event of Default with respect to the Debentures shall have occurred
and be continuing, the Company may commence a new Extension Period.

          In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions and limitations provided
in the Indenture.

         The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debentures of each series affected at the time
outstanding, as defined in the Indenture, and subject to certain limitations, to
execute supplemental indentures for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Indenture or
of any supplemental indenture or of modifying in any manner the rights of the
Holders of the Debentures. The Indenture also contains

                                       -2-

<PAGE>   12

provisions permitting the Holders of a majority in aggregate principal amount of
the Debentures of any series at any time outstanding, on behalf of all of the
Holders of the Debentures of such series, to waive any past default with respect
to such series, and its consequences, except a default in the payment of the
principal of or interest on the Debentures or a default in respect of a covenant
or provision of the Indenture or the Debentures of such series which cannot be
modified or amended without the consent of each Holder of Debentures of such
series affected. Any such consent or waiver by the Holder of this Debenture
shall be conclusive and binding upon such Holder and upon all future Holders and
owners of this Debenture and of any Debentures issued in exchange herefor or in
place hereof (whether by registration of transfer or otherwise), irrespective of
whether or not any notation of such consent or waiver is made upon this
Debenture.

         No reference herein to the Indenture and no provision of this Debenture
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and interest on this
Debenture at the time, place and rate and in the coin or currency herein
prescribed.

         As provided in the Indenture and subject to certain limitations therein
set forth, this Debenture is transferable by the registered Holder hereof on the
Securities Register of the Company, upon surrender of this Debenture for
registration of transfer at the Corporate Trust Office of the Trustee duly
endorsed by or accompanied by a written instrument of transfer in form
satisfactory to the Company duly executed by the Holder hereof or its attorney
duly authorized in writing, and thereupon one or more new Debentures of
authorized denominations and for the same aggregate principal amount and series
will be issued to the designated transferee or transferees. No service charge
will be made for any such transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation
thereto.

         Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any paying agent and any Registrar may deem
and treat the registered holder hereof as the absolute owner hereof (whether or
not this Debenture shall be overdue and notwithstanding any notice of ownership
or writing hereon made by anyone other than the Registrar) for the purpose of
receiving payment of or on account of the principal hereof and interest due
hereon and for all other purposes, and neither the Company nor the Trustee nor
any paying agent nor any Registrar shall be affected by any notice to the
contrary.

         No recourse shall be had for the payment of the principal of or the
interest on this Debenture or any obligation of the Company under this Debenture
or the Indenture or for any claim based hereon or thereon, against any
incorporator, stockholder, officer, director or employee, past, present or
future, as such, of the Company or of any predecessor or successor corporation,
all such liability being, by the acceptance hereof and as part of the
consideration for the issuance hereof, expressly waived and released.

         As provided in the Indenture and subject to certain limitations herein
and therein set forth, Debentures of this series so issued are exchangeable for
a like aggregate principal amount of

                                       -3-

<PAGE>   13

Debentures of this series of a different authorized denomination, as requested
by the Holder surrendering the same.

         All terms used in this Debenture that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.

         The Company and the Holder agree (i) that for United Stated federal,
state and local tax purposes it is intended that the Debenture constitute
indebtedness and (ii) to file all United States federal, state and local tax
returns and reports on such basis (unless the Company or the Holder, as the case
may be, shall have received an opinion of independent nationally recognized tax
counsel to the effect that as a result of a change in law after the date of the
issuance of the Debenture the Company or the Holder, as the case may be, is
prohibited from filing on such basis).

         The Indenture and this Debenture shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
conflicts of laws principles thereof.

                                       -4-

<PAGE>   14

                                  ABBREVIATIONS

         The following abbreviations, when used in the inscription on the first
page of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations.

                    UNIF GIFT MIN ACT --
                                           -------------------------------------
                                                         (Cust)

                             Custodian
                                           -------------------------------------
                                                        (Minor)

                                            Under Uniform Gifts to Minors Act

                                           -------------------------------------
                                                        (State)

TEN COM   --  as tenants in common
TEN ENT   --  as tenants by the entireties
JT TEN    --  as joint tenants with right of survivorship and not as tenants in
              common

       Additional abbreviations may be used though not in the above list.

                                   ----------

                                      -5-
<PAGE>   15

                                 ASSIGNMENT FORM

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto:

--------------------------------------------------------------------------------
        (Insert assignee's social security or tax identification number)

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
                    (Insert address and zip code of assignee)

the within Debenture and all rights thereunder, and hereby and irrevocably
constitutes and appoints________________________, attorney to transfer this
debenture on the books of the Company, with full power of substitution.

Date:
     -------------------------------------------------
Signature:
          --------------------------------------------
            (Sign exactly as your name appears on the
            face of the within Debenture)

                                       -6-

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