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_____________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 24, 1995
AMERICAN GENERAL CORPORATION
(Exact name of registrant as specified in its charter)
Texas 1-7981 74-0483432
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
2929 Allen Parkway, Houston, Texas 77019
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 522-1111
_____________________________________________________________________________
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Item 5. Other Events.
On August 24, 1995, American General Delaware Management Corporation,
the Managing Member of American General Capital, L.L.C. ("AG Capital"), adopted
the Written Action of the Managing Member which authorized the issuance in an
underwritten public offering of up to 9,200,000 of AG Capital's 8 1/8%
Cumulative Monthly Income Preferred Securities, Series B (the "Preferred
Securities") under the previously filed Registration Statement on Form S-3
(Registration Nos. 33-58317, 33-58317-01 and 33-58317-02) (the "Registration
Statement") and the related Prospectus dated May 23, 1995 and Prospectus
Supplement dated August 24, 1995. The Preferred Securities will be guaranteed
by American General Corporation to the extent provided in the Guarantee
Agreement ("Guarantee") dated May 24, 1995. In connection with the issuance
and sale of the Preferred Securities, AG Capital will acquire up to
$288,227,825.00 principal amount of 8 1/8% Series B Junior Subordinated
Debentures of American General Corporation (the "Debt Securities").
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits. The following Exhibits are filed as part of this
Report and as Exhibits to the Registration Statement:
<TABLE>
<CAPTION>
Exhibit
Number Description
------- --------------------------------------------------
<S> <C>
4(a) Resolutions relating to the Debt Securities including form of Debt Securities.
4(b) Written Action of the Managing Member.
4(c) Form of Global Preferred Securities.
5 Opinion of Vinson & Elkins L.L.P., special counsel for the Company, as to the
legality of the Preferred Securities, the Debt Securities and the Guarantee.
12 Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends.
</TABLE>
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Report to be signed on its behalf by
the undersigned thereunto duly authorized.
AMERICAN GENERAL CORPORATION
Dated: August 25, 1995 By: /s/ C. JEFFREY GAY
----------------------------
C. Jeffrey Gay
Assistant Treasurer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- --------------------------------------------------
<S> <C>
4(a) Resolutions relating to the Debt Securities including form of Debt Securities.
4(b) Written Action of the Managing Member.
4(c) Form of Global Preferred Securities.
5 Opinion of Vinson & Elkins L.L.P., special counsel for the Company, as to the
legality of the Preferred Securities, the Debt Securities and the Guarantee.
12 Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends.
</TABLE>
<PAGE> 1
EXHIBIT 4(a)
AMERICAN GENERAL CORPORATION
RESOLUTIONS RELATING TO 8 1/8% SERIES B JUNIOR SUBORDINATED DEBENTURES
ADOPTED BY THE TERMS COMMITTEE
WHEREAS, American General Capital, L.L.C., a Delaware limited
liability company ("American General Capital"), proposes to issue its 8 1/8%
Cumulative Monthly Income Preferred Securities, Series B (collectively, the
"Capital Series B Preferred Securities") and use the proceeds from the sale of
the Capital Series B Preferred 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 301 of the Indenture, dated as of
May 15, 1995 (the "Indenture"), between the Company and Chemical Bank, as
Trustee;
Now, therefore, be it:
RESOLVED, that, upon receipt of the purchase price therefor, the
Company shall issue, sell and deliver a series of its junior subordinated
debentures pursuant to the Indenture.
RESOLVED, that the title, principal amount, interest rate, redemption
provisions, and other terms of such debentures to be fixed pursuant to Section
301 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. Each of such debentures shall be designated as "8 1/8%
Series B Junior Subordinated Debenture" (collectively, the "Subordinated
Debentures") and each such Subordinated Debenture shall be included in the
series of Securities so designated.
2. PRINCIPAL AMOUNT. The aggregate principal amount of the
Subordinated Debentures which may be authenticated and delivered pursuant to
these resolutions shall be limited to $250,632,900.00 or, if and to the extent
that the underwriters underwriting the sale of the Capital Series B Preferred
Securities exercise their overallotment option with respect thereto, then such
aggregate principal amount of Subordinated Debentures shall be up to
$288,227,825.00 (except, in each case, for Subordinated Debentures
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Subordinated Debentures pursuant to Section 304, 305,
306, 907 or 1107 of the Indenture).
3. MATURITY DATE. The principal of the Subordinated Debentures
shall be payable (together with any accrued and unpaid interest thereon,
including Additional Interest, as defined in Section 6, if any) on the earlier
of (a) September 30, 2025 (subject to the Company's right to exchange the
Subordinated Debentures for new Securities or to redeem or repay the
Subordinated Debentures and reborrow the proceeds from such redemption
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or repayment upon the terms and subject to the conditions set forth in Section
11), or (b) the date upon which American General Capital is liquidated,
dissolved or wound-up; provided, however, that, if all the Capital Series B
Preferred Securities are exchanged for Subordinated Debentures (a "Capital
Special Event Exchange") in the manner set forth in Section 5(c)(ii) of the
Written Action, dated as of August 24, 1995 (the "Capital Written Action"), of
the Managing Member of American General Capital establishing the Capital Series
B Preferred Securities, then (i) the Subordinated Debentures will mature on the
date set forth in clause (a), notwithstanding that American General Capital may
have liquidated, dissolved or wound-up in connection with or after such Capital
Special Event Exchange and (ii) the Subordinated Debentures will not thereafter
be subject to an election by the Company pursuant to Section 11 hereof to
exchange the Subordinated Debentures for new Securities or to redeem or repay
the Subordinated Debentures and reborrow the proceeds from such redemption or
repayment.
4. INTEREST RATE; INTEREST PAYMENT DATES. The Subordinated
Debentures shall bear interest at the rate of 8 1/8% per annum; interest shall
accrue from August 29, 1995 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for; the Interest Payment Dates
on which such interest shall be payable shall be the last day of each calendar
month of each year, commencing September 30, 1995, until the principal is paid
in full or such payment is duly provided for; and the Regular Record Date for
the interest payable upon any such Interest Payment Date shall be the Business
Day next preceding such Interest Payment Date; provided, however, that if the
Subordinated Debentures are not in book-entry-only form during any period
following a Capital Special Event Exchange, the Regular Record Date for any
Interest Payment Date within such period shall be the fifteenth day of the
month in which such Interest Payment Date occurs. If any date on which
interest is payable on the Subordinated Debentures is not a Business Day, then
the payment of the interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case as with the same force and
effect as if made on such date.
5. EXTENSION OF AN INTEREST PAYMENT PERIOD. The Company shall
have the right, at any time and from time to time during the term of the
Subordinated Debentures, to extend the interest payment period to a period
ending on the last day of a calendar month (an "Extension Period") not
exceeding 60 consecutive months, but in no event beyond the date of Stated
Maturity or the Redemption Date of the Subordinated Debentures. During an
Extension Period, interest will continue to accrue and compound monthly in the
manner set forth in Section 6 below. Prior to the termination of any Extension
Period of less than 60 consecutive months, the Company may further extend the
interest payment period, provided that such Extension Period may not exceed 60
consecutive months and may not extend beyond the date of Stated Maturity or the
Redemption Date of the Subordinated Debentures. Upon the termination of any
Extension Period and the payment of all accrued and unpaid interest (including
Additional Interest) then due, the Company may select a new Extension Period,
subject to the above requirements. No interest shall be due during an
Extension Period until the end of such period. Such interest shall be due and
payable on
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the Interest Payment Date which is the last day of the Extension Period. The
Regular Record Date for the interest payable on such Interest Payment Date
shall be the Business Day next preceding such Interest Payment Date, provided
that if the Subordinated Debentures are not in book-entry-only form during any
period following a Capital Special Event Exchange, the Regular Record Date for
such payment shall be the 15th day of the month in which such Interest Payment
Date occurs.
At any time prior to a Capital Special Event Exchange and if any
Capital Series B Preferred Securities are then outstanding, the Company shall
give American General Capital notice of its selection of an Extension Period at
least one Business Day prior to the earlier of (i) the date that dividends on
the Capital Series B Preferred Securities are payable or (ii) the date on which
American General Capital is required to give notice of the record or payment
date of any dividend payable on the Capital Series B Preferred Securities to
the New York Stock Exchange ("NYSE") or other applicable self-regulatory
organization or to holders of the Capital Series B Preferred Securities, but in
any event not less than one Business Day prior to such record date. After any
Capital Special Event Exchange, the Company shall give the holders of the
Subordinated Debentures notice of its selection of an Extension Period not less
than two Business Days prior to the Regular Record Date for the first Interest
Payment Date for which such Extension Period will be effective. In each case,
the Company shall give the Trustee notice of its selection of an Extension
Period not later than the Business Day such notice is required to be given to
American General Capital or the Holders of the Subordinated Debentures, as the
case may be, pursuant to the preceding provisions of this paragraph.
Notice of the Company's extension of an Extension Period shall be
given prior to the then scheduled end of such Extension Period in a manner
similar to the notice given in connection with the selection of an Extension
Period.
6. ADDITIONAL INTEREST. Interest shall accrue at the rate of 8
1/8% per annum on any interest on the Subordinated Debentures that is not paid
during an Extension Period. Such interest shall compound monthly. The Company
shall pay such interest, to the fullest extent permitted by applicable law, on
the Interest Payment Date which is the last day of the Extension Period.
Additionally, if at any time prior to a Capital Special Event Exchange,
American General Capital shall be required to pay, with respect to the income
it derives from the interest payments on the Subordinated Debentures, any
amounts for or on account of any taxes, duties, assessments or governmental
charges of whatever nature imposed by the United States (other than withholding
taxes), or any other taxing authority, then, in any such case, the Company
shall pay, to the fullest extent permitted by applicable law, as additional
interest such additional amounts (the "Additional Amounts") as may be necessary
in order that the net amounts received and retained by American General Capital
with respect to interest payments on the Subordinated Debentures, after the
payment of such taxes, duties, assessments or governmental charges (including
such taxes, duties, assessments or governmental charges payable with respect to
Additional Amounts), shall result in American General Capital's having such
funds as it would have had in the absence of the payment of such taxes, duties,
assessments or governmental charges. Such Additional Amounts shall be payable
when the related interest payment on the Subordinated
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Debentures is due except that, if the existence or applicability of such taxes,
duties, assessments or governmental charges is not known by the Company at the
time of such interest payment, then on the Interest Payment Date immediately
preceding the date on which American General Capital proposes to pay such
taxes, duties, assessments or charges. The amounts of interest payable to
effect monthly compounding on the Subordinated Debentures pursuant to the first
three sentences of this Section 6, together with any such Additional Amounts,
are referred to herein as "Additional Interest."
In addition to the Additional Interest, the Company shall be required
to pay interest, at a rate borne by the Subordinated Debentures, on any
principal or premium that is not paid when due and, to the extent that payment
of such interest is lawful, interest on overdue installments of interest (which
shall not include interest not paid because of an extension of an interest
payment period).
7. PLACE OF PAYMENT. The Trustee is hereby appointed as the
initial sole Paying Agent for the Subordinated Debentures. The principal of
and interest (including any Additional Interest) on the Subordinated 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) by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register or (b) subject to the procedures of the Paying Agent, by wire transfer
in immediately available funds at such place and to such account maintained at
a bank located in the United States as may be designated by the Person entitled
thereto as specified in the Security Register.
8. SPECIAL EVENT REDEMPTION. At any time after the occurrence of
a Tax Event or an Investment Company Event (each as hereafter defined and each
constituting a "Capital Special Event") and prior to a Capital Special Event
Exchange, the Subordinated Debentures shall be subject to redemption, at the
option of the Company, in whole but not in part, at a cash Redemption Price
equal to the unpaid principal amount thereof, without premium or penalty, plus
any accrued and unpaid interest (including any Additional Interest) thereon to
the Redemption Date.
"Tax Event" means that a change in any applicable United States law or
regulation or in the interpretation thereof (including but not limited to the
enactment or imminent enactment of any legislation, the publication of any
judicial decisions, regulatory rulings, regulatory procedures, or notices or
announcements (including notices or announcements of intent to adopt such
procedures or regulations), or a change in the official position or the
interpretation of any law or regulation by any legislative body, court,
governmental authority or regulatory body, irrespective of the manner in which
such change is made known) shall have occurred after August 24, 1995, and that
American General Capital or the Company shall have received an opinion of
nationally recognized independent legal counsel experienced in such matters
that, as a result of such change, there exists more than an insubstantial risk
that (i) American General Capital will be subject to federal income tax with
respect to the interest received on the Subordinated Debentures, (ii) the
Company will be precluded from deducting the interest paid on the Subordinated
Debentures for federal
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income tax purposes or (iii) American General Capital will be subject to more
than a de minimis amount of other taxes, duties or other governmental charges.
"Investment Company Event" means that a change in any applicable
United States law or regulation or in the interpretation thereof (including but
not limited to the enactment or imminent enactment of any legislation, the
publication of any judicial decisions, regulatory rulings, regulatory
procedures, or notices or announcements (including notices or announcements of
intent to adopt such procedures or regulations), or a change in the official
position or the interpretation of any law or regulation by any legislative
body, court, governmental authority or regulatory body, irrespective of the
manner in which such change is made known) shall have occurred after August 24,
1995, and that American General Capital or the Company shall have received an
opinion of nationally recognized independent legal counsel experienced in
practice under the Investment Company Act of 1940, as amended (the "1940 Act"),
that, as a result of such change, there exists more than an insubstantial risk
that American General Capital is or will be considered an "investment company"
which is required to be registered under the 1940 Act.
9. MANDATORY REDEMPTION.
(a) If, prior to a Capital Special Event Exchange, American
General Capital redeems any Capital Series B Preferred Securities in accordance
with the terms thereof, then the Subordinated Debentures shall be due and
payable and shall be redeemed by the Company in an aggregate principal amount
equal to the aggregate stated liquidation preference of the Capital Series B
Preferred Securities so redeemed at a cash Redemption Price equal to the unpaid
principal amount of the Subordinated Debentures so redeemed, without premium or
penalty, plus any accrued and unpaid interest (including any Additional
Interest) thereon to the Redemption Date. Any redemption pursuant to this
Section shall be made prior to 12:00 noon, New York time, on the date of such
redemption of the Capital Series B Preferred Securities (or at such other time
on such earlier date as the Company and American General Capital shall agree).
(b) In the case of a redemption pursuant to this Section 9, the
Company shall, at least one Business Day prior to the Redemption Date, notify
the Trustee of such Redemption Date and of the principal amount of the
Subordinated Debentures to be redeemed. If the related redemption of Capital
Series B Preferred Securities does not occur, then such redemption of the
Subordinated Debentures shall be of no force and effect, notwithstanding the
giving of such notice of redemption.
10. OPTIONAL REDEMPTION.
(a) The Subordinated Debentures shall be subject to redemption, at
the option of the Company, in whole or in part, at any time or from time to
time on or after August 29, 2000 at a cash Redemption Price equal to the unpaid
principal amount thereof, without premium or penalty, plus any accrued and
unpaid interest (including any Additional Interest) thereon to the Redemption
Date.
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(b) If, prior to a Capital Special Event Exchange, the Company or
any of its Subsidiaries acquires any Capital Series B Preferred Securities by
tender, in the open market or otherwise, then the Subordinated Debentures shall
be subject to redemption, at the option of the Company, in an aggregate
principal amount not to exceed the aggregate stated liquidation preference of
the Capital Series B Preferred Securities so purchased, at a cash Redemption
Price equal to the unpaid principal amount thereof, without premium or penalty,
plus any accrued and unpaid interest (including any Additional Interest)
thereon to the Redemption Date.
(c) If at any time prior to a Capital Special Event Exchange the
Company is, or in the opinion of nationally recognized independent legal
counsel would be, required to pay Additional Interest with respect to the
Subordinated Debentures (other than Additional Interest required in order to
provide for monthly compounding on the Subordinated Debentures), then the
Company shall have the right to redeem the Subordinated Debentures, in whole
but not in part, at a cash Redemption Price equal to the unpaid principal
amount thereof, without premium or penalty, plus any accrued and unpaid
interest (including any Additional Interest) thereon to the Redemption Date.
11. REBORROWING OR EXCHANGE.
(a) Notwithstanding the provisions of Sections 3, 8, 9 and 10,
prior to a Capital Special Event Exchange, the Company may, with American
General Capital's consent, (i) in lieu of repaying the Subordinated Debentures
when due (either at Stated Maturity, earlier redemption or otherwise, but
excluding any payment due resulting from the acceleration of the maturity of
the Subordinated Debentures upon the occurrence of an Event of Default under
the Indenture), or optionally redeeming the Subordinated Debentures, exchange
such Subordinated Debentures for new Securities with an equal aggregate
principal amount or (ii) if the Company repays such Subordinated Debentures
when due or optionally redeems such Subordinated Debentures, reborrow from
American General Capital the proceeds from such repayment or redemption, which
reborrowing shall be evidenced by new Securities; provided, however, that the
Company may not so exchange the Subordinated Debentures for new Securities or
reborrow the proceeds from the repayment or redemption thereof unless American
General Capital owns all of such Subordinated Debentures and the following
conditions are satisfied (which satisfaction, in the case of clauses (6)
through (10), shall be determined in the judgment of the Managing Member of
American General Capital and American General Capital's financial advisor
selected by such Managing Member and who shall be unaffiliated with the Company
and shall be among the 30 largest investment banking firms, measured by total
capital, in the United States at the time of the issuance of the new Securities
that will evidence the new loan to be made in connection with such exchange or
reborrowing):
(1) the Company is not bankrupt, insolvent or in
liquidation,
(2) the Company is not in default in the payment of any
interest (including Additional Interest) or principal in respect of
any Securities under the Indenture,
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(3) the Company has made timely payments on the
Subordinated Debentures for the immediately preceding 24 months (and
has not elected to extend any interest payment period of the
Subordinated Debentures during such 24-month period),
(4) such new Securities will mature no later than the
earlier of (A) the 49th anniversary of the date of the initial
issuance of the Subordinated Debentures and (B) the 30th anniversary
of the date such new Securities are issued,
(5) American General Capital is not in arrears in the
payment of any dividends (including Additional Dividends) on the
Capital Series B Preferred Securities,
(6) the Company is expected to be able to make timely
payment of the principal of and the interest on such new Securities,
(7) the issuance of such new Securities is being made on
terms, and under circumstances, that are consistent with those which a
lender would then require for a loan to an unrelated party,
(8) the interest rate on such new Securities is
sufficient to provide payments equal to or greater than the amount of
dividend payments required under the Capital Series B Preferred
Securities,
(9) the terms of such new Securities are consistent with
market circumstances and the Company's financial condition, and
(10) immediately prior to the issuance of such new
Securities, the senior unsecured long-term debt of the Company is (or,
if no such debt is outstanding, would be) rated not less than BBB (or
the equivalent) by Standard & Poor's Corporation and Baa2 (or the
equivalent) by Moody's Investors Service, Inc. and the subordinated
unsecured long-term debt of the Company (or, if more than one issue of
such subordinated debt is outstanding, the most junior of such issues)
is (or, if no such debt is outstanding, would be) rated not less than
BBB- (or the equivalent) by Standard & Poor's Corporation and Baa3 by
Moody's Investors Service, Inc. (or, if either of such rating
organizations is not then rating the Company's senior or subordinated
unsecured long- term debt, as the case may be, the equivalent of such
ratings by any other "nationally recognized statistical rating
organization," as that term is defined by the Securities and Exchange
Commission for purposes of Rule 436(g)(2) under the Securities Act of
1933, as amended).
(b) If the Company elects to exercise its option to exchange new
Securities for Subordinated Debentures pursuant to clause (i) of Section 11(a),
then, no later than 15 Business Days prior to the Stated Maturity or Redemption
Date of the Subordinated Debentures to be exchanged (or, if such exchange is to
be made in lieu of an optional redemption, then no later than 15 Business Days
before the proposed date of exchange), the
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Company shall deliver a notice stating that it elects to exercise such option
to the Trustee and to American General Capital. If the Company desires to
reborrow the proceeds of the repayment or redemption of the Subordinated
Debentures pursuant to clause (ii) of Section 11(a), then the Company will
deliver a notice stating that desire to the Trustee and American General
Capital at any time before or after such repayment or redemption. The Company
shall specify in each such notice the date (the "Refunding Date") on which an
exchange or reborrowing is to occur and each such notice shall be accompanied
by an Officers' Certificate stating that the conditions to such exchange or
reborrowing contained in this Section 11 have been satisfied. If American
General Capital consents to such exchange or reborrowing (as evidenced by a
notice to the Company and the Trustee to that effect), then the Company shall,
on or prior to the Refunding Date, furnish to the Trustee a Company Order for
the authentication and delivery of the Securities which are to be issued in
exchange for the Subordinated Debentures or which are to evidence the
reborrowing, together with (i) the Securities which are to be authenticated,
(ii) the Board Resolutions and Officers' Certificate or supplemental indenture
or other instrument with respect to such Securities referred to in Sections 201
and 301 of the Indenture, and (iii) if required by the Trustee, the Opinion of
Counsel and other documents referred to in clauses (1), (2) and (3) of Section
303 of the Indenture.
(c) In the case of an exchange of new Securities for the
Subordinated Debentures pursuant to clause (i) of Section 11(a), on the
Refunding Date, the Company shall deliver the new Securities, authenticated by
the Trustee or an Authenticating Agent, to American General Capital in exchange
for the Subordinated Debentures held by American General Capital. Such
Subordinated Debentures shall be cancelled by the Trustee and, on the Refunding
Date, all rights of American General Capital, as Holder of the Subordinated
Debentures, shall cease.
12. CERTAIN PROVISION APPLICABLE AFTER A CAPITAL SPECIAL EVENT
EXCHANGE.
(a) If, immediately prior to any Capital Special Event Exchange,
the Capital Series B Preferred Securities are represented by one or more global
securities held by The Depository Trust Company ("DTC") or any successor
securities depository or their respective nominees, then (a) DTC or such
successor shall act as (and is hereby appointed) the Depository for the
Subordinated Debentures, and (b) the Subordinated Debentures exchanged for the
Capital Series B Preferred Securities upon such Capital Special Event Exchange
shall be represented by one or more global Subordinated Debentures registered
in the name of DTC or such successor securities depository or their respective
nominees.
(b) After the date fixed for a Capital Special Event Exchange, any
certificates representing Capital Series B Preferred Securities not held by DTC
or any successor securities depository or their respective nominees and not
surrendered for exchange shall be deemed to represent Subordinated Debentures
having a principal amount and accrued and unpaid interest equal to the
liquidation preference plus accrued and unpaid dividends of such Capital Series
B Preferred Securities until such certificates are surrendered to the agent
named in the Capital Written Action for exchange in accordance with the terms
of the Capital Special Event Exchange. Notwithstanding the foregoing, until
such certificates
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are so surrendered, no payments of interest or principal will be made with
respect to such Subordinated Debentures.
13. LISTING. If the Capital Series B Preferred Securities are
listed on the NYSE or another national securities exchange at the time of the
distribution of the Subordinated Debentures pursuant to a Capital Special Event
Exchange, then, prior to such distribution, the Company shall use its best
efforts to cause the Subordinated Debentures to be listed on the NYSE or such
other exchange on which the Capital Series B Preferred Securities are then
listed.
14. REGISTRAR. The Subordinated 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
Subordinated Debentures and the Indenture may be presented at that office.
15. FORM. The certificates evidencing the Subordinated 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.
16. TRANSFERABILITY. Prior to a Capital Special Event Exchange,
the Subordinated Debentures may not be transferred by American General Capital
without the Company's prior consent. The Subordinated Debentures may be
distributed to the holders of the Capital Series B Preferred Securities upon
the occurrence of a Tax Event or an Investment Company Event only upon the
written consent of the Company.
17. DENOMINATION. The Subordinated Debentures shall be issuable
in denominations of $25 and any integral multiple thereof.
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ANNEX A
FORM OF FACE OF SUBORDINATED DEBENTURE
AMERICAN GENERAL CORPORATION
8 1/8% Series B Junior Subordinated Debenture
No. ____ $________________
American General Corporation, a corporation duly organized and
existing under the laws of the State of Texas (herein called the "Company",
which term includes any successor under the Indenture referred to on the
reverse side), for value received, hereby promises to pay to American General
Capital, L.L.C., or registered assigns, the principal sum of
______________________________________________ Dollars ($___________) on the
earlier of (i) September 30, 2025 (subject to the Company's right to exchange
this Subordinated Debenture for a new Security or to redeem or repay this
Subordinated Debenture and reborrow the proceeds from such redemption or
repayment upon the terms and subject to the conditions set forth in the
Indenture and on the reverse hereof) or (ii) the date upon which American
General Capital, L.L.C., a Delaware limited liability company (herein called
"American General Capital"), is liquidated, dissolved or wound-up; provided,
however, that if all the 8 1/8% Cumulative Monthly Income Preferred Securities,
Series B, of American General Capital (herein called the "Capital Series B
Preferred Securities") are exchanged (herein called a "Capital Special Event
Exchange") for Subordinated Debentures (as defined on the reverse side) in
accordance with the terms of the Capital Series B Preferred Securities, (i)
this Subordinated Debenture will mature on September 30, 2025, notwithstanding
that American General Capital may have liquidated, dissolved or wound-up in
connection with or after such Capital Special Event Exchange, and (ii) this
Subordinated Debenture will not thereafter be subject to an election by the
Company to exchange this Subordinated Debenture for new Securities or to redeem
or repay this Subordinated Debenture and reborrow the proceeds from such
redemption or repayment. The Company also agrees to pay interest on the
principal hereof at the rate of 8 1/8% per annum from August 29, 1995 (or from
the most recent Interest Payment Date, as hereinafter defined, to which
interest has been paid or duly provided for), payable monthly in arrears on the
last day of each calendar month of each year (each an "Interest Payment Date"),
commencing September 30, 1995, until the principal hereof is paid or made
available for payment. To the fullest extent permitted by applicable law,
interest will accrue at the rate of 8 1/8% per annum on any interest
installment that is not paid at the end of any monthly interest period,
compounded monthly (herein, together with the Additional Amounts referred to in
the Indenture, called "Additional Interest"). The amount of interest payable
for any period shall be computed on the basis of a 360 day year consisting of
twelve 30-day months and, for any period shorter than a full monthly interest
payment period, will be computed on the basis of the actual number of days
elapsed in such period. If any date on which interest is
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<PAGE> 11
payable on this Subordinated Debenture is not a Business Day, then the payment
of the interest payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in respect
of any such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date. A
"Business Day" shall mean any day other than a Saturday, Sunday or other day on
which banking institutions in New York City are authorized or obligated by law
or executive order to close. The interest 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 Subordinated Debenture (or
one or more Predecessor Securities, as defined in the Indenture) is registered
at the close of business on the Regular Record Date for such Interest Payment
Date. The Regular Record Date shall be the Business Day next preceding such
Interest Payment Date, provided that if the Subordinated Debentures are not in
book- entry-only form during any period following a Capital Special Event
Exchange, the Regular Record Date for any Interest Payment Date within such
period shall be the 15th day of the month in which such Interest Payment Date
occurs. Any such interest not so punctually paid or duly provided for (other
than by reason of the following paragraph) will forthwith cease to be payable
to the Holder on such Regular Record Date and may either be paid to the Person
in whose name this Subordinated Debenture (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, or be paid
at any time in any other lawful manner not inconsistent with the requirements
of any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in such
Indenture.
The Company shall have the right, at any time and from time to time,
to extend the interest payment period hereof to a period ending on the last day
of a calendar month (herein called an "Extension Period") not exceeding 60
consecutive months, but in no event beyond the date of Stated Maturity or the
Redemption Date of this Subordinated Debenture. During an Extension Period,
interest will continue to accrue and compound monthly. Prior to the
termination of any Extension Period of less than 60 consecutive months, the
Company may further extend the interest payment period hereof, provided that
such Extension Period may not exceed 60 consecutive months and may not extend
beyond the date of Stated Maturity or the Redemption Date of this Subordinated
Debenture. Upon the termination of any Extension Period and the payment of all
accrued and unpaid interest (including any Additional Interest) then due, the
Company may select a new Extension Period, subject to the above requirements.
No interest shall be due during an Extension Period until the end of such
period. Such interest shall be due and payable on the Interest Payment Date
which is the last day of the Extension Period to the Person in whose name this
Subordinated Debenture is registered on the Regular Record Date for such
Interest Payment Date.
Payment of the principal of and interest on this Subordinated
Debenture will be made at the office or agency of the Company maintained for
that purpose in New York, New York, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that at
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<PAGE> 12
the option of the Company payment of interest may be made (i) by check mailed
to the address of the Person entitled thereto as such address shall appear in
the Security Register or (ii) subject to the procedures of the Paying Agent, by
wire transfer in immediately available funds at such place and to such account
at a bank located in the United States as may be designated by the Person
entitled thereto as specified in the Security Register.
Reference is hereby made to the further provisions of the Indenture
summarized on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Subordinated Debenture shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: __________________
AMERICAN GENERAL CORPORATION
By: _________________________________
Name:
Title:
[SEAL]
Attest:_______________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein referred
to in the within-mentioned Indenture.
CHEMICAL BANK
As Trustee
By:__________________________________
Authorized Officer
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<PAGE> 13
FORM OF REVERSE OF SUBORDINATED DEBENTURE
This Subordinated Debenture is one of a duly authorized issue of
Securities of the Company, designated as its 8 1/8% Series B Junior
Subordinated Debentures (herein called the "Subordinated Debentures"), limited
in aggregate principal amount to $250,632,900.00 (or up to $288,227,825.00
aggregate principal amount if and to the extent that the over-allotment option
granted to the underwriters for the sale of the Capital Series B Preferred
Securities is exercised), issued and to be issued under an Indenture, dated as
of May 15, 1995 (herein called the "Indenture"), between the Company and
Chemical Bank, as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture). Reference is made to the Indenture and
all indentures supplemental thereto (including the Board Resolution setting
forth the terms of this series of Securities) for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee, the holders of Senior Indebtedness and the Holders of the
Subordinated Debentures and other series of Securities which may be issued
pursuant to the Indenture and of the terms upon which the Securities are, and
are to be, authenticated and delivered. All terms used in this Subordinated
Debenture which are defined in the Indenture shall have the meanings assigned
to them in the Indenture.
The indebtedness evidenced by this Subordinated Debenture, including
all principal and interest (including Additional Interest), is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Subordinated
Debenture is issued subject to the provisions of the Indenture with respect
thereto. The Holder of this Subordinated Debenture, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination so provided and (c) appoints the Trustee his
attorney-in-fact for any and all such purposes.
If an Event of Default with respect to the Subordinated Debentures
shall occur and be continuing, the principal of the Subordinated Debentures may
be declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Subordinated Debentures under the
Indenture at any time by the Company and the Trustee with, in some cases, the
consent of the Holders of a majority in aggregate principal amount of the
Subordinated Debentures at the time Outstanding and, in other cases, without
the consent of any Holders. This Indenture also contains provisions permitting
the Holders of specified percentages in principal amount of the Subordinated
Debentures, on behalf of the Holders of all Subordinated Debentures, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver shall be conclusive and binding upon the Holder of this Subordinated
Debenture and upon all future Holders of this Subordinated Debenture and of any
Subordinated Debenture issued upon the registration
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<PAGE> 14
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent is made upon this Subordinated Debenture or thereon.
The Subordinated Debentures are subject to redemption, at the option
of the Company, in whole or in part, at any time or from time to time on or
after August 29, 2000, at a Redemption Price equal to the unpaid principal
amount thereof, without premium or penalty, plus any accrued and unpaid
interest (including any Additional Interest) thereon to the Redemption Date.
If American General Capital redeems the Capital Series B Preferred Securities
in accordance with the terms thereof, the Subordinated Debentures shall be due
and payable and shall be redeemed by the Company in an aggregate principal
amount equal to the aggregate stated liquidation preference of the Capital
Series B Preferred Securities so redeemed at a Redemption Price equal to the
unpaid principal amount of the Subordinated Debentures so redeemed, without
premium or penalty, plus any accrued and unpaid interest (including any
Additional Interest) thereon to the Redemption Date.
The Company also has the right to redeem the Subordinated Debentures,
in whole, at a Redemption Price equal to the principal amount thereof, without
premium or penalty plus any accrued and unpaid interest (including any
Additional Interest) thereon to the Redemption Date if a Tax Event or an
Investment Company Event, as defined in the Indenture, shall have occurred. If
at any time prior to a Capital Special Event Exchange the Company is, or in the
opinion of nationally recognized independent legal counsel would be, required
to pay Additional Interest with respect to the Subordinated Debentures (other
than Additional Interest required in order to provide for monthly compounding
on the Subordinated Debentures), the Company shall have the right to redeem the
Subordinated Debentures, in whole but not in part, at a Redemption Price equal
to the principal amount thereof, without premium or penalty, plus any accrued
and unpaid interest (including any Additional Interest) thereon to the
Redemption Date.
In addition, if the Company or any of its Subsidiaries acquires any
Capital Series B Preferred Securities by tender, in the open market or
otherwise, the Company shall have the right to redeem the Subordinated
Debentures, in an aggregate principal amount not to exceed the aggregate stated
liquidation preference of the Capital Series B Preferred Securities so
purchased, at a Redemption Price equal to the principal amount thereof, plus
any accrued and unpaid interest (including any Additional Interest) thereon to
the Redemption Date.
Notwithstanding any other provision of this Subordinated Debenture,
prior to a Capital Special Event Exchange, the Company may, with American
General Capital's consent and if the conditions stated in the Indenture have
been satisfied, in lieu of repaying this Subordinated Debenture when due
(either at Stated Maturity, earlier redemption or otherwise, but excluding any
payment due as a result of the acceleration of the maturity of this
Subordinated Debenture upon the occurrence of an Event of Default under the
Indenture), or optionally redeeming this Subordinated Debenture, exchange this
Subordinated Debenture for a new Security issued under the Indenture with an
equal aggregate principal amount or, if the Company repays this Subordinated
Debenture when
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<PAGE> 15
due or optionally redeems this Subordinated Debenture, reborrow from American
General Capital the proceeds from such repayment or redemption, which
reborrowing shall be evidenced by a new Security.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Subordinated Debenture is registrable in
the Security Register, upon surrender of this Subordinated Debenture for
registration of transfer at the office or agency of the Trustee in New York
City, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and thereupon one
or more new Subordinated Debentures, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees; provided, however, that prior to a Capital Special Event Exchange,
this Subordinated Debenture may not be transferred without the written consent
of the Company.
The Subordinated Debentures are issuable only in registered form
without coupons in denominations of $25 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations set forth therein,
Subordinated Debentures are exchangeable for a like aggregate principal amount
of Subordinated Debentures of a different authorized denomination, as requested
by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Subordinated Debenture for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Subordinated Debenture
is registered as the owner hereof for all purposes, whether or not this
Subordinated Debenture be overdue, and neither the Company, the Trustee nor any
such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of or
interest (including Additional Interest, if any) on this Subordinated
Debenture, or for any claim based hereon, or otherwise in respect hereof, or
based on or in respect of the Indenture or any indenture supplemental thereto,
against any incorporator, stockholder, officer or director, as such, past,
present or future, of the Company or of any successor corporation, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.
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<PAGE> 1
EXHIBIT 4(b)
TERMS OF THE 8 1/8% CUMULATIVE MONTHLY INCOME PREFERRED SECURITIES, SERIES B
DATED AS OF AUGUST 24, 1995
WRITTEN ACTION OF THE MANAGING MEMBER
PURSUANT TO SECTION 7.1(B) OF THE AMENDED
AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
OF AMERICAN GENERAL CAPITAL, L.L.C.
The undersigned Managing Member of American General Capital, L.L.C., a
Delaware limited liability company (the "Company"), pursuant to Section 7.1(b)
of the Amended and Restated Limited Liability Company Agreement of the Company
(the "Agreement") dated as of May 24, 1995 by and among American General
Corporation ("American General"), the Managing Member and the Persons who
became or become Members of the Company in accordance with the provisions
thereof, does hereby authorize the issue of, and establish the relative rights,
powers, preferences, limitations and restrictions of, a series of Preferred
Securities as follows:
1. Definitions. All terms defined in the Agreement and not
otherwise defined herein shall have for purposes hereof the meanings provided
for therein. The following additional terms have the respective meanings
specified below:
"Additional Dividends" means the amount of dividends that is
payable by the Company on any dividend arrearages in respect of the Series B
Preferred Securities at the rate of 8 1/8% per annum compounded monthly.
"Book-Entry Interest" means a beneficial interest in the
global certificates representing Series B Preferred Securities, ownership and
transfers of which shall be made through the book-entry system of a Clearing
Agency as described in Section 12.
"Business Day" means any day other than a Saturday, Sunday or
other day on which banking institutions in The City of New York are authorized
or obligated by law or executive order to close.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended, that is acting as depositary for the Series B Preferred
Securities and in whose name (or nominee's name) shall be registered one or
more global certificates representing Series B Preferred Securities and which
shall undertake to effect book-entry transfers and pledges of interests in the
Series B Preferred Securities.
<PAGE> 2
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of interests in
securities deposited with the Clearing Agency.
"Dividend Payment Date" has the meaning set forth in
Section 4(b) hereof.
"Guarantee" means the Guarantee Agreement dated as of May 24,
1995, executed and delivered by American General for the benefit of the holders
from time to time of the Series B Preferred Securities and other Preferred
Securities of the Company, as amended from time to time.
"Holders" means the registered holders of the Series B
Preferred Securities as they appear on the books and records of the Company.
"Investment Company Event" means that a change in any
applicable United States law or regulation or in the interpretation thereof
(including but not limited to the enactment or imminent enactment of any
legislation, the publication of any judicial decisions, regulatory rulings,
regulatory procedures, or notices or announcements (including notices or
announcements of intent to adopt such procedures or regulations), or a change
in the official position or the interpretation of any law or regulation by any
legislative body, court, governmental authority or regulatory body,
irrespective of the manner in which such change is made known) shall have
occurred after August 24, 1995, and that the Company or American General shall
have received an opinion of nationally recognized independent legal counsel
experienced in practice under the Investment Company Act of 1940, as amended
(the "1940 Act"), that, as a result of such change, there exists more than an
insubstantial risk that the Company is or will be considered an "investment
company" which is required to be registered under the 1940 Act.
"Liquidation Distribution" has the meaning set forth in
Section 7 hereof.
"Notice of Exchange" has the meaning set forth in
Section 6(a) hereof.
"Notice of Redemption" has the meaning set forth in
Section 6(a) hereof.
"NYSE" means the New York Stock Exchange, Inc.
"Redemption Price" has the meaning set forth in Section 5(a)
hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Series B Debentures" means the $250,632,900.00 aggregate
principal amount (or up to $288,227,825.00 aggregate principal amount if and to
the extent the over-allotment option granted by the Company to the underwriters
of the Series B Preferred Securities is exercised) of American General's 8 1/8%
Series B Junior Subordinated Debentures due September 30, 2025 issued pursuant
to the Indenture and sold by American General to the
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<PAGE> 3
Company in connection with the issuance and sale by the Company of the Series B
Preferred Securities.
"Series B Preferred Securities" has the meaning set forth in
Section 2 hereof.
"Tax Event" means that a change in any applicable United
States law or regulation or in the interpretation thereof (including but not
limited to the enactment or imminent enactment of any legislation, the
publication of any judicial decisions, regulatory rulings, regulatory
procedures, or notices or announcements (including notices or announcements of
intent to adopt such procedures or regulations), or a change in the official
position or the interpretation of any law or regulation by any legislative
body, court, governmental authority or regulatory body, irrespective of the
manner in which such change is made known) shall have occurred after August 24,
1995, and that the Company or American General shall have received an opinion
of nationally recognized independent legal counsel experienced in such matters
that, as a result of such change, there exists more than an insubstantial risk
that (i) the Company will be subject to federal income tax with respect to the
interest received on the Series B Debentures, (ii) American General will be
precluded from deducting the interest paid on the Series B Debentures for
federal income tax purposes or (iii) the Company will be subject to more than a
de minimis amount of other taxes, duties or other governmental charges.
2. Designation. A total of 8,000,000 8 1/8% Cumulative Monthly
Income Preferred Securities, Series B (or up to 9,200,000 8 1/8% Cumulative
Monthly Income Preferred Securities, Series B if and to the extent the
over-allotment option granted by the Company to the related underwriters is
exercised) with a liquidation preference of $25.00 per Preferred Security are
hereby authorized and designated as "8 1/8% Cumulative Monthly Income Preferred
Securities, Series B" (collectively, the "Series B Preferred Securities"). The
Series B Preferred Securities shall rank pari passu with the 8.45% Cumulative
Monthly Income Preferred Securities, Series A previously issued by the Company
as to the payment of dividends and as to the distribution of assets upon
liquidation, dissolution or winding-up.
3. Voting. Except as otherwise provided in the Delaware Limited
Liability Company Act, 6 Del. C. Section 18-101, et seq., as amended, the
Agreement (including, without limitation, Section 8.1 thereof) or this Written
Action, Preferred Members holding the Series B Preferred Securities shall have,
with respect to such Series B Preferred Securities, no right or power to vote
on any question or matter or in any proceeding or to be represented at, or to
receive notice of, any meeting of Members.
4. Dividends. (a) The Holders shall be entitled to receive,
when, as and if declared by the Company out of funds legally available
therefor, cumulative cash dividends at a rate per annum of 8 1/8% of the
liquidation preference of $25.00 per Series B Preferred Security. The amount
of dividends payable for a full monthly dividend period shall be computed on
the basis of a 360-day year consisting of 12 months of 30 days each, and for
any period shorter than a full monthly dividend period, shall be computed on
the basis of the actual number of days elapsed in such period. Dividends shall
accrue from
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<PAGE> 4
August 29, 1995, and shall be payable in United States dollars monthly in
arrears on the last day of each calendar month of each year, commencing
September 30, 1995. Dividends shall accrue and be cumulative whether or not
they have been earned or declared and whether or not there are funds of the
Company legally available for the payment of dividends. Upon any dividend
arrearages in respect of the Series B Preferred Securities, the Company shall
declare and pay Additional Dividends in order to provide, in effect, monthly
compounding on such dividend arrearages at a rate of 8 1/8% per annum
compounded monthly and such Additional Dividends shall accumulate. In the
event that any date on which dividends are payable on the Series B Preferred
Securities is not a Business Day, then payment of the dividend payable on such
date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except
that if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on such date.
(b) Dividends on the Series B Preferred Securities must
be declared monthly and be paid on the last day of each calendar month (each a
"Dividend Payment Date") to the extent that the Company has, on such date, (x)
funds legally available for the payment of such dividends and (y) cash on hand
sufficient to make such payments, it being understood that to the extent that
funds are not available to pay in full all accumulated and unpaid dividends,
the Company may pay partial dividends to the extent of funds legally available
therefor. For purposes of this Section 4(b), net interest and investment
income from Eligible Investments shall be considered funds available for the
payment of dividends; provided, however, that the principal amount of Eligible
Investments shall not be available as distributions, dividends or otherwise
except in connection with a Liquidation Distribution pursuant to Section 15.4
of the Agreement. Dividends will be payable to the Holders as of the relevant
record dates, which, if and so long as the Series B Preferred Securities are
represented by one or more global certificates through the book-entry system of
a Clearing Agency, will be one Business Day prior to the related Dividend
Payment Dates. In the event that the Series B Preferred Securities shall not
continue to be so represented, the Managing Member shall have the right to
select relevant record dates that are more than one Business Day prior to the
related Dividend Payment Dates. In addition, if American General has extended
an interest payment period with respect to the Series B Debentures pursuant to
the Indenture, thereby resulting in the deferral of the payment of dividends on
the Series B Preferred Securities, the Managing Member shall notify the Holders
in writing as to such extended interest payment period no later than the last
date on which notice would be required to be given to the NYSE of the related
record date or Dividend Payment Date.
5. Redemption and Exchange. (a) Upon repayment by American
General of the principal of the Series B Debentures at stated maturity, earlier
redemption or otherwise, including as a result of the acceleration of the
Series B Debentures upon the occurrence of an Event of Default under the
Indenture with respect to the Series B Debentures, the Series B Preferred
Securities shall be subject to mandatory redemption, in whole but not in part,
by the Company, and the proceeds from such repayment shall be applied to redeem
the Series B Preferred Securities at a cash redemption price equal to the
liquidation preference
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<PAGE> 5
for such Series B Preferred Securities plus accumulated and unpaid dividends
(whether or not earned or declared), including any Additional Dividends, to the
date fixed for redemption thereof (the "Redemption Price") (unless such
proceeds are used to fund the aggregate Liquidation Distributions on the Series
B Preferred Securities in connection with the liquidation, dissolution or
winding-up of the Company). In case of such repayment, the Series B Preferred
Securities will be redeemed only when repayment of the Series B Debentures has
actually been received by the Company. Notwithstanding the foregoing, the
Series B Preferred Securities will not be so redeemed if (i) in lieu of
repaying the Series B Debentures at stated maturity or date of earlier
redemption, American General is permitted by the Company to exchange the Series
B Debentures for new Debentures or (ii) American General repays the Series B
Debentures at stated maturity or date of earlier redemption but is permitted by
the Company to reborrow the proceeds from such repayment which reborrowing will
be evidenced by new Debentures; provided, however, that the Company may only
permit American General to so exchange the Series B Debentures for new
Debentures or reborrow the proceeds from the repayment thereof if the Company
owns all of the Series B Debentures and the following conditions are satisfied
(which satisfaction, in the case of clauses (f) through (j), shall be
determined in the judgment of the Managing Member and the Company's financial
advisor (which shall be selected by the Managing Member, and must be
unaffiliated with American General and be among the 30 largest investment
banking firms, measured by total capital, in the United States at the time of
the proposed issuance of the new Debentures that would evidence the new loan to
be made in connection with such exchange or reborrowing)): (a) American
General is not bankrupt, insolvent or in liquidation, (b) American General is
not in default in the payment of any interest (including Additional Interest,
as defined in the Indenture) or principal in respect of any Debentures, (c)
American General has made timely payments on the Series B Debentures for the
immediately preceding 24 months (and has not elected to extend any interest
payment period of the Series B Debentures during such 24-month period), (d)
such new Debentures will mature no later than the earlier of (1) the 49th
anniversary of the date of the initial issuance of the Series B Debentures and
(2) the 30th anniversary of the date such new Debentures are issued, (e) the
Company is not in arrears in the payment of any dividends (including Additional
Dividends) on the Series B Preferred Securities, (f) American General is
expected to be able to make timely payment of principal of and interest on such
new Debentures, (g) the issuance of such new Debentures is being made on terms,
and under circumstances, that are consistent with those which a lender would
then require for a loan to an unrelated party, (h) the interest rate on such
new Debentures is sufficient to provide payments equal to or greater than the
amount of dividend payments required under the Series B Preferred Securities,
(i) the terms of such new Debentures are consistent with market circumstances
and American General's financial condition and (j) immediately prior to the
issuance of such new Debentures, the senior unsecured long-term debt of
American General is (or, if no such debt is outstanding, would be) rated not
less than BBB (or the equivalent) by Standard & Poor's Corporation ("S&P") and
Baa2 (or the equivalent) by Moody's Investors Service, Inc. ("Moody's") and the
subordinated unsecured long-term debt of American General (or, if more than one
issue of such subordinated debt is outstanding, the most junior of such issues)
is (or, if no such debt is outstanding, would be) rated not less than BBB- (or
the equivalent) by S&P and Baa3 by Moody's (or, if either of such rating
organizations is not then rating American General's
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<PAGE> 6
senior or subordinated unsecured long-term debt, as the case may be, then, in
lieu of the rating organization no longer rating American General's senior or
subordinated unsecured long-term debt, the equivalent of such ratings by any
other "nationally recognized statistical rating organization," as that term is
defined by the Securities and Exchange Commission for purposes of Rule
436(g)(2) under the Securities Act).
(b) The Series B Preferred Securities shall be redeemable
at the option of the Company (subject to the prior consent of American
General), in whole or in part from time to time, on or after August 29, 2000 at
the Redemption Price. The Company may not redeem the Series B Preferred
Securities in part unless all accumulated and unpaid dividends (whether or not
earned or declared), including any Additional Dividends, have been paid in full
on all Series B Preferred Securities for all monthly dividend periods
terminating on or prior to the date of redemption. American General shall have
the right to cause the Company to exercise such redemption option.
(c) At any time after the occurrence of a Tax Event or an
Investment Company Event, the Company (subject to the prior consent of American
General) may, either (i) redeem, in whole but not in part, the Series B
Preferred Securities at the Redemption Price or (ii) exchange, in whole but not
in part, the Series B Preferred Securities for Series B Debentures having an
aggregate principal amount and accrued and unpaid interest equal to the
Redemption Price. Upon any such exchange, American General will use its best
efforts to have the Series B Debentures listed on the NYSE or, if the Series B
Preferred Securities are not then listed on the NYSE, such other exchange on
which the Series B Preferred Securities may then be listed. American General
shall have the right to cause the Company to exercise its right to effect any
such exchange for Series B Debentures.
(d) Subject to applicable law, American General or its
subsidiaries may at any time and from time to time purchase outstanding Series
B Preferred Securities by tender, in the open market or otherwise.
6. Redemption and Exchange Procedures. (a) Notice of any
redemption (optional or mandatory) of the Series B Preferred Securities (a
"Notice of Redemption") and notice of any exchange of the Series B Preferred
Securities for Series B Debentures (a "Notice of Exchange") shall be
irrevocable and shall be given by the Company by mail not fewer than 30 nor
more than 60 calendar days prior to the date fixed for redemption or exchange
thereof to American General and (i) with respect to a Notice of Redemption, to
each Holder of Series B Preferred Securities that are being redeemed and (ii)
with respect to a Notice of Exchange, to each Holder of Series B Preferred
Securities. For purposes of the calculation of the date of redemption or
exchange and the dates on which notices are given pursuant to this Section
6(a), a Notice of Redemption or Notice of Exchange shall be deemed to be given
on the day such notice is first mailed by first-class mail, postage prepaid, to
each appropriate Holder of Series B Preferred Securities. A Notice of
Redemption or Notice of Exchange shall be addressed to each appropriate Holder
of Series B Preferred Securities at the address of such Holder appearing in the
books and records of the Company. If all of the Series B Preferred Securities
are represented by Book-Entry
-6-
<PAGE> 7
Interests, Notices of Redemption or Notices of Exchange shall be sent to the
Clearing Agency. No defect in the Notice of Redemption or Notice of Exchange
or in the mailing thereof with respect to any Series B Preferred Security shall
affect the validity of the redemption or exchange proceedings with respect to
any other Series B Preferred Security.
(b) If the Company issues a Notice of Redemption, then,
by 12:00 noon, New York time, on the date fixed for redemption, American
General will repay to the Company an aggregate principal amount of the Series B
Debentures which, together with accrued and unpaid interest thereon, will be an
amount sufficient to pay the Redemption Price for the Series B Preferred
Securities to be redeemed. If the Series B Preferred Securities are
represented by Book-Entry Interests, the Company shall irrevocably deposit such
funds on the date fixed for redemption with the Clearing Agency and give the
Clearing Agency irrevocable instructions and authority to pay the Redemption
Price to the Holders of the Series B Preferred Securities to be redeemed, and
if the Series B Preferred Securities are not represented by Book-Entry
Interests, the Company shall irrevocably deposit such funds with the paying
agent for the Series B Preferred Securities and give such paying agent such
irrevocable instructions and authority to pay the Redemption Price to the
Holders of the Series B Preferred Securities to be redeemed. If a Notice of
Redemption shall have been given and funds irrevocably deposited as required,
then immediately prior to the close of business on the date of such deposit,
all rights of the Holders of such Series B Preferred Securities so called for
redemption will cease, except the right of such Holders to receive the
Redemption Price, but without additional interest from and after such
redemption date. In the event that any date fixed for redemption of Series B
Preferred Securities is not a Business Day, then payment of the Redemption
Price payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day. In the event
that payment of the Redemption Price is improperly withheld or refused and not
paid either by the Company or by American General (pursuant to the Guarantee),
dividends on the Series B Preferred Securities called for redemption (including
any Additional Dividends) will continue to accumulate at the then applicable
rate, from the original redemption date to the date that the Redemption Price
is actually paid and the Holders of such Series B Preferred Securities may
exercise all of their rights as Holders thereof.
(c) If the Company issues a Notice of Exchange, then
following the date fixed for the exchange of Series B Preferred Securities for
Series B Debentures (as set forth in the Notice of Exchange), (i) the Series B
Preferred Securities will no longer be deemed to be outstanding, (ii)
certificates representing Series B Debentures will be issued to holders of
certificates representing Series B Preferred Securities, upon surrender of such
certificates to the Company or its agent for exchange, (iii) any certificates
representing Series B Preferred Securities not so surrendered for exchange will
be deemed to represent Series B Debentures having a principal amount and
accrued and unpaid interest equal to the Redemption Price of such Series B
Preferred Securities until such certificates are so surrendered (and until such
certificates are so surrendered, no payments of interest or principal will be
made with respect to such Series B Debentures) and (iv) all rights of Holders
of Series B Preferred Securities will cease, except the right of such Holders
to
-7-
<PAGE> 8
receive Series B Debentures upon surrender of certificates representing Series
B Preferred Securities.
7. Liquidation Rights. In the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company (other than
in connection with or after the exchange of the Series B Preferred Securities
for the Series B Debentures as set forth in Section 5(c)), the Holders of
Series B Preferred Securities then outstanding will be entitled to receive out
of the assets of the Company (including any Eligible Investments or amounts
deposited in the Eligible Investment Account) legally available for
distribution to Members, after satisfaction of liabilities of creditors as
required by the Delaware Act but before any distribution of assets is made with
respect to any Interest in the Company ranking junior to the Series B Preferred
Securities as to the distribution of assets upon such liquidation, dissolution
or winding-up of the Company, but together with Preferred Members holding
Preferred Securities or any other Interests in the Company then outstanding
ranking pari passu with the Series B Preferred Securities as to the
distribution of assets upon such liquidation, dissolution or winding-up of the
Company, an amount equal to the aggregate of the liquidation preference of
$25.00 per Series B Preferred Security plus all accumulated and unpaid
Dividends (whether or not earned or declared), including any Additional
Dividends, to the date of payment (the "Liquidation Distribution"). A merger,
consolidation, replacement, conveyance, transfer or lease in accordance with
the provisions of Section 2.8 of the Agreement shall not be deemed to be a
liquidation, dissolution or winding-up of the Company for purposes of this
Section 7.
8. Sinking Fund. The Series B Preferred Securities shall not be
subject to the operation of a retirement or sinking fund.
9. Guarantee of Liabilities. It shall be a condition precedent
to the issuance of the Series B Preferred Securities that American General
execute and deliver to the Company the Guarantee, the Indenture and the Series
B Debentures.
10. Book-Entry-Only Issuance. (a) The Depository Trust Company,
New York, New York ("DTC"), will initially act as the Clearing Agency. The
Series B Preferred Securities will be issued only as fully-registered
securities and will be initially registered in the name of Cede & Co. (DTC's
partnership nominee).
(b) Redemption notices shall be sent to Cede & Co. or any
successor thereof. If less than all of the Series B Preferred Securities are
being redeemed, such securities shall be redeemed in accordance with DTC's then
current practice.
(c) DTC may discontinue providing its services as
Clearing Agency with respect to the Series B Preferred Securities by giving
reasonable notice to the Company as provided in the agreement between the
Company and DTC. Under such circumstances, if a successor Clearing Agency is
not obtained, the Company at its expense shall cause certificates for Series B
Preferred Securities to be printed and delivered as promptly as practicable.
If an Event of Default occurs under the Indenture with respect to the Series B
Debentures or if the Company (with the consent of American General) decides to
-8-
<PAGE> 9
discontinue use of the system of book-entry transfers through DTC (or a
successor Clearing Agency), the Company at its expense shall cause certificates
for Series B Preferred Securities to be printed and delivered to the beneficial
owners of the Series B Preferred Securities as promptly as practicable.
(d) In the event that the Series B Preferred Securities
do not remain in book-entry-only form, the following provisions will apply:
(i) Registration of transfers of Series B Preferred
Securities will be effected without charge by or on behalf of the
Company, but upon payment (and/or the giving of such indemnity as the
Company or the Managing Member may require) in respect of any tax or
other governmental charges which may be imposed in connection
therewith.
(ii) Exchanges of Series B Preferred Securities for Series
B Debentures will be effected without charge by or on behalf of the
Company, but upon payment (and/or the giving of such indemnity as the
Company or the Managing Member may require) in respect of any tax or
other governmental charges which may be imposed in connection with the
issuance of any Series B Debenture in the name of any person other
than the Holder of the Series B Preferred Security for which the
Series B Debenture is being exchanged or for any reason other than
such exchange.
(iii) The Company will not be required to register or
cause to be registered the transfer of Series B Preferred Securities
after such Series B Preferred Securities have been called for
redemption or exchange.
11. Registrar and Transfer Agent. The Company hereby appoints
Chemical Mellon Shareholder Services, LLC as its initial registrar, transfer
agent and paying agent for the Series B Preferred Securities. The Company may
at any time designate an additional or substitute registrar, transfer agent and
paying agent for the Series B Preferred Securities.
12. Governing Law. This Written Action shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflict of laws thereof.
IN WITNESS WHEREOF, the undersigned Managing Member of the Company has
hereto set its hand as of the day and year first above written.
AMERICAN GENERAL DELAWARE
MANAGEMENT CORPORATION
By: /S/ KENT E. BARRETT
-------------------------------------
Name: Kent E. Barrett
Title: Vice President and Treasurer
-9-
<PAGE> 1
EXHIBIT 4(c)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. (or in such other name as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co. has an interest herein.
Certificate Number: Number of Shares: _________
CUSIP NO.: 02637F 30 1
CERTIFICATE EVIDENCING LIMITED LIABILITY COMPANY INTERESTS
8 1/8% CUMULATIVE MONTHLY INCOME PREFERRED SECURITIES, SERIES B
OF
AMERICAN GENERAL CAPITAL, L.L.C.
American General Capital, L.L.C., a Delaware limited liability company
(the "Company"), hereby certifies that Cede & Co. (the "Holder") is the
registered owner of _________ preferred limited liability company interests in
the Company of a series designated the 8 1/8% Cumulative Monthly Income
Preferred Securities, Series B (the "Securities"). The Securities are fully
paid and nonassessable limited liability company interests in the Company, as
to which the members of the Company who hold the Securities (the "Preferred
Securityholders") in their capacity as members of the Company will have no
liability solely by reason of being Preferred Securityholders in excess of
their share of the Company's assets and undistributed profits (subject to the
obligation of a Preferred Securityholder to repay any funds wrongfully
distributed to it), and are transferable on the books and records of the
Company, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer. The powers,
preferences and special rights and restrictions of the Securities are set forth
in, and this Certificate and the Securities represented hereby are issued and
shall in all respects be subject to the terms and provisions of, the Amended
and Restated Limited Liability Company Agreement of the Company, dated as of
May 24, 1995, as the same may be amended from time to time (the "Limited
Liability Company Agreement") and the written action of the Managing Member of
the Company authorizing the issuance of the Securities and determining the
powers, preferences and special rights and restrictions, regarding dividends,
voting, redemption, conversion, exchange, liquidation and otherwise, and other
matters relating to the Securities (the "Securities Terms"), copies of which
Limited Liability Company Agreement and Securities Terms are on file at the
principal office of the Company. The Company will furnish a copy of such
Limited Liability Company Agreement and Securities Terms to each Preferred
Securityholder without charge upon written request to the Company at its
principal place of business or registered office, as the case may be. Each
Preferred Securityholder is entitled to the benefits of the Guarantee Agreement
of American General Corporation ("American General") dated as of May 24, 1995
(the "Guarantee") to the extent provided therein and is entitled to enforce the
rights of the
<PAGE> 2
Company under the 8 1/8% Series B Junior Subordinated Debentures (the
"Debentures") issued by American General to the Company pursuant to the
Indenture dated as of May 15, 1995 between American General and Chemical Bank,
as trustee (the "Indenture"), to the extent provided therein. The Company will
furnish a copy of such Guarantee and Indenture to each Preferred Securityholder
without charge upon written request to the Company at its principal place of
business.
Each Preferred Securityholder, by accepting this Certificate, is
deemed to have agreed that (i) the Debentures are subordinate and junior in
right of payment to all Senior Indebtedness (as defined in the Indenture) as
and to the extent provided in the Indenture, (ii) the Guarantee is subordinate
and junior in right of payment to all liabilities of American General other
than the guarantees referred to in clauses (iii) and (iv) below, (iii) the
Guarantee is pari passu with the most senior preferred stock issued by American
General and with any other guarantee executed by American General in respect of
any preferred stock or interest of any affiliate of American General that
provides that such guarantee is pari passu in right of payment with the
Guarantee and (iv) the Guarantee is senior to American General Common Stock and
any other class or series of capital stock issued by American General which by
its express terms ranks junior to the most senior preferred stock issued by
American General as to the payment of dividends and the distribution of assets
upon the liquidation, dissolution or winding-up of American General and any
guarantee executed by American General that provides that such guarantee is
junior in right of payment to the Guarantee.
IN WITNESS WHEREOF, this certificate has been signed on behalf of the
Company by a duly authorized officer of its Managing Member and on behalf of
American General, as Guarantor, by a duly authorized officer thereof.
AMERICAN GENERAL CAPITAL, L.L.C.
BY AMERICAN GENERAL DELAWARE
MANAGEMENT CORPORATION,
AS MANAGING MEMBER
By:
-------------------------------------
Name:
Title:
AMERICAN GENERAL CORPORATION,
AS GUARANTOR
By:
-------------------------------------
Name:
Title:
Dated: ________________
-2-
<PAGE> 1
EXHIBIT 5
[VINSON & ELKINS LETTERHEAD]
TELEPHONE FAX
(713) 758-2750 (713) 615-5637
August 25, 1995
American General Corporation
2929 Allen Parkway
Houston, Texas 77019-2155
American General Delaware, L.L.C.
c/o American General Delaware
Management Corporation
2099 South Dupont Avenue
Dover, Delaware 19901
American General Capital, L.L.C.
c/o American General Delaware
Management Corporation
2099 South Dupont Avenue
Dover, Delaware 19901
Ladies and Gentlemen:
We have acted as counsel to American General Corporation, a Texas
corporation ("American General"), and American General Capital, L.L.C., a
Delaware limited liability company ("American General Capital"), in connection
with the proposed issuance and sale of up to 9,200,000 shares of American
General Capital's 8 1/8% Cumulative Monthly Income Preferred Securities,
Series B (the "Series B Preferred Securities"), issued pursuant to the
Underwriting Agreement (the "Agreement") incorporated by reference into the
Pricing Agreement, dated August 24, 1995 (the "Pricing Agreement") among
American General, American General Capital and the Underwriters named therein,
and guaranteed by American General pursuant to the Guarantee Agreement, dated
as of May 24, 1995 (the "Guarantee"). In connection with the issuance and sale
of the Series B Preferred Securities, American General Capital will acquire up
to $288,227,825 principal amount of 8 1/8% Series B Junior Subordinated
Debentures of American General ("Series B Junior Subordinated
<PAGE> 2
American General Corporation
American General Delaware, L.L.C.
American General Capital, L.C.C.
Page 2
August 25, 1995
Debentures") to be issued under the Indenture (the "Indenture") dated as of May
15, 1995 between American General and Chemical Bank (the "Trustee") pursuant to
the Registration Statement on Form S-3 (Registration Nos. 33-58317, 33-58317-
01 and 33-58317-02) (the "Registration Statement") filed with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act").
For the purposes of this opinion, we have examined such certificates,
instruments and documents and reviewed such questions of law as we considered
necessary or appropriate.
Based on the foregoing, we are of the opinion that:
1. American General has been duly incorporated and is validly
existing and in good standing under the laws of the State of Texas. American
General Capital has been duly formed and is validly existing as a limited
liability company in good standing under the laws of the State of Delaware.
2. The Series B Preferred Securities have been duly authorized,
and, when issued and delivered against payment therefor as provided in the
Agreement and the Pricing Agreement, will be validly issued, fully paid and
(subject to the obligation of the holders of the Series B Preferred Securities
to repay any funds wrongfully distributed to them) non-assessable preferred
limited liability company interests in the Company.
3. The Series B Junior Subordinated Debentures have been duly and
validly authorized and, when executed and authenticated pursuant to the
Indenture and issued and delivered against payment therefor as contemplated by
the Agreement and the Pricing Agreement, will be duly executed, authenticated,
issued and delivered and will constitute valid and legally binding obligations
of American General, enforceable against American General in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
4. The Guarantee has been duly and validly authorized, executed
and delivered by American General and constitutes a valid and legally binding
obligation of American General, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
The foregoing opinions are limited in all respects to the laws of the
State of Texas, the Limited Liability Company Act of the State of Delaware and
federal laws.
<PAGE> 3
American General Corporation
American General Delaware, L.L.C.
American General Capital, L.L.C.
Page 3
August 25, 1995
We hereby consent to the incorporation by reference of this opinion as
an exhibit to the Registration Statement and to the references to us under the
caption "Legal Opinions" in the related Prospectus, dated May 23, 1995, as
supplemented by the Prospectus Supplement dated August 24, 1995. By giving
such consent, we do not admit that we are within the category of persons whose
consent is required under Section 7 of the Securities Act or the rules and
regulations of the Commission issued thereunder.
Very truly yours
/s/ VINSON & ELKINS L.L.P.
VINSON & ELKINS L.L.P.
<PAGE> 1
EXHIBIT 12
COMPUTATION OF
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------
PRO FORMA
1994(A) 1994 1993 1992 1991 1990
--------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS, EXCEPT RATIOS)
Consolidated operations:
Income before income tax expense, accounting changes, and
dividends on preferred securities ............................... $ 952 $ 802(b) $ 602(c) $ 775 $ 678 $ 836
Fixed charges deducted from income
Interest expense ................................................ 569 526 488 516 568 608
Implicit interest in rents ...................................... 16 16 15 13 13 12
Preferred dividend of subsidiary ................................ - - - - - 6
------ ------ ------ ------ ------ ------
Total fixed charges deducted from income .................. 585 542 503 529 581 626
------ ------ ------ ------ ------ ------
Earnings available for fixed charges ...................... $1,537 $1,344 $1,105 $1,304 $1,259 $1,462
====== ====== ====== ====== ====== ======
Fixed charges per above ........................................... $ 585 $ 542 $ 503 $ 529 $ 581 $ 626
Capitalized interest relating to real estate operations ........... 18 18 15 21 31 39
------ ------ ------ ------ ------ ------
Total fixed charges ............................................. 603 560 518 550 612 665
Dividends on preferred securities ............................... 41 - - - - -
------ ------ ------ ------ ------ ------
Total fixed charges and dividends on preferred securities.. $ 644 $ 560 $ 518 $ 550 $ 612 $ 665
====== ====== ====== ====== ====== ======
Ratio of earnings to fixed charges ........................ 2.5 2.4 2.1 2.4 2.1 2.2
====== ====== ====== ====== ====== ======
Ratio of earnings to combined fixed charges and preferred
stock dividends ......................................... 2.4 2.4 2.1 2.4 2.1 2.2
====== ====== ====== ====== ====== ======
Consolidated operations, corporate fixed charges and preferred stock
dividends only (d):
Income before income tax expense, accounting changes, and
dividends on preferred securities ................................ $ 952 $ 802(b) $ 602(c) $ 775 $ 678 $ 836
Corporate fixed charges deducted from income
Corporate interest expense ....................................... 164 121 127 134 148 191
------ ------ ------ ------ ------ ------
Earnings available for fixed charges ...................... $1,116 $ 923 $ 729 $ 909 $ 826 $1,027
====== ====== ====== ====== ====== ======
Total corporate fixed charges per above ........................... $ 164 $ 121 $ 127 $ 134 $ 148 $ 191
Capitalized interest related to real estate operations ............ 18 18 15 21 31 39
------ ------ ------ ------ ------ ------
Total fixed charges ............................................. 182 139 142 155 179 230
Dividends on preferred securities ................................. 41 - - - - -
------ ------ ------ ------ ------ ------
Total fixed charges and dividends on preferred securities.. $ 223 $ 139 $ 142 $ 155 $ 179 $ 230
====== ====== ====== ====== ====== ======
Ratio of earnings to corporate fixed charges .............. 6.1 6.6 5.1 5.9 4.6 4.5
====== ====== ====== ====== ====== ======
Ratio of earnings to combined corporate fixed charges and
preferred stock dividends ............................... 5.0 6.6 5.1 5.9 4.6 4.5
====== ====== ====== ====== ====== ======
American General Finance, Inc.:
Income before income tax expense and accounting changes ........... $ 392 $ 392 $ 337 $ 250 $ 208 $ 191
Fixed charges deducted from income
Interest expense ................................................ 416 416 380 398 440 452
Implicit interest in rents ...................................... 11 11 10 9 9 9
Preferred dividend of subsidiary ................................ - - - - - 6
------ ------ ------ ------ ------ ------
Total fixed charges ....................................... 427 427 390 407 449 467
------ ------ ------ ------ ------ ------
Earnings available for fixed charges ...................... $ 819 $ 819 $ 727 $ 657 $ 657 $ 658
====== ====== ====== ====== ====== ======
Ratio of earnings to fixed charges ........................ 1.9 1.9 1.9 1.6 1.5 1.4
====== ====== ====== ====== ====== ======
</TABLE>
(a) Assuming the American Franklin Company acquisition and the actual and
proposed permanent financing of the acquisition had been effective as
of January 1, 1994. See American General's Current Report on Form 8-K
dated August 23, 1995 incorporated herein by reference.
(b) Includes net realized investment losses of $114 million primarily due
to the capital gains offset program. See "Significant Events --
Capital Gains Offset Program" within Item 7 of American General's
Annual Report on Form 10-K for the fiscal year ended December 31, 1994
incorporated herein by reference.
(c) Includes $300 million write-down of goodwill. See "Significant Events
-- 1993 Significant Events" within Item 7 and Note 1.7 within Item 8
of American General's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 incorporated herein by reference.
(d) Includes interest expense on American General's real estate debt.
<PAGE> 2
EXHIBIT 12 (CONTINUED)
COMPUTATION OF
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
SIX
MONTHS ENDED JUNE 30,
-----------------------------
Pro Forma
1995(a) 1995 1994
--------- ------ -----
<S> <C> <C> <C>
(IN MILLIONS, EXCEPT RATIOS)
Consolidated operations:
Income before income tax expense and dividends on preferred
securities .................................................... $ 573 $ 556(b) $ 500
Fixed charges deducted from income
Interest expense .............................................. 334 339 246
Implicit interest in rents .................................... 9 9 8
----- ----- -----
Total fixed charges deducted from income ................ 343 348 254
----- ----- -----
Earnings available for fixed charges .................... $ 916 $ 904 $ 754
===== ===== =====
Fixed charges per above ......................................... $ 343 $ 348 $ 254
Capitalized interest relating to real estate operations ......... 9 9 8
----- ----- -----
Total fixed charges ........................................... 352 357 262
Dividends on preferred securities ............................. 22 3 -
----- ----- -----
Total fixed charges and dividends on preferred securities $ 374 $ 360 $ 262
===== ===== =====
Ratio of earnings to fixed charges ...................... 2.6 2.5 2.9
===== ===== =====
Ratio of earnings to combined fixed charges and preferred
stock dividends ....................................... 2.4 2.5 2.9
===== ===== =====
Consolidated operations, corporate fixed charges and preferred
stock dividends only (c):
Income before income tax expense and dividends on preferred
securities ..................................................... $ 573 $ 556(b) $ 500
Corporate fixed charges deducted from income
Corporate interest expense ..................................... 89 94 60
----- ----- -----
Earnings available for fixed charges ..................... $ 662 $ 650 $ 560
===== ===== =====
Total corporate fixed charges per above .......................... $ 89 $ 94 $ 60
Capitalized interest related to real estate operations ........... 9 9 8
----- ----- -----
Total fixed charges ........................................... 98 103 68
Dividends on preferred securities ............................. 22 3 -
----- ----- -----
Total fixed charges and dividends on preferred securities $ 120 $ 106 $ 68
===== ===== =====
Ratio of earnings to corporate fixed charges ............. 6.8 6.3 8.2
===== ===== =====
Ratio of earnings to combined corporate fixed charges and
preferred stock dividends .............................. 5.5 6.1 8.2
===== ===== =====
American General Finance, Inc.:
Income before income tax expense ................................. $ 195 $ 195 $ 184
Fixed charges deducted from income
Interest expense ............................................... 255 255 193
Implicit interest in rents ..................................... 6 6 5
----- ----- -----
Total fixed charges ...................................... 261 261 198
----- ----- -----
Earnings available for fixed charges ..................... $ 456 $ 456 $ 382
===== ===== =====
Ratio of earnings to fixed charges ....................... 1.7 1.7 1.9
===== ===== =====
</TABLE>
----------------
(a) Assuming the American Franklin Company acquisition and the actual and
proposed permanent financing of the acquisition had been effective as
of January 1, 1994. See American General's Current Report on Form 8-K
dated August 23, 1995 incorporated herein by reference.
(b) Includes five months of operations for AFC, which was acquired
January 31, 1995.
(c) Includes interest expense on American General's real estate debt.
