PROSPECTUS SUPPLEMENT
(To Prospectus dated December 14, 1994)
$200,000,000
American General Finance Corporation
6 1/8% SENIOR NOTES DUE SEPTEMBER 15, 2000
------------------------
Interest payable March 15 and September 15
------------------------
INTEREST ON THE 6 1/8% SENIOR NOTES DUE SEPTEMBER 15, 2000 (THE "NOTES") IS
PAYABLE SEMIANNUALLY ON MARCH 15 AND SEPTEMBER 15 OF EACH YEAR, COMMENCING
MARCH 15, 1998. THE NOTES ARE NOT REDEEMABLE AT THE OPTION OF THE
COMPANY OR REPAYABLE AT THE OPTION OF ANY HOLDER PRIOR TO
MATURITY, AND DO NOT HAVE THE BENEFIT OF A SINKING FUND.
THE NOTES WILL BE REPRESENTED BY ONE OR MORE GLOBAL DEBT SECURITIES REGISTERED
IN THE NAME OF A NOMINEE OF THE DEPOSITORY TRUST COMPANY, AS DEPOSITARY
("DTC"), OR OTHER DEPOSITARY. BENEFICIAL INTERESTS IN THE GLOBAL DEBT
SECURITIES WILL BE SHOWN ON, AND TRANSFERS THEREOF WILL BE EFFECTED
ONLY THROUGH, RECORDS MAINTAINED BY DTC'S PARTICIPANTS. EXCEPT AS
PROVIDED HEREIN, OWNERS OF BENEFICIAL INTERESTS IN THE
GLOBAL DEBT SECURITIES WILL NOT BE ENTITLED TO RECEIVE
NOTES IN DEFINITIVE FORM AND WILL NOT BE CONSIDERED
OWNERS OR HOLDERS THEREOF.
SEE "DESCRIPTION OF NOTES" IN THIS
PROSPECTUS SUPPLEMENT AND "DESCRIPTION
OF DEBT SECURITIES" IN THE
ACCOMPANYING PROSPECTUS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
PRICE 100% AND ACCRUED INTEREST, IF ANY
------------------------
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
------------------ --------------- -----------------
Per Note.............. 100.000% .106% 99.894%
Total................. $200,000,000 $212,000 $199,788,000
- ------------
(1) Plus accrued interest, if any, from September 22, 1997.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $150,000.
------------------------
The Notes are offered, subject to prior sale, when, as and if accepted by
the Underwriter and subject to approval of certain legal matters by Brown & Wood
LLP, counsel to the Underwriter. See "Underwriting." It is expected that the
Notes will be available for delivery in book-entry form only through the
facilities of DTC in New York, New York on or about September 22, 1997 against
payment therefor in immediately available funds.
------------------------
MORGAN STANLEY DEAN WITTER
September 17, 1997
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICES OF THE NOTES.
SPECIFICALLY, THE UNDERWRITER MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, THE NOTES IN THE OPEN MARKET. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING."
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus Supplement and
Prospectus in connection with the offering made hereby and, if given or made,
such information or representations must not be relied upon as having been
authorized by the Company or by the Underwriter. Neither the delivery of this
Prospectus Supplement and Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that information herein is correct as
of any time subsequent to the date hereof. This Propectus Supplement and
Prospectus do not constitute an offer or solicitation by anyone in any
jurisdiction in which such offer or solicitation is not authorized or in which
the person making such offer or solicitation is not qualified to do so or to
anyone to whom it is unlawful to make such offer or solicitation.
------------------------
DESCRIPTION OF NOTES
THE FOLLOWING DESCRIPTION OF THE PARTICULAR TERMS OF THE NOTES OFFERED
HEREBY SUPPLEMENTS THE DESCRIPTION OF THE GENERAL TERMS AND PROVISIONS OF DEBT
SECURITIES SET FORTH IN THE PROSPECTUS UNDER THE CAPTION "DESCRIPTION OF DEBT
SECURITIES."
GENERAL
The Notes are to be issued as a series of Debt Securities under the
Indenture, which is more fully described in the Prospectus. Certain terms used
herein are defined in the Prospectus.
The Notes are to mature on September 15, 2000 and bear interest at the rate
set forth on the cover page of this Prospectus Supplement, payable semiannually
on March 15 and September 15, commencing March 15, 1998, to the registered
holders thereof on the preceding March 1 or September 1, as the case may be.
The Notes are not redeemable at the option of the Company or repayable at
the option of any holder prior to maturity.
The Notes will be issued as a global Debt Security. See "Description of
Debt Securities -- Global Debt Securities" in the Prospectus. DTC will be the
Depository with respect to the Notes. The Notes will be issued as
fully-registered securities in the name of Cede & Co., DTC's partnership
nominee, and will be deposited with DTC.
BOOK-ENTRY NOTES
DTC has advised the Company that it is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities that its Participants deposit with
DTC and facilitates the settlement among Participants of securities transactions
in deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Participants include securities brokers and dealers
(including the Underwriter), banks, trust companies, clearing corporations and
certain other organizations. DTC is owned by a number of its Participants and by
the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to DTC's book-entry
system is also available to others, such as securities brokers and dealers,
banks, and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly. The rules
applicable to DTC and its Participants are on file with the Commission.
S-2
<PAGE>
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriter in immediately
available funds. All payments of principal and interest on the Notes will be
made by the Company in immediately available funds. The Notes will trade in
DTC's Same-Day Funds Settlement System until maturity, and secondary market
trading activity in the Notes will therefore be required by DTC to settle in
immediately available funds.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement") between the Company and Morgan Stanley & Co.
Incorporated (the "Underwriter"), the Company has agreed to sell to the
Underwriter, and the Underwriter has agreed to purchase from the Company, the
entire principal amount of Notes offered hereby.
The Underwriter proposes to offer the Notes in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus Supplement and in part to certain securities dealers at such price
less a concession not to exceed .10% of the principal amount of the Notes. The
Underwriter may allow, and such dealers may reallow, a concession not to exceed
.05% of the principal amount of the Notes to certain brokers and dealers. After
the Notes are released for sale to the public, the offering prices and other
selling terms may from time to time be varied by the Underwriter.
The Underwriting Agreement provides that the obligation of the Underwriter
to pay for and accept delivery of the Notes is subject to certain conditions,
ncluding delivery of certain legal opinions by counsel for the Underwriter.
The Underwriting Agreement provides that the Company will indemnify the
Underwriter against certain liabilities under the Securities Act and will
contribute to payments the Underwriter may be required to make in respect
thereof.
The Notes will be a new issue of securities for which there is currently no
market. Although the Underwriter has informed the Company that it currently
intends to make a market in the Notes, it is not obligated to do so, and any
such market making may be discontinued at any time without notice. Accordingly,
there can be no assurance as to the development or liquidity of any market for
the Notes.
In the ordinary course of its businesses, the Underwriter has from time to
time provided, and may in the future provide, investment banking services to the
Company and its affiliates in connection with various transactions and proposed
transactions.
In order to facilitate the offering of the Notes, the Underwriter may
engage in transactions that stabilize, maintain or otherwise affect the price of
the Notes. Specifically, the Underwriter may over-allot in connection with the
offering, creating a short position in the Notes for its own account. In
addition, to cover over-allotments or to stabilize the price of the Notes, the
Underwriter may bid for, and purchase, the Notes in the open market. Finally,
the Underwriter may reclaim selling concessions allowed to a dealer for
distributing the Notes in the offering, if the Underwriter repurchases
previously distributed Notes in transactions to cover syndicate short positions,
in stabilization transactions or otherwise. Any of these activities may
stabilize or maintain the market price of the Notes above independent market
levels. The Underwriter is not required to engage in these activities and may
end any of these activities at any time.
S-3
<PAGE>
$2,000,000,000
AMERICAN GENERAL FINANCE CORPORATION
DEBT SECURITIES AND WARRANTS TO PURCHASE DEBT SECURITIES
------------------------
American General Finance Corporation (the "Company") may offer from time
to time, either jointly or separately, (i) up to $2,000,000,000 aggregate
principal amount of its debt securities (the "Debt Securities") and (ii)
warrants (without limitation as to number or offering price) to purchase such
Debt Securities (the "Warrants") (the Debt Securities and the Warrants being
herein referred to collectively as the "Securities"). The Debt Securities will
be direct, unsecured obligations of the Company and will rank equally with all
other unsecured and unsubordinated indebtedness of the Company. See
"Description of Debt Securities."
The Securities may be offered as separate series in amounts, at prices and
on terms to be determined at the time of sale. The title, aggregate principal
amount, initial public offering price, denominations, maturity, rate (which may
be fixed or variable) and time of payment of any interest, any terms for
redemption at the option of the Company or repayment at the option of the
holder, any terms for sinking fund payments, any listing on a securities
exchange, any exercise provisions and any other terms in connection with the
offering and sale of the Securities in respect of which this Prospectus is being
delivered will be set forth in one or more supplements to this Prospectus (each,
a "Prospectus Supplement").
The Company may sell the Securities directly, through agents designated
from time to time or through underwriters or dealers. If any agents of the
Company or any dealers or underwriters are involved in the sale of the
Securities in respect of which this Prospectus is being delivered, the names of
such agents, dealers or underwriters and any applicable agent's commission,
dealer's purchase price, or underwriter's discount will be set forth in, or may
be calculated on the basis set forth in, the applicable Prospectus Supplement.
The net proceeds to the Company from such sale will be the purchase price of
such Securities less such commission in the case of an agent, the purchase price
of such Securities in the case of a dealer or the public offering price less
such discount in the case of an underwriter, and less, in each case, other
issuance expenses. See "Plan of Distribution" for possible indemnification
arrangements for any such agents, dealers and underwriters.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF THE SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
------------------------
THE DATE OF THIS PROSPECTUS IS DECEMBER 14, 1994.
<PAGE>
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT
APPROVED OR DISAPPROVED THIS OFFERING NOR HAS THE COMMISSIONER PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information filed by the
Company may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and at the Commission's Regional Offices at 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300,
New York, New York 10048. Copies of such materials may be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates. In addition, such material may also
be inspected and copied at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits thereto, referred to as
the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"). This Prospectus, which constitutes part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is hereby made to the Registration Statement. Statements contained herein
concerning the provisions of any document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission are not
necessarily complete, and in each instance reference is made to the copy of such
document so filed. Each such statement is qualified in its entirety by such
reference.
INCORPORATION BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act (File No. 1-6155), are incorporated by
reference into this Prospectus and shall be deemed to be a part hereof:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993;
(b) the Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1994 (as amended by Form 10-Q/A dated May 19, 1994), June
30, 1994 and September 30, 1994; and
(c) the Company's Current Reports on Form 8-K dated February 1, 1994,
April 27, 1994, July 26, 1994 and October 25, 1994 (which relate to
earnings releases of the Company); and March 22, 1994, April 6, 1994, May
17, 1994, June 8, 1994, September 26, 1994 and November 10, 1994 (which
relate to prior issuances of debt securities of the Company or to its
Medium-Term Notes, Series C).
Each document filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Securities made hereby shall be deemed to
be incorporated by reference into this Prospectus and to be a part hereof from
the date of filing of such document.
Any statement contained herein, in a Prospectus Supplement or in a document
incorporated or deemed to be incorporated by reference herein, shall be deemed
to be modified or superseded for purposes of the Registration Statement and this
Prospectus to the extent that a statement contained herein, in a Prospectus
Supplement or in any subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of the Registration Statement or
this Prospectus.
The Company files with the Commission Annual Reports on Form 10-K
containing financial information that has been audited and reported upon, with
an opinion expressed, by independent auditors. Such Annual Reports are available
from the Company upon request.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the documents
which are incorporated herein by reference, other than exhibits to such
documents (unless such exhibits are specifically incorporated by reference into
such documents). Requests should be directed to the Company, 2929 Allen Parkway,
Houston, Texas 77019, Attention: Treasury Department, telephone (713) 522-1111.
2
<PAGE>
THE COMPANY
American General Finance Corporation is a financial services holding
company, the subsidiaries of which are engaged primarily in the consumer finance
and credit insurance businesses.
The Company was incorporated under the laws of the State of Indiana in 1927
as successor to a business started in 1920. All of the common stock of the
Company is owned by American General Finance, Inc. ("AGFI"), which was
incorporated under the laws of the State of Indiana in 1974. Since 1982, AGFI
has been a direct or indirect wholly-owned subsidiary of American General
Corporation, a consumer financial services organization incorporated in the
State of Texas in 1980 as the successor to American General Insurance Company, a
Texas insurance company incorporated in 1926.
At September 30, 1994, the Company and its subsidiaries had over 1,200
offices in 39 states, Puerto Rico and the Virgin Islands. Total finance
receivables, net of unearned finance charges, at September 30, 1994 were $6.3
billion.
The principal executive offices of the Company are located at 601 N.W.
Second Street, Evansville, Indiana 47708, and its telephone number is (812)
424-8031.
USE OF PROCEEDS
Except as may otherwise be provided in an applicable Prospectus Supplement,
the net proceeds to be received by the Company from the sale of the Securities
being offered hereby will be used to repay borrowings incurred in, or to finance
the growth of receivables arising in connection with, the Company's consumer
finance operations or will be available for the purchase of receivables or for
other general corporate purposes. Pending the uses described above, such net
proceeds may be temporarily invested in short-term marketable securities.
3
<PAGE>
SELECTED FINANCIAL INFORMATION
The following selected financial information is derived from consolidated
financial statements of the Company and its subsidiaries which have been audited
by Ernst & Young LLP, independent auditors. The information should be read in
conjunction with the consolidated financial statements, related notes, and other
financial information incorporated herein by reference. See "Incorporation by
Reference."
(DOLLARS IN THOUSANDS)
YEARS ENDED DECEMBER 31,
----------------------------------------
1993 1992 1991
------------ ------------ ------------
SELECTED FINANCIAL INFORMATION
Revenues:
Finance charges............ $ 974,276 $ 890,989 $ 801,040
Insurance.................. 142,333 118,950 110,069
Other...................... 96,308 82,919 82,296
------------ ------------ ------------
Total revenues........ 1,212,917 1,092,858 993,405
------------ ------------ ------------
Expenses:
Interest expense........... 368,986 378,679 375,349
Operating expenses......... 304,037 280,605 243,619
Provision for finance
receivable losses........ 133,577 107,608 96,732
Insurance losses and loss
adjustment expenses...... 79,214 66,603 59,410
------------ ------------ ------------
Total expenses........ 885,814 833,495 775,110
------------ ------------ ------------
Income before provision for
income taxes and cumulative
effect of accounting
changes....................... 327,103 259,363 218,295
Provision for income taxes...... 124,884 99,192 82,458
------------ ------------ ------------
Income before cumulative effect
of accounting changes......... 202,219 160,171 135,837
Cumulative effect of accounting
changes....................... (12,591) -- --
------------ ------------ ------------
Net income............ $ 189,628 $ 160,171 $ 135,837
============ ============ ============
DECEMBER 31,
----------------------------------------
1993 1992 1991
------------ ------------ ------------
Finance receivables, net of unearned
finance charges.................... $ 5,871,648 $ 5,607,078 $ 5,137,942
Total assets......................... 7,504,798 6,999,570 6,464,519
Short-term debt...................... 1,647,461 1,718,839 2,030,070
Long-term debt....................... 3,965,772 3,558,401 2,776,561
Preferred stock...................... -- -- 4,000
Common shareholder's equity.......... 1,201,889 1,120,494 1,086,756
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical consolidated ratios of
earnings to fixed charges of the Company and its subsidiaries for the periods
indicated:
NINE MONTHS
ENDED YEARS ENDED DECEMBER 31,
SEPTEMBER 30, ----------------------------------------
1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ----
1.9 1.9 1.7 1.6 1.5 1.4
For purposes of computing the ratio of earnings to fixed charges, earnings
represent the aggregate of net income, provision for income taxes, cumulative
effect of accounting changes and fixed charges. Fixed charges represent interest
expense and implicit interest in rents.
4
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture dated as of October
1, 1994 (the "Indenture") between the Company and The Chase Manhattan Bank
(National Association), as trustee (the "Trustee").
The form of the Indenture is filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The statements and descriptions
under this heading regarding provisions of the Debt Securities and the Indenture
are summaries thereof, do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all of the provisions of the
Indenture and the Debt Securities, including the definitions therein of certain
terms. Certain capitalized terms used herein are defined in the Indenture.
Wherever particular sections of the Indenture or terms that are defined in the
Indenture are referred to herein or in a Prospectus Supplement, it is intended
that such sections or defined terms shall be incorporated by reference herein or
therein, as the case may be.
The Indenture allows for the issuance of Debt Securities denominated in
foreign currencies and/or in bearer form. The Company does not intend to issue
any such Debt Securities pursuant to this Prospectus. Accordingly, certain
provisions of the Indenture relating to such Debt Securities are not described
herein.
GENERAL
The Debt Securities will be direct, unsecured and unsubordinated
obligations of the Company, and may be issued in one or more series. The
particular terms of each series of Debt Securities, as well as any modifications
or additions to the general terms of the Debt Securities as described herein
which may be applicable in the case of a particular series of Debt Securities,
are described in the Prospectus Supplement relating to such series of Debt
Securities. Accordingly, for a description of the terms of a particular series
of Debt Securities, reference must be made to both the Prospectus Supplement
relating thereto and to the description of Debt Securities set forth in this
Prospectus.
Reference is made to the Prospectus Supplement for the following terms of
the Debt Securities being offered thereby: (1) the designation of such Debt
Securities; (2) any limit on the aggregate principal amount of such Debt
Securities and the series in which such Debt Securities shall be included; (3)
the percentage of their principal amount at which such Debt Securities will be
issued and, in the case of Original Issue Discount Securities, the principal
amount thereof payable upon acceleration of the maturity thereof; (4) the date
or dates on which such Debt Securities will mature or the manner in which such
dates are determined; (5) the rate or rates per annum (which may be fixed or
variable) at which such Debt Securities will bear interest, if any, or the
method of determining such rate or rates; (6) the date from which such interest,
if any, on such Debt Securities will accrue, the dates on which such interest,
if any, will be payable, the date on which payment of such interest, if any,
will commence and the record dates for such interest payment dates, if any; (7)
the terms of any mandatory or optional redemption (including any sinking fund
provisions or any provisions for repayment at the option of a Holder); (8)
whether such Debt Securities are to be issued initially or permanently in the
form of a global Debt Security and, if so, the identity of the Depository
(hereinafter defined) for such global Debt Security; and (9) any other terms of
such Debt Securities not inconsistent with the provisions of the Indenture. Debt
Securities may also be issued under the Indenture upon the exercise of Warrants.
See "Description of Warrants."
The Indenture does not limit the aggregate principal amount of Debt
Securities that may be issued thereunder or of any particular series of such
Debt Securities and provides that, in addition to the Debt Securities,
additional securities may be issued thereunder from time to time in one or more
series up to the aggregate principal amount which may be authorized from time to
time by the Company. (Section 301 of the Indenture) All Debt Securities issued
under the Indenture will rank equally and ratably with any additional Debt
Securities issued thereunder. Because the Company is a holding company, the
right of the Company, and hence the right of creditors of the Company (including
the Holders of the Debt Securities), to participate in any distribution of the
assets of any subsidiary upon its liquidation or reorganization or otherwise is
necessarily subject to the prior claims of creditors of the subsidiary, except
to the extent that claims of the Company itself as a creditor of the subsidiary
may be recognized.
Unless the Prospectus Supplement relating to a particular issuance of Debt
Securities specifies otherwise, Debt Securities will be issued in denominations
of $1,000 and integral multiples thereof. No service charge will be made for any
transfer or exchange of Debt Securities, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. (Sections 302 and 305 of the Indenture)
5
<PAGE>
Some of the Debt Securities may be issued under the Indenture as Original
Issue Discount Securities (bearing no interest or interest at a rate which at
the time of issuance is below market rates) to be sold at a substantial discount
below their stated principal amount. Federal income tax consequences and other
special considerations applicable to any such Original Issue Discount Securities
will be described in the Prospectus Supplement relating thereto.
Unless otherwise indicated in the Prospectus Supplement relating to a
particular series of Debt Securities, the principal of and any premium or
interest on Debt Securities issued in certificated form will be payable, and the
transfer of Debt Securities will be registrable, at the office of the Trustee
designated for that purpose in New York City, provided that, at the option of
the Company, interest may be paid by check, wire transfer or any other means
permitted in the form of such Debt Securities. In the case of global Debt
Securities (which will be registered in the name of the Depository or its
nominee), payment will be made to the Depository or its nominee in accordance
with the then-existing arrangements between the paying agent(s) for such global
Debt Securities and the Depository. See "-- Global Debt Securities." (Sections
305, 307 and 1002 of the Indenture)
The Indenture does not contain any provision that limits the ability of the
Company to incur indebtedness or that would afford Holders of Debt Securities
protection in the event of a highly leveraged or similar transaction involving
the Company, except as described herein under "-- Limitations on Liens" and
"-- Merger and Consolidation." Reference is made to the Prospectus Supplement
relating to the series of Debt Securities offered thereby for information with
respect to any deletions from, modifications of, or additions to, the Events of
Default or covenants that may be included in the terms of such series of Debt
Securities, including any addition of a covenant or other provision providing
event risk or similar protection.
Under the Indenture, the Company will have the ability, in addition to the
ability to issue Debt Securities with terms different from those of Debt
Securities previously issued, to "reopen" a previous issue of a series of Debt
Securities and issue additional Debt Securities of such series.
LIMITATIONS ON LIENS
The Indenture provides that neither the Company nor a Subsidiary shall
create, assume or suffer to exist, except in favor of the Company or a
Wholly-owned Subsidiary, any Mortgage upon any of its or their property, without
equally and ratably securing the Debt Securities, but this restriction does not
apply to certain permitted encumbrances described in the Indenture, including,
without limitation, (a) Mortgages existing on October 1, 1994, (b) any Mortgages
on properties or assets, in addition to those otherwise permitted, securing
Indebtedness which at the time incurred does not, together with all other
Indebtedness so secured and not otherwise permitted, exceed in the aggregate 10%
of Consolidated Net Worth, (c) any Mortgages on properties or assets securing
Indebtedness of Subsidiaries, created in the ordinary course of business by such
Subsidiaries, if, as a matter of practice, such Subsidiaries prior to becoming
Subsidiaries had incurred Indebtedness on a secured basis, (d) purchase money
Mortgages on property acquired or constructed by the Company or any of its
Subsidiaries after October 1, 1994 to secure the purchase price thereof (or to
secure Indebtedness incurred for the purpose of financing the acquisition or
construction thereof), Mortgages existing on any property at the time of
acquisition, Mortgages existing on any property of any corporation at the time
it becomes a Subsidiary, and any Mortgage with respect to property acquired
after October 1, 1994, in any amount (with respect to any Mortgage described in
this clause (d)) not exceeding 75% of the cost of any property, including
improvements thereon, so acquired or constructed, (e) refundings or extensions
of any permitted Mortgage, and (f) any Mortgage created by the Company or any
Subsidiary in connection with a transaction intended by the Company or such
Subsidiary to be one or more sales of properties or assets of the Company or
such Subsidiary; provided that such Mortgage shall only apply to the properties
or assets involved in such sale or sales, the income therefrom and/or the
proceeds thereof. (Section 1009 of the Indenture) "Mortgage" means any
mortgage, pledge, lien, security interest, conditional sale or other title
retention agreement or other similar encumbrance. (Section 101 of the Indenture)
EVENTS OF DEFAULT, NOTICE AND WAIVER
If an Event of Default with respect to any Debt Securities of any series
Outstanding under the Indenture shall occur and be continuing, the Trustee or
the Holders of at least 25% in principal amount of the Debt Securities of that
series Outstanding may declare, by notice as provided in the Indenture, the
principal amount (or such lesser amount as may be provided for in the Debt
Securities of that series) of all the Debt Securities of that series Outstanding
to be due and payable immediately; provided, that in the case of an Event of
Default involving certain events in bankruptcy,
6
<PAGE>
insolvency or reorganization, acceleration is automatic; and, provided further,
that if all Events of Default with respect to Debt Securities of that series
shall have been cured, or waived as hereinafter provided, and all amounts due
otherwise than on account of such acceleration shall have been paid or deposited
with the Trustee, the Holders of a majority in aggregate principal amount of the
Debt Securities of that series then Outstanding may rescind and annul such
acceleration and its consequences. (Section 502 of the Indenture) Upon
acceleration of the Maturity of Original Issue Discount Securities, an amount
less than the principal amount thereof will become due and payable. Reference is
made to the Prospectus Supplement relating to any Original Issue Discount
Securities for the particular provisions relating to acceleration of the
Maturity thereof. Any past default under the Indenture with respect to Debt
Securities of any series, and any Event of Default arising therefrom, may be
waived by the Holders of a majority in principal amount of all Debt Securities
of such series Outstanding under the Indenture, except in the case of (i)
default in the payment of the principal of or any premium or interest on any
Debt Securities of such series or (ii) default in respect of a covenant or
provision which may not be amended or modified without the consent of the Holder
of each Outstanding Debt Security of such series affected. (Section 513 of the
Indenture)
An Event of Default with respect to any series of Debt Securities is
defined in the Indenture as being: (a) default in the payment of any interest
upon any Debt Security of such series when such interest becomes due and
payable, and continuance of such default for a period of 30 days; (b) default in
the payment of the principal of and any premium on any Debt Security of such
series when it becomes due and payable, whether at the Stated Maturity, upon
redemption or repayment, by declaration or otherwise; (c) default in the making
of any sinking fund payment on any Debt Security of such series; (d) default in
the performance or breach of any covenant or warranty of the Company contained
in the Indenture for the benefit of such series or in the Debt Securities of
such series, and the continuance of such default for 60 days after written
notice has been given as provided in the Indenture; (e) acceleration of the
maturity of indebtedness for money borrowed of the Company in a principal amount
in excess of $25,000,000 if such acceleration is not annulled or such
indebtedness is not discharged within 10 days after written notice as provided
in the Indenture; (f) certain events in bankruptcy, insolvency or
reorganization; and (g) any other Event of Default provided with respect to the
Debt Securities of such series. (Section 501 of the Indenture)
The Trustee is required, within 90 days after the occurrence of a default
with respect to the Debt Securities of any series which is known to the Trustee
and is continuing (without regard to any grace period or notice requirements),
to give to the Holders of the Debt Securities of such series notice of such
default; provided, however, that, except in the case of a default in the payment
of the principal of or any premium or interest on any Debt Securities of such
series or in the payment of any sinking fund installment with respect to the
Debt Securities of such series, the Trustee shall be protected in withholding
such notice if it in good faith determines that the withholding of such notice
is in the interests of the Holders of the Debt Securities of such series; and
provided further that, in the case of any default referred to in clause (d) of
the preceding paragraph with respect to the Debt Securities of such series, no
such notice to Holders shall be given until at least 30 days after the
occurrence thereof. (Section 602 of the Indenture)
The Trustee, subject to its duties during default to act with the required
standard of care, may require indemnification by the Holders of the Debt
Securities of any series with respect to which a default has occurred before
proceeding to exercise any right or power under the Indenture at the request of
the Holders of the Debt Securities of such series. (Sections 601 and 603 of the
Indenture) Subject to such right of indemnification and to certain other
limitations, the Holders of a majority in principal amount of the Outstanding
Debt Securities of any series may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee with respect to the Debt Securities
of such series. (Section 512 of the Indenture)
The Company is required to furnish annually to the Trustee statements as to
the Company's compliance with all conditions and covenants under the Indenture.
(Section 1007 of the Indenture)
MERGER AND CONSOLIDATION
The Company may consolidate or merge with or into any other corporation,
and the Company may sell or transfer all or substantially all of its assets to
another corporation, provided that (a) the corporation (if other than the
Company) formed by, resulting from or surviving any such consolidation or merger
or which shall have received the transfer of such assets shall be a corporation
organized and existing under the laws of The United States of America or a state
thereof and shall assume payment of the principal of and any premium and
interest on the Debt Securities and the
7
<PAGE>
performance and observance of all of the covenants and conditions of the
Indenture to be performed or observed by the Company and (b) the Company or such
successor corporation, as the case may be, shall not immediately thereafter be
in default in the performance of any such covenant or condition under the
Indenture and shall not immediately thereafter have outstanding (or otherwise be
liable for) any Indebtedness secured by a Mortgage not permitted by the
provisions of Section 1009 of the Indenture or shall have secured the Debt
Securities equally and ratably with (or prior to) any Indebtedness secured by
any Mortgage not so permitted. (Section 801 of the Indenture)
MODIFICATION AND WAIVER
Modification and amendment of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of not less than 66 2/3% in
principal amount of the Outstanding Debt Securities of each series affected
thereby, provided that no such modification or amendment may, without the
consent of the Holder of each Outstanding Debt Security affected thereby, (a)
change the Stated Maturity of the principal of, or any installment of principal
of or interest on, any Outstanding Debt Security; (b) reduce the principal
amount of or the rate of interest on or any premium payable with respect to any
Debt Security; (c) reduce the amount of principal of an Original Issue Discount
Security that would be due and payable upon acceleration of the Maturity thereof
or that would be provable in bankruptcy; (d) adversely affect any right of
repayment at the option of the Holder of any Debt Security; (e) change the place
or currency of payment of the principal of or any premium or interest on any
Debt Security; (f) impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity, or any date of redemption or
repayment, thereof; (g) reduce the above-stated percentage of Outstanding Debt
Securities of any series necessary to modify or amend the Indenture with respect
to such series or reduce the percentage of Outstanding Debt Securities of any
series necessary to waive any past default or compliance with certain
restrictive provisions to less than a majority of such series, or reduce the
requirements of Section 1404 of the Indenture for quorum or voting; or (h)
modify the provisions of the Indenture described in this paragraph or those
regarding waiver of compliance with certain provisions of, or certain defaults
and their consequences under, the Indenture, except to increase the percentage
of Outstanding Debt Securities necessary to modify and amend the Indenture or to
give any such waiver, and except to provide that certain other provisions of the
Indenture cannot be modified or waived without the consent of the Holder of each
Outstanding Debt Security affected thereby. The Holders of at least a majority
in principal amount of the Outstanding Debt Securities of any series may waive
compliance by the Company with certain restrictive provisions applicable to such
series. (Sections 902 and 1010 of the Indenture)
Modification and amendment of the Indenture may be made by the Company and
the Trustee without the consent of any Holder of Outstanding Debt Securities,
for any of the following purposes: (a) to evidence the succession of another
corporation to the Company and the assumption of the covenants of the Company;
(b) to add to the covenants of the Company for the benefit of the Holders of all
or any series of Debt Securities or to surrender any right or power conferred
upon the Company; (c) to add any additional Events of Default with respect to
all or any series of Debt Securities; (d) to change or eliminate any
restrictions on the payment of the principal of or any premium or interest on
Debt Securities or to permit the issuance of Debt Securities in uncertificated
form, provided any such action does not adversely affect the interests of the
Holders of the Debt Securities of any series in any material respect; (e) to
change or eliminate any provision of the Indenture, provided that no Outstanding
Debt Security of any series is entitled to the benefit of such provision; (f) to
secure the Debt Securities pursuant to the requirements of Sections 801 or 1009
of the Indenture or otherwise; (g) to establish the form or terms of the Debt
Securities of any series; (h) to provide for the acceptance of appointment by a
successor Trustee with respect to the Debt Securities of one or more series and
to add to or change any of the provisions as shall be necessary to provide for
or facilitate the administration of the trusts under the Indenture by more than
one Trustee; (i) to change the conditions, limitations and restrictions on the
authorized amount, terms or purposes of issuance, authentication and delivery of
the Debt Securities as set forth in the Indenture, the Debt Securities and the
Prospectus Supplement relating thereto; or (j) to cure any ambiguity, defect or
inconsistency in the Indenture, provided such action does not adversely affect
the interests of the Holders of the Debt Securities of any series in any
material respect. (Section 901 of the Indenture)
DEFEASANCE AND DISCHARGE
The Indenture provides that the Company and the Trustee, without the
consent of any Holder of Outstanding Debt Securities, may execute a supplemental
indenture to provide that the Company will be discharged from any and all
8
<PAGE>
obligations in respect of the Debt Securities of any series (except for certain
obligations to register the transfer or exchange of Debt Securities, to replace
stolen, lost or mutilated Debt Securities, to maintain paying agencies and hold
moneys for payment in trust) upon the deposit with the Trustee, in trust, of
money or Government Obligations, or a combination thereof, which through the
payment of interest and principal thereof in accordance with their terms will
provide money in an amount sufficient to pay the principal of, any premium and
interest on, and any mandatory sinking fund payments in respect of, the Debt
Securities of such series on the Stated Maturity of such payments in accordance
with the terms of the Indenture and such Debt Securities. Such a supplemental
indenture may only be executed if the Company has received from, or there has
been published by, the United States Internal Revenue Service a ruling, or if
there has been a change in the applicable federal income tax law, in either
case, to the effect that such a discharge will not cause the Holders of the Debt
Securities of such series to recognize income, gain or loss for federal income
tax purposes; and the provisions of such a supplemental indenture shall not be
applicable to any series of Debt Securities then listed on the New York Stock
Exchange if the provisions would cause the Outstanding Debt Securities of such
series to be delisted. (Section 901 of the Indenture)
The Indenture provides that, when the conditions set forth in Section 401
thereof have been satisfied, upon the request of the Company, the Indenture will
cease to be of further effect (except as to any surviving right of registration
of transfer or exchange of Debt Securities expressly provided for therein). Such
conditions include that (i) all Debt Securities issued under the Indenture
either shall have been delivered to the Trustee for cancellation or shall be
due, or are to be called for redemption, within one year and (ii) with respect
to all Debt Securities issued under the Indenture but not previously delivered
to the Trustee for cancellation, there shall have been delivered to the Trustee,
in trust, money or Government Obligations, or a combination thereof, which
through the payment of interest and principal thereof in accordance with their
terms will provide money in an amount sufficient to pay the principal of, and
any premium and interest on, all such Debt Securities on the Stated Maturity of
such payments in accordance with the Indenture. (Section 401 of the Indenture)
DEFEASANCE OF CERTAIN COVENANTS
The terms of the Debt Securities of any series may provide the Company with
the option to omit to comply with the covenants described under "-- Limitations
on Liens" above and any additional covenants not included in the Indenture that
may be specified as applicable to such series in the Prospectus Supplement with
respect thereto. If such terms make such option available with respect to the
Debt Securities of any series, the Company, in order to exercise such option,
will be required to deposit with the Trustee, in trust, money or Government
Obligations, or a combination thereof, which through the payment of interest and
principal thereof in accordance with their terms will provide money in an amount
sufficient to pay the principal of, any premium and interest on, and any
mandatory sinking fund payments in respect of, the Debt Securities of such
series on the Stated Maturity of such payments in accordance with the terms of
the Indenture and such Debt Securities. The Company will also be required to
deliver to the Trustee an Opinion of Counsel to the effect that the deposit and
related covenant defeasance will not cause the Holders of the Debt Securities of
such series to recognize income, gain or loss for federal income tax purposes.
Such covenant defeasance would not be available with respect to any series of
Debt Securities then listed on the New York Stock Exchange if such defeasance
would cause the Outstanding Debt Securities of such series to be delisted.
(Section 1011 of the Indenture) The Prospectus Supplement relating to a
particular issuance of Debt Securities may further describe the provisions, if
any, permitting such an omission to comply.
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global Debt Securities that will be deposited with, or on
behalf of, a depositary (the "Depository") identified in the Prospectus
Supplement relating to such series. Unless and until it is exchanged in whole or
in part for the individual Debt Securities represented thereby, a global Debt
Security may not be transferred except as a whole among the Depository, any
successor Depository and their respective nominees.
The specific terms of the depository arrangement with respect to a series
of Debt Securities will be described in the Prospectus Supplement relating to
such series. Unless otherwise indicated in the applicable Prospectus Supplement,
the following provisions will apply to all depository arrangements.
9
<PAGE>
Upon the issuance of a global Debt Security, the Depository for such global
Debt Security or its nominee will credit, on its book-entry registration and
transfer system, the respective principal amounts of the individual Debt
Securities represented by such global Debt Security to the accounts of persons
that have accounts with such Depository ("Participants"). Such accounts will
be designated by the underwriters or agents with respect to such Debt Securities
or by the Company if such Debt Securities are offered and sold directly by the
Company. Ownership of beneficial interests in a global Debt Security will be
limited to Participants or persons that may hold interests through Participants.
Ownership of beneficial interests in such global Debt Security will be shown on,
and the transfer of that ownership will be effected only through, records
maintained by the applicable Depository or its nominee (with respect to
interests of Participants) and the records of Participants (with respect to
interests of persons other than Participants). The laws of some states may
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limitation and such laws may impair the
ability to transfer beneficial interests in a global Debt Security.
So long as the Depository for a global Debt Security, or its nominee, is
the registered owner of such global Debt Security, such Depository or such
nominee, as the case may be, will be considered the sole owner or Holder of the
Debt Securities represented by such global Debt Security for all purposes under
the Indenture. Except as provided below, owners of beneficial interests in a
global Debt Security will not be entitled to have any of the individual Debt
Securities of the series represented by such global Debt Security registered in
their names, will not receive or be entitled to receive physical delivery of
such Debt Securities in definitive form, and will not be considered the owners
or Holders thereof under the Indenture.
Payments of principal of, premium, if any, and interest, if any, on
individual Debt Securities represented by a global Debt Security registered in
the name of a Depository or its nominee will be made to the Depository or its
nominee, as the case may be, as the registered owner of the global Debt Security
representing such Debt Securities. Neither the Company, the Trustee, any Paying
Agent, nor the Security Registrar for such Debt Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the global Debt
Security for such Debt Securities or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
The Company expects that the Depository for a series of Debt Securities, or
its nominee, upon receipt of any payment of principal, premium or interest in
respect of a global Debt Security representing any of such Debt Securities, will
immediately credit Participants' accounts with payments in amounts proportionate
to their respective beneficial interests in the principal amount of such global
Debt Security for such Debt Securities as shown on the records of such
Depository or its nominee. The Company also expects that payments by
Participants to owners of beneficial interests in such global Debt Security held
through such Participants will be governed by standing instructions and
customary practices, as is now the case with securities registered in "street
name." Such payments will be the responsibility of such Participants.
If the Depository for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is not
appointed by the Company within 90 days or if the Company executes and delivers
to the Trustee a Company Order to the effect that a global Debt Security shall
be exchangeable for certificated Debt Securities or if an Event of Default has
occurred and is continuing with respect to a series of Debt Securities, the
Company will issue individual certificated Debt Securities of such series in
definitive form in exchange for the global Debt Security or Debt Securities
representing such series of Debt Securities. Accordingly, the Company may at any
time and in its sole discretion, subject to any limitations described in the
Prospectus Supplement relating to such Debt Securities, determine not to have
any Debt Securities of a series represented by one or more global Debt
Securities and, in such event, will issue individual certificated Debt
Securities of such series in definitive form in exchange for the global Debt
Security or Debt Securities representing such series of Debt Securities. In any
such instance, the individual certificated Debt Securities of such series issued
by the Company will be issued to Participants, as directed by the Depository or
its nominee, or to the beneficial owners holding Debt Securities of such series
through such Participants, as directed by such Participants, all in accordance
with standing instructions and customary practices, as is now the case with
securities registered in "street name." Certificated Debt Securities of such
series so issued in definitive form will be issued in denominations, unless
otherwise specified by the Company, of $1,000 and integral multiples thereof.
10
<PAGE>
MISCELLANEOUS
No Holder of a Debt Security of any series may institute any action against
the Company under the Indenture (except actions for payment of overdue principal
of, premium, if any, or interest on such Debt Securities) unless the Holders of
at least 25% of the principal amount of the Debt Securities of that series then
Outstanding under the Indenture shall have requested the Trustee to institute
such action and offered to the Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance with such request and the
Trustee shall not have instituted such action within 60 days of such request.
(Sections 507 and 508 of the Indenture)
THE TRUSTEE UNDER THE INDENTURE
The Company and certain of its affiliates maintain banking and borrowing
relations with The Chase Manhattan Bank (National Association).
The Indenture provides that an alternative Trustee may be appointed by the
Company with respect to any particular series of Debt Securities. Any such
appointment will be described in the Prospectus Supplement relating to such
series of Debt Securities.
DESCRIPTION OF WARRANTS
The Company may issue, together with Debt Securities or separately,
Warrants for the purchase of Debt Securities. Any Warrants are to be issued
under Warrant Agreements (each a "Warrant Agreement") to be entered into
between the Company and a bank or trust company, as Warrant Agent (the "Warrant
Agent"), all as shall be set forth in the Prospectus Supplement relating to
Warrants being offered thereby. A copy of the form of Warrant Agreement,
including the forms of Warrant Certificates representing the Warrants (the
"Warrant Certificates"), reflecting the alternative provisions to be included
in the Warrant Agreements that will be entered into with respect to particular
offerings of Warrants, is filed as an exhibit to the Registration Statement. The
following summaries of certain provisions of the Warrant Agreement and the
Warrant Certificates do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the Warrant
Agreement and the Warrant Certificates, respectively, including the definitions
therein of certain terms.
The form of Warrant Agreement allows for the issuance of Warrants in
foreign currencies and/or in bearer form. The Company does not intend to issue
any such Warrants pursuant to this Prospectus. Accordingly, certain provisions
of the form of Warrant Agreement relating to such Warrants are not described
herein.
GENERAL
The applicable Prospectus Supplement will describe the terms of Warrants
offered thereby, the Warrant Agreement relating to such Warrants and the Warrant
Certificates representing such Warrants, including the following: (1) the
designation, aggregate principal amount, denominations and terms of the series
of Debt Securities purchasable upon exercise of such Warrants and the procedures
and conditions relating to the exercise of such Warrants; (2) the designation
and terms of any related series of Debt Securities with which such Warrants are
issued and the number of such Warrants issued with each such Debt Security; (3)
the date, if any, on and after which such Warrants and the related Debt
Securities will be separately transferable; (4) the principal amount of the
series of Debt Securities purchasable upon exercise of each such Warrant and the
price at which such principal amount of Debt Securities may be purchased upon
such exercise and whether such Debt Securities may be purchased for
consideration other than cash; (5) the date on which the right to exercise such
Warrants shall commence and the date on which such right shall expire (the
"Expiration Date"); (6) if the series of Debt Securities purchasable upon
exercise of such Warrants are Original Issue Discount Securities, a discussion
of Federal income tax considerations applicable thereto; (7) where the Warrant
Certificates may be transferred and registered; and (8) any other terms of the
Warrants.
Warrant Certificates will be exchangeable for new Warrant Certificates of
different denominations at the corporate trust office of the Warrant Agent or
any other office indicated in the applicable Prospectus Supplement. Prior to the
exercise of Warrants, holders of such Warrants will not have any of the rights
of Holders of the Debt Securities purchasable upon such exercise and will not be
entitled to payments of principal of or any premium or interest on the Debt
Securities purchasable upon such exercise.
11
<PAGE>
EXERCISE OF WARRANTS
Each Warrant will entitle the Holder to purchase for cash or specified
securities such principal amount of the related series of Debt Securities at
such exercise price as shall in each case be set forth in, or be determinable as
set forth in, the Prospectus Supplement relating to the Warrants offered
thereby. Warrants may be exercised as set forth in the Prospectus Supplement
relating to the Warrants offered thereby and may be so exercised up to the close
of business on the Expiration Date set forth in such Prospectus Supplement.
After the close of business on the Expiration Date, unexercised Warrants will
become void.
Warrants may be exercised by delivery to the Warrant Agent of payment as
provided in the applicable Prospectus Supplement of the amount required to
purchase the Debt Securities purchasable upon such exercise together with
certain information set forth in the Warrant Certificate. Warrants will be
deemed to have been exercised upon receipt of the exercise price, subject to the
receipt within five business days of the Warrant Certificate representing such
Warrants. Upon receipt of the requisite payment and the Warrant Certificate
properly completed and duly executed at the corporate trust office of the
Warrant Agent or any other office indicated in the applicable Prospectus
Supplement, the Company will, as soon as practicable, issue and deliver pursuant
to the Indenture the Debt Securities purchasable upon such exercise. If less
than all of the Warrants represented by such Warrant Certificate are exercised,
a new Warrant Certificate will be issued for the remaining amount of Warrants.
PLAN OF DISTRIBUTION
GENERAL
The Company may sell the Securities to or through underwriters or dealers;
directly to other purchasers; or through agents. Any such underwriter, dealer or
agent involved in the offer and sale of the Securities will be named in an
applicable Prospectus Supplement or Prospectus Supplements (including any
Pricing Supplement or Pricing Supplements).
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Securities, underwriters may receive
compensation from the Company or from purchasers of Securities for whom they may
act as agents, in the form of discounts, concessions or commissions.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agent. Underwriters, dealers and agents that participate in the distribution of
Securities may be deemed to be underwriters, and any discounts or commissions
received by them from the Company and any profit on the resale of Securities by
them may be deemed to be underwriting discounts and commissions, under the
Securities Act. Any compensation paid by the Company to underwriters, dealers or
agents in connection with the offering of the Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be described in an applicable Prospectus Supplement or Pricing Supplement.
Under agreements which may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of Securities may be
entitled to indemnification by the Company against and/or contribution by the
Company toward certain liabilities, including liabilities under the Securities
Act.
The Company has reserved the right to sell the Securities through AGF
Investment Corp. ("AGFIC"), an affiliate of the Company which may, as an agent
acting on a best efforts basis, solicit offers to purchase the Securities in
those jurisdictions where it is authorized to do so. No commissions will be
payable to AGFIC. AGFIC's business is limited to the solicitation of offers to
purchase securities of the Company and the Company's parent, American General
Finance, Inc. AGFIC utilizes as salespersons full-time employees of the Company
and American General Corporation, who continue to receive their regular salaries
for the continued performance of their regular duties. The Company intends to
pay all direct expenses associated with sales of Securities through AGFIC. The
offering of the Securities will be conducted in compliance with any applicable
requirements of Schedule E of the By-Laws of the National Association of
Securities Dealers, Inc. ("NASD") regarding the distribution by an NASD member
firm of the securities of an affiliate. In accordance with Section 12 of such
Schedule E, underwriters, dealers and agents who participate in the
12
<PAGE>
distribution of Securities will not engage in transactions in Securities for any
discretionary account without the prior specific written approval of the
customer.
DELAYED DELIVERY ARRANGEMENTS
If so indicated in a Prospectus Supplement, the Company will authorize
underwriters, dealers or other persons acting as the Company's agents to solicit
offers by certain institutions to purchase Securities from the Company pursuant
to contracts providing for payment and delivery on a future date. Institutions
with which such contracts may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and others, but in all cases such institutions must be
approved by the Company. The obligations of any purchaser under any such
contract will be subject to the condition that the purchase of the Securities
shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject. The underwriters and such other
agents will not have any responsibility in respect of the validity or
performance of such contracts.
LEGAL OPINIONS
Unless otherwise indicated in a Prospectus Supplement, the validity of each
issue of the Securities will be passed upon for the Company by Baker & Daniels,
Indianapolis, Indiana, and certain legal matters relating to the Securities
offered hereby will be passed upon for any underwriters or agents by Brown &
Wood, New York, New York. Brown & Wood may rely as to matters of Indiana law on
the opinion of Baker & Daniels.
EXPERTS
The consolidated financial statements of the Company and its subsidiaries
appearing in the Company's Annual Report on Form 10-K for the year ended
December 31, 1993 have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein by
reference. See "Incorporation by Reference." Such financial statements are,
and audited financial statements to be included in subsequently filed documents
will be, incorporated herein by reference in reliance upon the reports of Ernst
& Young LLP, pertaining to such financial statements (to the extent covered by
consents filed with the Commission) given upon the authority of such firm as
experts in accounting and auditing.
13
