Ally Bank 2012 Annual Report Download - page 160

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As a result, Treasury now holds 118,750,000 shares of the New MCP, with a total liquidation preference of $5.9 billion. Dividends of the
New MCP accrue at 9% per annum. Dividends are payable quarterly, in arrears, only if and when declared by Ally's Board of Directors. The
New MCP generally is nonvoting, other than class-voting on certain matters under certain circumstances, including generally, the
authorization of senior capital stock, the adverse amendment of the New MCP, and any exchange or reclassification involving the New MCP
or merger or consolidation of Ally. Upon conversion of the New MCP into Ally common stock, the holder would have the voting rights
associated with the common stock.
The shares of the New MCP are convertible into common stock at the applicable conversion rate (as provided in the Certificate of
Designation) either: (i) at Ally's option, at any time or from time to time, with the prior approval of the Federal Reserve provided that Ally is
not permitted to convert any shares of the New MCP held by Treasury except (a) with the prior written consent of Treasury (which consent
may be granted in the sole discretion of Treasury with respect to each conversion considering such factors as it deems appropriate at such
time, which may include seeking to condition the terms on which it may provide such consent, which may include seeking an alteration of the
conversion rate) or (b) pursuant to an order of the Federal Reserve compelling such a conversion; or (ii) at the option of the holder, upon the
occurrence of certain specified transactions. All shares of the New MCP that remain outstanding on December 30, 2016, will automatically
convert into common stock at a conversion rate of 0.00432 common shares per share of the New MCP. Under any conversion of the
New MCP, settlement will always occur by issuance of our common stock.
Subject to the approval of the Federal Reserve and the restrictions imposed by the terms of our other preferred stock, we may opt to
redeem, in whole or in part, from time to time, the New MCP then outstanding at any time. The New MCP may be redeemed at the greater
of the liquidation preference, plus any accrued and unpaid dividends or the as-converted value, as defined in the Certificate of Designation.
Subject to certain exceptions, for so long as any shares of the New MCP are outstanding and owned by Treasury, Ally is generally
prohibited from paying certain dividends or distributions on, or redeeming, repurchasing, or acquiring its capital stock or other equity
securities without the consent of Treasury. Additionally, Ally is generally prohibited from making any dividends or distributions on, or
redeeming, repurchasing, or acquiring its capital stock or other equity securities unless all accrued and unpaid dividends for all past dividend
periods on the New MCP are fully paid.
Series A Preferred Stock
On March 1, 2011, pursuant to a registration rights agreement between Ally and GM, GM notified Ally of its intent to sell shares of
Ally's existing Fixed Rate Perpetual Preferred Stock, Series A (Existing Series A Preferred Stock), held by a subsidiary of GM. On
March 25, 2011, Ally filed a Certificate of Amendment of Amended and Restated Certificate of Incorporation (the Amendment) with the
Secretary of State of the State of Delaware. Pursuant to the Amendment, Ally's Certificate of Incorporation, which included the terms of the
Existing Series A Preferred Stock, was amended to modify certain terms of the Existing Series A Preferred Stock. As part of the Amendment,
the Existing Series A Preferred Stock was redesignated as Ally's Fixed Rate / Floating Rate Perpetual Preferred Stock, Series A (the Amended
Series A Preferred Stock) and the liquidation amount was reduced from $1,000 per share to $25 per share. The Amendment, and a
corresponding amendment to Ally's bylaws, also increased the authorized number of shares of Amended Series A Preferred Stock to
160,870,560 shares, which was adjusted to account for the decreased liquidation amount per share. The total number of shares outstanding
following the Amendment is 40,870,560 shares.
Immediately following the Amendment, the subsidiary of GM that held all of the outstanding Amended Series A Preferred Stock sold
100% of such stock in an offering registered with the SEC. Ally did not receive any proceeds from the sale.
Holders of the Amended Series A Preferred Stock are entitled to receive, when, and if declared by Ally, noncumulative cash dividends.
Beginning March 25, 2011, to but excluding May 15, 2016, dividends accrue at a fixed rate of 8.5% per annum. Beginning on May 15, 2016,
dividends will accrue at a rate equal to three-month London interbank offer rate (LIBOR) plus 6.243%, commencing on August 15, 2016, in
each case on the 15th day of February, May, August, and November. Dividends will be payable to holders of record at the close of business on
the preceding February 1, May 1, August 1, or November 1, as the case may be, or on such other date, not more than seventy calendar days
prior to the dividend payment date, as will be fixed by the Ally Board of Directors. In the event that dividends with respect to a dividend
period have not been paid in full on the dividend payment date, we will be prohibited, subject to certain specified exceptions, from
(i) redeeming, purchasing or otherwise acquiring, any stock that ranks on a parity basis with, or junior in interest to, the Amended Series A
Preferred Stock; (ii) paying any dividends or making any distributions with respect to any stock that ranks junior in interest to the Amended
Series A Preferred Stock, until such time as Ally has paid the dividends payable on shares of the Amended Series A Preferred Stock with
respect to a subsequent dividend period; and (iii) declaring or paying any dividend on any stock ranking on a parity basis with the Amended
Series A Preferred Stock, subject to certain exceptions.
The holders of the Amended Series A Preferred Stock do not have voting rights other than those set forth in the certificate of designations
for the Amended Series A Preferred Stock included in Ally's Certificate of Incorporation. Ally may not redeem the Amended Series A
Preferred Stock before May 15, 2016, and after such time the Amended Series A Preferred Stock may be redeemed in certain circumstances.
In the event of any liquidation, dissolution or winding up of the affairs of Ally, holders of the Amended Series A Preferred Stock will be
entitled to receive the liquidation amount per share of Amended Series A Preferred Stock and an amount equal to all declared, but unpaid
dividends declared prior to the date of payment out of assets available for distribution, before any distribution is made for holders of stock that
ranks junior in interest to the Amended Series A Preferred Stock, subject to the rights of Ally's creditors.
Table of Contents
Notes to Consolidated Financial Statements
Ally Financial Inc. • Form 10-K