<PAGE> 1
Filed Pursuant to Rule 424(b)(5)
Registration Nos. 033-58317
and 033-58317-01
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED MAY 23, 1995
(AMERICAN GENERAL LOGO)
8,000,000 PREFERRED SECURITIES
AMERICAN GENERAL CAPITAL
8 1/8% CUMULATIVE MONTHLY INCOME PREFERRED SECURITIES, SERIES B (MIPS(SM)*)
(LIQUIDATION PREFERENCE $25 PER SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
AMERICAN GENERAL CORPORATION
---------------------
The 8 1/8% Cumulative Monthly Income Preferred Securities, Series B (the
"Series B Preferred Securities"), representing the preferred limited liability
company interests offered hereby, are being issued by American General Capital,
L.L.C., a Delaware limited liability company ("American General Capital"). All
of the common limited liability company interests in American General Capital
(the "Common Securities") are owned directly or indirectly by American General
Corporation, a Texas corporation ("American General" or the "Company"). American
General Capital exists for the purpose of issuing limited liability company
interests and investing the proceeds thereof in debt securities of American
General. The proceeds from the offering of the Series B Preferred Securities
will be used by American General Capital to purchase from American General its
8 1/8% Series B Junior Subordinated Debentures (the "Series B Junior
Subordinated Debentures") having the terms described herein and in the
accompanying Prospectus.
(continued on next page)
---------------------
SEE "RISK FACTORS" ON PAGE S-3 HEREIN FOR A DISCUSSION OF CERTAIN MATERIAL
RISKS TO BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SERIES B
PREFERRED SECURITIES, INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND UNDER
WHICH PAYMENTS ON THE SERIES B PREFERRED SECURITIES AND THE SERIES B JUNIOR
SUBORDINATED DEBENTURES MAY BE DEFERRED AND THE RELATED FEDERAL INCOME TAX
CONSIDERATIONS.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
<TABLE>
<CAPTION>
PROCEEDS TO
INITIAL PUBLIC UNDERWRITING AMERICAN GENERAL
OFFERING PRICE COMMISSION(1) CAPITAL(2)(3)
---------------------------------------------------------------
<S> <C> <C> <C>
Per Series B Preferred Security........ $25.00 (2) $25.00
Total(4)............................... $200,000,000 (2) $200,000,000
</TABLE>
---------------
(1) American General Capital and American General have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting".
(2) In view of the fact that the proceeds of the sale of the Series B Preferred
Securities will be used by American General Capital to purchase the Series B
Junior Subordinated Debentures of American General, the Underwriting
Agreement provides that American General will pay to the Underwriters, as
compensation ("Underwriters' Compensation"), $0.7875 per Series B Preferred
Security (or $6,300,000 in the aggregate); provided that such compensation
will be $0.50 per Series B Preferred Security sold to certain institutions.
Therefore, to the extent that Series B Preferred Securities are sold to such
institutions, the actual amount of Underwriters' Compensation will be less
than the amount otherwise indicated. See "Underwriting".
(3) Expenses of the offering, which are payable by American General, are
estimated to be $500,000.
(4) American General Capital and American General have granted the Underwriters
an option for 30 days to purchase up to an additional 1,200,000 Series B
Preferred Securities at the initial public offering price per Series B
Preferred Security solely to cover over-allotments, if any. American General
will pay to the Underwriters, as Underwriters' Compensation, $0.7875 per
Series B Preferred Security purchased pursuant to this option. If such
option is exercised in full, the total initial public offering price,
Underwriters' Compensation and proceeds to American General Capital will be
$230,000,000, $7,245,000 and $230,000,000, respectively. See "Underwriting".
---------------------
The Series B Preferred Securities offered hereby are offered severally by
the Underwriters, as specified herein, subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that delivery of the Series B Preferred Securities will be made only in
book-entry form through the facilities of The Depository Trust Company on or
about August 29, 1995.
---------------
* MIPS is a service mark of Goldman, Sachs & Co.
---------------------
GOLDMAN, SACHS & CO. MERRILL LYNCH & CO.
ALEX. BROWN & SONS
INCORPORATED
CS FIRST BOSTON
DEAN WITTER REYNOLDS INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
KEMPER SECURITIES, INC.
LEHMAN BROTHERS
PRUDENTIAL SECURITIES INCORPORATED
SALOMON BROTHERS INC
SMITH BARNEY INC.
---------------------
The date of this Prospectus Supplement is August 24, 1995.
<PAGE> 2
(continued from previous page)
The Series B Junior Subordinated Debentures are subordinated in right of
payment to all Senior Indebtedness (as defined under "Description of the Junior
Subordinated Debentures -- Subordination" in the accompanying Prospectus) of
American General. As of June 30, 1995, American General had approximately $2.3
billion of indebtedness constituting Senior Indebtedness.
Holders of the Series B Preferred Securities will be entitled to receive
cumulative cash distributions ("dividends") from American General Capital at the
annual rate of 8 1/8% of the liquidation preference of $25 per Series B
Preferred Security, accruing from the date of original issuance and payable
monthly in arrears on the last day of each calendar month of each year,
commencing September 30, 1995. See "Description of the Series B Preferred
Securities -- Dividends".
In the event of the liquidation, dissolution or winding-up of American
General Capital, holders of Series B Preferred Securities will be entitled to
receive for each Series B Preferred Security a liquidation preference of $25
plus an amount equal to any accumulated and unpaid dividends (whether or not
earned or declared), including any Additional Dividends (as defined herein), to
the date of payment, subject to certain limitations, unless such liquidation,
dissolution or winding-up is in connection with the exchange of the Series B
Preferred Securities for the Series B Junior Subordinated Debentures. See
"Description of the Series B Preferred Securities -- Liquidation Rights".
The Series B Preferred Securities will be redeemable at the option of
American General Capital (subject to the prior consent of American General), in
whole or in part, from time to time, on or after August 29, 2000 at a cash
redemption price equal to the liquidation preference 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
(the "Redemption Price"). Furthermore, at any time after the occurrence of a
Special Event (as defined herein), American General Capital (subject to the
prior consent of American General) may either (i) redeem the Series B Preferred
Securities in whole, but not in part, at the Redemption Price, or (ii) exchange
in the manner described herein, in whole but not in part, the Series B Preferred
Securities for Series B Junior Subordinated Debentures. See "Description of the
Series B Preferred Securities -- Special Event Redemption or Exchange".
For a description of the terms relating to the mandatory redemption of the
Series B Preferred Securities and the circumstances under which the repayment
date of the Series B Preferred Securities may be extended, see "Description of
the Series B Preferred Securities -- Mandatory Redemption".
American General will irrevocably and unconditionally guarantee, on a
subordinated basis and to the extent set forth herein and in the accompanying
Prospectus, the payment of dividends by American General Capital on the Series B
Preferred Securities (but only if and to the extent declared from funds of
American General Capital legally available therefor), the Redemption Price
payable with respect to Series B Preferred Securities (but only to the extent
payable out of funds of American General Capital legally available therefor) and
payments on liquidation, dissolution or winding-up with respect to the Series B
Preferred Securities (but only to the extent that assets of American General
Capital are available for distribution to holders of the Series B Preferred
Securities) (the "Guarantee"). The Guarantee will be unsecured and will be
subordinate to all other liabilities of American General (other than certain
other guarantees) and will rank pari passu with the most senior preferred stock
issued by American General. See "Description of the Guarantees" in the
accompanying Prospectus.
The Series B Preferred Securities have been approved for listing on the New
York Stock Exchange ("NYSE"), subject to notice of issuance, under the symbol
"AGC prN".
---------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES B
PREFERRED SECURITIES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK
STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE> 3
RISK FACTORS
Prospective purchasers of Series B Preferred Securities should carefully
review the information contained elsewhere in this Prospectus Supplement and the
accompanying Prospectus and should particularly consider the following matters:
SUBORDINATE OBLIGATIONS UNDER GUARANTEE AND SERIES B JUNIOR SUBORDINATED
DEBENTURES
American General Capital's ability to pay amounts due on the Series B
Preferred Securities is solely dependent upon its receipt of payments from
American General on the Series B Junior Subordinated Debentures as and when
required. American General's obligations under the Series B Junior Subordinated
Debentures are subordinate and junior in right of payment to all Senior
Indebtedness of American General. American General's obligations under the
Guarantee are subordinate to all other liabilities of American General except
for certain other guarantees executed by American General. The Guarantee will
rank pari passu with the most senior preferred stock issued by American General.
As of June 30, 1995, American General had approximately $2.3 billion of Senior
Indebtedness outstanding. There are no terms in the Series B Preferred
Securities, the Series B Junior Subordinated Debentures, the Junior Subordinated
Indenture (as defined herein) or the Guarantee that limit American General's
ability to incur additional indebtedness, including indebtedness that ranks
senior to the Series B Junior Subordinated Debentures and the Guarantee, or the
ability of its subsidiaries to incur additional indebtedness. In addition,
because American General is a holding company, rights to participate in any
distribution of assets of any subsidiary upon its liquidation or reorganization
or otherwise (and thus the ability of holders of Series B Junior Subordinated
Debentures and, to the extent of the Guarantee, the holders of Series B
Preferred Securities, to benefit indirectly from such distribution) are subject
to the prior claims of creditors of that subsidiary, except to the extent that
American General may itself be a creditor of that subsidiary. Claims on American
General's subsidiaries by other creditors include substantial claims for policy
benefits and debt obligations, as well as other liabilities incurred in the
ordinary course of business. In addition, since many of American General's
subsidiaries are insurance companies subject to regulatory control by various
state insurance departments, the ability of such subsidiaries to pay dividends
to American General without prior regulatory approval is limited by applicable
laws and regulations. Further, certain non-insurance subsidiaries are restricted
in their ability to make dividend payments by long-term debt agreements. At
December 31, 1994, the amount available to American General for dividends from
subsidiaries not limited by such restrictions was $1.1 billion.
The Guarantee guarantees payment to the holders of the Series B Preferred
Securities of accumulated and unpaid monthly dividends (but only if and to the
extent declared by American General Capital), amounts payable on redemption and
amounts payable upon the liquidation, dissolution or winding-up of American
General Capital. In each case, however, such amount is guaranteed only to the
extent that American General Capital has funds on hand legally available
therefor and payment thereof does not otherwise violate applicable law. If
American General were to default on its obligation to pay interest or amounts
payable on redemption or maturity of the Series B Junior Subordinated
Debentures, American General Capital would lack legally available funds for the
payment of dividends or amounts payable on redemption of the Series B Preferred
Securities, and in such event holders of the Series B Preferred Securities would
not be able to rely upon the Guarantee for payment of such amounts. Upon the
liquidation, dissolution or winding-up of American General, its obligations
under the Guarantee would rank junior to all of its other liabilities (other
than certain other guarantees) and, therefore, funds may not be available for
payment under the Guarantee. See "Description of the Guarantees" and
"Description of the Junior Subordinated Debentures -- Subordination" in the
accompanying Prospectus.
S-3
<PAGE> 4
OPTION TO EXTEND INTEREST PAYMENT PERIOD (DEFERRAL OF DIVIDENDS ON SERIES B
PREFERRED SECURITIES)
American General has the right to extend the interest payment period on the
Series B Junior Subordinated Debentures from time to time to a period not
exceeding 60 consecutive months (an "Extension Period"), in which event monthly
dividend payments on the Series B Preferred Securities by American General
Capital would be deferred but would continue to accumulate monthly and
Additional Dividends, intended to provide monthly compounding on dividend
arrearages, would also accumulate. Prior to the termination of any Extension
Period of less than 60 consecutive months, American General may further extend
the interest payment period as long as such Extension Period, as further
extended, does not exceed 60 consecutive months and does not extend beyond the
stated maturity date or date of redemption of the Series B Junior Subordinated
Debentures. Upon the termination of any Extension Period and the payment of all
accrued and unpaid interest (including compounded interest), American General
may select a new Extension Period, subject to the preceding sentence. No
interest will be due during an extended interest payment period until the end of
such period. During any Extension Period, American General may not declare or
pay any dividend on, and, subject to certain exceptions, American General may
not, and American General may not permit any of its majority-owned subsidiaries
to, redeem, purchase, acquire or make a liquidation payment with respect to, any
of American General's capital stock or make any guarantee payments with respect
to the foregoing. See "Description of the Series B Junior Subordinated
Debentures -- Option to Extend Interest Payment Period."
TAX CONSIDERATIONS OF EXTENDED INTEREST PAYMENT PERIOD (DEFERRAL OF DIVIDENDS ON
SERIES B PREFERRED SECURITIES)
If an extension of an interest payment period occurs, American General
Capital, except in very limited circumstances, would continue to accrue income
for United States federal income tax purposes, which would be allocated, but no
corresponding amount of cash would be distributed, to holders of record of
Series B Preferred Securities. As a result, such holders would be required to
include such interest in gross income for United States federal income tax
purposes in advance of the receipt of cash and would not receive the cash
dividend related to such income from American General Capital if such a holder
disposed of its Series B Preferred Securities prior to the record date for
payment of dividends. See "Certain Federal Income Tax Considerations -- Original
Issue Discount."
SPECIAL EVENT REDEMPTION OR EXCHANGE
At any time after the occurrence of a Special Event, American General
Capital (subject to the prior consent of American General) may elect to either
(i) redeem the Series B Preferred Securities, in whole but not in part, or (ii)
exchange, in whole but not in part, the Series B Preferred Securities for Series
B Junior Subordinated Debentures having an aggregate principal amount and
accrued and unpaid interest equal to the aggregate liquidation preference and
accumulated and unpaid dividends (including Additional Dividends), respectively,
of the Series B Preferred Securities. Under current United States federal income
tax law, such an exchange would not be a taxable event to holders of Series B
Preferred Securities unless the relevant Special Event is a Tax Event (as
defined herein) which causes American General Capital to be treated as an
association taxable as a corporation. In such case, an exchange of Series B
Preferred Securities for Series B Junior Subordinated Debentures may be a
taxable event to holders of the Series B Preferred Securities. See "Description
of the Series B Preferred Securities -- Special Event Redemption or Exchange for
Series B Junior Subordinated Debentures" and "Certain Federal Income Tax
Considerations -- Exchange of Series B Preferred Securities for Series B Junior
Subordinated Debentures."
S-4
<PAGE> 5
AMERICAN GENERAL CORPORATION
GENERAL
American General, with assets of $58 billion and shareholders' equity of
$5.3 billion as of June 30, 1995, is the parent company of one of the nation's
largest consumer financial services organizations. American General provides
financial services directly to consumers, emphasizing personal service and
frequent customer contact. American General's operating subsidiaries are leading
providers of retirement annuities, consumer loans and life insurance. American
General, headquartered in Houston, was incorporated as a general business
corporation in Texas in 1980 and is the successor to American General Insurance
Company, an insurance company incorporated in Texas in 1926. The principal
executive offices of American General are located at 2929 Allen Parkway,
Houston, Texas 77019-2155, and its telephone number is (713) 522-1111.
RETIREMENT ANNUITIES
Retirement Annuities represented 27% of the Company's segment earnings for
the year ended December 31, 1994 and for the six months ended June 30, 1995. The
Variable Annuity Life Insurance Company ("VALIC"), American General's retirement
annuity subsidiary with assets of $25 billion as of June 30, 1995, is a leading
provider of tax-deferred retirement plans and annuities to employees of
educational, health care and other not-for-profit organizations. Based on assets
of $22 billion as of December 31, 1994, VALIC ranks as the 18th largest life
insurance company in the United States.
VALIC markets products in 50 states and the District of Columbia to
approximately 860,000 customers through a national network of approximately 800
sales representatives. These sales representatives are highly trained retirement
specialists, providing personalized service to VALIC's customers.
VALIC currently holds among the strongest claims-paying ability ratings in
the life insurance industry. Management believes that these ratings provide
VALIC with a significant competitive advantage.
VALIC is committed to using advanced technologies to improve customer
service. VALIC recently introduced a new product, Portfolio DirectorSM, which
offers customers an array of 18 different investment options, as well as access
to professional investment managers, in order to have more flexibility in
creating a diversified retirement portfolio. VALIC has also introduced Portfolio
OptimizerSM, an innovative software program developed exclusively for VALIC
which helps customers allocate retirement funds among investment options.
VALIC's strategy for future growth is centered on increasing the size and
effectiveness of its sales force in order to enter new geographic territories
and further penetrate existing markets.
CONSUMER FINANCE
Consumer Finance represented 36% of the Company's segment earnings for the
year ended December 31, 1994 and 31% for the six months ended June 30, 1995.
American General Finance, Inc. and subsidiaries ("AGF"), with finance
receivables of $8.3 billion as of June 30, 1995, is a leading provider of
consumer and home equity loans, credit cards and credit-related insurance to
individuals. With more than three million customers and over 1,300 branch
offices, AGF ranks among the nation's largest consumer finance organizations.
AGF provides financing programs through approximately 20,000 retail merchants
and offers personalized service through over 9,000 employees in 41 states,
Puerto Rico and the U.S. Virgin Islands. AGF has traditionally focused on
marketing to creditworthy, middle-income families with annual household incomes
of $25,000 to $50,000 and with a head of household typically between the ages of
25 and 45.
Management believes that AGF's competitive advantages are its large branch
office network, improved technology, new market development and strong credit
ratings. AGF's branch office
S-5
<PAGE> 6
network gives it a local presence in approximately 900 communities. AGF
continually seeks to develop local markets. For example, AGF provides retail
financing programs through approximately 20,000 merchants nationwide. This
growing merchant base provides a flow of new business and represents AGF's
largest source of new loan customers.
AGF's strategy for future growth is centered on growing the branch office
customer base, further developing the retail dealer network and providing a
wider array of financial products and services to its customers.
LIFE INSURANCE
Life Insurance represented 37% of the Company's segment earnings for the
year ended December 31, 1994 and 42% for the six months ended June 30, 1995.
American General's life insurance companies, with assets of $23 billion as of
June 30, 1995, provide traditional and interest-sensitive life insurance and
both fixed and variable annuity products to nearly five million households
throughout all 50 states, the District of Columbia and Canada. This large
customer base is served principally by American General Life and Accident
Insurance Company ("AGLA"), American General Life Insurance Company ("AGL"),
and, since January 1995, The Franklin Life Insurance Company ("Franklin Life")
(see "Recent Developments" below). The life insurance companies meet the
financial security needs of individual consumers, business owners and customers
of financial institutions, and offer personalized service through approximately
14,000 sales representatives and general agents.
Management believes that specialization is the key to success in the highly
competitive life insurance marketplace. Each of American General's life
insurance companies specializes in serving a different market segment. AGLA
concentrates on meeting the basic life insurance needs of families with incomes
of less than $50,000. AGL serves the estate planning needs of middle- and
upper-income households. Franklin Life provides individual life insurance to
middle-income households, primarily in the Midwest.
Management believes that the life insurance companies' competitive
advantages are a strong market presence, financial strength and a commitment to
personalized customer service. The life insurance companies' strategy for future
growth centers on growing internally by increasing the size and productivity of
the agency field force and externally by pursuing selective acquisitions.
RECENT DEVELOPMENTS
As of November 29, 1994, the Company signed a definitive agreement to
acquire American Franklin Company ("AFC"), the holding company of Franklin Life,
for $1.17 billion. The transaction closed on January 31, 1995. The purchase
price consisted of $920 million in cash paid at closing and a $250 million
dividend paid by AFC to its former parent prior to closing. This acquisition was
accounted for using the purchase method. Beginning with the first quarter of
1995, Franklin Life was reported as part of the Life Insurance segment,
increasing that segment's assets and life insurance in force by approximately
45% and 35%, respectively. Franklin Life was acquired to complement American
General's existing life insurance distribution systems and further strengthen
the Company's position in middle-income households, particularly in the Midwest.
On December 23, 1994, the Company acquired a 40% interest in Western
National Corporation ("WNC") through the acquisition of 24,947,500 shares of
WNC's common stock for $274 million in cash. The acquisition was reflected in
the Company's 1994 consolidated financial statements using the equity method of
accounting. The Company's equity in the operating results of WNC for the period
from the acquisition date to December 31, 1994 did not have a material impact on
the Company's 1994 consolidated results of operations. The shares of WNC were
acquired for investment purposes.
S-6
<PAGE> 7
AMERICAN GENERAL CAPITAL, L.L.C.
American General Capital, L.L.C. is a limited liability company formed in
March 1995 under the laws of the State of Delaware. American General and
American General Delaware Management Corporation, a wholly-owned subsidiary of
American General, own all of the common limited liability company interests (the
"Common Securities") of American General Capital, which securities are
nontransferable. American General Capital is managed by American General
Delaware Management Corporation, as manager (the "Manager"), in accordance with
the Amended and Restated Limited Liability Company Agreement of American General
Capital (the "LLC Agreement"). American General Capital exists solely for the
purpose of issuing Preferred Securities and Common Securities and investing 99%
of the proceeds thereof in Junior Subordinated Debentures. The remaining 1% of
such proceeds will be invested in Eligible Investments (as defined in the LLC
Agreement). See "Use of Proceeds." On June 5, 1995, American General Capital
issued $287.5 million aggregate liquidation preference of its 8.45% Cumulative
Monthly Income Preferred Securities, Series A (the "Series A Preferred
Securities"). The Series A Preferred Securities represent, and the Series B
Preferred Securities, upon their issuance, will represent, preferred limited
liability company interests of American General Capital. American General
Capital's principal executive offices are located c/o American General Delaware
Management Corporation at 2099 South Dupont Avenue, Dover, Delaware 19901, and
its telephone number at such address is (302) 697-1912.
S-7
<PAGE> 8
CAPITALIZATION
The following table sets forth the consolidated short-term debt and
capitalization of American General as of June 30, 1995, as adjusted to reflect
the subsequent actual and proposed permanent financing of the AFC acquisition
which, for pro forma purposes, was assumed to be partially financed with the
estimated net proceeds from the sale of the Series B Preferred Securities
(assuming the Underwriters' over-allotment option is not exercised). See "Use of
Proceeds".
(UNAUDITED)
(IN MILLIONS)
<TABLE>
<CAPTION>
JUNE 30, 1995
---------------------------
PRO
FORMA,
REFLECTING
AFC
HISTORICAL FINANCING(a)
---------- ------------
<S> <C> <C>
Short-term debt
Corporate.................................................... $ 1,167 $ 823
Consumer Finance............................................. 2,309 2,309
-------- --------
Total short-term debt................................ $ 3,476 $ 3,132
======== ========
Long-term debt
Corporate.................................................... $ 1,023 $ 1,173
Consumer Finance............................................. 5,136 5,136
-------- --------
Total long-term debt................................. 6,159 6,309
-------- --------
Company-obligated mandatorily redeemable non-convertible
preferred securities of American General Capital,
L.L.C.(b).................................................... 277 471
Company-obligated mandatorily redeemable convertible preferred
securities of American General Delaware, L.L.C............... 244 244
Common stock subject to put contracts.......................... 25 25
Shareholders' equity
Common stock................................................. 365 365
Net unrealized gains on securities(c)........................ 662 662
Retained earnings............................................ 4,724 4,724
Cost of treasury stock....................................... (443) (443)
-------- --------
Total shareholders' equity........................... 5,308 5,308
-------- --------
Total capitalization (excluding short-term debt)..... $ 12,013 $ 12,357
======== ========
</TABLE>
---------------
(a) Reflects the application of the proceeds from the Offering (as defined
herein) and the issuance by American General of $150 million principal
amount of notes in July 1995, which together constitute the portion of the
permanent financing of the AFC acquisition that had not been completed as of
June 30, 1995. See American General's Current Report on Form 8-K dated
August 23, 1995 incorporated herein by reference.
(b) American General Capital owns approximately $360 million in principal amount
of American General's 8.45% Series A Junior Subordinated Debentures. Upon
completion of the Offering, American General Capital will own approximately
$251 million in principal amount of Series B Junior Subordinated Debentures
if the Underwriters' over-allotment option is not exercised, or
approximately $288 million in principal amount of Series B Junior
Subordinated Debentures if the Underwriters' over-allotment option is
exercised in full. In either case, such Series A Junior Subordinated
Debentures and Series B Junior Subordinated Debentures will constitute
approximately 99% of the assets of American General Capital.
(c) Includes a $631 million unrealized gain at June 30, 1995, due to the effect
of SFAS 115. See "Management's Discussion and Analysis" within American
General's Quarterly Report on Form 10-Q for the quarterly period ended June
30, 1995 incorporated herein by reference.
S-8
<PAGE> 9
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the historical and pro forma ratio of
earnings to fixed charges and ratio of earnings to combined fixed charges and
preferred stock dividends for the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
----------------------- ---------------
PRO PRO
FORMA FORMA
1995(a) 1995 1994 1994(a) 1994
------- ---- ---- ------- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges(b):
Consolidated operations............................ 2.6 2.5 2.9 2.5 2.4
Consolidated operations, corporate fixed charges
only(c)......................................... 6.8 6.3 8.2 6.1 6.6
Ratio of earnings to combined fixed charges and
preferred stock dividends:
Consolidated operations............................ 2.4 2.5 2.9 2.4 2.4
Consolidated operations, corporate fixed charges
and preferred stock dividends only(c)........... 5.5 6.1 8.2 5.0 6.6
</TABLE>
---------------
(a) Assuming the AFC acquisition and the subsequent actual and proposed
permanent financing, including this Offering, 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) Dividends on preferred securities are excluded from the calculation of the
ratio of earnings to fixed charges.
(c) Includes interest expense on American General's real estate debt.
USE OF PROCEEDS
American General Capital will invest the proceeds received from the sale of
the Series B Preferred Securities in the Series B Junior Subordinated Debentures
of American General. After paying the Underwriters' Compensation and other
expenses associated with the offering made hereby (the "Offering"), American
General will use the net proceeds of approximately $193 million (approximately
$222 million if the Underwriters' over-allotment option is exercised in full) to
repay short-term notes issued in connection with the acquisition of AFC. See
"American General Corporation -- Recent Developments." At August 24, 1995, the
blended interest rate on such short-term notes was 5.76% per annum.
S-9
<PAGE> 10
SUMMARY FINANCIAL INFORMATION OF AMERICAN GENERAL
The following table presents summary consolidated financial information
derived from American General's audited financial statements as of and for the
five years ended December 31, 1994. The financial data as of and for the six
months ended June 30, 1995 and 1994 has been derived from American General's
unaudited quarterly financial statements, which, in the opinion of management,
include all adjustments (consisting of normal recurring accruals) necessary for
a fair presentation of the Company's results of operations and financial
position. The results of operations for the six months ended June 30, 1995 are
not necessarily indicative of results to be anticipated for the entire year. The
table should be read in conjunction with "Management's Discussion and Analysis
of American General" and the consolidated financial statements and the related
notes within Items 7 and 8 of American General's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994 and within American General's Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 1995 incorporated
herein by reference.
(IN MILLIONS, EXCEPT PER SHARE DATA)
Operating Results and Per Share Data
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
-------------------- --------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues............................... $ 3,145 $ 2,446 $ 4,841 $ 4,829 $ 4,602 $ 4,395 $ 4,434
======== ======== ======== ======== ======== ======== ========
Business segment earnings
Retirement Annuities................. $ 108 $ 103 $ 187 $ 162 $ 130 $ 110 $ 99
Consumer Finance..................... 122 114 245 206 161 136 125
Life Insurance....................... 170(a) 127 257 (9)(b) 323 326 303
-------- -------- -------- -------- -------- -------- --------
Total business segments........ 400 344 689 359 614 572 527
-------- -------- -------- -------- -------- -------- --------
Corporate operations
Net interest on corporate debt....... (56) (37) (76) (81) (85) (87) (119)
Net dividends on preferred securities
of subsidiaries.................... (2) - - - - - -
Expenses not allocated to segments... (17) (15) (29) (25) (28) (37) (52)
Earnings on corporate assets......... 14 25 43 21 23 31 69
Net equity in earnings of WNC........ 14 - - - - - -
Net realized investment gains
(losses)........................... 2 2 (114)(c) 6 9 1 137(d)
-------- -------- -------- -------- -------- -------- --------
Total corporate operations..... (45) (25) (176) (79) (81) (92) 35
-------- -------- -------- -------- -------- -------- --------
Income before cumulative effect and tax
rate related adjustment.............. 355 319 513 280 533 480 562
Tax rate related adjustment............ - - - (30) - - -
Cumulative effect of accounting
changes.............................. - - - (46) - - -
-------- -------- -------- -------- -------- -------- --------
Net income..................... $ 355 $ 319 $ 513 $ 204 $ 533 $ 480 $ 562
======== ======== ======== ======== ======== ======== ========
Net income per share................... $ 1.73 $ 1.50 $ 2.45 $ .94(b) $ 2.45 $ 2.13 $ 2.35
======== ======== ======== ======== ======== ======== ========
Dividends per share.................... $ .62 $ .58 $ 1.16 $ 1.10 $ 1.04 $ 1.00 $ .79(e)
======== ======== ======== ======== ======== ======== ========
Average shares outstanding............. 206.3 211.8 209.4 216.6 217.7 225.4 238.6
======== ======== ======== ======== ======== ======== ========
</TABLE>
Financial Position and Book Value Per Share
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
-------------------- --------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets.................................. $58,424(f) $44,824(f) $46,295(g) $43,982(g) $39,742 $36,105 $33,808
Debt (including short-term)
Corporate............................. 2,190 1,769 1,836 1,686 1,987 1,981 2,053
Consumer Finance...................... 7,445 6,309 7,090 5,843 5,484 5,243 5,096
Redeemable equity....................... 546 22 47 - - - 296
Shareholders' equity.................... 5,308(f) 4,266(f) 3,457(g) 5,137(g) 4,616 4,329 4,138
Book value per share.................... 26.41(f) 20.48(f) 17.05(g) 23.96(g) 21.33 19.86 18.57
</TABLE>
------------
(a) Includes five months of operations for AFC, which was acquired January 31,
1995.
(b) 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.
(c) Results primarily from 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.
(d) Results primarily from the sale of substantially all of the common stock
portfolio.
(e) Excludes special dividends of $.61 per share.
(f) Includes $980 million, $631 million, and $2.98 increase in assets,
shareholders' equity, and book value per share, respectively, at June 30,
1995, and $326 million, $213 million, and $1.02 decrease in assets,
shareholders' equity, and book value per share respectively, at June 30,
1994, due to the effect of SFAS 115. See "Management's Discussion and
Analysis" within American General's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1995 incorporated herein by reference.
(g) Includes $986 million, $950 million, and $4.65 decrease in assets,
shareholders' equity, and book value per share, respectively, at December
31, 1994, and $1.0 billion, $676 million, and $3.14 increase in assets,
shareholders' equity, and book value per share, respectively, at December
31, 1993, due to the effect of SFAS 115. See "Significant Events -- Effect
of SFAS 115" within Item 7 and Note 1.2 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.
S-10
<PAGE> 11
DESCRIPTION OF THE SERIES B PREFERRED SECURITIES
GENERAL
The following summary of certain terms and provisions of the Series B
Preferred Securities supplements the description of the terms and provisions of
the Preferred Securities set forth in the accompanying Prospectus under the
heading "Description of the Preferred Securities," to which description
reference is hereby made. Capitalized terms used and not defined in this
Prospectus Supplement have the meanings ascribed to them in the accompanying
Prospectus. The Series B Preferred Securities constitute a series of Preferred
Securities of American General Capital having such dividend terms, liquidation
preferences per share, voting rights, redemption provisions and other rights,
preferences, privileges, limitations and restrictions as are set forth in the
LLC Agreement, the Delaware Limited Liability Company Act (the "LLC Act") and
the written action taken or to be taken pursuant to the LLC Agreement by the
Manager relating to the Series B Preferred Securities (the "Series B
Declaration"). The summary of certain terms and provisions of the Series B
Preferred Securities set forth below does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the LLC Agreement and
the Series B Declaration.
DIVIDENDS
General. Holders of the Series B Preferred Securities will be entitled to
receive cumulative cash dividends from American General Capital, accruing from
the date of original issuance and payable monthly in arrears on the last day of
each calendar month of each year, commencing September 30, 1995, except as
otherwise described below. The dividends payable on each Series B Preferred
Security will be fixed at the annual rate of $2.03125, or 8 1/8% of the
liquidation preference of $25 per Series B Preferred Security. The amount of
dividends payable for any full monthly dividend period will 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 dividend period, will be computed on the basis of
the actual number of days elapsed in such period. Payment of dividends is
limited to the funds held by American General Capital and legally available for
distribution to holders of Series B Preferred Securities. See "Description of
the Series B Junior Subordinated Debentures -- Interest."
Dividends on the Series B Preferred Securities must be declared monthly and
paid on the last day of each calendar month to the extent that American General
Capital has funds legally available for the payment of such dividends and cash
on hand sufficient to make such payments. It is anticipated that the funds of
American General Capital available for the payment of dividends on the Series B
Preferred Securities will be limited principally to payments received from
American General under the Series B Junior Subordinated Debentures. If American
General fails to make interest payments on the Series B Junior Subordinated
Debentures, American General Capital will not have sufficient funds to pay
dividends on the Series B Preferred Securities. The payment of dividends (but
only if and to the extent declared from funds of American General Capital
legally available therefor) will be guaranteed by American General as and to the
extent set forth herein and under "Description of the Guarantees" in the
accompanying Prospectus.
American General has the right under the Series B Junior Subordinated
Debentures to extend, from time to time, the interest payment period on the
Series B Junior Subordinated Debentures for up to 60 consecutive months on one
or more occasions, but not beyond the stated maturity date or date of redemption
thereof. Monthly dividends on the Series B Preferred Securities would be
deferred (but would continue to accumulate monthly and Additional Dividends,
intended to provide monthly compounding on dividend arrearages, would also
accumulate) by American General Capital during any such extension of the
interest payment period. American General Capital will give written notice of
American General's extension of the interest payment period to the holders of
the Series B Preferred Securities no later than the last date on which it would
be required to notify the NYSE of the record or payment date of the related
dividend, which is currently 10 days prior to such record or payment date. See
"-- Additional Dividends" and "Description of the Series B Junior
S-11
<PAGE> 12
Subordinated Debentures -- Option to Extend Interest Payment Period." Any
failure by American General to make interest payments on the Series B Junior
Subordinated Debentures within 10 days of the relevant payment dates in the
absence of an extension of an interest payment period would constitute an Event
of Default (as defined under "Description of the Junior Subordinated
Debentures -- Events of Default" in the accompanying Prospectus) under the
Junior Subordinated Indenture with respect to the Series B Junior Subordinated
Debentures. American General has agreed, among other things, not to declare or
pay any dividend on any of its capital stock at any time that American General
has exercised its option to extend an interest payment period on the Series B
Junior Subordinated Debentures and such extension is continuing or any Event of
Default under the Junior Subordinated Indenture with respect to the Series B
Junior Subordinated Debentures shall have occurred and be continuing. See
"Description of the Guarantees -- Certain Covenants of American General" in the
accompanying Prospectus.
Dividends declared on the Series B Preferred Securities will be payable to
the holders thereof as they appear on the books and records of American General
Capital on the relevant record dates, which, if and so long as the Series B
Preferred Securities are in book-entry form, will be one Business Day (as
defined below) prior to the related payment dates. Subject to any applicable
laws and regulations and the LLC Agreement and the Series B Declaration, each
such payment will be made as described under "Description of the Preferred
Securities -- Book-Entry-Only Issuance -- The Depository Trust Company" in the
accompanying Prospectus. In the event that the Series B Preferred Securities
shall not continue to remain in book-entry form, the Manager shall have the
right to select relevant record dates that are more than one Business Day prior
to the related payment dates. If 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 that is a
Business Day (and without any interest or other payment in respect of any such
delay), except that if such Business Day is in the next succeeding calendar
year, such payment will 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" 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.
Additional Dividends. Upon any dividend arrearages in respect of the Series
B Preferred Securities, American General Capital will be required to declare and
pay additional dividends on the Series B Preferred Securities in order to
provide, in effect, monthly compounding on such dividend arrearages. The amounts
payable to effect such monthly compounding on dividend arrearages in respect of
the Series B Preferred Securities are referred to herein as "Additional
Dividends."
Certain Restrictions on American General Capital. If accumulated dividends
(including Additional Dividends) have not been paid in full on the Series B
Preferred Securities, American General Capital may not:
(i) pay, or declare and set aside for payment, any dividends on the
Preferred Securities of any other series or any other limited liability
company interests in American General Capital ranking pari passu with the
Series B Preferred Securities as to the payment of dividends ("Dividend
Parity Securities"), unless the amount of any dividends declared on such
Dividend Parity Securities is paid on such Dividend Parity Securities and
the Series B Preferred Securities on a pro rata basis on the date such
dividends are paid on such Dividend Parity Securities, so that the ratio of
(x)(A) the aggregate amount paid as dividends on the Series B Preferred
Securities to (B)the aggregate amount paid as dividends on such Dividend
Parity Securities is the same as the ratio of (y)(A) the aggregate amount
of all accumulated arrears of unpaid dividends on the Series B Preferred
Securities to (B) the aggregate amount of all accumulated arrears of unpaid
dividends on such Dividend Parity Securities;
S-12
<PAGE> 13
(ii) pay, or declare and set aside for payment, any dividends on any
limited liability company interests in American General Capital ranking
junior to the Series B Preferred Securities as to the payment of dividends
("Dividend Junior Securities"); or
(iii) redeem, purchase, or otherwise acquire any Dividend Parity
Securities or Dividend Junior Securities (other than purchases or
acquisitions resulting from the reclassification of such securities or the
exchange or conversion of any Dividend Parity Security or Dividend Junior
Security pursuant to the terms thereof or the purchase of fractional
interests therein upon such conversion or exchange);
until, in each case, such time as all accumulated and unpaid dividends
(including Additional Dividends) on all of the Series B Preferred Securities
shall have been paid in full or have been irrevocably set aside for payment in
full for all dividend periods terminating on or prior to, in the case of clauses
(i) and (ii), the date of such payment, and in the case of clause (iii), the
date of such redemption, purchase, or other acquisition.
As of the date of this Prospectus Supplement, there is one series of
Preferred Securities outstanding: the Series A Preferred Securities. The Series
B Preferred Securities will rank pari passu with the Series A Preferred
Securities as to the payment of dividends and as to the distribution of assets
upon liquidation, dissolution or winding-up of American General Capital.
OPTIONAL REDEMPTION
On or after August 29, 2000, the Series B Preferred Securities will be
redeemable at the option of American General Capital (subject to the prior
consent of American General), in whole or in part, from time to time, at the
Redemption Price. American General Capital may not redeem the Series B Preferred
Securities in part unless all accumulated and unpaid dividends (whether or not
earned or declared), including 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 has the right to cause American General Capital to
exercise such optional redemption rights. In addition, subject to applicable law
(including, without limitation, United States federal securities laws), 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.
SPECIAL EVENT REDEMPTION OR EXCHANGE
At any time after the occurrence of a Tax Event or an Investment Company
Event (each, a "Special Event"), American General Capital (subject to the prior
consent of American General) may, upon not less than 30 nor more than 60
calendar days' notice to the holders of Series B Preferred Securities, either
(i) redeem the Series B Preferred Securities in whole but not in part, at the
Redemption Price, or (ii) exchange, in whole but not in part, the Series B
Preferred Securities for Series B Junior Subordinated Debentures having an
aggregate principal amount and accrued and unpaid interest equal to the
aggregate liquidation preference and accumulated and unpaid dividends (whether
or not earned or declared), including Additional Dividends, to the date fixed
for exchange, respectively, of the Series B Preferred Securities (a "Special
Event Exchange"). In connection with any Special Event Exchange, American
General Capital may be liquidated, dissolved or wound-up. Upon any Special Event
Exchange, American General will use its best efforts to have the Series B Junior
Subordinated Debentures listed on the NYSE or other exchange on which the Series
B Preferred Securities may then be listed. American General has the right to
cause American General Capital to exercise its right to effect a Special Event
Exchange.
"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
S-13
<PAGE> 14
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
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) American General
Capital will be subject to federal income tax with respect to the interest
received on the Series B Junior Subordinated Debentures, (ii) American General
will be precluded from deducting the interest paid on the Series B Junior
Subordinated Debentures for federal 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 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
American General Capital is or will be considered an "investment company" which
is required to be registered under the 1940 Act.
After the date fixed for any Special Event Exchange, (i) the Series B
Preferred Securities will no longer be deemed to be outstanding, (ii) any global
certificate or certificates representing Series B Preferred Securities held by
DTC or its nominee will be exchanged for a registered global certificate or
certificates representing the Series B Junior Subordinated Debentures to be
delivered upon such exchange, (iii) any certificates representing Series B
Preferred Securities not held by DTC or its nominee and not surrendered for
exchange will be deemed to represent Series B Junior Subordinated Debentures
having a principal amount and accrued and unpaid interest equal to the
liquidation preference and accumulated and unpaid dividends (whether or not
earned or declared), including Additional Dividends, to the date fixed for
exchange, respectively, of such Series B Preferred Securities until such
certificates are surrendered to American General Capital or its agent for
exchange (and until such certificates are so surrendered, no payments of
interest or principal will be made with respect to such Series B Junior
Subordinated Debentures) and (iv) all rights of the holders of the Series B
Preferred Securities will cease, except the right of such holders to receive the
Series B Junior Subordinated Debentures upon surrender of certificates
representing the Series B Preferred Securities.
MANDATORY REDEMPTION
Upon repayment by American General of the principal of the Series B Junior
Subordinated Debentures at stated maturity, earlier redemption or otherwise,
including as a result of the acceleration of Series B Junior Subordinated
Debentures upon the occurrence of an Event of Default under the Junior
Subordinated Indenture with respect to the Series B Junior Subordinated
Debentures, the Series B Preferred Securities will be subject to mandatory
redemption, in whole but not in part, by American General Capital and the
proceeds from such repayment will be applied to redeem the Series B Preferred
Securities at the Redemption Price (unless such proceeds are used to fund the
aggregate Liquidation Distributions (as defined herein) on the Series B
Preferred Securities in connection with the liquidation, dissolution or
winding-up of American General Capital). In the case of such repayment, the
Series B Preferred Securities will only be redeemed when repayment of the Series
B Junior Subordinated Debentures has actually been received by American General
Capital. Notwithstanding the foregoing, the Series B Preferred Securities will
not be so
S-14
<PAGE> 15
redeemed if (i) in lieu of repaying the Series B Junior Subordinated Debentures
at stated maturity or date of earlier redemption, American General is permitted
by American General Capital to exchange the Series B Junior Subordinated
Debentures for new Junior Subordinated Debentures or (ii) American General
repays the Series B Junior Subordinated Debentures at stated maturity or date of
earlier redemption but is permitted by American General Capital to reborrow the
proceeds from such repayment which reborrowing will be evidenced by new Junior
Subordinated Debentures issued under the Indenture; provided, however, that
American General Capital may only permit American General to so exchange the
Series B Junior Subordinated Debentures for new Junior Subordinated Debentures
or reborrow the proceeds from the repayment thereof if American General Capital
owns all of the Series B Junior Subordinated 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 Manager and American General
Capital's financial advisor (which will be selected by the Manager 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 Junior Subordinated 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 herein) or principal in
respect of any Junior Subordinated Debentures, (c) American General has made
timely payments on the Series B Junior Subordinated Debentures for the
immediately preceding 24 months (and has not elected to extend any interest
payment period of the Series B Junior Subordinated Debentures during such 24
month period), (d) such new Junior Subordinated Debentures will mature no later
than the earlier of (1) the 49th anniversary of the date of the initial issuance
of the Series B Junior Subordinated Debentures and (2) the 30th anniversary of
the date such new Junior Subordinated Debentures are issued, (e) American
General Capital 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 Junior Subordinated Debentures, (g) the issuance of such new Junior
Subordinated 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 Junior Subordinated
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 Junior Subordinated Debentures are consistent with market
circumstances and American General's financial condition and (j) immediately
prior to the issuance of such new Junior Subordinated 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 and Baa2 (or the equivalent) by Moody's Investors Service,
Inc. 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 Standard & Poor's Corporation and Baa3 by
Moody's Investors Service, Inc. (or, if either of such rating organizations is
not then rating American General'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). As a result of the foregoing
conditions, such new Junior Subordinated Debentures will bear interest at a rate
sufficient to provide payments equal to or greater than the amount of dividend
payments required under the Series B Preferred Securities but, pursuant to
clauses (g) and (i) above, may have other terms which vary from the terms of the
Series B Junior Subordinated Debentures.
S-15
<PAGE> 16
REDEMPTION PROCEDURES
Notice of any redemption (optional or mandatory) of Series B Preferred
Securities (which notice will be irrevocable) will be given by American General
Capital to American General and each record holder of Series B Preferred
Securities that are being redeemed not fewer than 30 nor more than 60 calendar
days prior to the date fixed for redemption thereof. If American General Capital
gives a notice of redemption, then on the redemption date American General
Capital will irrevocably deposit with DTC or the Paying Agent, as the case may
be, sufficient funds to pay the Redemption Price for the Series B Preferred
Securities to be redeemed and give DTC or the Paying Agent, as the case may be,
irrevocable instructions and authority to pay the Redemption Price to the
holders of the Series B Preferred Securities to be redeemed. See "Description of
the Preferred Securities -- Book-Entry-Only Issuance -- The Depository Trust
Company" in the accompanying Prospectus. If notice of redemption has been given
and funds irrevocably deposited with DTC or the Paying Agent, as the case may
be, as required, then immediately prior to the close of business on the date of
such deposit, all rights of holders of the 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 is not a
Business Day, then payment of the Redemption Price payable on such date will be
made the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), except that if such Business Day
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 by either American General Capital
or American General (pursuant to the Guarantee), dividends on the Series B
Preferred Securities called for redemption (including any Additional Dividends
thereon) 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 of Series B Preferred Securities.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary liquidation, dissolution or
winding-up of American General Capital other than in connection with or after
the exchange of the Series B Preferred Securities for the Series B Junior
Subordinated Debentures in the manner described under "-- Special Event
Redemption or Exchange" above, the holders of Series B Preferred Securities then
outstanding will be entitled to receive out of the assets of American General
Capital legally available for distribution to the holders of limited liability
company interests, after satisfaction of liabilities to creditors as required by
the LLC Act but before any distribution of assets is made to holders of any
Common Securities or any other class of limited liability company interests in
American General Capital ranking junior to the Series B Preferred Securities as
to the distribution of assets upon liquidation, dissolution or winding-up of
American General Capital, but together with the holders of Preferred Securities
of any other series or any other limited liability company interests in American
General Capital then outstanding ranking pari passu with the Series B Preferred
Securities as to the distribution of assets upon liquidation, dissolution or
winding-up ("Liquidation Parity Securities"), an amount equal to the liquidation
preference of $25 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").
If, upon any such liquidation, dissolution or winding-up, the Liquidation
Distributions can be paid only in part because American General Capital has
insufficient assets available to pay in full the aggregate Liquidation
Distributions on the Series B Preferred Securities and the aggregate maximum
liquidation distributions on the Liquidation Parity Securities, then the amounts
payable directly by American General Capital on the Series B Preferred
Securities and on such Liquidation Parity Securities shall be paid on a pro rata
basis, so that the ratio of (i)(A) the aggregate amount paid as Liquidation
Distributions on the Series B Preferred Securities to (B) the aggregate amount
paid as
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<PAGE> 17
liquidation distributions on the Liquidation Parity Securities is the same as
the ratio of (ii)(A) the aggregate Liquidation Distributions on the Series B
Preferred Securities to (B) the aggregate maximum liquidation distributions on
the Liquidation Parity Securities.
If, upon any liquidation, dissolution or winding-up of American General
Capital, the holders of Series B Preferred Securities are paid in full the
Liquidation Distributions to which they are entitled, then such holders will not
be entitled to receive or share in any other assets of American General Capital
thereafter available for distribution to any other holders of limited liability
company interests in American General Capital.
Pursuant to the LLC Agreement, American General Capital shall be dissolved
and its affairs shall be wound up upon the earliest to occur of (i) December 31,
2050 (the expiration of the period fixed for the duration of American General
Capital); (ii) the bankruptcy, insolvency, liquidation, dissolution or
winding-up of the Manager or American General (collectively, the "Common
Members") or the withdrawal, retirement, resignation or expulsion of either
Common Member from American General Capital or the occurrence of any other event
that terminates the continued membership of either Common Member therein under
the LLC Act; (iii) the entry of a decree of a judicial dissolution of American
General Capital under the LLC Act; (iv) the decision of the Manager to dissolve
American General Capital (subject to the voting rights of the holders of Series
B Preferred Securities described under "Voting Rights" below and of other
holders of limited liability company interests in American General Capital); (v)
the election of the Manager, in connection with or after the exchange of all
series of Preferred Securities outstanding (in accordance with the written
action establishing each such series of Preferred Securities) for the related
series of Junior Subordinated Debentures; or (vi) upon the written consent
thereto of all holders of outstanding Common Securities and Preferred Securities
of American General Capital.
Any merger, consolidation, replacement, conveyance, transfer or lease
effected in accordance with the provisions described under "Merger,
Consolidation or Sale of Assets of American General Capital" below shall not be
deemed a liquidation, dissolution or winding-up of American General Capital for
the foregoing purposes.
VOTING RIGHTS
Except as provided below and under "Description of the
Guarantees -- Amendments and Assignment" and "Description of the Junior
Subordinated Debentures -- Modification of the Junior Subordinated Indenture" in
the accompanying Prospectus and as otherwise required by law and provided by the
LLC Agreement, the holders of the Series B Preferred Securities will have no
voting rights.
If (i) American General Capital fails to pay dividends in full (including
any arrearages and Additional Dividends) on the Series B Preferred Securities
for 18 consecutive months; (ii) an Event of Default under the Junior
Subordinated Indenture with respect to the Series B Junior Subordinated
Debentures occurs and is continuing; or (iii) American General is in default
under any of its payment or other obligations under the Guarantee with respect
to the Series B Preferred Securities, then the holders of outstanding Series B
Preferred Securities will be entitled by the vote of a majority in aggregate
liquidation preference of such holders to appoint and authorize a special
trustee (a "Special Trustee") to enforce American General Capital's rights under
the Series B Junior Subordinated Debentures against American General, enforce
the obligations undertaken with respect to the Series B Preferred Securities by
American General under the Guarantee and, to the extent permitted by law,
declare and pay dividends on the Series B Preferred Securities to the extent
funds of American General Capital are legally available therefor (but only in
the event that American General Capital's failure to pay dividends on the Series
B Preferred Securities is not a consequence of American General's exercise of
its right to extend the interest payment period on the Series B Junior
Subordinated Debentures). For purposes of determining whether American General
Capital has failed to pay dividends in full for 18 consecutive months, dividends
shall be deemed to remain in
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arrears, notwithstanding any partial payments in respect thereof, until all
accumulated and unpaid dividends (including any Additional Dividends) have been
or contemporaneously are declared and paid with respect to all monthly dividend
periods terminating on or prior to the date of payment of such full cumulative
dividends. Not later than 30 calendar days after such right to appoint a Special
Trustee arises and upon not less than 15 calendar days' written notice by
first-class mail to the holders of Series B Preferred Securities, the Manager
will convene a meeting to elect a Special Trustee. If the Manager fails to
convene such meeting within such 30-day period, the holders of at least 10% of
the aggregate liquidation preference of the Series B Preferred Securities will
be entitled to convene such meeting. In the event that, at such meeting, holders
of less than a majority in aggregate liquidation preference of Series B
Preferred Securities vote for such appointment, no Special Trustee shall be
appointed. Any Special Trustee shall vacate office immediately if American
General Capital (or American General pursuant to the Guarantee) shall have paid
in full all accumulated and unpaid dividends (including any Additional
Dividends) on the Series B Preferred Securities or such Event of Default under
the Junior Subordinated Indenture or such default under the Guarantee, as the
case may be, shall have been cured. Notwithstanding the appointment of any such
Special Trustee, American General will retain all rights, including the right to
extend the interest payment period from time to time as provided under
"Description of the Series B Junior Subordinated Debentures -- Option to Extend
Interest Payment Period," and be subject to all obligations under the Junior
Subordinated Indenture and as obligor under the Series B Junior Subordinated
Debentures, and any such extension would not constitute an Event of Default
under the Junior Subordinated Indenture with respect to the Series B Junior
Subordinated Debentures or enable a holder of Series B Preferred Securities to
require the payment of a dividend that has not theretofore been declared.
In furtherance of the foregoing, and without limiting the powers of any
Special Trustee so appointed and for the avoidance of any doubt concerning the
powers of the Special Trustee, any Special Trustee, in its own name and as
trustee of an express trust, may, subject to the applicable provisions of the
Junior Subordinated Indenture, institute a proceeding, including, without
limitation, any suit in equity, an action at law or other judicial or
administrative proceeding, to enforce American General Capital's creditor rights
directly against American General to the same extent as American General Capital
and on behalf of American General Capital, and may prosecute such proceeding to
judgment or final decree, and enforce the same against American General and,
subject to the subordination provisions contained in the Junior Subordinated
Indenture, collect, out of the property, wherever situated, of American General
the monies adjudged or decreed to be payable in the manner and to the extent
provided by law.
If any proposed amendment to the LLC Agreement or the Series B Declaration
provides for, or the Manager otherwise proposes to effect, (i) any action that
would materially adversely affect the powers, preferences or special rights of
the Series B Preferred Securities, whether by way of amendment to the LLC
Agreement, the Series B Declaration or otherwise, including, without limitation,
the authorization or issuance of any limited liability company interests of
American General Capital ranking, as to payment of dividends or distribution of
assets upon liquidation, dissolution or winding-up of American General Capital,
senior to the Series B Preferred Securities, (ii) the liquidation, dissolution
or winding-up of American General Capital (in any case other than upon the
occurrence of a Special Event Exchange, as described under "-- Merger,
Consolidation or Sale of Assets of American General Capital" or as described in
the proviso to the next succeeding sentence), or (iii) the commencement of any
voluntary bankruptcy, insolvency, reorganization or other similar proceeding
involving American General Capital, then the holders of outstanding Series B
Preferred Securities will be entitled to vote on such amendment or action of the
Manager (but not on any other amendment or action). In the case of an amendment
or action described in clause (i) which would materially adversely affect the
powers, preferences or special rights of any Dividend Parity Securities or any
Liquidation Parity Securities, the holders of such Dividend Parity Securities or
Liquidation Parity Securities, as the case may be, or, in the case of an
amendment or action described in clause (ii) or (iii), the holders of all
Liquidation Parity Securities, will be entitled
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to vote with the holders of the Series B Preferred Securities, together as a
class, on such amendment or action of the Manager and such amendment or action
shall not be effective except with the approval of the holders of at least
66 2/3% of the aggregate liquidation preference of such outstanding securities;
provided, however, that no such approval shall be required if the liquidation,
dissolution or winding-up of American General Capital is proposed or initiated
upon the occurrence of certain of the events specified in the LLC Agreement. See
"-- Liquidation Rights."
The powers, preferences or special rights attached to the Series B
Preferred Securities will be deemed not to be adversely affected by the creation
or issuance of, and no vote will be required for the creation or issuance of,
any further limited liability company interests of American General Capital
ranking junior to or pari passu with the Series B Preferred Securities with
respect to voting rights or rights to payment of dividends or distribution of
assets upon liquidation, dissolution or winding-up of American General Capital.
So long as any Series B Junior Subordinated Debentures are held by American
General Capital, the Manager shall not (i) at any time in which a Special
Trustee has been appointed, direct the time, method and place of conducting any
proceeding for any remedy available to the Special Trustee or the Junior
Subordinated Trustee, or the exercise of any trust or power conferred on the
Special Trustee or the Junior Subordinated Trustee with respect to the Series B
Junior Subordinated Debentures, (ii) waive compliance with, or any past default
under, the Series B Junior Subordinated Debentures or the Junior Subordinated
Indenture (to the extent that holders of Series B Junior Subordinated Debentures
are entitled to the benefits of the covenant or condition waived or breached),
(iii) exercise any right to rescind or annul a declaration that the principal of
the Series B Junior Subordinated Debentures shall be due and payable, (iv)
consent to any amendment or modification of the Series B Junior Subordinated
Debentures or of the Junior Subordinated Indenture without, in each case,
obtaining the prior approval of the holders of at least 66 2/3% of the aggregate
liquidation preference of the Series B Preferred Securities then outstanding;
provided, however, that where a waiver or consent under the Series B Junior
Subordinated Debentures would require the waiver or consent of each holder
affected thereby, no such waiver or consent shall be given by the Manager
without the prior consent of each holder of the Series B Preferred Securities.
The Manager shall not revoke any action previously authorized or approved by a
vote of holders of the Series B Preferred Securities, without the approval of
holders of at least 66 2/3% of the aggregate liquidation preference of the
Series B Preferred Securities then outstanding (or, if such action required the
approval of each holder, then only with the approval of each holder). The
Manager shall notify all holders of the Series B Preferred Securities of any
notice of default received from the Junior Subordinated Trustee under the Junior
Subordinated Indenture with respect to the Series B Junior Subordinated
Debentures.
Any required approval of holders of the Series B Preferred Securities may
be given at a separate meeting of such holders convened for such purpose or at a
meeting of holders of limited liability company interests in American General
Capital or pursuant to written consents. The Manager will cause a notice of any
meeting at which holders of the Series B Preferred Securities are entitled to
vote, or of any matter upon which action by written consent of such holders is
to be taken, to be mailed to each holder of the Series B Preferred Securities.
Each such notice will include a statement setting forth (i) the date of such
meeting or the date by which such action is to be taken, (ii) a description of
any matter on which such holders are entitled to vote or of such matter upon
which written consent is sought and (iii) instructions for the delivery of
proxies or consents.
Notwithstanding that holders of Series B Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Series B Preferred Securities and any other series of Preferred Securities that
are entitled to vote or consent with such Series B Preferred Securities as a
single class at such time that are owned by American General or by any entity
more than 50% of which is owned by American General, either directly or
indirectly, shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
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TRANSFER AGENT, REGISTRAR AND PAYING AGENT
Chemical Mellon Shareholder Services, LLC will act as Transfer Agent,
Registrar and Paying Agent for the Series B Preferred Securities, but American
General Capital may designate an additional or substitute Transfer Agent,
Registrar or Paying Agent. In the event that the Series B Preferred Securities
do not remain in book-entry-only form, registration of transfers of Series B
Preferred Securities will be effected without charge by or on behalf of American
General Capital, but upon payment in respect of any tax or other governmental
charges which may be imposed in connection therewith (and/or the giving of such
indemnity as American General Capital or the Manager may require with respect
thereto). Exchanges of Series B Preferred Securities for Series B Junior
Subordinated Debentures will be effected without charge by or on behalf of
American General Capital, but upon payment in respect of any tax or other
governmental charges which may be imposed (and/or the giving of such indemnity
as American General Capital or the Manager may require with respect thereto) in
connection with the issuance of any Series B Junior Subordinated Debentures in
the name of any person other than the registered holder of the Series B
Preferred Security for which the Series B Junior Subordinated Debenture is being
exchanged or for any reason other than such exchange. American General Capital
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.
MERGER, CONSOLIDATION OR SALE OF ASSETS OF AMERICAN GENERAL CAPITAL
American General Capital may not consolidate with, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to, any entity, except with the prior
approval of the holders of not less than 66 2/3% of the aggregate liquidation
preference of the Series B Preferred Securities or as described below. American
General Capital may, without the consent of the holders of the Series B
Preferred Securities, consolidate with, merge with or into, or be replaced by,
or convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to, a limited liability company, limited
partnership or trust organized as such under the laws of any state of the United
States of America or the District of Columbia, provided that (i) such successor
entity either (x) expressly assumes all of the obligations of American General
Capital under the Series B Preferred Securities or (y) substitutes for the
Series B Preferred Securities other securities having substantially the same
terms as the Series B Preferred Securities (the "Successor Securities") so long
as the Successor Securities rank, with respect to participation in the profits
or assets of the successor entity, at least as high as the Series B Preferred
Securities rank with respect to payment of dividends and distribution of assets
upon the liquidation, dissolution or winding-up of American General Capital,
(ii) American General expressly acknowledges such successor entity as the holder
of the Series B Junior Subordinated Debentures and its obligations under the
Guarantee with respect to the Successor Securities, (iii) such merger,
consolidation, replacement, conveyance, transfer or lease does not cause the
Series B Preferred Securities (or any Successor Securities) to be delisted (or,
in the case of any Successor Securities, to fail to be listed) by any national
securities exchange or other organization on which the Series B Preferred
Securities are then listed, (iv) such merger, consolidation, replacement,
conveyance, transfer or lease does not cause the Series B Preferred Securities
(or any Successor Securities) to be downgraded by any nationally recognized
statistical rating organization, (v) such merger, consolidation, replacement,
conveyance, transfer or lease does not adversely affect the powers, preferences
and other special rights of the holders of the Series B Preferred Securities (or
any Successor Securities) in any material respect (other than with respect to
any dilution of the holders' interest in the new entity), and (vi) prior to such
merger, consolidation, replacement, conveyance, transfer or lease, American
General has received an opinion of nationally recognized independent legal
counsel to American General Capital experienced in such matters to the effect
that (x) such successor entity will be treated as a partnership or as a grantor
trust, as appropriate, for federal income tax purposes, (y) following such
merger, consolidation, replacement, conveyance, transfer or lease, American
General and such successor entity
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will be in compliance with the 1940 Act without registering thereunder as an
investment company and (z) such merger, consolidation, replacement, conveyance,
transfer or lease will not adversely affect the limited liability of the holders
of the Series B Preferred Securities (or any Successor Securities) or result in
federal income tax liability to such holders other than with respect to any
fractional share interests converted into cash.
MISCELLANEOUS
The Manager is authorized and directed to conduct its affairs and to
operate American General Capital in such a way that American General Capital
will not be deemed to be an "investment company" required to be registered under
the 1940 Act or taxed as a corporation for federal income tax purposes and so
that the Series B Junior Subordinated Debentures will be treated as indebtedness
of American General for federal income tax purposes. In this connection, the
Manager is authorized to take any action not inconsistent with applicable law,
the LLC Agreement and the Series B Declaration that does not adversely affect
the interests of the holders of the Series B Preferred Securities and that the
Manager determines in its discretion to be necessary or desirable for such
purposes.
DESCRIPTION OF THE SERIES B JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the specific terms of the Series B
Junior Subordinated Debentures in which American General Capital will invest (i)
the proceeds of the issuance and sale of the Series B Preferred Securities and
(ii) substantially all of the purchase price paid by American General and the
Manager for the Common Securities and any related capital contribution (the
"Common Securities Payment"). This description supplements the description of
the general terms and provisions of the Junior Subordinated Debentures set forth
in the accompanying Prospectus under the caption "Description of the Junior
Subordinated Debentures."
GENERAL
The Series B Junior Subordinated Debentures will be limited in aggregate
principal amount to the sum of the aggregate amount of the proceeds received by
American General Capital from the Offering and the Common Securities Payment,
less 1% of such sum.
The entire principal amount of the Series B Junior Subordinated Debentures
will become due and payable, together with any accrued and unpaid interest
thereon, including Additional Interest, if any, on the earlier of (i) September
30, 2025 (subject to American General's right to exchange the Series B Junior
Subordinated Debentures for new Junior Subordinated Debentures or to redeem or
repay the Series B Junior Subordinated Debentures and reborrow the proceeds from
such redemption or repayment of the Series B Junior Subordinated Debentures upon
the terms and subject to the conditions set forth under "Description of the
Series B Preferred Securities -- Mandatory Redemption") or (ii) the date upon
which American General Capital is liquidated, dissolved or wound-up; provided,
however, that in the event that the Series B Preferred Securities are exchanged
for Series B Junior Subordinated Debentures in the manner described under
"Description of the Series B Preferred Securities -- Special Event Redemption or
Exchange," (x) the Series B Junior Subordinated Debentures will mature on
September 30, 2025, notwithstanding that American General Capital may have
liquidated, dissolved or wound-up in connection with or after such exchange and
(y) the Series B Junior Subordinated Debentures will not thereafter be subject
to an election by American General to exchange the Series B Junior Subordinated
Debentures for new Junior Subordinated Debentures or to redeem or repay the
Series B Junior Subordinated Debentures and reborrow the proceeds from such
redemption or repayment.
The Series B Junior Subordinated Debentures are subordinate and junior in
right of payment to all Senior Indebtedness of American General in the manner
described under the caption "Description of Junior Subordinated
Debentures -- Subordination" in the accompanying Prospectus.
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INTEREST
Each Series B Junior Subordinated Debenture will bear interest at the rate
of 8 1/8% per annum from the original date of issuance, payable monthly in
arrears on the last day of each calendar month of each year (each, an "Interest
Payment Date"), commencing September 30, 1995. Interest will compound monthly
and will accrue at the annual rate of 8 1/8% on any interest installment not
paid when due.
The amount of interest payable for any period will be computed on the basis
of a 360-day year consisting of twelve 30-day months and, for any period shorter
than a full month, will be computed on the basis of the actual number of days
elapsed in such period. In the event that any date on which principal or
interest is payable on the Series B Junior Subordinated Debentures is not a
Business Day, then the required payment to be made 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. Interest payments on the Series B Junior Subordinated
Debentures will generally be payable to the holders thereof as they appear in
the security register maintained pursuant to the Junior Subordinated Indenture
on the relevant record dates, which will be one Business Day prior to the
relevant interest payment dates; provided, however, that if the Series B Junior
Subordinated Debentures are not in book-entry-only form during any period
following a Special Event Exchange, the relevant record date during such period
will be the fifteenth day of the month with respect to the interest payment that
is to be paid on the last day of such month.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
American General will have the right at any time and from time to time
during the term of the Series B Junior Subordinated Debentures to extend the
interest payment period to a period ending on an Interest Payment Date not
exceeding 60 consecutive months, but in no event beyond the stated maturity date
or date of redemption of the Series B Junior Subordinated Debentures. At the end
of any such Extension Period, American General shall pay all interest then
accrued and unpaid (together with any Additional Interest to the extent
permitted by applicable law). Prior to the termination of any Extension Period
of less than 60 consecutive months, American General may further extend the
interest payment period, provided that such Extension Period, as further
extended, does not exceed 60 consecutive months and does not extend beyond the
stated maturity date or date of redemption of the Series B Junior Subordinated
Debentures. Upon the termination of any Extension Period and the payment of all
amounts then due, American General may select a new Extension Period, subject to
the above requirements. No interest will be due during an Extension Period until
the Interest Payment Date that is the last day of such Extension Period. During
any Extension Period, American General has agreed not to take, and to cause its
majority-owned subsidiaries not to take, certain actions as described under
"Description of the Junior Subordinated Debentures -- Certain Covenants of
American General" in the accompanying Prospectus. American General will give
American General Capital, as holder of the Series B Junior Subordinated
Debentures, notice of its selection of any Extension Period one Business Day
prior to the earlier of (i) the date the dividends on the Series B Preferred
Securities are payable or (ii) the date American General Capital is required to
give notice to the NYSE or other applicable self-regulatory organization or to
holders of the Series B Preferred Securities of the record date or the date such
dividend is payable (which is currently 10 days prior to such date), but in any
event not less than one Business Day prior to such record date. The Manager will
cause American General Capital to give notice of American General's selection of
such Extension Period to the holders of the Series B Preferred Securities. If
the Series B Preferred Securities have been exchanged for the Series B Junior
Subordinated Debentures following the occurrence of a Special Event, American
General will give the holders of the Series B Junior Subordinated Debentures
notice of its selection of any Extension Period not less than two Business Days
prior to the record date related to the first interest payment
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date for which such Extension Period will be effective. If American General
selects an Extension Period and thereafter elects to extend the Extension
Period, then it is required to give a similar notice prior to the then scheduled
end of the Extension Period.
ADDITIONAL INTEREST
American General will be required to pay interest at the rate of 8 1/8% per
annum upon any interest that has not been paid on the Series B Junior
Subordinated Debentures during an Extension Period. Accordingly, in such
circumstances, American General will, to the fullest extent permitted by
applicable law, pay interest upon interest in order to provide for monthly
compounding on the Series B Junior Subordinated Debentures. The persons entitled
to receive such interest shall be the holders of the Series B Junior
Subordinated Debentures on the record date for the Interest Payment Date that is
the last day of the Extension Period. In addition, if at any time prior to an
exchange of the Series B Preferred Securities for Series B Junior Subordinated
Debentures in connection with a Special Event, American General Capital shall be
required to pay, with respect to its income derived from the interest payments
on the Series B Junior 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, American General will, to the fullest extent
permitted by applicable law, pay as additional interest such additional amounts
("Additional Amounts") as may be necessary in order that the net amounts
received and retained by American General Capital after the payment of such
taxes, duties, assessments or governmental charges (including such taxes,
duties, assessments or governmental charges with respect to such 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. The amounts of interest payable to effect monthly
compounding on the Series B Junior Subordinated Debentures, together with any
such Additional Amounts, are referred to herein as "Additional Interest."
OPTIONAL REDEMPTION
American General will have the right to redeem the Series B Junior
Subordinated Debentures, 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, on the portion being
redeemed. At any time after the occurrence of a Special Event and prior to a
Special Event Exchange, American General will also have the right to redeem the
Series B Junior 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.
In addition, if at any time prior to a Special Event Exchange American
General is, or in the opinion of nationally recognized independent legal counsel
would be, required to pay Additional Amounts, American General will have the
right to redeem the Series B Junior 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.
If, prior to a Special Event Exchange, American General or any of its
subsidiaries purchases any Series B Preferred Securities by tender, in the open
market, or otherwise, American General may redeem the Series B Junior
Subordinated Debentures in a principal amount not to exceed the aggregate
liquidation preference of the 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.
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Notice of any such redemption occurring after a Special Event Exchange will
be given by American General to the holder or holders of the Series B Junior
Subordinated Debentures in a manner similar to that required to be given by
American General Capital with respect to the redemption of the Series B
Preferred Securities. See "Description of the Series B Preferred
Securities -- Redemption Procedures."
MANDATORY PREPAYMENT
If American General Capital redeems the Series B Preferred Securities in
accordance with the terms thereof, the Series B Junior Subordinated Debentures
will become due and payable in a principal amount equal to the aggregate
liquidation preference of the Series B Preferred Securities so redeemed,
together with any accrued and unpaid interest, including any Additional
Interest, thereon to the Redemption Date. Any redemption pursuant to this
provision shall be made prior to 12:00 noon, New York time, on the date of such
redemption or at such other time on such earlier date as American General and
American General Capital shall agree.
SET-OFF
Notwithstanding anything to the contrary in the Junior Subordinated
Indenture, American General shall have the right to set-off any payment with
respect to the Series B Junior Subordinated Debentures it is otherwise required
to make thereunder with and to the extent American General has theretofore made,
or is concurrently on the date of such payment making, a payment under the
Guarantee with respect to the Series B Preferred Securities.
ENFORCEMENT OF CERTAIN RIGHTS BY SPECIAL TRUSTEE
If, prior to a Special Event Exchange, (i) American General Capital fails
to pay dividends in full (including any arrearages) on the Series B Preferred
Securities for 18 consecutive months; (ii) an Event of Default under the Junior
Subordinated Indenture with respect to the Series B Junior Subordinated
Debentures occurs and is continuing; or (iii) American General is in default
under any of its payment or other obligations under the Guarantee with respect
to the Series B Preferred Securities, then, under the terms of the Series B
Preferred Securities, the holders of outstanding Series B Preferred Securities
will have the rights referred to under "Description of the Series B Preferred
Securities -- Voting Rights," including the right to appoint a Special Trustee,
which Special Trustee would be authorized, subject to the applicable provisions
of the Junior Subordinated Indenture, to exercise American General Capital's
right to accelerate the principal amount of the Series B Junior Subordinated
Debentures and to enforce American General Capital's other creditor rights with
respect to the Series B Junior Subordinated Debentures. Notwithstanding the
appointment of any such Special Trustee, American General Delaware Management
Corporation would continue as Manager and American General would retain all
rights, including the right to extend the interest payment period from time to
time as described above under the caption "-- Option to Extend Interest Payment
Period," and be subject to all of the obligations under the Junior Subordinated
Indenture and as obligor under the Series B Junior Subordinated Debentures.
GLOBAL SECURITIES
If, immediately prior to any Special Event Exchange following the
occurrence of a Special Event, the Series B Preferred Securities are represented
by one or more global securities held by DTC, then the Series B Junior
Subordinated Debentures exchanged for the Series B Preferred Securities will be
represented by one or more global securities registered in the name of DTC or
its nominee and be deposited with DTC or its custodian. Unless and until it is
exchanged in whole or in part for the Series B Junior Subordinated Debentures in
definitive registered form, a global security may not be registered for transfer
or exchange except in limited circumstances.
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For a description of DTC and DTC's book-entry system, see "Description of
the Preferred Securities -- Book-Entry-Only Issuance -- The Depository Trust
Company" in the accompanying Prospectus. As of the date of this Prospectus
Supplement, the description therein of DTC's book-entry system and DTC's
practices as they relate to purchases, transfers, notices and payments with
respect to the Series B Preferred Securities apply in all material respects to
any debt obligations represented by one or more global securities held by DTC.
MISCELLANEOUS
For restrictions on certain actions of American General with respect to the
Series B Junior Subordinated Debentures held by American General Capital, see
"Description of the Series B Preferred Securities -- Voting Rights."
If Series B Junior Subordinated Debentures are outstanding and owned by any
entity other than American General, or its affiliates (including American
General Capital), then any Series B Junior Subordinated Debentures owned by
American General or its affiliates will not be entitled to vote or consent and
will, for purposes of any such vote or consent, be treated as if they were not
outstanding.
Chemical Bank will serve as the initial Paying Agent and registrar for the
Series B Junior Subordinated Debentures.
S-25
<PAGE> 26
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following is a summary of the material federal income tax
considerations relevant to the purchase, ownership and disposition of the Series
B Preferred Securities, which in the opinion of Vinson & Elkins L.L.P., counsel
to American General and American General Capital, is accurate insofar as it
expresses conclusions of law. However, this summary does not address all federal
income tax aspects of the Series B Preferred Securities, or the tax
considerations relevant to certain types of holders subject to special treatment
under the federal income tax laws (for example, banks, life insurance companies,
securities or other dealers, or foreign persons and foreign entities).
This summary is based upon current provisions of the Internal Revenue Code
of 1986, as amended (the "Code"), the Treasury Regulations promulgated
thereunder, judicial decisions and Internal Revenue Service ("IRS") rulings and
notices. All of these authorities, however, are subject to change; any such
change may cause the tax consequences to vary substantially from those described
below. Moreover, the transactions described in this Prospectus Supplement and
the accompanying Prospectus raise a number of novel tax issues which have not
been ruled on by the courts or the IRS in similar transactions. As a result,
there can be no assurance that the IRS will not audit these transactions and, if
it does so, that the IRS will agree with the conclusions set forth below or the
positions taken by American General and American General Capital in conformity
therewith. See "-- American General Capital Information Returns and Audit
Procedures" below.
Unless otherwise indicated, the information below is directed at Holders
(as defined below) who purchase Series B Preferred Securities on their original
issue at their initial offering price, and that hold such Series B Preferred
Securities as capital assets (generally property held for investment). For
purposes of this discussion, a "Holder" is a beneficial owner of a Series B
Preferred Security who or that is (i) a citizen or resident of the United
States, (ii) a domestic corporation, partnership, estate or trust, or (iii)
otherwise subject to United States federal income taxation on a net income basis
in respect of a Series B Preferred Security.
PROSPECTIVE PURCHASERS OF SERIES B PREFERRED SECURITIES ARE ADVISED TO
CONSULT THEIR OWN TAX ADVISORS AS TO THE UNITED STATES OR OTHER TAX
CONSIDERATIONS OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF SERIES B PREFERRED
SECURITIES, INCLUDING THE EFFECTS OF STATE, LOCAL AND FOREIGN TAX LAWS.
TAX CLASSIFICATION
While the following matters are not free from doubt, Vinson & Elkins L.L.P.
is of the opinion that (i) American General Capital will be classified as a
partnership for federal income tax purposes and not as an association taxable as
a corporation and (ii) the Series B Junior Subordinated Debentures will be
classified as indebtedness for federal income tax purposes. The following
discussion assumes such classifications.
INCOME FROM SERIES B PREFERRED SECURITIES
Each Holder of Series B Preferred Securities will be required to include in
gross income his distributive share of the net income of American General
Capital, which net income generally will be equal to the amount of interest
received or accrued by American General Capital on the Series B Junior
Subordinated Debentures. Such income will not exceed dividends received on a
Series B Preferred Security, except in limited circumstances. See "-- Original
Issue Discount." Any amount so included in a Holder's gross income will increase
his tax basis in the Series B Preferred Securities, and the amount of
distributions of cash or other property by American General Capital to a Holder
will reduce such Holder's tax basis in the Series B Preferred Securities. No
portion of the amounts received on the Series B Preferred Securities will be
eligible for the dividends received deduction.
S-26
<PAGE> 27
American General Capital does not presently intend to make an election
under section 754 of the Code. Accordingly, a subsequent purchaser of Series B
Preferred Securities will not be permitted to adjust the tax basis in his
allocable share of American General Capital's assets so as to reflect any
difference between his purchase price for the Series B Preferred Securities and
his share of American General Capital's underlying tax basis in its assets. As a
result, a Holder of Series B Preferred Securities may be required to report a
larger or smaller amount of income from holding the Series B Preferred
Securities than would otherwise be appropriate based upon the Holder's purchase
price for the Series B Preferred Securities.
ORIGINAL ISSUE DISCOUNT
Under Treasury Regulations, the stated interest payments on the Series B
Junior Subordinated Debentures will be treated as "original issue discount"
because of the option that American General has, under the terms of the Series B
Junior Subordinated Debentures, to extend interest payment periods for up to 60
consecutive months. Under the Code, a Holder of debt with original issue
discount must include that discount in income on an economic accrual basis and
before the receipt of cash attributable to the income regardless of his method
of tax accounting. The amount of original issue discount that accrues in any
month will approximately equal the amount of the interest that accrues in that
month at the stated interest rate. In the event that the interest payment period
is extended, however, American General Capital will accrue additional original
issue discount approximately equal to the amount of the additional interest
payment due at the end of the extended interest payment period on an economic
accrual basis over the length of the extended interest period.
Accrued income in respect of deferred interest will be allocated, but the
corresponding cash will not be distributed, to Holders of record on the Business
Day preceding the last day of each calendar month. As a result, Holders of
record during an extended interest payment period will include interest in gross
income in advance of the receipt of cash, and any such Holder who disposes of
Series B Preferred Securities prior to the record date for the payment of
dividends following such extended interest payment period will have included
such Holder's allocable share of such interest in gross income but will not
receive any cash related thereto from American General Capital. The tax basis of
a Series B Preferred Security will be increased by the amount of any interest
that is included in income without a corresponding receipt of cash and will be
decreased when and if such cash is subsequently received from American General
Capital.
DISPOSITION OF SERIES B PREFERRED SECURITIES
Generally, capital gain or loss will be recognized on a sale (including a
complete redemption for cash) of Series B Preferred Securities equal to the
difference between the amount realized and the Holder's tax basis in the Series
B Preferred Securities sold. Gain or loss recognized by a Holder on the sale or
exchange of a Series B Preferred Security held for more than one year generally
will be taxable as long-term capital gain or loss. The adjusted tax basis of the
Series B Preferred Securities sold generally will equal the amount paid for the
Series B Preferred Securities, increased by accrued but unpaid original issue
discount and other income, if any, as described herein allocated to such Holder,
and reduced by any cash or other property distributed to such Holder by American
General Capital. A Holder who acquires Series B Preferred Securities at
different prices may be required to maintain a single aggregate adjusted tax
basis in all of his Series B Preferred Securities and, upon sale or other
disposition of some of such Series B Preferred Securities, to allocate a pro
rata portion of such aggregate tax basis to the Series B Preferred Securities
sold (rather than maintaining a separate tax basis in each Series B Preferred
Security for purposes of computing gain or loss on a sale of that Series B
Preferred Security).
EXCHANGE OF SERIES B PREFERRED SECURITIES FOR SERIES B JUNIOR SUBORDINATED
DEBENTURES
The exchange of Series B Preferred Securities for Series B Junior
Subordinated Debentures after the occurrence of a Special Event generally would
be a nontaxable event to American General
S-27
<PAGE> 28
Capital and the Holders. Each Holder's aggregate tax basis for the Series B
Junior Subordinated Debentures received in the exchange would be the same as the
Holder's aggregate tax basis for his
Series B Preferred Securities surrendered in the exchange, and the holding
period for the Series B Junior Subordinated Debentures would include his holding
period for his Series B Preferred Securities. However, if the relevant Special
Event is a Tax Event which results in American General Capital's being treated
as an association taxable as a corporation, the exchange would be a taxable
event to the Holders in respect of which each Holder would recognize gain or
loss equal to the difference between the Holder's aggregate tax basis for his
Series B Preferred Securities surrendered in the exchange and the aggregate fair
market value of the Series B Junior Subordinated Debentures received in the
exchange.
AMERICAN GENERAL CAPITAL INFORMATION RETURNS AND AUDIT PROCEDURES
The Manager of American General Capital will furnish each Holder with a
Schedule K-1 setting forth such Holder's allocable share of income for each
year, as soon as practicable following the end of the year but in any event
prior to March 15th of each succeeding year.
Any person who holds Series B Preferred Securities as nominee for another
person is required to furnish to American General Capital a written statement
containing: (a) the name, address and taxpayer identification number of the
beneficial owner and of the nominee; (b) information as to whether the
beneficial owner is (i) a person that is not a United States person, (ii) a
foreign government, an international organization or any wholly-owned agency or
instrumentality of either, or (iii) a tax-exempt entity; and (c) a description
of the Series B Preferred Securities held, acquired or transferred for the
beneficial owner, including the dates of acquisitions and transfers, the methods
and costs of acquisitions, and the net proceeds from transfers. Brokers and
financial institutions are also required to furnish written statements
containing similar information with respect to Series B Preferred Securities
they hold for their own accounts. A penalty of $50 per failure (up to a maximum
of $100,000 per calendar year) is imposed by the Code for failure to report such
information to American General Capital. The nominee is required to supply the
beneficial owners of the Series B Preferred Securities with the information
furnished to American General Capital.
The Manager, as the tax matters partner, will be responsible for
representing American General Capital (and, indirectly, the Holders) in any
dispute with the IRS involving the partnership information returns filed by
American General Capital. The Code provides for administrative examination of
such returns as if American General Capital (which is treated as a partnership)
were a separate and distinct taxpayer. Generally, the statute of limitations for
partnership items reflected or required to be reflected on a partnership
information return does not expire until three years after the later of the
filing or the last date for filing of such return. Any adverse determination
following an audit of a return of American General Capital by the appropriate
taxing authorities could result in an adjustment of the returns of the Holders,
and, under certain circumstances, a Holder may be precluded from separately
litigating a proposed adjustment to the items of American General Capital. An
adjustment could also result in an audit of a Holder's return and adjustments of
items not related to the income and losses of American General Capital.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
holder that is, as to the United States for federal income tax purposes, a
non-resident alien individual, a foreign corporation, a foreign partnership or a
foreign estate or trust not subject to United States federal income tax on a net
income basis with respect to a Series B Preferred Security or a Series B Junior
Subordinated Debenture.
Under present United States federal income tax law:
(i) payments by American General Capital or any of its paying agents
to any United States
S-28
<PAGE> 29
Alien Holder of a Series B Preferred Security and payments of principal or
interest by American General on the Series B Junior Subordinated Debentures
to any United States Alien Holder of a Series B Junior Subordinated
Debenture will not be subject to United States federal withholding tax;
provided that (a) the beneficial owner of the Series B Preferred Security
or Series B Junior Subordinated Debenture, as the case may be, does not
actually or constructively own 10% or more of the total combined voting
power of all classes of stock of American General entitled to vote, (b) the
beneficial owner of the Series B Preferred Security or Series B Junior
Subordinated Debenture, as the case may be, is not a controlled foreign
corporation that is related to American General through stock ownership,
and (c) either (A) the beneficial owner of the Series B Preferred Security
or Series B Junior Subordinated Debenture certifies to American General
Capital or its agent, under penalties of perjury, that it is a United
States Alien Holder and provides its name and address or (B) a securities
clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business (a
"Financial Institution") and holds the Series B Preferred Security or
Series B Junior Subordinated Debenture certifies to American General
Capital or its agent under penalties of perjury that such statement has
been received from the beneficial owner by it or by a Financial Institution
between it and the beneficial owner and furnishes American General Capital
or its agent with a copy thereof; and
(ii) a United States Alien Holder of a Series B Preferred Security or
Series B Junior Subordinated Debenture will not be subject to United States
federal income tax on any gain realized upon the sale or other disposition
of a Series B Preferred Security or Series B Junior Subordinated Debenture,
provided such United States Alien Holder is not present in the United
States for 183 days or more during the taxable year.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to payments of
dividends on, and payments of the proceeds of the sale of, Series B Preferred
Securities within the United States to noncorporate Holders, and "backup
withholding" at a rate of 31% will apply to such payments if such a Holder fails
to provide an accurate taxpayer identification number.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSIDERATIONS TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE SERIES
B PREFERRED SECURITIES, INCLUDING THE TAX CONSIDERATIONS UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR
OTHER TAX LAWS.
S-29
<PAGE> 30
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, American
General Capital has agreed to sell to each of the Underwriters named below, and
each of such Underwriters, for whom Goldman, Sachs & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Alex. Brown & Sons Incorporated, CS First Boston
Corporation, Dean Witter Reynolds Inc., Donaldson, Lufkin & Jenrette Securities
Corporation, Kemper Securities, Inc., Lehman Brothers Inc., Prudential
Securities Incorporated, Salomon Brothers Inc and Smith Barney Inc. are acting
as representatives, has severally agreed to purchase from American General
Capital, the respective number of Series B Preferred Securities set forth
opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
SERIES B
PREFERRED
UNDERWRITER SECURITIES
------------------------------------------------------------------------- ----------
<S> <C>
Goldman, Sachs & Co...................................................... 656,500
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................ 655,600
Alex. Brown & Sons Incorporated.......................................... 655,600
CS First Boston Corporation.............................................. 655,600
Dean Witter Reynolds Inc. ............................................... 655,600
Donaldson, Lufkin & Jenrette Securities Corporation...................... 655,600
Kemper Securities, Inc. ................................................. 655,600
Lehman Brothers Inc. .................................................... 655,600
Prudential Securities Incorporated....................................... 655,600
Salomon Brothers Inc .................................................... 655,600
Smith Barney Inc. ....................................................... 655,600
Advest, Inc. ............................................................ 25,000
Bear, Stearns & Co. Inc. ................................................ 62,500
J.C. Bradford & Co. ..................................................... 62,500
Craigie Incorporated..................................................... 25,000
Dain Bosworth Incorporated............................................... 25,000
Doft & Co., Inc. ........................................................ 25,000
A.G. Edwards & Sons, Inc. ............................................... 62,500
Fahnestock & Co. Inc. ................................................... 25,000
Interstate/Johnson Lane Corporation ..................................... 25,000
Janney Montgomery Scott Inc. ............................................ 25,000
Legg Mason Wood Walker, Incorporated..................................... 25,000
McDonald & Company Securities, Inc. ..................................... 25,000
McGinn, Smith & Co., Inc. ............................................... 25,000
Morgan Keegan & Company, Inc. ........................................... 25,000
Olde Discount Corporation................................................ 25,000
Piper Jaffray Inc. ...................................................... 25,000
Principal Financial Securities, Inc. .................................... 25,000
Rauscher Pierce Refsnes, Inc. ........................................... 62,500
Raymond James & Associates, Inc. ........................................ 25,000
The Robinson-Humphrey Company, Inc. ..................................... 62,500
Trilon International Inc. ............................................... 25,000
Tucker Anthony Incorporated.............................................. 25,000
U.S. Clearing Corp. ..................................................... 25,000
Wheat, First Securities, Inc. ........................................... 25,000
----------
Total.......................................................... 8,000,000
=========
</TABLE>
S-30
<PAGE> 31
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all such Series B Preferred
Securities offered hereby, if any are taken.
The Underwriters propose to offer the Series B Preferred Securities in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement, and in part to certain securities
dealers at such price less a concession of $0.50 per Series B Preferred
Security. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of $0.25 per Series B Preferred Security to certain brokers and
dealers. After the Series B Preferred Securities are released for sale to the
public, the offering price and other selling terms may from time to time be
varied by the representatives.
In view of the fact that the proceeds from the sale of the Series B
Preferred Securities will be used by American General Capital to purchase the
Series B Junior Subordinated Debentures of American General, the Underwriting
Agreement provides that American General will pay, as compensation to the
Underwriters, a commission of $0.7875 per Series B Preferred Security ($0.50 per
Series B Preferred Security sold to certain institutions).
American General Capital and American General have granted the Underwriters
an option exercisable for 30 days after the date of this Prospectus Supplement
to purchase up to an aggregate of 1,200,000 additional Series B Preferred
Securities at the initial public offering price per Series B Preferred Security
solely to cover over-allotments, if any. If the Underwriters exercise their
over-allotment option, the Underwriters have severally agreed, subject to
certain conditions, to purchase approximately the same percentage thereof that
the number of Series B Preferred Securities to be purchased by each of them, as
shown in the foregoing table, bears to the total Series B Preferred Securities
offered.
Certain of the Underwriters are customers of, or engage in transactions
with, and from time to time have performed services for, American General and
its subsidiaries and associated companies in the ordinary course of business.
Prior to the Offering, there has been no public market for the Series B
Preferred Securities. The Series B Preferred Securities have been approved for
listing on the NYSE, subject to notice of issuance, under the symbol "AGC prN."
In order to meet one of the requirements for listing the Series B Preferred
Securities on the NYSE, the Underwriters have undertaken to sell lots of 100 or
more Series B Preferred Securities to a minimum of 400 beneficial holders.
Trading of the Series B Preferred Securities on the NYSE is expected to commence
within a seven-day period after the initial delivery of the Series B Preferred
Securities. The representatives have advised American General and American
General Capital that they intend to make a market in the Series B Preferred
Securities prior to the commencement of trading on the NYSE, but are not
obligated to do so and may discontinue any such market making at any time
without notice.
American General and American General Capital have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, as amended.
S-31
<PAGE> 32
PROSPECTUS
(AMERICAN GENERAL LOGO)
$1,250,000,000
AMERICAN GENERAL DELAWARE, L.L.C.
AMERICAN GENERAL CAPITAL, L.L.C.
PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
AMERICAN GENERAL CORPORATION
------------------------
American General Delaware, L.L.C. and American General Capital, L.L.C.,
each a Delaware limited liability company (each, an "American General LLC"
and, together, the "American General LLCs"), may separately offer from time to
time, in one or more series, their preferred limited liability company
interests (the "Preferred Securities"). The payment of periodic cash
distributions ("dividends") with respect to Preferred Securities of each of the
American General LLCs, and payments on redemption and liquidation with respect
to such Preferred Securities will be guaranteed by American General
Corporation, a Texas corporation ("American General" or the "Company"), to the
extent described herein (each, a "Guarantee"). See "Description of the
Guarantees." American General's obligations under the Guarantees will be
subordinate and junior in right of payment to all other liabilities of American
General and pari passu with the most senior preferred stock issued by American
General. Concurrently with the issuance of each series of Preferred Securities,
the American General LLC issuing such Preferred Securities will invest the
proceeds thereof in a series of American General's junior subordinated
debentures (the "Junior Subordinated Debentures"), which will bear interest at
the same rate as the dividend rate on such Preferred Securities. If and to the
extent set forth in the Prospectus Supplement pertaining to the particular
series of Preferred Securities in respect of which this Prospectus is being
delivered (the "Prospectus Supplement"), such Junior Subordinated Debentures
subsequently may be distributed to holders of such series of Preferred
Securities upon the occurrence of certain events. The Junior Subordinated
Debentures will be unsecured and subordinate and junior in right of payment to
Senior Indebtedness (as defined herein) of American General. See "Description
of the Junior Subordinated Debentures."
The specific terms of the Preferred Securities of any particular series in
respect of which this Prospectus is being delivered will be set forth in the
Prospectus Supplement which will describe, without limitation and to the extent
applicable, the following: the specific designation, number of Preferred
Securities, dividend rate (or the method of determining such rate), dates on
which dividends will be payable, liquidation preference, any voting rights, any
redemption provisions, terms for any conversion or exchange into Common Stock,
par value $.50 per share, of American General ("American General Common Stock"),
Preferred Stock, par value $1.50 per share, of American General ("American
General Preferred Stock") or other securities, the initial public offering
price, any listing on a securities exchange, and any other rights, preferences,
privileges, limitations and restrictions thereof. The specific terms of the
related series of Junior Subordinated Debentures will also be described in such
Prospectus Supplement.
The Preferred Securities may be offered in amounts, at prices and on terms
to be determined at the time of offering; provided, however, that the aggregate
initial public offering price of all Preferred Securities sold hereunder may not
exceed $1,250,000,000, less the aggregate initial public offering price of all
securities of American General which are sold under a separate prospectus which
also constitutes a part of the Registration Statement of which this Prospectus
constitutes a part. See "Available Information."
The Prospectus Supplement relating to any series of Preferred Securities
will contain information concerning certain United States federal income tax
considerations applicable to such Preferred Securities and the related series of
Junior Subordinated Debentures.
The Preferred Securities may be sold directly, through agents, underwriters
or dealers as designated from time to time, or through a combination of such
methods. If any such agents, underwriters or dealers are involved in the sale of
the Preferred Securities in respect of which this Prospectus is being delivered,
the names of such agents, underwriters or dealers and any applicable agent's
commission, underwriter's discount or dealer's purchase price and the net
proceeds to the applicable American General LLC from such sale will be set forth
in, or may be calculated on the basis set forth in, the applicable Prospectus
Supplement. See "Plan of Distribution" for possible indemnification arrangements
for any such agents, underwriters and dealers.
This Prospectus may not be used to consummate sales of the Preferred
Securities unless accompanied by a Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is May 23, 1995.
<PAGE> 33
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER
OF INSURANCE OF THE STATE OF NORTH CAROLINA, NOR HAS THE COMMISSIONER OF
INSURANCE PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT.
AVAILABLE INFORMATION
American General is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by American General may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices at 500 West Madison Street, Chicago, Illinois 60661 and Seven World
Trade Center, Suite 1300, New York, New York 10048. Copies of such materials may
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, such
material may also be inspected and copied at the offices of The New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005 and The Pacific Stock
Exchange, Incorporated, 301 Pine Street, San Francisco, California 94104.
The American General LLCs and American General have filed with the
Commission a registration statement on Form S-3 (herein, together with all
amendments and exhibits, referred to as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus,
which constitutes part of the Registration Statement, does not contain all of
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission. For
further information, reference is hereby made to the Registration Statement.
In addition to this Prospectus, the Registration Statement contains another
prospectus which relates to the offer and sale from time to time of various
securities of American General. The $1,250,000,000 aggregate maximum initial
public offering price of Preferred Securities which may be sold under this
Prospectus will be reduced by the amount of the aggregate initial public
offering price of any securities sold under such other prospectus.
Statements contained herein concerning the provisions of any document filed
as an exhibit to the Registration Statement or otherwise filed with the
Commission are not necessarily complete, and in each instance reference is made
to the copy of such document so filed. Each such statement is qualified in its
entirety by such reference.
No separate financial statements of either of the American General LLCs have
been included herein. American General and the American General LLCs do not
consider that such financial statements would be material to holders of the
Preferred Securities because each American General LLC is a newly formed special
purpose entity, has no operating history, has no independent operations and is
not engaged in, and does not propose to engage in, any activity other than as
set forth below, and because American General will guarantee the obligations of
each American General LLC under the terms of the Preferred Securities to the
extent set forth herein and in the applicable Prospectus Supplement. See
"American General LLCs" and "Description of the Guarantees."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by American General with the
Commission pursuant to the Exchange Act (File No. 1-7981), are incorporated
herein by reference:
o American General's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994;
o American General's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1995; and
o American General's Current Reports on Form 8-K dated February 14, 1995,
March 22, 1995, April 14, 1995 and May 9, 1995.
Each document filed by American General pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of Preferred Securities made hereby shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such document.
Any statement contained herein, in a Prospectus Supplement or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of the Registration Statement and this
Prospectus to the extent that a statement contained herein, in a Prospectus
Supplement or in any subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of the Registration Statement or
this Prospectus.
2
<PAGE> 34
American General will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the documents
which are incorporated herein by reference, other than exhibits to such
documents (unless such exhibits are specifically incorporated by reference into
such documents). Requests should be directed to American General, 2929 Allen
Parkway, Houston, Texas 77019-2155, Attention: Treasury Department, telephone
(713) 831-1949.
AMERICAN GENERAL
American General is the parent company of one of the nation's largest
consumer financial services organizations. American General is headquartered in
Houston, Texas and operates through its subsidiaries in all 50 states, the
District of Columbia, Canada, Puerto Rico, and the U.S. Virgin Islands. American
General was incorporated as a general business corporation in Texas in 1980 and
is the successor to American General Insurance Company, incorporated in Texas in
1926.
American General's operations are classified into three business segments:
Retirement Annuities, which specializes in providing tax-deferred retirement
plans and annuities to employees of educational, health care and other
not-for-profit organizations; Consumer Finance, which offers consumer and home
equity loans, credit cards, and credit-related insurance to individuals through
more than 1,300 branch offices; and Life Insurance, which provides traditional
and interest-sensitive life insurance and both fixed and variable annuity
products through 14,000 sales representatives and general agents.
Since American General is a holding company, rights to participate in any
distribution of assets of any subsidiary upon its liquidation or reorganization
or otherwise (and thus the ability of holders of securities or guarantees issued
by American General to benefit indirectly from such distribution) are subject to
the prior claims of creditors of that subsidiary, except to the extent that
American General may itself be a creditor of that subsidiary. Claims on American
General's subsidiaries by other creditors include substantial claims for policy
benefits and debt obligations, as well as other liabilities incurred in the
ordinary course of business. In addition, since many of American General's
subsidiaries are insurance companies subject to regulatory control by various
state insurance departments, the ability of such subsidiaries to pay dividends
to American General without prior regulatory approval is limited by applicable
laws and regulations. Further, certain non-insurance subsidiaries are similarly
restricted in their ability to make dividend payments by long-term debt
agreements. At December 31, 1994, the amount available to American General for
dividends from subsidiaries not limited by such restrictions was $1.1 billion.
The principal executive offices of American General are located at 2929
Allen Parkway, Houston, Texas 77019-2155, and its telephone number is (713)
522-1111.
AMERICAN GENERAL LLCS
American General Delaware, L.L.C. and American General Capital, L.L.C. are
each a limited liability company formed in March 1995 under the laws of the
State of Delaware. American General owns directly or indirectly all of the
common limited liability interests (the "Common Securities") of each American
General LLC, which securities are nontransferable. Each of the American General
LLCs will be managed by American General Delaware Management Corporation, a
wholly-owned subsidiary of American General, as manager (the "Manager"), in
accordance with its respective Limited Liability Company Agreement, as amended
(each, an "LLC Agreement"). Each American General LLC exists solely for the
purpose of issuing Preferred Securities and Common Securities and investing 99%
of the proceeds thereof in Junior Subordinated Debentures. The remaining 1% of
such proceeds will be invested by the applicable American General LLC in
Eligible Investments (as defined in the applicable LLC Agreement). See "Use of
Proceeds." The principal executive offices of each of the American General LLCs
are located c/o the Manager at 2099 South Dupont Avenue, Dover, Delaware 19901.
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Pursuant to each LLC Agreement, the members of an American General LLC that
own Common Securities have unlimited liabilities for the debts, obligations and
liabilities of such American General LLC in the same manner as a general partner
of a Delaware limited partnership (which do not include obligations to holders
of Preferred Securities in their capacity as such), to the extent not fully
satisfied and discharged by such American General LLC. That liability on the
part of such members is for the benefit of, and is enforceable by, the
liquidating trustee of such American General LLC in the event of its dissolution
and is for the benefit of third parties to whom such American General LLC owes
such debts, obligations and liabilities. The holders of Preferred Securities, in
their capacity as members of an American General LLC, will not be liable for the
debts, obligations or liabilities of such American General LLC (subject to their
obligation to repay any funds wrongfully distributed to them).
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The ratio of earnings to fixed charges is calculated by dividing total
fixed charges into earnings available for the payment of fixed charges. Earnings
available for the payment of fixed charges is the sum of fixed charges deducted
from income and income before tax expense, accounting changes, and preferred
stock dividends. Total fixed charges consist of interest expense, capitalized
interest, a portion of rental expense, and preferred stock dividends of
majority-owned subsidiaries.
The following table sets forth the ratio of earnings to fixed charges for
the periods indicated.
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
----------- -----------------------------------
1995 1994 1994 1993 1992 1991 1990
--- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges:
Consolidated operations................... 2.5 3.0 2.4 2.1 2.4 2.1 2.2
Consolidated operations, corporate (parent
company) fixed charges only............ 7.6 9.3 7.6 6.0 7.2 5.8 5.3
</TABLE>
Because no preferred stock dividends were paid in the periods reported
above (other than preferred stock dividends paid by a subsidiary in 1990), the
ratio of earnings to combined fixed charges and preferred stock dividends for
such periods is the same as the ratio of earnings to fixed charges.
USE OF PROCEEDS
Each of the American General LLCs will invest the proceeds received from
any sale by it of Preferred Securities in Junior Subordinated Debentures of
American General. Unless otherwise specified in the applicable Prospectus
Supplement, the net proceeds to be received by American General from the sale of
Junior Subordinated Debentures will be added to American General's general
corporate funds and may be used for repayment of long- or short-term
indebtedness or for general corporate purposes.
DESCRIPTION OF THE PREFERRED SECURITIES
The following is a summary of certain terms and provisions of the Preferred
Securities. Reference is made to the amended LLC Agreement of the applicable
American General LLC and the written action taken or to be taken pursuant to
such LLC Agreement establishing the rights, preferences, privileges, limitations
and restrictions relating to the Preferred Securities of each series (each, a
"Declaration"). The summaries set forth below and in the applicable Prospectus
Supplement address the material terms of the Preferred Securities of any
particular series but do not purport to be complete and are subject to, and
qualified in their entirety by reference to, the
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applicable LLC Agreement and Declaration. Capitalized terms used in the
summaries below and not otherwise defined herein have the respective meanings
set forth in the applicable LLC Agreement and Declaration.
GENERAL
Each American General LLC is authorized to issue, from time to time, Common
Securities and Preferred Securities, in one or more series, with such dividend
terms, liquidation preferences per share, voting rights, redemption provisions,
conversion or exchange rights and other rights, preferences, privileges,
limitations and restrictions as are set forth in its LLC Agreement, the Delaware
Limited Liability Company Act (the "LLC Act") and the Declaration adopted or to
be adopted with respect to each such series. All of the Preferred Securities
which may be issued in one or more series by either American General LLC will
rank pari passu with each other series issued by such American General LLC with
respect to the payment of dividends and distribution of assets upon liquidation,
dissolution or winding-up. Holders of Preferred Securities will have no
preemptive rights and will not have the right to remove or replace the Manager
of either American General LLC. The holders of Preferred Securities, in their
capacity as members of an American General LLC, are not liable for the debts,
obligations or liabilities of such American General LLC (subject to their
obligation to repay any funds wrongfully distributed to them).
Reference is made to the Prospectus Supplement relating to the particular
series of Preferred Securities being offered thereby for the specific terms
thereof, including: (i) the particular American General LLC issuing such series
of Preferred Securities; (ii) the initial public offering price of such series
of Preferred Securities; (iii) the specific designation of such series of
Preferred Securities which shall distinguish it from other series; (iv) the
number of Preferred Securities included in such series, which number may be
increased or decreased from time to time unless otherwise provided by the
Manager in creating the series; (v) the annual dividend rate of Preferred
Securities of such series (or method of determining such rate) and when
dividends will accrue and be payable; (vi) whether dividends on Preferred
Securities of such series shall be cumulative, and, if so, the date or dates or
method of determining the date or dates from which dividends on Preferred
Securities of such series shall be cumulative; (vii) the amount or amounts which
shall be paid out of the assets of such American General LLC to the holders of
Preferred Securities of such series upon voluntary or involuntary liquidation,
dissolution or winding-up of such American General LLC; (viii) if applicable,
the price or prices at which, the date or dates on which, the period or periods
within which and the terms and conditions upon which Preferred Securities of
such series may be redeemed or purchased, in whole or in part, at the option of
such American General LLC or the Manager; (ix) the obligation, if any, of such
American General LLC to purchase or redeem Preferred Securities of such series
and the price or prices at which, the date or dates on which, the period or
periods within which and the terms and conditions upon which Preferred
Securities of such series shall be purchased or redeemed, in whole or in part,
pursuant to such obligation; (x) the voting rights, if any, of Preferred
Securities of such series in addition to those required by law, including the
number of votes per Preferred Security of such series and any requirement for
the approval by the holders of a certain specified percentage of Preferred
Securities of such series as a condition to specified action or amendments to
the LLC Agreement of such American General LLC or the applicable Declaration;
(xi) the terms and conditions, if any, under which Preferred Securities of such
series may be converted into shares of American General Common Stock, including
the conversion price per share and the circumstances, if any, under which any
such conversion right shall expire; (xii) the terms and conditions, if any,
under which Preferred Securities of such series may be exchanged for shares of a
series of American General Preferred Stock; (xiii) the terms and conditions, if
any, upon which the related series of Junior Subordinated Debentures may be
distributed to holders of Preferred Securities of such series; (xiv) if
applicable, any securities exchange upon which the Preferred Securities of such
series shall be listed; and (xv) any other rights, preferences, privileges,
limitations or restrictions of the Preferred Securities of such series (and such
Prospectus Supplement may state that any of the terms set forth herein are
inapplicable
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<PAGE> 37
to Preferred Securities of such series or are modified to the extent described
therein). All Preferred Securities offered hereby will be guaranteed by American
General to the extent set forth below under "Description of the Guarantees" and
in the applicable Prospectus Supplement. Certain federal income tax
considerations applicable to an investment in Preferred Securities will be
described in the Prospectus Supplement relating thereto.
BOOK-ENTRY-ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary for
the Preferred Securities. Each series of Preferred Securities will be issued
only as fully-registered securities registered in the name of Cede & Co. (as
nominee for DTC). One or more fully-registered global Preferred Security
certificates will be issued by the applicable American General LLC, representing
in the aggregate the total number of Preferred Securities of a series, and will
be deposited with or on behalf of DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock Exchange,
Inc., the American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others
such as securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
a Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Direct or Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased the Preferred
Securities. Transfers of ownership interests in Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in a series of Preferred Securities, except upon a
resignation of DTC, upon the occurrence of an Event of Default (as defined
below) under the Junior Subordinated Indenture (as defined below) with respect
to the related series of Junior Subordinated Debentures or upon a decision by
the applicable American General LLC, approved by American General, to
discontinue the book-entry system for such series of Preferred Securities.
The laws of some jurisdictions require that certain purchasers take
physical delivery of securities in definitive form. Such laws may impair the
ability to transfer beneficial interests in a global Preferred Security.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
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Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct and
Indirect Participants to Beneficial Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Redemption notices with respect to the Preferred Securities will be sent to
Cede & Co. If less than all of a series of Preferred Securities are being
redeemed, DTC's practice is to determine by lot the amount of the interest of
each Direct Participant in such series to be redeemed.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the applicable American General
LLC as soon as possible after the record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose accounts
the Preferred Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Dividend payments on the Preferred Securities will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of each
Participant and not of DTC, the American General LLCs or American General,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of dividends to DTC is the responsibility of the
applicable American General LLC, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments to
the Beneficial Owners is the responsibility of Direct and Indirect Participants.
In order to convert a Preferred Security represented by a global Preferred
Security certificate, the Beneficial Owner must give notice of its election to
convert such Preferred Security, through its Direct or Indirect Participant, to
the Conversion Agent, and must effect delivery thereof by causing the Direct
Participant to transfer its interest in the related global Preferred Security
certificate, on DTC's records, to the Conversion Agent.
Except as provided herein, a Beneficial Owner in a global Preferred
Security will not be entitled to receive physical delivery of Preferred
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC and the applicable Participants to exercise any rights under any series of
the Preferred Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities or any series thereof at any time by giving
reasonable notice to each applicable American General LLC. Under such
circumstances, in the event that a successor depositary is not obtained,
certificates representing the applicable series of Preferred Securities will be
printed and delivered. If an Event of Default occurs under the Junior
Subordinated Indenture with respect to the related series of Junior Subordinated
Debentures or if an American General LLC (with the consent of American General)
decides to discontinue use of the system of book-entry transfers through DTC (or
a successor depositary), certificates representing the applicable series of
Preferred Securities will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that American General and the American General
LLCs believe to be reliable, but neither American General, either American
General LLC nor any agent, underwriter or dealer takes responsibility for the
accuracy thereof.
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<PAGE> 39
DESCRIPTION OF THE GUARANTEES
Set forth below is a summary of information concerning the separate
Guarantees which will be executed and delivered by American General to each
American General LLC. Each such Guarantee delivered to an American General LLC
will be for the benefit of the holders from time to time of the Preferred
Securities issued by the applicable American General LLC. The summary does not
purport to be complete and is subject in all respects to the provisions of, and
is qualified in its entirety by reference to, each Guarantee, a form of which is
filed as an exhibit to the Registration Statement of which this Prospectus forms
a part.
GENERAL
American General will execute separate Guarantees with respect to all
Preferred Securities, regardless of series, issued by each American General LLC.
Pursuant to each Guarantee, American General will irrevocably and
unconditionally agree, on a subordinated basis and to the extent set forth
therein, to pay in full to the holders of the Preferred Securities of each
series issued by the applicable American General LLC, the Guarantee Payments (as
defined below) (except to the extent previously paid by such American General
LLC), as and when due, regardless of any defense, right of set-off or
counterclaim that such American General LLC may have or assert. The following
payments with respect to any series of Preferred Securities issued by an
American General LLC, to the extent not paid by such American General LLC, are
the "Guarantee Payments": (a) any accumulated and unpaid dividends (whether or
not earned) (including any additional dividends intended to provide monthly
compounding on dividend arrearages) which are required to be paid on any such
Preferred Securities, but only if and to the extent that such dividends have
been declared from funds of such American General LLC legally available
therefor; (b) the redemption price, including all accumulated and unpaid
dividends (whether or not earned or declared and including any additional
dividends intended to provide monthly compounding of dividend arrearages)
payable with respect to any such Preferred Securities called for redemption (the
"Redemption Price"), but only to the extent payable out of funds of such
American General LLC legally available therefor, and (c) upon a voluntary or
involuntary liquidation, dissolution, or winding-up of such American General LLC
other than in connection with or after the exchange, if applicable, of any such
Preferred Securities for the related series of Junior Subordinated Debentures,
the lesser of (i) the aggregate of the liquidation preference and all
accumulated and unpaid dividends (whether or not earned or declared and
including any additional dividends intended to provide monthly compounding on
dividend arrearages) on any such Preferred Securities to the date of payment and
(ii) the amount of assets of such American General LLC available for
distribution to holders of any such Preferred Securities in liquidation,
dissolution or winding-up of such American General LLC. American General's
obligation to make a Guarantee Payment in respect of a series of Preferred
Securities may be satisfied by American General's direct payment of the required
amounts to the holders of such series of Preferred Securities or by causing the
applicable American General LLC to pay such amounts to such holders.
If American General fails to make interest or redemption payments on a
series of Junior Subordinated Debentures held by an American General LLC, such
American General LLC will have insufficient funds to pay dividends on, the
Redemption Price of, or the liquidation distribution with respect to, the
related series of Preferred Securities. Upon the bankruptcy, liquidation or
winding-up of American General, its obligations under the Junior Subordinated
Debentures will rank junior to all Senior Indebtedness (as defined below) of
American General and, therefore, funds may not be available for payment on such
series of Junior Subordinated Debentures. The Guarantees do not cover payment of
dividends, the Redemption Price or the liquidation distribution when the
applicable American General LLC does not have sufficient funds legally available
to make such payments. Furthermore, upon any such bankruptcy, liquidation or
winding-up of American General, its obligations under the Guarantees will rank
junior to all its other liabilities and, therefore, funds may not be available
for payment under the Guarantees.
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<PAGE> 40
The Guarantees will constitute guarantees of payment and not of collection.
Each Guarantee will be deposited with the Manager of the applicable American
General LLC to be held for the benefit of the holders of Preferred Securities
issued by such American General LLC. In the event of the appointment by the
holders of a series of Preferred Securities of a special trustee (a "Special
Trustee"), the Special Trustee may enforce such Guarantee to the extent it
relates to such series. The Prospectus Supplement with respect to each series of
Preferred Securities will set forth the procedures for the appointment of any
such Special Trustee. If no Special Trustee has been appointed to enforce such
Guarantee, the Manager of such American General LLC shall have the right to
enforce such Guarantee on behalf of the holders of such series of Preferred
Securities. The holders of not less than 66 2/3% of the aggregate liquidation
preference of such series of Preferred Securities then outstanding shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available with respect to such series of Preferred Securities under
such Guarantee, including the giving of directions to such Manager or Special
Trustee, as the case may be; provided, however, that, notwithstanding the
foregoing, each holder of such series of Preferred Securities shall have the
right to institute a legal proceeding directly against American General to
enforce its rights under such Guarantee, and American General waives any right
or remedy to require that any action be first brought against the applicable
American General LLC or any other person or entity before proceeding directly
against American General.
The provisions of the Guarantees, when taken together with the obligations
of American General under the LLC Agreements and the Junior Subordinated
Indenture, constitute full and unconditional guarantees by American General of
dividend, redemption and liquidation payments due on the Preferred Securities.
Absent a default by American General under any of these agreements, all
dividend, redemption and liquidation payments on the Preferred Securities will
be made and American General is fully and unconditionally responsible for
causing such payments to be made.
CERTAIN COVENANTS OF AMERICAN GENERAL
In each Guarantee, American General will covenant and agree that, so long
as any Preferred Securities subject to such Guarantee remain outstanding,
American General will not declare or pay any dividend on, and American General
will not, and American General will not permit any of its majority-owned
subsidiaries to, redeem, purchase, acquire or make a liquidation payment with
respect to, any of American General's capital stock (other than (i) purchases or
acquisitions of shares of American General Common Stock in connection with the
satisfaction by American General or any of its majority-owned subsidiaries of
its obligations under any employee benefit plans or the satisfaction by American
General of its obligations pursuant to any put contract requiring American
General to purchase shares of American General Common Stock, (ii) as a result of
a reclassification of American General's capital stock or the exchange or
conversion of one class or series of American General's capital stock for
another class or series of American General's capital stock, (iii) redemptions
or purchases of any share purchase rights issued by American General pursuant to
the Rights Agreement (see "Description of American General Common
Stock -- Preferred Share Purchase Rights") or the declaration and payment of a
dividend of similar share purchase rights in the future or (iv) the purchase of
fractional interests in shares of American General's capital stock pursuant to
the conversion or exchange provisions of such American General capital stock or
the security being converted or exchanged) or make any guarantee payments with
respect to the foregoing, if at such time American General has exercised its
option to extend an interest payment period on the series of Junior Subordinated
Debentures related to such Preferred Securities and such extension is
continuing, American General is in default with respect to its payment or other
obligations under such Guarantee or there has occurred and is continuing any
Event of Default under the Junior Subordinated Indenture with respect to the
series of Junior Subordinated Debentures related to such Preferred Securities.
American General will covenant to take all actions necessary to ensure the
compliance of its majority-owned subsidiaries with the above covenant.
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In each Guarantee, American General will also covenant that, so long as any
Preferred Securities subject to such Guarantee remain outstanding, it will (a)
not cause or permit any Common Securities to be transferred (other than, in the
case of American General, in connection with a merger or consolidation permitted
under the Junior Subordinated Indenture as described under "-- Consolidation,
Merger and Sale" or, in the case of the Manager, in connection with any merger
or consolidation involving the Manager), (b) maintain direct or indirect
ownership of all outstanding Common Securities and other limited liability
company interests in the applicable American General LLC other than any series
of Preferred Securities (except as permitted in the applicable LLC Agreement),
(c) cause at least 21% of all interests in the capital, income, gain, loss,
deduction and credit of such American General LLC to be represented by Common
Securities, (d) not voluntarily liquidate, dissolve or wind-up itself (other
than in connection with a merger or consolidation permitted under the Junior
Subordinated Indenture as described under "-- Consolidation, Merger and Sale"),
or permit the Manager (other than in connection with any merger or consolidation
involving the Manager) or such American General LLC (other than in connection
with or after an exchange of all outstanding series of Preferred Securities of
such American General LLC for the related series of Junior Subordinated
Debentures, if so provided in the applicable Declaration) to liquidate, dissolve
or wind-up, (e) cause American General Delaware Management Corporation or any
successor thereto by merger or consolidation to remain the Manager and to timely
perform all of its duties as Manager of such American General LLC (including the
duty to cause such American General LLC to declare and pay dividends on such
Preferred Securities to the extent set forth in the applicable LLC Agreement and
Declaration) and (f) subject to the terms of such Preferred Securities, use
reasonable efforts to cause such American General LLC to remain a Delaware
limited liability company and otherwise continue to be treated as a partnership
for United States federal income tax purposes.
In each Guarantee, American General will further agree to honor all its
obligations, if any, relating to the conversion or exchange of Preferred
Securities subject to such Guarantee into or for shares of American General
Common Stock or the related series of American General Preferred Stock. Such
obligations, if any, will be described in the applicable Prospectus Supplement.
STATUS OF THE GUARANTEES
The Guarantees will constitute unsecured obligations of American General
and will rank (i) subordinate and junior in right of payment to all other
liabilities of American General other than the guarantees referred to in clauses
(ii) and (iii) below, (ii) 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 Guarantees and (iii) senior to American General Common Stock,
any other class or series of capital stock issued by American General which by
its express terms ranks junior to the most senior preferred stock issued by
American General as to the payment of dividends and the distribution of assets
upon the liquidation, dissolution or winding-up of American General and any
guarantee executed by American General that provides that such guarantee is
junior in right of payment to the Guarantees. Upon the liquidation, dissolution
or winding-up of American General, its obligations under the Guarantees will
rank junior to all of its other liabilities (other than those guarantees
referred to in clauses (ii) and (iii) above) and, therefore, funds may not be
available for payment under the Guarantees. The LLC Agreement of each American
General LLC provides that each holder of Preferred Securities issued by such
American General LLC by acceptance thereof agrees to the subordination
provisions and other terms of the Guarantee relating thereto.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required),
each Guarantee may be amended with respect to each series of Preferred
Securities subject to such Guarantee and affected by such
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<PAGE> 42
amendment only with the prior approval of the holders of not less than 66 2/3%
of the aggregate liquidation preference of the outstanding Preferred Securities
of such series. The manner of obtaining any such approval of holders of such
Preferred Securities will be as set forth in the applicable Prospectus
Supplement. All provisions contained in a Guarantee will bind the successors,
assigns, receivers, trustees and representatives of American General and will
inure to the benefit of the holders of the Preferred Securities of the
applicable American General LLC then outstanding. Except in connection with any
merger or consolidation of American General into or with another entity as
permitted under "Description of the Junior Subordinated
Debentures -- Consolidation, Merger and Sale," American General may not assign
its rights or delegate its obligations under a Guarantee without the prior
approval of the holders of not less than 66 2/3% of the aggregate liquidation
preference of the outstanding Preferred Securities of all series subject to such
Guarantee voting as a single class.
TERMINATION
Each Guarantee will terminate as to the Preferred Securities of any
particular series subject thereto upon (a) full payment of the Redemption Price
of all outstanding Preferred Securities of such series, (b) if applicable, the
conversion of all outstanding Preferred Securities of such series into shares of
American General Common Stock or other property, (c) if applicable, the exchange
of all outstanding Preferred Securities of such series for shares of the related
series of American General Preferred Stock or (d) if applicable, the exchange of
all outstanding Preferred Securities of such series for the related series of
Junior Subordinated Debentures. In addition, each Guarantee will terminate
completely upon full payment of the amounts payable with respect to all
Preferred Securities subject to such Guarantee upon liquidation, dissolution or
winding-up of such American General LLC. Notwithstanding the foregoing, each
Guarantee will continue to be effective or (to the fullest extent permitted by
law) will be reinstated, as the case may be, with respect to the applicable
Preferred Securities of any holder who has been required to restore payment of
any sums received on account of, or to redeliver any securities received on
account of, such Preferred Securities or the Guarantee relating thereto.
GOVERNING LAW
The Guarantees will be governed by, and construed in accordance with, the
laws of the State of New York.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a summary of information concerning the Junior
Subordinated Debentures which will be issued from time to time in one or more
series under an Indenture, dated as of May 15, 1995 (the "Junior Subordinated
Indenture"), between American General and Chemical Bank, as trustee (the "Junior
Subordinated Trustee"). Concurrently with the issuance of each series of
Preferred Securities, the American General LLC issuing such Preferred Securities
will invest the proceeds thereof, together with substantially all the proceeds
from any related issuance of Common Securities, in a series of the Junior
Subordinated Debentures. The following summary does not purport to be complete
and is subject in all respects to the provisions of, and is qualified in its
entirety by reference to, the Junior Subordinated Indenture, a form of which is
filed as an exhibit to the Registration Statement of which this Prospectus forms
a part. Whenever particular provisions or defined terms in the Junior
Subordinated Indenture are referred to herein or in a Prospectus Supplement, it
is intended that such provisions or defined terms are incorporated by reference
herein or therein, as the case may be.
GENERAL
The Junior Subordinated Debentures will be unsecured, subordinated
obligations of American General as hereinafter described. The Junior
Subordinated Indenture does not limit the aggregate principal amount of Junior
Subordinated Debentures which may be issued thereunder and provides
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that the Junior Subordinated Debentures may be issued thereunder from time to
time in one or more series pursuant to an indenture supplemental to the Junior
Subordinated Indenture or a resolution of American General's Board of Directors
or in a manner specified in or authorized by a Board resolution (each, a
"Supplemental Junior Subordinated Indenture"). The aggregate principal amount of
Junior Subordinated Debentures relating to the Preferred Securities of any
series will be set forth in the Prospectus Supplement for such series of
Preferred Securities and will be equal to 99% of the sum of the aggregate
liquidation preference of the Preferred Securities for such series and the
purchase price paid by American General and its subsidiaries for Common
Securities of the applicable American General LLC, and any related capital
contributions made, in connection with the issuance of such series of Preferred
Securities.
Reference is made to the Prospectus Supplement relating to the particular
series of Preferred Securities being offered thereby for the specific terms of
the series of Junior Subordinated Debentures relating to such series of
Preferred Securities, including: (i) the specific title of such Junior
Subordinated Debentures; (ii) any limit on the aggregate principal amount of
such Junior Subordinated Debentures; (iii) the date or dates on which the
principal of such Junior Subordinated Debentures is payable and the terms, if
any, on which American General may reborrow the proceeds of such payment or
exchange securities for such Junior Subordinated Debentures when a principal
payment is due; (iv) the rate or rates at which such Junior Subordinated
Debentures will bear interest or the method of determination of such rate or
rates; (v) the date or dates from which such interest shall accrue, the interest
payment dates on which such interest will be payable, or the manner of
determination of such interest payment dates, the record dates for the
determination of holders to whom interest is payable on any such interest
payment dates, and the basis on which interest will accrue if other than that of
a 360-day year of twelve 30-day months; (vi) the right, if any, of American
General to extend the interest payment periods of such Junior Subordinated
Debentures, the maximum duration of any such extension or extensions and the
additional interest, if any, payable on such Junior Subordinated Debentures if
an interest payment period is extended; (vii) the date or dates on which, the
period or periods within which, the price or prices at which and the terms and
conditions upon which, if any, such Junior Subordinated Debentures may be
redeemed, in whole or in part, at the option of American General; (viii) the
obligation, if any, of American General to redeem or repay such Junior
Subordinated Debentures pursuant to any sinking fund or analogous provisions or
at the option of the holder thereof or upon the occurrence of one or more
specified events and the date or dates on which, the period or periods within
which (or the event or events upon which), the price or prices at which and the
terms and conditions upon which, if any, such Junior Subordinated Debentures
shall be redeemed or repaid, in whole or part, pursuant to such obligation, and
any provisions for the remarketing of such Junior Subordinated Debentures so
redeemed or repaid; (ix) the terms and conditions, if any, upon which such
Junior Subordinated Debentures may be converted into shares of American General
Common Stock or exchanged for shares of a series of American General Preferred
Stock, including the conversion or exchange price and the circumstances under
which any such conversion or exchange right shall expire; (x) the form of such
Junior Subordinated Debentures, including whether such Junior Subordinated
Debentures are issuable as a global security, and in such case, the identity of
the depositary; (xi) the denominations in which such Junior Subordinated
Debentures shall be issuable if other than denominations of $25 and any integral
multiple thereof; (xii) any modifications to the Events of Default or covenants
of the Company with respect to such series of Junior Subordinated Debentures and
any change in rights to declare the principal of such series of Junior
Subordinated Debentures to be immediately due and payable; (xiii) the terms and
conditions, if any, under which the Junior Subordinated Indenture may be
defeased with respect to such Junior Subordinated Debentures; (xiv) whether and
under what circumstances additional amounts on such Junior Subordinated
Debentures shall be payable, and, if so, whether American General has the option
to redeem such Junior Subordinated Debentures rather than pay such additional
amounts; (xv) any restrictions on the transferability of such Junior
Subordinated Debentures; and (xvi) any other terms of such Junior Subordinated
Debentures. (Section 301)
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The Junior Subordinated Indenture does not contain any provisions that
limit American General's ability to incur indebtedness or impose liens on its
assets or that afford holders of Junior Subordinated Debentures protection in
the event of a highly leveraged or similar transaction involving American
General.
SUBORDINATION
The Junior Subordinated Indenture provides that the Junior Subordinated
Debentures are subordinate and junior in right of payment to all Senior
Indebtedness of American General in the manner described below. (Article
Thirteen)
Upon any payment or distribution of assets of American General to creditors
upon any liquidation, dissolution, winding-up, reorganization, assignment for
the benefit of creditors, marshalling of assets or liabilities or any
bankruptcy, insolvency or similar proceedings of American General, the holders
of Senior Indebtedness will be entitled to receive payment in full in cash of
all amounts due on or to become due on or in respect of all Senior Indebtedness
(including any interest accruing thereon after commencement of such
proceedings), before the holders of the Junior Subordinated Debentures will be
entitled to receive any payment (other than payment in shares of stock or other
subordinated securities issued in a reorganization proceeding or payments from
funds previously deposited in trust to defease one or more series of Junior
Subordinated Debentures under the Junior Subordinated Indenture) on account of
the principal of, premium, if any, or interest on the Junior Subordinated
Debentures or on account of any purchase, redemption or other acquisition of the
Junior Subordinated Debentures by American General. (Section 1302)
The holders of the Junior Subordinated Debentures of each series will be
subrogated to the rights of the holders of the Senior Indebtedness to the extent
of payments made to the holders of Senior Indebtedness out of the distributive
share of such series of Junior Subordinated Debentures. (Section 1305)
American General may not make any payments in respect of the Junior
Subordinated Debentures or on account of the purchase, redemption or other
acquisition of the Junior Subordinated Debentures (other than payment in shares
of stock or other subordinated securities issued in a reorganization proceeding
or payments from funds previously deposited in trust to defease one or more
series of Junior Subordinated Debentures under the Junior Subordinated
Indenture), if there has occurred and is continuing a default in the payment of
the principal of (or premium, if any) or interest on any Senior Indebtedness (a
"Senior Payment Default"). In addition, if any event of default (other than a
Senior Payment Default), or any event which after notice or lapse of time (or
both) would become an event of default, with respect to Senior Indebtedness,
permitting the holders thereof (or a trustee or agent on behalf of the holders
thereof) to accelerate the maturity thereof has occurred and is continuing (a
"Senior Nonmonetary Default"), and American General or the Junior Subordinated
Trustee have received written notice thereof from a holder of such Senior
Indebtedness or a trustee on behalf of a holder of such Senior Indebtedness,
then American General may not make any payments in respect of the Junior
Subordinated Debentures or on account of the purchase, redemption or other
acquisition of the Junior Subordinated Debentures (other than payment in shares
of stock or other subordinated securities issued in a reorganization proceeding
or payments from funds previously deposited in trust to defease one or more
series of Junior Subordinated Debentures under the Junior Subordinated
Indenture), for a period (a "blockage period") commencing on the date American
General or the Junior Subordinated Trustee receive such written notice and
ending on the earlier of (i) 179 days after such date and (ii) the date, if any,
on which the Senior Indebtedness to which such default relates is discharged or
such default is waived in writing or otherwise cured or ceases to exist and any
acceleration of Senior Indebtedness to which such Senior Nonmonetary Default
relates is rescinded or annulled.
In any event, not more than one blockage period may be commenced during any
period of 360 consecutive days, and there must be a period of at least 181
consecutive days in each period of 360 consecutive days when no blockage period
is in effect. Following the commencement of a
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blockage period, the holders of Senior Indebtedness will be precluded from
commencing a subsequent blockage period until the conditions set forth in the
preceding sentence are satisfied. No Senior Nonmonetary Default that existed or
was continuing on the date of commencement of any blockage period with respect
to the Senior Indebtedness initiating such blockage period will be, or can be,
made the basis for the commencement of a subsequent blockage period, unless such
default has been cured for a period of not less than 90 consecutive days.
(Section 1303)
The term "Senior Indebtedness" shall mean the principal of, and any premium
and interest on, and any other payment due pursuant to, any of the following,
whether outstanding at the date of execution of the Junior Subordinated
Indenture or thereafter incurred, created or assumed:
(a) all obligations of American General for money borrowed;
(b) all obligations of American General evidenced by notes,
debentures, bonds or other securities, including, without limitation,
American General's 13 1/2% Restricted Subordinated Notes Due 2002 and any
obligations incurred, created or assumed in connection with the acquisition
of property, assets or businesses;
(c) all Capitalized Lease Obligations of American General;
(d) all reimbursement obligations of American General with respect to
letters of credit, bankers acceptances or similar facilities issued for the
account of American General;
(e) all obligations of American General issued or assumed as the
deferred purchase price of property or services (but excluding trade
accounts payable or accrued liabilities arising in the ordinary course of
business);
(f) all payment obligations of American General under any interest
rate, currency or commodity swap agreement, option agreement, hedge
agreement, forward contract, or similar agreement designed to protect
American General or another person against fluctuations in interest rates,
exchange rates or commodity prices;
(g) all obligations of the type referred to in clauses (a) through (f)
above of another person and all dividends of another person, the payment of
which, in either case, American General has assumed or guaranteed, or for
which American General is responsible or liable, directly or indirectly,
jointly or severally, as obligor, guarantor or otherwise; and
(h) all amendments, modifications, renewals, extensions, refinancings,
replacements and refundings by American General of any such indebtedness
referred to in clauses (a) through (g) above (and of any such amended,
modified, renewed, extended, refinanced, replaced or refunded indebtedness
or obligations);
other than (i) any indebtedness, renewal, extension, refinancing, replacement,
refunding, assumption, guarantee or other obligation which expressly provides,
or in the instrument creating or evidencing the same or the assumption or
guarantee of the same it is expressly provided, that such indebtedness, renewal,
extension, refinancing, replacement, refunding, assumption, guarantee or other
obligation is junior in right of payment to or is pari passu with the Junior
Subordinated Debentures; and (ii) each Guarantee. Such Senior Indebtedness shall
continue to be Senior Indebtedness and entitled to the benefits of the
subordination provisions irrespective of any amendment, modification or waiver
of any term of such Senior Indebtedness.
By reason of such subordination, in the event of an insolvency, creditors
of American General who are holders of Senior Indebtedness, as well as certain
general creditors of American General, may recover more, ratably, than the
holders of the Junior Subordinated Debentures. Additionally, American General
currently conducts substantially all of its operations through subsidiaries, and
the holders of Junior Subordinated Debentures will be structurally subordinated
to the creditors of American General's subsidiaries. See "American General."
The Junior Subordinated Indenture does not limit the aggregate amount of
Senior Indebtedness which may be issued. As of March 31, 1995, Senior
Indebtedness of American General aggregated approximately $2.8 billion.
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CERTAIN COVENANTS OF AMERICAN GENERAL
In the Junior Subordinated Indenture, American General will covenant for
the benefit of the holders of each series of Junior Subordinated Debentures that
American General shall not declare or pay any dividend on, and American General
shall not, and American General shall not permit any of its majority-owned
subsidiaries to, redeem, purchase, acquire or make a liquidation payment with
respect to, any of American General's capital stock (other than (i) acquisitions
of shares of American General Common Stock in connection with the satisfaction
by American General or any of its majority-owned subsidiaries of its obligations
under any employee benefit plans or the satisfaction by American General of its
obligations pursuant to any put contract requiring American General to purchase
shares of American General Common Stock, (ii) as a result of a reclassification
of capital stock or the exchange or conversion of one class or series of capital
stock for another class or series of capital stock, (iii) redemptions of any
share purchase rights issued by American General pursuant to the Rights
Agreement (see "Description of American General Common Stock -- Preferred Share
Purchase Rights") or the declaration and payment of a dividend of similar share
purchase rights in the future, or (iv) the purchase of fractional interests in
shares of capital stock pursuant to conversion or exchange provisions of such
capital stock or the security being converted or exchanged) or make any
guarantee payments with respect to the foregoing, if at such time American
General has exercised its option to extend the interest payment period on such
series of Junior Subordinated Debentures and such extension is continuing,
American General is in default with respect to its payment or other obligations
under the Guarantee with respect to any outstanding series of Preferred
Securities related to such series of Junior Subordinated Debentures or there has
occurred and is continuing any Event of Default under the Junior Subordinated
Indenture with respect to such series of Junior Subordinated Debentures.
American General is required to take all actions necessary to ensure the
compliance of its majority-owned subsidiaries with the above covenant. (Section
1006)
In the Junior Subordinated Indenture, American General also will covenant
for the benefit of the holders of each series of Junior Subordinated Debentures
that, so long as the related series of Preferred Securities remains outstanding,
it will (a) not cause or permit any Common Securities to be transferred (other
than, in the case of American General, in connection with a merger or
consolidation permitted under the Junior Subordinated Indenture as described
under "-- Consolidation, Merger and Sale" or, in the case of the Manager, in
connection with any merger or consolidation involving the Manager), (b) maintain
direct or indirect ownership of all outstanding Common Securities and other
limited liability company interests in the applicable American General LLC other
than any series of Preferred Securities (except as permitted in the applicable
LLC Agreement), (c) cause at least 21% of all interests in the capital, income,
gain, loss, deduction and credit of such American General LLC to be represented
by Common Securities, (d) not voluntarily liquidate, dissolve or wind-up itself
(other than in connection with a merger or consolidation permitted under the
Junior Subordinated Indenture as described under "-- Consolidation, Merger and
Sale"), or permit the Manager (other than in connection with any merger or
consolidation involving the Manager) or such American General LLC (other than in
connection with or after an exchange of all outstanding series of Preferred
Securities of such American General LLC for the related series of Junior
Subordinated Debentures, if so provided in the applicable Declaration), to
liquidate, dissolve or wind-up, (e) cause American General Delaware Management
Corporation or any successor thereto by merger or consolidation to remain the
Manager and to timely perform all of its duties as Manager of such American
General LLC (including the duty to cause such American General LLC to declare
and pay dividends on such Preferred Securities to the extent set forth in the
applicable LLC Agreement and Declaration) and (f) if so provided in the
Prospectus Supplement pertaining to such Preferred Securities, to deliver
American General Preferred Stock or American General Common Stock, as the case
may be, upon an election by the holders of such Preferred Securities to exchange
or convert such series of Junior Subordinated Debentures. (Section 1007)
Compliance by the Company with any of the covenants described above can be
waived by the holders of a majority of the aggregate principal amount of the
related series of Junior Subordinated
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Debentures then outstanding and, so long as the Preferred Securities of the
related series are outstanding, the consent or approval of at least 66 2/3% of
the aggregate liquidation preference of the Preferred Securities of such series.
(Section 1009)
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Junior Subordinated Debentures of each series will be issued in registered
form and in either certificated form or will be represented by one or more
global securities. If any Junior Subordinated Debentures of a series are
represented by one or more global securities, the applicable Prospectus
Supplement will describe the circumstances, if any, under which beneficial
owners of interests in any such global securities may exchange such interests
for Junior Subordinated Debentures of such series in certificated form and of
like tenor and principal amount in any authorized denomination. Principal of and
any premium and interest on a global security will be payable in the manner
described in the Prospectus Supplement.
If not represented by one or more global securities, Junior Subordinated
Debentures may be presented for registration of transfer (with the form of
transfer endorsed thereon duly executed) or exchange, at the office of the
Debenture Registrar or at the office of any transfer agent designated by
American General for such purpose with respect to any series of Junior
Subordinated Debentures and referred to in the applicable Prospectus Supplement,
without service charge and upon payment of any taxes and other governmental
charges as described in the Junior Subordinated Indenture. Such transfer or
exchange will be effected upon the Debenture Registrar or such transfer agent,
as the case may be, being satisfied with the documents of title and identity of
the person making the request and subject to such reasonable regulations as
American General may prescribe. American General has appointed the Junior
Subordinated Trustee as Debenture Registrar with respect to the Junior
Subordinated Debentures. If a Prospectus Supplement refers to any transfer
agents (in addition to the Debenture Registrar) initially designated by American
General with respect to any series of Junior Subordinated Debentures, American
General may at any time rescind the designation of any such transfer agent or
approve a change in the location through which any such transfer agent acts,
except that American General will be required to maintain a transfer agent in
each Place of Payment for such series. American General may at any time
designate additional transfer agents with respect to any series of Junior
Subordinated Debentures. (Sections 305 and 1002)
In the event of any redemption of a series of Junior Subordinated
Debentures in part, American General shall not be required to (i) issue,
register the transfer of or exchange Junior Subordinated Debentures of any
series during a period beginning at the opening of business 15 days before any
selection for redemption of such Junior Subordinated Debentures of like tenor
and of the same series and ending at the close of business on the day of the
mailing of the relevant notice of redemption or (ii) register the transfer of or
exchange any such Junior Subordinated Debentures so selected for redemption, in
whole or in part, except the unredeemed portion of any such Junior Subordinated
Debentures being redeemed in part. Similarly, if a Junior Subordinated Debenture
is subject to repayment at the option of the holder, American General shall not
be required to register the transfer or exchange of any Junior Subordinated
Debenture so surrendered for repayment. (Section 305)
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and premium (if any) on any series of Junior Subordinated
Debentures will be made only against surrender to the Paying Agent of such
Junior Subordinated Debentures. Unless otherwise indicated in the applicable
Prospectus Supplement, principal of and any premium, if any, and interest on
Junior Subordinated Debentures will be payable, subject to any applicable laws
and regulations, at the office of such Paying Agent or Paying Agents as American
General may designate from time to time, except that at the option of American
General payment of any interest may be made by check mailed to the address of
the person entitled thereto as such address shall appear in the Debenture
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Register with respect to such Junior Subordinated Debentures or by wire transfer
to an account maintained at a bank located in the United States or by any other
means described in the Prospectus Supplement. Unless otherwise indicated in the
applicable Prospectus Supplement, payment of interest on a Junior Subordinated
Debenture on any interest payment date will be made to the person in whose name
such Junior Subordinated Debenture (or Predecessor Security) is registered at
the close of business on the record date for such interest payment. (Section
307)
Unless otherwise specified in the applicable Prospectus Supplement, the
Junior Subordinated Trustee will act as Paying Agent with respect to the Junior
Subordinated Debentures. American General may at any time designate additional
Paying Agents or rescind the designation of any Paying Agents or approve a
change in the office through which any Paying Agent acts, except that American
General will be required to maintain a Paying Agent in each Place of Payment for
each series of Junior Subordinated Debentures. (Section 1002)
All monies paid by American General to a Paying Agent for the payment of
the principal of or any premium or interest on any Junior Subordinated Debenture
of any series which remain unclaimed at the end of two years after such
principal, premium or interest shall have become due and payable will be repaid
to American General and the holder of such Junior Subordinated Debenture will
thereafter look only to American General for payment thereof. (Section 1003)
MODIFICATION OF THE JUNIOR SUBORDINATED INDENTURE
The Junior Subordinated Indenture may be amended by American General and
the Junior Subordinated Trustee, with the consent of the holders of a majority
in aggregate principal amount of the Junior Subordinated Debentures of each
series affected thereby, to modify the Junior Subordinated Indenture or any
Supplemental Junior Subordinated Indenture affecting that series or the rights
of the holders of that series of Junior Subordinated Debentures; provided, that
no such modification or amendment may, without the consent of the holder of each
outstanding Junior Subordinated Debenture affected thereby, (a) change the
maturity of the principal of, or any installment of the principal of or interest
on, any Junior Subordinated Debenture or change any obligation of American
General to pay certain Additional Amounts described in a Prospectus Supplement,
(b) reduce the principal amount of, or any premium payable upon the redemption
of or the rate or amount of interest on, any Junior Subordinated Debenture, (c)
change the place (except as otherwise permitted when additional paying agents
are selected or removed) or currency of payment of principal of, or any premium
or interest on, any Junior Subordinated Debenture, (d) impair the right to
institute suit for the enforcement of any payment on or with respect to any
Junior Subordinated Debenture or for the conversion or exchange of any Junior
Subordinated Debenture in accordance with its terms, (e) adversely affect any
right to convert or exchange any Junior Subordinated Debenture, (f) modify the
subordination provisions in a manner adverse to the holder of any Junior
Subordinated Debenture, (g) reduce the above-stated percentage of outstanding
Junior Subordinated Debentures of a series necessary to modify or amend the
Junior Subordinated Indenture with respect to such series of Junior Subordinated
Debentures or (h) reduce the percentage of aggregate principal amount of
outstanding Junior Subordinated Debentures of a series necessary for waiver of
compliance with certain provisions of the Junior Subordinated Indenture
applicable to such series of Junior Subordinated Debentures or for waiver of
certain defaults with respect to such series of Junior Subordinated Debentures
or reduce certain requirements relating to quorums and voting at meetings.
(Section 902)
So long as an American General LLC holds the Junior Subordinated Debentures
of any series, it may not waive compliance with the provisions of the Junior
Subordinated Indenture benefiting the related series of Preferred Securities or
modify or amend the Junior Subordinated Indenture without the approval of the
same percentage of the aggregate liquidation preference of the holders of
Preferred Securities of the related series as would be required if the holders
of such Preferred Securities then held such Junior Subordinated Debentures.
(Section 903)
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In addition, American General and the Junior Subordinated Trustee may
execute, without the consent of any holder of Junior Subordinated Debentures,
any Supplemental Junior Subordinated Indenture (a) to evidence the succession of
another corporation to American General and the assumption of the covenants of
American General; (b) to add to the covenants of American General for the
benefit of the holders of all or any series of Junior Subordinated Debentures or
to surrender any right or power conferred upon American General; (c) to add any
additional Events of Default with respect to all or any series of Junior
Subordinated Debentures; (d) to change or eliminate any restrictions on the
payment of the principal of or any premium or interest on Junior Subordinated
Debentures, to modify the provisions relating to global Junior Subordinated
Debentures, or to permit the issuance of Junior Subordinated Debentures in
bearer or uncertificated form, provided any such action does not adversely
affect the interests of the holders of the Junior Subordinated Debentures of any
series in any material respect; (e) to add to, change or eliminate any provision
of the Junior Subordinated Indenture, provided that such Supplemental Junior
Subordinated Indenture shall become effective only if there is no outstanding
Junior Subordinated Debentures of any series then entitled to the benefit of
such provision or such amendment does not apply to any then Outstanding Junior
Subordinated Debentures; (f) to secure the Junior Subordinated Debentures; (g)
to establish the form or terms of the Junior Subordinated Debentures of any
series; (h) to provide for the acceptance of appointment by a successor Trustee
with respect to the Junior Subordinated Debentures of one or more series and to
add to or change any of the provisions as shall be necessary to provide for or
facilitate the administration of the trusts under the Junior Subordinated
Indenture by more than one Junior Subordinated Trustee; (i) to provide for the
discharge of the Junior Subordinated Indenture with respect to the Junior
Subordinated Debentures of any series by the deposit of monies or government
obligations in trust; (j) to change the conditions, limitations and restrictions
on the authorized amount, terms or provisions of issuance, authentication and
delivery of the Junior Subordinated Debentures as set forth in the Junior
Subordinated Indenture and the Prospectus Supplement relating thereto; (k) to
provide for conversion or exchange rights of any series of Junior Subordinated
Debentures pursuant to the requirements of the instrument authorizing such
series; (l) to limit or terminate the benefit to the holders of Senior
Indebtedness of the subordination provisions contained in the Junior
Subordinated Indenture; or (m) to cure any ambiguity, defect or inconsistency in
the Junior Subordinated Indenture, or to make other provisions with respect to
matters or questions arising under the Junior Subordinated Indenture, provided
such action does not adversely affect the interests of the holders of the Junior
Subordinated Debentures of any series in any material respect. (Section 901)
EVENTS OF DEFAULT
The Junior Subordinated Indenture provides that, unless a Prospectus
Supplement relating to a particular series of Junior Subordinated Debentures
provides otherwise, any one or more of the following events, which has occurred
and is continuing, constitutes an "Event of Default" with respect to any
particular series of Junior Subordinated Debentures:
(a) failure to pay any interest (including any Additional Interest (as
defined in the Junior Subordinated Indenture)) on the Junior Subordinated
Debentures of that series when due and such failure continues for a period
of 10 days; provided that (i) a valid extension of the interest payment
period by American General shall not constitute a default in the payment of
interest for this purpose, and (ii) no such default shall be deemed to
exist if, on or prior to the date on which such interest became due,
American General shall have made a payment, sufficient to pay such interest
pursuant to the Guarantee with respect to the series of Preferred
Securities related to such series of Junior Subordinated Debentures; or
(b) failure to pay principal of (or premium, if any, on) the Junior
Subordinated Debentures of that series when due, whether at maturity, upon
redemption, by declaration of acceleration or otherwise, or to make any
sinking fund payment with respect to that series; provided that (i) no such
default shall be deemed to exist if, on or prior to the date on which such
principal or premium, if any became due, American General shall have made a
payment, sufficient to pay
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such principal or premium, if any, pursuant to the Guarantee related to
such series of Junior Subordinated Debentures and (ii) a valid exchange of
a Junior Subordinated Debenture for a Junior Subordinated Debenture of
another series pursuant to the provisions permitting such exchange shall
not constitute a default in the payment of the principal of the Junior
Subordinated Debenture being exchanged; or
(c) if applicable, failure by American General to deliver shares of
the applicable series of American General Preferred Stock or American
General Common Stock upon an appropriate election by holders of the related
series of Preferred Securities to exchange or convert such Preferred
Securities; or
(d) failure by American General to observe or perform in any material
respect any other covenant (other than those specifically relating to
another series) contained in the Junior Subordinated Indenture or the
Junior Subordinated Debentures of that series continued for 90 days after
written notice to American General from the Junior Subordinated Trustee or
to American General and the Junior Subordinated Trustee from the holders of
at least 25% in aggregate outstanding principal amount of the Junior
Subordinated Debentures of such series or the holders of at least 25% in
aggregate liquidation preference of the Preferred Securities of the series
related to such series of Junior Subordinated Debentures; or
(e) the liquidation, dissolution or winding-up of the American General
LLC that holds such series of Junior Subordinated Debentures, except in
connection with or after the exchange of Preferred Securities for Junior
Subordinated Debentures or American General Preferred Stock or in
connection with certain mergers or consolidations permitted by the
applicable LLC Agreement; or
(f) certain events of bankruptcy, insolvency or reorganization of
American General; or
(g) any other Event of Default with respect to such series of Junior
Subordinated Debentures described in the applicable Prospectus Supplement.
If an Event of Default under the Junior Subordinated Indenture shall occur
and be continuing with respect to a particular series of Junior Subordinated
Debentures (other than an Event of Default described in clause (f) above, which
shall result in the immediate acceleration of the maturity of such series of
Junior Subordinated Debentures), then the Junior Subordinated Trustee or the
holders of not less than 25% in aggregate outstanding principal amount of such
series of Junior Subordinated Debentures may declare the principal thereof due
and payable immediately. The holders of a majority in aggregate outstanding
principal amount of such series (with the consent of the holders of at least
66 2/3% of the aggregate liquidation preference of the related series of
Preferred Securities if such series is then outstanding), however, may annul
such declaration if such Event of Default has been cured and a sum sufficient to
pay all matured principal, premium, if any, and interest has been deposited with
the Junior Subordinated Trustee. (Section 502)
The holders of a majority in aggregate outstanding principal amount of any
series of Junior Subordinated Debentures will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Junior Subordinated Trustee or the exercise of any trust or power conferred on
the Junior Subordinated Trustee with respect to the Junior Subordinated
Debentures of such series. (Section 512)
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures of any series may, on behalf of the holders of
all the Junior Subordinated Debentures of such series, waive any past default
with respect to such Junior Subordinated Debentures and its consequences, except
a default in the payment of principal, premium, if any, or interest. (Section
513) As long as the related series of Preferred Securities is outstanding, such
a waiver cannot be granted without the approval of 66 2/3% in aggregate
liquidation preference of such series of Preferred Securities. (Section 1007)
American General is required to file annually with the Junior Subordinated
Trustee a certificate as to whether or not American General is in compliance
with all the conditions and covenants under the Junior Subordinated Indenture.
(Section 1008)
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No holder of a Junior Subordinated Debenture of any series may institute
any proceeding against American General under the Junior Subordinated Indenture
(except actions for payment of overdue principal of, or premium, if any, or
interest on, such Junior Subordinated Debenture or for the conversion of
exchange of any Junior Subordinated Debenture in accordance with its terms)
unless the holders of not less than 25% in aggregate principal amount of the
Junior Subordinated Debentures of that series then outstanding shall have
requested the Junior Subordinated Trustee to institute such proceeding and
offered to the Junior Subordinated Trustee reasonable indemnity against the
costs, expenses and liabilities to be incurred in compliance with such request
and the Junior Subordinated Trustee shall not have instituted such proceeding
within 60 calendar days of such request. (Sections 507 and 508)
To the extent described in the applicable Prospectus Supplement, upon the
occurrence and continuance of an Event of Default with respect to a series of
Junior Subordinated Debentures, the holders of the related series of Preferred
Securities will have the right to appoint a Special Trustee to exercise certain
of the rights the applicable American General LLC has as holder of such series
of Junior Subordinated Debentures. (Section 516)
CONSOLIDATION, MERGER AND SALE
American General, without the consent of the holder or holders of any
Junior Subordinated Debentures, may consolidate with or merge with or into, or,
if no Preferred Securities are then outstanding, convey, transfer or lease its
assets as an entirety or substantially as an entirety to, any corporation,
partnership, trust or other entity organized and validly existing under the laws
of the United States of America or a state thereof, provided that, in the case
of a merger, American General survives the merger or, in the case of a merger in
which American General is not the survivor and in the case of a consolidation or
conveyance, transfer or lease of assets, the successor assumes American
General's obligations under the Junior Subordinated Debentures, the Junior
Subordinated Indenture and the Guarantees and, in each case, that, after giving
effect to the transaction, no Event of Default, and no event which, after notice
or lapse of time, or both, would become an Event of Default, shall have occurred
and be continuing. (Section 801)
DEFEASANCE AND DISCHARGE
American General may discharge its indebtedness and its obligations under
the Junior Subordinated Indenture with respect to a series of Junior
Subordinated Debentures by depositing funds or obligations issued or guaranteed
by the United States of America if certain conditions are satisfied. Such
conditions include a condition that such funds or government obligations be
sufficient to pay and discharge the indebtedness evidenced by the Junior
Subordinated Debentures of such series and that all Junior Subordinated
Debentures of such series issued under the Junior Subordinated Indenture either
shall have been delivered to the Junior Subordinated Trustee for cancellation or
shall be due, or will be called for redemption, within one year. If American
General has any other right to defease the Junior Subordinated Indenture with
respect to a particular series of Junior Subordinated Debentures by depositing
with the Junior Subordinated Trustee, in trust, monies or government obligations
in an amount sufficient to pay, when due, the principal of, premium, if any, and
interest on the Junior Subordinated Debentures of that series, then the
applicable Prospectus Supplement with respect to the Preferred Securities
relating to that series of Junior Subordinated Debentures will describe such
provisions. (Article Four)
MEETINGS
The Junior Subordinated Indenture contains provisions for convening
meetings of the holders of a series of Junior Subordinated Debentures which
would apply if the applicable Prospectus Supplement provides that the Junior
Subordinated Trustee shall call a meeting of such holders. A meeting may be
called by the Junior Subordinated Trustee for the purposes specified in such
Prospectus Supplement, and, upon the conditions described in such Prospectus
Supplement, by American General or the holders of at least 10% in aggregate
principal amount of the outstanding
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Junior Subordinated Debentures of such series. Except for any consent which,
under the Junior Subordinated Indenture, must be given by the holder of each
outstanding Junior Subordinated Debenture affected thereby and any particular
instance in which less than a majority vote is required, any resolution
presented at a meeting or adjourned meeting at which a quorum is present may be
adopted by the affirmative vote of the holders of a majority in principal amount
of the Junior Subordinated Debentures of that series. Any resolution passed or
decision taken at any meeting of holders of Junior Subordinated Debentures of
any series duly held in accordance with the Junior Subordinated Indenture will
be binding on all holders of Junior Subordinated Debentures of that series. The
quorum at any meeting, and at any reconvened meeting, will be persons holding or
representing a majority in aggregate principal amount of the outstanding Junior
Subordinated Debentures of a series, unless a higher vote requirement is
specified in the applicable Prospectus Supplement. (Article Fourteen)
GOVERNING LAW
The Junior Subordinated Indenture and the Junior Subordinated Debentures
will be governed by, and construed in accordance with, the laws of the State of
New York. (Section 112)
INFORMATION CONCERNING THE JUNIOR SUBORDINATED TRUSTEE
The Junior Subordinated Trustee, prior to default, undertakes to perform
only such duties as are specifically set forth in the Junior Subordinated
Indenture and, after default, is required to exercise the same degree of care as
a prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provision, the Junior Subordinated Trustee is under no
obligation to exercise any of the powers vested in it by the Junior Subordinated
Indenture at the request of any holder of Junior Subordinated Debentures, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby. The Junior Subordinated Trustee is
not required to expend or risk its own funds or otherwise incur personal
financial liability in the performance of its duties if the Junior Subordinated
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it. The Junior Subordinated Indenture contains other
provisions limiting the responsibilities and liabilities of the Junior
Subordinated Trustee. The Junior Subordinated Trustee does not have any
fiduciary duty to the holders of the Preferred Securities. (Article Six)
American General may appoint a separate trustee for any series of Junior
Subordinated Debentures.
American General and certain of its affiliates from time to time borrow
money from, and maintain deposit accounts and conduct certain banking
transactions with, the Junior Subordinated Trustee in the ordinary course of
their business. The Junior Subordinated Trustee and one of its affiliates also
serve as trustees under other indentures maintained by American General.
MISCELLANEOUS
American General will have the right at all times to assign any of its
rights or obligations under the Junior Subordinated Indenture to a direct or
indirect wholly-owned subsidiary of American General; provided, that, in the
event of any such assignment, American General will remain liable for all such
obligations. The Junior Subordinated Indenture may also be assigned in
connection with the merger, consolidation or transfer of all or substantially
all of the assets of American General, but is not otherwise assignable. Subject
to the foregoing, the Junior Subordinated Indenture will be binding upon and
inure to the benefit of the parties thereto and their respective successors and
assigns. The subordination provisions of the Junior Subordinated Indenture are
also for the benefit of the holders of Senior Indebtedness. A holder of a series
of Preferred Securities shall not have the right, as such a holder, to enforce
any provision of the Junior Subordinated Indenture except for the covenants
described above under the caption "-- Certain Covenants of American General" and
certain provisions of the Junior Subordinated Indenture requiring the approval
of the holders of a specified percentage of Preferred Securities in certain
events.
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DESCRIPTION OF AMERICAN GENERAL PREFERRED STOCK
If so indicated in a Prospectus Supplement relating to a particular series
of Preferred Securities, such series may, in certain events, be exchangeable for
shares of a series of American General Preferred Stock. The following sets forth
certain general terms and provisions of the American General Preferred Stock.
Certain other terms of any series of American General Preferred Stock that may
be issued upon exchange of a series of Preferred Securities offered by a
Prospectus Supplement will be specified in such Prospectus Supplement. If so
specified in the applicable Prospectus Supplement, the terms of any series of
American General Preferred Stock may differ from the terms set forth below. The
description of the terms of the American General Preferred Stock set forth below
and in an applicable Prospectus Supplement does not purport to be complete and
is subject to and qualified in its entirety by reference to the Statement of
Resolution Establishing a Series of Shares relating to the applicable series of
American General Preferred Stock, which will be filed as an exhibit to, or
incorporated by reference in, the Registration Statement of which this
Prospectus forms a part.
GENERAL
Pursuant to the Restated Articles of Incorporation of American General, as
amended (the "Articles"), the Bylaws of American General, and applicable Texas
law, the Board of Directors of American General, or an authorized committee
thereof, has the authority, without further shareholder action, to issue up to
60,000,000 shares of American General Preferred Stock, par value $1.50 per
share, in one or more series and in such amounts and for such consideration, as
may be determined from time to time by resolution of the Board of Directors of
American General, or an authorized committee thereof, and to fix before the
issuance of any shares of American General Preferred Stock of a particular
series, the number of shares constituting that series and the distinctive
designation of that series; the dividend rate (or method of determining the
same); the voting rights; conversion or exchange provisions; redemption
provisions; repurchase obligations; sinking fund availability; rights upon
liquidation, dissolution or winding-up; restrictions upon American General with
respect to the creation of debt or the issuance of additional Preferred Stock or
other stock ranking senior with respect to the payment of dividends or the
distribution of assets upon liquidation, dissolution or winding-up; restrictions
on American General with respect to the issuance of, payment of dividends upon,
or the making of other distributions with respect to, or the acquisition or
redemption of, shares of stock ranking pari passu with or junior to such series
of American General Preferred Stock; the priority of such series of American
General Preferred Stock in relation to other series of American General
Preferred Stock; and any other designations, powers, preferences and rights,
including, without limitation, any qualifications, limitations or restrictions
thereof. The holders of any series of American General Preferred Stock shall not
have any preemptive rights to acquire any shares or securities of any class
which may at any time be issued, sold or offered for sale by American General.
As of May 23, 1995, American General had no Preferred Stock outstanding. As
of such date, the Company did have Preferred Share Purchase Rights outstanding.
A description of these rights is provided under "Description of American General
Common Stock -- Preferred Share Purchase Rights."
DIVIDENDS
The holders of American General Preferred Stock of each series will be
entitled to receive, when, as and if declared by the Board of Directors of
American General, out of funds legally available therefor, dividends at such
rates and on such dates as shall be specified in the applicable Prospectus
Supplement. Such rates may be fixed or variable or both. If variable, the
formula used for determining the dividend rate for each dividend period will be
specified in the applicable Prospectus Supplement. Dividends will be payable to
the holders of record as they appear on the stock books of American General on
such record dates as shall be fixed by the Board of Directors of American
General.
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Unless otherwise indicated in an applicable Prospectus Supplement, all
series of American General Preferred Stock are senior in right as to the payment
of dividends and the distribution of assets upon liquidation, dissolution or
winding-up to the American General Common Stock and any other class of stock of
American General ranking junior to the American General Preferred Stock.
VOTING RIGHTS
Except as indicated in the applicable Prospectus Supplement or as expressly
required by applicable law, the holders of American General Preferred Stock will
not be entitled to vote. In the event American General issues a series of
American General Preferred Stock with voting rights, unless otherwise specified
in the applicable Prospectus Supplement, each such share will be entitled to one
vote on matters on which holders of such series of the American General
Preferred Stock are entitled to vote. Since each full share of any series of
American General Preferred Stock shall be entitled to one vote, the voting power
of such series, on matters on which holders of such series and holders of other
series of American General Preferred Stock are entitled to vote as a single
class, shall depend on the number of shares in such series, not the aggregate
stated value, liquidation preference or initial offering price of the shares of
such series of American General Preferred Stock.
CONVERSION AND EXCHANGE
The applicable Prospectus Supplement will set forth the conditions or
terms, if any, upon which the series of American General Preferred Stock
described in such Prospectus Supplement will be convertible or exchangeable, and
the terms of the securities into which such series will be convertible or
exchangeable.
REDEMPTION RIGHTS
A series of American General Preferred Stock may be redeemable, in whole or
in part, at the option of American General or any holder thereof, and may be
subject to mandatory redemption pursuant to a sinking fund or otherwise, in each
case upon terms, at the times and at the redemption prices specified in the
applicable Prospectus Supplement and subject to the rights of holders of other
securities of American General. American General Preferred Stock redeemed by
American General will be restored to the status of authorized but unissued
shares of Preferred Stock, without series designation.
If less than all outstanding shares of a series of American General
Preferred Stock are to be redeemed, the shares to be redeemed will be selected
ratably or by lot in such manner as may be prescribed by resolution of the Board
of Directors of American General. The notice of redemption will set forth the
designation of the series or part of the series of shares to be redeemed, the
date fixed for redemption, the redemption price, the place at which the
shareholders may obtain payment of the redemption price upon surrender of their
respective share certificates, that dividends will cease to accrue on such
shares on the date fixed for redemption and a statement with respect to the
existence of any right of conversion with respect to the shares to be redeemed
and the period within which such right may be exercised. Such notice will be
given to each holder of shares being called, by first class mail, not less than
30 nor more than 60 calendar days before the date fixed for redemption. Such
notice will be deemed to be delivered when deposited in the United States mail
addressed to the shareholder at such shareholder's address as it appears on the
stock transfer book of American General, with postage thereon prepaid.
Unless otherwise indicated in the applicable Prospectus Supplement,
American General may, on or prior to the date fixed for redemption of a series
of American General Preferred Stock, deposit with any bank or trust company in
Texas, or any bank or trust company in the United States duly appointed and
acting as transfer agent for American General, as a trust fund, a sum sufficient
to redeem all of the shares called for redemption, with irrevocable instructions
and authority to such bank or trust company to give or complete the notice of
redemption thereof and to pay, on and after the date fixed for such redemption,
to the respective holders of shares, as evidenced by a list of
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holders of such shares certified by an officer of American General, the
redemption price upon surrender of their respective share certificates. If
notice of redemption is duly given and funds irrevocably deposited as required,
then from and after the date fixed for redemption, such shares shall be deemed
to be redeemed, dividends thereon shall cease to accrue, such shares shall no
longer be deemed to be outstanding, and the holders thereof shall cease to be
shareholders with respect to such shares and shall have no rights with respect
thereto except the right to receive payment of the redemption price of such
shares, without interest (and, in the case of holders of certificated shares,
upon the surrender of their respective certificates therefor). In case the
holders of such shares shall not, within six years after such deposit, claim the
amount deposited for redemption thereof, such bank or trust company shall upon
demand pay over to American General the balance of such amount so deposited to
be held in trust and such bank or trust company shall thereupon be relieved of
all responsibility to the holders thereof.
REPURCHASE OBLIGATION
The applicable Prospectus Supplement will state the conditions and terms,
if any, upon which the series of American General Preferred Stock described in
the Prospectus Supplement shall be subject to repurchase by American General.
RIGHTS UPON LIQUIDATION
In the event of any voluntary or involuntary liquidation, dissolution or
winding-up of American General, the holders of each series of American General
Preferred Stock shall be entitled to receive out of the net assets of American
General legally available for distribution to shareholders, before any
distribution of assets is made to holders of American General Common Stock or
any other class or series of securities ranking junior to such American General
Preferred Stock upon liquidation, dissolution or winding-up, a liquidating
distribution in the amount per share as set forth in the applicable Prospectus
Supplement plus accumulated and unpaid dividends. If, upon any voluntary or
involuntary liquidation, dissolution or winding-up of American General, the
amounts payable with respect to American General Preferred Stock of any series
and any other securities of American General ranking as to any such distribution
pari passu with such American General Preferred Stock of such series are not
paid in full, the holders of such American General Preferred Stock of such
series and of such other securities will share ratably in any such distribution
of assets of American General in proportion to the full respective preferential
amounts to which they are entitled. Neither the sale of all or substantially all
of the property or business of American General nor the merger or consolidation
of American General into or with any other corporation shall be deemed to be a
liquidation, dissolution or winding-up, voluntary or involuntary, of American
General. After payment of the full amount of the liquidating distribution to
which they are entitled, the holders of American General Preferred Stock of any
series will not be entitled to any further participation in any distribution of
assets by American General.
CONDITIONS AND RESTRICTIONS UPON AMERICAN GENERAL
The applicable Prospectus Supplement will describe any conditions or
restrictions upon American General which are for the benefit of the series of
American General Preferred Stock described in the Prospectus Supplement,
including any restrictions upon the creation of debt or other series of American
General Preferred Stock, the payment of dividends, or the distribution,
acquisition or redemption of shares ranking junior to such series.
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DESCRIPTION OF AMERICAN GENERAL COMMON STOCK
GENERAL
American General is authorized to issue 300,000,000 shares of American
General Common Stock, par value $.50 per share. As of March 31, 1995, there were
outstanding 204,820,775 shares of American General Common Stock.
Holders of American General Common Stock are entitled to receive dividends
when, as and if declared by the Board of Directors of American General out of
any funds legally available therefor, and are entitled upon liquidation, after
claims of creditors and preferences of any series of American General Preferred
Stock, to receive pro rata the net assets of American General.
The holders of American General Common Stock are entitled to one vote for
each share held. Directors of American General are elected for a one-year term
expiring upon the annual meeting of stockholders of American General. The
holders of American General Common Stock do not have cumulative voting rights.
The holders of American General Common Stock do not have any preemptive
rights to acquire any shares or other securities of any class which may at any
time be issued, sold or offered for sale by American General. The holders of
American General Common Stock have no conversion rights and the American General
Common Stock is not subject to redemption by either American General or a
stockholder.
The American General Common Stock is listed on the New York, Pacific,
London and Swiss Stock Exchanges. First Chicago Trust Company of New York is the
transfer agent, registrar and dividend disbursing agent for the American General
Common Stock.
PREFERRED SHARE PURCHASE RIGHTS
On July 27, 1989, the Board of Directors of American General authorized the
issuance of one preferred share purchase right (a "Right") for each share of
American General Common Stock outstanding on August 7, 1989 and for each share
of American General Common Stock issued thereafter but prior to the earlier of
the Distribution Date and the Termination Date (as each such term is defined
below). A Right is attached to each share of American General Common Stock and
entitles the registered holder to purchase from American General one
one-hundredth of a share of Series A Junior Participating Preferred Stock, par
value $1.50 per share, of American General (the "American General Junior
Preferred Shares") at a price of $120 per one one-hundredth of an American
General Junior Preferred Share, subject to certain adjustments.
The Rights will expire on August 7, 1999, unless the expiration date is
extended or the Rights are redeemed earlier (any such date being the
"Termination Date"). The Rights are not exercisable or transferable separately
from the shares of American General Common Stock until the "Distribution Date"
which will occur on the earlier of (i) 10 business days following the first
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired beneficial ownership of 15% or more of the
outstanding American General Common Stock and any other shares of capital stock
of American General entitled to vote generally in the election of directors or
entitled to vote in respect of any merger, consolidation, sale of all or
substantially all of American General's assets, liquidation, dissolution or
winding up of American General (the "Voting Stock") or (ii) 10 business days
following the commencement of, or the first public announcement of an intention
to commence, a tender or exchange offer the consummation of which would result
in the beneficial ownership by a person or group of affiliated or associated
persons of 25% or more of the then outstanding Voting Stock.
In the event American General is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earnings
power should be sold or otherwise transferred, each holder of a Right will have
the right to receive, upon payment of the Right's then current exercise price,
common stock of the acquiring company which has a market value of two times the
exercise price of the Right. In the event that any person becomes an
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Acquiring Person, each holder of a Right will thereafter have the right to
receive upon exercise thereof that number of shares of American General Common
Stock (or under certain circumstances, Common Stock-equivalent American General
Junior Preferred Shares) having a market value of two times the exercise price
of the Rights.
At any time 10 business days after a person or group of affiliated or
associated persons has become an Acquiring Person and prior to the acquisition
by any person or group of 50% or more of the outstanding Voting Stock, the Board
of Directors of American General may exchange the Rights (other than Rights
acquired or beneficially owned by such Acquiring Person, which Rights held by
such Acquiring Person shall then be null and void), in whole or in part, at an
exchange ratio of one share of Common Stock (or one one-hundredth of a share of
American General Junior Preferred Stock), appropriately adjusted to reflect any
stock split, stock dividend or similar transaction, for each two shares of
Common Stock for which the Right is then exercisable.
At any time prior to the close of business on the tenth day following the
first public announcement that a person or group of affiliated or associated
persons has become an Acquiring Person, the Board of Directors of American
General may redeem the then outstanding Rights in whole, but not in part, at a
price of $.01 per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction (the "Rights Redemption Price"). Any such
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors of American General in its sole
discretion may establish.
The purchase price payable, and the number of American General Junior
Preferred Shares or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution in the
event of a stock dividend on, or a subdivision, combination or reclassification
of, the American General Junior Preferred Shares.
The number of outstanding Rights and the number of one one-hundredths of an
American General Junior Preferred Share issuable upon exercise of each Right are
also subject to adjustment in the event of reclassification of securities, or
recapitalization or reorganization of American General or other transaction
involving American General which has the effect, directly or indirectly, of
increasing by more than one percent the proportionate share of the outstanding
shares of any class of equity securities of American General or any of its
subsidiaries beneficially owned by any Acquiring Person, in any such case, prior
to an exchange by American General as described above.
The terms of the Rights may be amended, including extending the expiration
date, by the Board of Directors of American General without the consent of the
holders of the Rights, except in certain circumstances.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire American
General on terms not approved by the Board of Directors of American General. The
Rights should not interfere with any merger or other business combination
approved by the Board of Directors of American General since the Rights may be
redeemed by American General at the Rights Redemption Price prior to the time
that a person or group has acquired beneficial ownership of 50% or more of the
Voting Stock.
The American General Junior Preferred Shares will be non-redeemable and
rank junior to all other series of American General Preferred Stock. Each whole
American General Junior Preferred Share will be entitled to receive a quarterly
preferential dividend in an amount equal to the greater of (i) $0.25 or (ii)
subject to certain adjustments, 100 times the dividend declared on each share of
American General Common Stock. In the event of the liquidation, dissolution or
winding up of American General, each whole American General Junior Preferred
Share will be entitled to receive a preferential liquidation payment in an
amount equal to the greater of (i) $1.50, or (ii) 100 times the aggregate amount
to be distributed per share to holders of American General Common Stock, plus,
in either case, an amount equal to all accrued and unpaid dividends thereon. In
the event of any merger, consolidation or other transaction in which American
General Common Stock is exchanged for or changed into other stock or securities,
cash or other property, each whole American General
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Junior Preferred Share will be entitled to receive 100 times the amount received
per each share of American General Common Stock. Each whole American General
Junior Preferred Share will be entitled to 100 votes on all matters submitted to
a vote of the shareholders of American General, and American General Junior
Preferred Shares will generally vote together as one class with the American
General Common Stock and any other voting capital stock of American General on
all matters submitted to a vote of shareholders of American General.
If such registration is then required by applicable law, American General
will use its best efforts to cause the offer and sale of American General Junior
Preferred Shares issuable upon exercise of the Rights to be registered pursuant
to the Securities Act at any such time as the Rights become exercisable.
The foregoing description of the Rights and the American General Junior
Preferred Shares does not purport to be complete and is qualified in its
entirety by reference to the Rights Agreement, as amended, which is an exhibit
to the Registration Statement of which this Prospectus forms a part, and the
Statement of Resolution Establishing Series of Shares of American General Junior
Preferred Shares.
PLAN OF DISTRIBUTION
The American General LLCs may sell Preferred Securities to or through
underwriters or dealers; directly to other purchasers; through agents; or
through a combination of any such methods of sale. Any such underwriter, dealer
or agent involved in the offer and sale of the offered Preferred Securities will
be named in an applicable Prospectus Supplement or Prospectus Supplements.
The distribution of the Preferred Securities may be effected from time to
time in one or more transactions at a fixed price or prices, which may be
changed, or at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices.
In connection with the sale of Preferred Securities, underwriters may
receive compensation from American General or the American General LLC issuing
the Preferred Securities or from purchasers of Preferred Securities for whom
they may act as agents, in the form of discounts, concessions or commissions.
Underwriters may sell Preferred Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agent. Underwriters, dealers and agents that participate in
the distribution of Preferred Securities may be deemed to be underwriters, and
any discounts or commissions received by them from American General or an
American General LLC, and any profit on the resale of Preferred Securities by
them may be deemed to be underwriting discounts and commissions, under the
Securities Act. Any compensation paid by American General or an American General
LLC to underwriters, dealers or agents in connection with the offering of the
Preferred Securities, and any discounts, concessions or commissions allowed by
underwriters to participating dealers, will be described in an applicable
Prospectus Supplement.
Under agreements which may be entered into by American General and an
American General LLC, underwriters, dealers and agents who participate in the
distribution of Preferred Securities may be entitled to indemnification by
American General and such American General LLC against, and/or contribution by
American General and such American General LLC toward, certain liabilities,
including liabilities under the Securities Act, and to reimbursement for certain
expenses.
Certain of the underwriters, dealers or agents and their associates may be
customers of, engage in transactions with and perform services for American
General or one or more of its affiliates in the ordinary course of business.
The specific terms and manner of sale, including the place and time of
delivery, of the Preferred Securities in respect of which this Prospectus is
being delivered will be set forth or summarized in the applicable Prospectus
Supplement.
27
<PAGE> 59
LEGAL OPINIONS
Unless otherwise indicated in a Prospectus Supplement, the validity of each
series of Preferred Securities, the related Guarantee and the related series of
Junior Subordinated Debentures, as well as the validity of any American General
Common Stock and American General Preferred Stock issuable upon conversion or
exchange of such Junior Subordinated Debentures, will be passed upon for
American General by Vinson & Elkins L.L.P., Houston, Texas. Unless otherwise
indicated in a Prospectus Supplement, certain legal matters relating to such
securities will be passed upon for any underwriters, dealers or agents by Brown
& Wood, New York, New York. Brown & Wood may rely as to matters of Texas law on
the opinion of Vinson & Elkins L.L.P. J. Evans Attwell, a partner in the firm of
Vinson & Elkins L.L.P., is a director of American General.
EXPERTS
The consolidated financial statements and schedules of American General and
its subsidiaries appearing in or incorporated by reference in American General's
Annual Report on Form 10-K for the year ended December 31, 1994 have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon included therein and incorporated herein by reference. See
"Incorporation of Certain Documents by Reference." Such financial statements and
schedules are, and audited financial statements and schedules to be included in
subsequently filed documents will be, incorporated herein by reference in
reliance upon the reports of Ernst & Young LLP pertaining to such financial
statements (to the extent covered by consents filed with the Commission) given
upon the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of American Franklin Company and
Subsidiaries as of December 31, 1993, and for the year then ended, appearing in
American General's Current Report on Form 8-K dated February 14, 1995, and the
consolidated financial statements of American Franklin Company and Subsidiaries
as of December 31, 1994 and 1993, and for the years ended December 31, 1994 and
1993, appearing in American General's Current Report on Form 8-K dated April 14,
1995, have been audited by Coopers & Lybrand L.L.P., independent accountants, as
set forth in their reports thereon included therein and incorporated herein by
reference. See "Incorporation of Certain Documents by Reference." Such
consolidated financial statements are incorporated herein by reference in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
28
<PAGE> 60
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY AMERICAN GENERAL CAPITAL, L.L.C.,
AMERICAN GENERAL CORPORATION OR THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF AMERICAN GENERAL CAPITAL, L.L.C.
OR AMERICAN GENERAL CORPORATION SINCE SUCH DATE.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
PROSPECTUS SUPPLEMENT
Risk Factors......................... S-3
American General Corporation......... S-5
American General Capital, L.L.C...... S-7
Capitalization....................... S-8
Ratio of Earnings to Fixed Charges
and Ratio of Earnings to Combined
Fixed Charges and Preferred Stock
Dividends.......................... S-9
Use of Proceeds...................... S-9
Summary Financial Information of
American General................... S-10
Description of the Series B Preferred
Securities......................... S-11
Description of the Series B Junior
Subordinated Debentures............ S-21
Certain Federal Income Tax
Considerations..................... S-26
Underwriting......................... S-30
PROSPECTUS
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 2
American General..................... 3
American General LLCs................ 3
Ratio of Earnings to Fixed Charges
and Ratio of Earnings to Combined
Fixed Charges and Preferred Stock
Dividends.......................... 4
Use of Proceeds...................... 4
Description of the Preferred
Securities......................... 4
Description of the Guarantees........ 8
Description of the Junior
Subordinated Debentures............ 11
Description of American General
Preferred
Stock.............................. 22
Description of American General
Common
Stock.............................. 25
Plan of Distribution................. 27
Legal Opinions....................... 28
Experts.............................. 28
</TABLE>
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8,000,000
PREFERRED SECURITIES
AMERICAN GENERAL
CAPITAL
8 1/8% CUMULATIVE MONTHLY INCOME
PREFERRED SECURITIES, SERIES B
GUARANTEED TO THE EXTENT
SET FORTH HEREIN BY
AMERICAN GENERAL CORPORATION
---------------------
(AMERICAN GENERAL LOGO)
---------------------
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
ALEX. BROWN & SONS
INCORPORATED
CS FIRST BOSTON
DEAN WITTER REYNOLDS INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
KEMPER SECURITIES, INC.
LEHMAN BROTHERS
PRUDENTIAL SECURITIES INCORPORATED
SALOMON BROTHERS INC
SMITH BARNEY INC.
REPRESENTATIVES OF THE UNDERWRITERS
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